Fair Housing Highlights: 2016 Yearly Update

This quarter, we have updates to two Fair Housing cases discussed in last year’s Legal Pulse. One of these updates addresses accessibility standards in the design and construction of a residential apartment building. Another case decided in the fourth quarter of 2016 involves very similar design and construction issues. In both cases, the properties did not meet accessibility requirements and the owner and/or builder will be making changes to the buildings. Other decisions from this past year involved claims regarding predatory and discriminatory lending and discriminatory advertising.

1.         Bowman v. RLB Investment Partners, LLC, No. 4:15-CV-00857, 2016 WL 7326622 (E.D. Tex. Dec. 16, 2016)

The plaintiff is a veteran who uses a wheelchair. He alleges that defendant’s apartment building does not meet accessibility standards as required by the Fair Housing Act, and he brought suit against the owner and builder of the building. The plaintiff claims that wall switches and thermostats in the units were placed too high, the building contained insufficient clear openings, and there was no accessible route to the mailboxes. In a prior decision, the court denied the defendants’ motion to dismiss the claims. In this decision, the court found that the building did violate Fair Housing Act accessibility requirements and granted summary judgment in favor of the plaintiff. The court ordered the owner and builder to submit a remedial plan to the court describing how they will remedy the FHA violations.

2.         United States v. Nistler, No. 6:16-CV-00094, 2016 WL 6462189 (D. Mont. Oct. 28, 2016)

The United States sued various owners, developers, builders, and the architect involved in the design and construction of properties that failed to meet accessibility standards. The complaint alleged that the properties had noncompliant thresholds, contained outlets that were placed too high, and did not have accessible routes. The defendants entered into a consent agreement under which they will make retrofits to the buildings to make the properties accessible. Under the agreement, the defendants also agreed to design and construct accessible buildings with respect to future construction, and to train employees involved in design and construction regarding the accessibility guidelines.

3.         City of Miami v. Wells Fargo, No. 13-24508, 2016 WL 1156882 (S.D. Fla. Mar. 17, 2016); City of Miami v. Bank of America, No. 13-24506, 2016 WL 1072488 (S.D. Fla. Mar. 17, 2016); City of Miami v. J.P. Morgan Chase Bank, No. 1:14-CV-2205, 2016 WL 1621632 (S.D. Fla. Mar. 18, 2016)

In this series of related cases, the City of Miami sued various lenders for an alleged pattern of discriminatory mortgage lending in violation of the Fair Housing Act. The City claimed that the lenders steered minority borrowers into predatory mortgages with higher cost and risk, and discriminated against those borrowers in refinancing. The City sought damages for reduced tax revenues due to foreclosed vacant properties in the city and its expenditures for services to address unsafe conditions at the vacant properties.

In earlier decisions, it was determined that the City had standing to bring a FHA claim, and the City was given an opportunity to provide additional facts to show that its claims were not barred by the statute of limitations. The City amended its complaint, and the respective lenders moved to dismiss the claims. In these decisions, the court determined that the City failed to properly state a claim. The allegations lumped the parties together and failed to identify specific information about the loans, such as the type of loan, when the loan closed, and how the loan was discriminatory. Without these facts, the City could not establish a violation occurring within the statute of limitations period. The court granted the lenders’ motions to dismiss.

4.         Miami Valley Fair Housing Center, Inc. v. The Connor Group, No. 3:1-CV-83, 2015 WL 9582550 (S.D. Ohio Dec. 31, 2015)

Miami Valley Fair Housing Center argued that an advertisement posted by The Connor Group discriminated on the basis of sex and familial status in violation of fair housing laws. A jury determined that the advertisement was discriminatory. Following that verdict, Miami Valley sought a permanent injunction against The Connor Group. Among other things, the permanent injunction would prohibit The Connor Group from using the words “single” or “man” in advertisements in a manner designed to target single people or males to rent or buy property.

The court denied Miami Valley’s request for an injunction. There was no evidence that The Connor Group was continuing to engage in the same practices or was currently doing anything in violation of the fair housing laws.

5.         Fair Housing Rights Center in Southeastern Pennsylvania v. Post Goldtex, No. 15-1366, 2016 WL 2865733 (3d Cir. May 17, 2016)

The Fair Housing Rights Center sued the owner of a commercial building that had been converted into residential housing units. The Center claimed that the building violated the design and accessibility requirements of the Fair Housing Act. The district court dismissed the claims, finding that converted buildings constructed prior to 1991 are exempt from the accessibility requirements. Relying on an interpretation of the FHA issued by the Department of Housing and Urban Development stating that the design and construction requirements do not apply to converted buildings, the appellate court agreed with the district court’s decision. The Court of Appeals affirmed dismissal of the claims.

B.         Statutes and Regulations

Delaware

The Delaware Fair Housing Act was amended to prohibit discrimination on the basis of “source of income” in housing, real estate-related transactions, and brokerage services.[1] For purposes of the Act, “source of income” means any lawful source of money paid directly by or on behalf of a renter or buyer of housing, including government or private assistance.[2] A party may still consider the sufficiency of the renter or buyer’s income and the credit rating, as long as sufficiency and sustainability of income and credit requirements “are applied in a commercially reasonable manner and without regard to source of income.”[3]

Illinois

Under the Illinois Human Rights Act, licensees may not discriminate in the performance of licensed activities on the basis of one’s “military status.”[4]

New York

The New York Department of State modified its regulation regarding unlawful discriminatory practices by real estate brokers and salespersons. This amendment adds age, sex, sexual orientation, disability, gender identity, and military status to the protected grounds upon which brokers and salespersons may not discriminate.[5] Furthermore, a new section of the regulations states that a finding by a court or local agency that a licensee engaged in discrimination in the performance of licensed real estate activities constitutes presumptive evidence of the licensee’s untrustworthiness and may lead to discipline, including revocation.[6]

C.         Volume of Materials Retrieved

Fair Housing issues were addressed in 25 cases in 2016, which is a decrease from the number of similar cases we saw in 2015 (see Tables 1, 4). The cases principally addressed Lending and Design-and-Build issues (see Table 2). Three statutes and two regulations were located (see Tables 1, 6).