UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JULIA B. WILLIAMS,

Plaintiff-Appellant,

and

FRED MOUZON; CHERYL MOUZON,

Plaintiffs,

v.

No. 95-2964

5300 COLUMBIA PIKE CORPORATION;

CARLYLE HOUSE UNIT OWNERS'

ASSOCIATION, INCORPORATED; ROBERT

FALK; TRISHA HAND; CLAY BROWN;

JOHN HEMSWORTH; BETTY DEMEUTER,

Defendants-Appellees.

FRED MOUZON; CHERYL MOUZON,

Plaintiffs-Appellants,

and

JULIA B. WILLIAMS,

Plaintiff,

v.

No. 95-3091

5300 COLUMBIA PIKE CORPORATION;

CARLYLE HOUSE UNIT OWNERS'

ASSOCIATION, INCORPORATED; ROBERT

FALK; TRISHA HAND; CLAY BROWN;

JOHN HEMSWORTH; BETTY DEMEUTER,

Defendants-Appellees.
Appeals from the United States District Court

for the Eastern District of Virginia, at Alexandria.

T. S. Ellis, III, District Judge.

(CA-95-225-A)

Argued: September 25, 1996

Decided: December 3, 1996

Before MURNAGHAN and HAMILTON, Circuit Judges, and

MICHAEL, Senior United States District Judge for the Western

District of Virginia, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Julian Karpoff, KARPOFF, TITLE & MITNICK, Arlington, Virginia, for Appellants. Thomas Collier Mugavero, MONTEDONICO, HAMILTON & ALTMAN, P.C., Washington, D.C., for

Appellees. ON BRIEF: Julia B. Williams, Washington, D.C., for

Appellants. William John Hickey, MONTEDONICO, HAMILTON

& ALTMAN, P.C., Washington, D.C., for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

This appeal requires us to decide whether the district court erred in

granting appellees' motion for summary judgment pursuant to Fed. R.

 2
Civ. P. 56 on appellants' claims (1) that appellees violated the Fair

Housing Act, 42 U.S.C. § 3601 et seq., and (2) that appellees

breached their contractual and fiduciary duties under Delaware state

law. For the reasons stated below, we affirm the judgment of the district court.

BACKGROUND

Appellants Julia Williams and Fred and Cheryl Mouzon--all of

whom are black, and one of whom is disabled1--were residents of the

Carlyle House, a 136-unit residential building owned as a cooperative

by the 5300 Columbia Pike Corporation ("Co-op"), a Delaware corporation of which appellants were shareholders. Most units of the Carlyle House were occupied by shareholders, although some were in the

Co-op's possession as a result of defaults. Because of various financial difficulties, the Co-op's five-member Board of Directors (Robert

Falk, Trisha Hand, Clay Brown, John Hemsworth, and Betty Demeuter), who were also residents of the Carlyle House, decided to

explore the possibility of converting the form of ownership from a

cooperative association into a condominium regime. The Board

believed that conversion would benefit the Co-op's shareholders

because it would increase the market value commanded by the units,

decrease the Co-op's and the shareholder-residents' debt-service payments, and place final responsibility for tendering timely mortgage

payments on the shareholder-residents. Accordingly, the corporation's

by-laws were amended to authorize the Board to develop a conversion

plan. The amended by-law ("By-law 82") vested the Board with discretion to adopt such a plan, so long as a majority of the Board and

a majority of the shareholders approved the plan.

Pursuant to the Board's proposed conversion plan the Co-op was

to dissolve and a Virginia corporation, the Carlyle House Unit Owners' Association, Inc. ("Condominium Association"), headed by the

same Board, was to take over the duties previously handled through

the Co-op. The plan required each participating shareholder to purchase his or her unit and to exchange his or her shares in the Co-op

in return for a title in a condominium unit. While it was hoped that

all shareholders would participate in the conversion, the Board

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1 Mr. Mouzon has Hodgkin's disease and receives disability payments.

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expected that some would be unable to participate because they would

not qualify for a mortgage necessary to finance their purchase. To

minimize the possibility of nonparticipation, the Board made arrangements with Crestar Mortgage Company ("Crestar"), whose criteria for

extending credit were less restrictive than those of other institutions;

shareholders had the option, however, of securing financing from any

other financial institution if they so preferred. By-law 82 provided

that if a shareholder did not participate, the corporation would, "upon

conversion acquire title to that property and then sell the unit . . . in

a commercial [sic] reasonable fashion and then return to the shareholder the net proceeds of sale after deduction for outstanding indebtedness . . . ." Although By-law 82 suggested that nonparticipating

shareholders would be able to capture the predicted increase in value

that would redound to participating shareholders from the conversion

(or the change from cooperative to condominium status), the conversion plan adopted by the Board rejected this generosity as impracticable because of financial constraints faced by the corporation. The

corporation had to purchase any defaulted units as well as all units

that chose not to participate, and the amount it could borrow was limited to a percentage of the appraised value of the units as condominiums. Moreover, higher compensation for nonparticipating units would

likely encourage nonparticipation, thus aggravating the financial hit

the corporation would take if it treated cooperative units as condominiums for valuation purposes. Finally, and decisively, if the corporation

were forced to purchase too many units, the entire conversion would

fail.2 Thus, it was decided that nonparticipating shareholders would

receive a sum equal to the fair market value of their unit as a cooperative, and not the greater worth their unit would, according to estimates, assume as a condominium.

Subsequent to several informational meetings and following the

distribution of the conversion plan to all shareholders, a vote on the

conversion plan was conducted, with the result that all voting shares

were cast in favor of the plan. Ms. Williams was among those who

voted in favor of the conversion plan; Mr. and Mrs. Mouzon did not

cast their proxies. None of the appellants voiced any concerns regarding the conversion plan, and all three appellants signed an agreement

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2 According to appellees, purchase of one additional unit would have

doomed the conversion plan.

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indicating their intention to participate in the conversion plan. Ms.

Williams, however, was turned down for a mortgage by Crestar, and

the company to which Crestar referred her, because of a troubled

credit history and current indebtedness. For like reasons, Crestar also

rejected the applications of Mr. and Mrs. Mouzon; although the institution to which Crestar directed the Mouzons offered them a mortgage, they declined the offer because they believed the interest rate

(14.9%) to be excessive. As a result of their inability to obtain the

necessary financing (on satisfactory terms), appellants were unable to

participate in the conversion plan. The units of appellants were

appraised by independent professionals, and appellants were paid the

amount their units were worth under cooperative ownership.3 Residents of six units, including appellants, did not participate in the conversion and 114 units participated in the conversion plan. The

remaining sixteen units had earlier defaulted on their obligations.4

Dissatisfied with receiving compensation for a cooperative unit as

opposed to a condominium unit, which would have fetched a higher

price according to appellees' estimates, appellants filed this suit, naming as defendants the Co-op, the Condominium Association, and the

Board members. Appellants alleged violations of the Sherman Act, 15

U.S.C. § 1 et seq., the Fair Housing Act, and breaches of contract and

fiduciary duties under Delaware state law. The district court dismissed appellants' Sherman Act claims pursuant to Fed. R. Civ. P.

12(b)(6), Williams et al. v. The 5300 Columbia Pike Corp. et al., 891

F. Supp. 1169 (E.D. Va. 1995), and subsequently granted summary

judgment on the remainder of the claims. Williams et al. v. The 5300

Columbia Pike Corp. et al., Civil Action No. 95-225-A (Sept. 15,

1995); Williams et al. v. The 5300 Columbia Pike Corp. et al., 901

F. Supp. 208 (E.D. Va. 1995). Appellants appeal only from the grant

of summary judgment.

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3 Although Ms. Williams received cash for her unit (after the amount

she owed the Co-op was deducted), the Mouzons did not receive any

money because their debt to the Co-op offset the amount to which they

were entitled for their unit. Ms. Williams' unit was purchased for

$93,000, and she received $7,121.89. The Mouzons' unit sold for

$110,000.

4 Because a unit may contain a family, and not just an individual, the

number of individuals participating does not correspond numerically to

the number of participating units.

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SUMMARY JUDGMENT PRINCIPLES

We review a district court's grant of summary judgment de novo.

Becerra v. Dalton, 94 F.3d 145, 148 (4th Cir. 1996). Under Fed. R.

Civ. P. 56(c), summary judgment should issue where"there is no genuine issue as to any material fact and . . . the moving party is entitled

to a judgment as a matter of law." Unless there is sufficient evidence

for a reasonable jury to return a verdict in favor of the nonmovant,

an issue is not genuine. Anderson v. Liberty Lobby Inc., 477 U.S. 242,

248 (1986). In making this assessment, the court must view all facts

and reasonable inferences drawn therefrom in the light most favorable

to the nonmoving party. Smith v. Virginia Commonwealth University,

84 F.3d 672, 675 (4th Cir. 1996) (en banc). Nonetheless, "some metaphysical doubt as to the material facts" will not defeat a motion for

summary judgment. Matsushita Electric Industrial Co., Ltd. v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986).

CLAIM UNDER THE FAIR HOUSING ACT

The Fair Housing Act prohibits discrimination "against any person

in the terms, conditions, or privileges of sale or rental of a dwelling

or in the provision of services or facilities in connection therewith,

because of race, . . ." 42 U.S.C. § 3604(b), or handicap. Id.

§ 3604(f)(2). Unlawful discrimination under the Fair Housing Act

may be cognizable if either a discriminatory purpose or a disparate

impact is demonstrated. Betsey v. Turtle Creek Associates, 736 F.2d

983 (4th Cir. 1984) (citing Smith v. Town of Clarkton, 682 F.2d 1055,

1065 (4th Cir. 1982)). Appellants make no suggestion that appellees'

conversion plan was infected by bias harbored by appellees against

blacks or handicapped persons; instead, they argue that appellees'

conversion plan disproportionately injured groups protected by the

Fair Housing Act because members of protected classes were overrepresented in the group of nonparticipating shareholders. Otherwise

stated, appellants argue that appellees' facially neutral policy

adversely affected blacks and the handicapped more so than other

groups. See Edwards v. Johnston County Health Dept., 885 F.2d

1215, 1223 (4th Cir. 1989) (defining disparate impact claims under

the Fair Housing Act) (citing Huntington Branch, NAACP v. Town of

Huntington, 844 F.2d 926, 936 (2d Cir.), aff'd, 488 U.S. 15 (1988)).

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Appellants presented the following statistics in support of their

claim that blacks and disabled persons suffered disproportionately

with the conversion plan. Out of 120 residential units, 114 participated and six did not. Of the participants, eight were black, four Hispanic, ten Asian, and ninety-two white. Of the nonparticipants, two

were black, one Hispanic, and three white. Two of the six nonparticipants were disabled (one black, one white), and eight of 114 participants were disabled. The district court agreed that with these statistics

appellants, "if only barely," had established a prima facie case of disparate impact discrimination. However, the court below found that

appellees had shown "a [nonpretextual] business necessity sufficiently

compelling to justify the challenged practice," Betsey, 736 F.2d at

988, for which no less discriminatory alternative was available. See

Town of Huntington, 844 F.2d at 936.

As a threshold matter, appellants counter that the Fair Housing Act

does not apply to this case as a matter of law. We agree. Crudely

stated, the conversion plan placed only one obstacle between a resident and the purchase of his or her unit(s): money. All residents of

the Carlyle House were invited and encouraged to participate in the

conversion plan; if everyone had been able to secure the requisite

financing (whether through Crestar, another financial institution, or a

windfall inheritance) no one would have been excluded. The only

term, condition, or privilege here at issue entails the requirement that

appellants be able and willing to pay the price asked for by appellees.

Although it is no doubt true that the "neutral criterion" of price may

disparately impact blacks and the handicapped, because they may, on

average, be poorer than whites or nondisabled persons, this type of

injury extends beyond the reach of the Fair Housing Act. This is

because the Fair Housing Act is not so expansive that it would require

sales or rentals of residences to those who concede that they are

unable to pay the price faced by all other buyers or leasers. The Fair

Housing Act does not purport to grapple with the truism that, all

things being equal, those with money are better off than those without

it. To conclude otherwise would be to effect a radical alteration in the

status quo, neither permitted by the plain language of the Fair Housing Act nor its legislative history. Therefore, we hold that when the

alleged injury to a claimant is solely the product of a facially neutral

price (e.g., a price that does not vary depending on one's race, handicap, or other status protected by the Fair Housing Act), no claim

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based on disparate impact can be brought under the Fair Housing Act.

Because appellants have no claim under the Fair Housing Act as a

matter of law, the entry of summary judgment on this claim by the

district court was proper.5

CLAIMS FOR BREACH OF CONTRACT AND

BREACH OF FIDUCIARY DUTY

The parties agree that Delaware law governs appellants' claims for

breach of contract and breach of fiduciary duty against appellees.

Here, and not with the Fair Housing Act claim, lies the substance of

appellants' complaint. Appellants attack (1) the adoption of the conversion plan and (2) the method of compensation chosen by appellees.

They maintain that the conversion plan illegitimately disadvantaged

certain shareholders, including themselves, and that it was tainted by

appellees' self-dealing; by the term self-dealing, appellants refer

solely to the fact that the Board members, as shareholders of the Coop and prospective owners of their units, would benefit personally

from the conversion plan. Further, appellants insist that they were

entitled to enjoy the increase in value expected to be brought to their

units by the conversion plan. The district court held that Ms. Williams

was estopped from making such claims because she voted for the

plan. Because the Mouzons submitted no proxies, the district court

felt compelled to rule on the substantive merits of their contentions.

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5 Given our holding that the Fair Housing Act does not apply to this

case, we have no occasion to pass upon the district court's holding that

a prima facie case of disparate impact discrimination can be established

where only two members from each class protected by the Fair Housing

Act were detrimentally affected (two black units and two disabled units).

Nor do we express any opinion on the district court's calculations of the

standard deviation in this case, one of which included in the relevant

"minority" class blacks, disabled persons, and Hispanics, but excluded

the Asian minority. Finally, we have no opportunity to determine

whether, after a prima facie case of disparate impact has been established, a party's rebuttal burden includes a showing that there is no less

discriminatory alternative to the challenged practice, as the district court

held. Compare Huntington Branch, NAACP v. Town of Huntington, 844

F.2d 926, 936 (2d Cir.) (articulating this standard), aff'd, 488 U.S. 15

(1988), with Mountain Side Mobile Estates v. HUD , 56 F.3d 1243, 1255

(10th Cir. 1995) (rejecting this standard).

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It determined the following as a matter of law: that nonparticipants

had no right to share the gains from a profitable corporate endeavor,

that there was no legal requirement dictating equal treatment for all

shareholders (as opposed to shares), and that the Board members

engaged in no self-dealing behavior.

First, we address appellees' argument that all of the appellants

before us are barred from making a legal attack on the conversion

plan, because if successful the argument will bring an end to appellants' state law claims and will thus conclude our inquiry. Delaware

courts have recognized that under the twin doctrines of estoppel and

acquiescence wrongful and otherwise actionable conduct by a corporate board may not be redressed by fully informed shareholders who

agreed to the conduct and were prepared to accept the benefits to be

derived from it. See Kahn v. Household Acquisition Corp., 591 A.2d

166, 176-77 (Del. Super. Ct. 1991). The doctrine of estoppel comes

into play when a shareholder votes for a given transaction, the corporation relies on the shareholder's expression of approval, and, subsequently, the shareholder seeks to challenge the transaction. Id. In such

circumstances, regardless of the propriety of the transaction in question, the shareholder may be estopped from launching a legal attack

against it. Similarly, a shareholder who acquiesces in a transaction by

taking actions indicative of an intent to reap its fruits may be precluded from asserting the invalidity of the transaction in court, even

if no affirmative vote is cast by him or her. Id. The reasoning behind

such a rule is sound. A shareholder should voice his or her concerns

about corporate matters to the governing body and give it (and the

other shareholders) the benefit of his or her views, as well as an

opportunity to reconsider. At the very least, absent some legitimate

justification, a shareholder should not enlist the judiciary's aid after

having facilitated the passage of that which he or she seeks to overturn.

In the case at bar, Ms. Williams voted for the conversion plan and

took steps to participate in the plan, signing an agreement to purchase

her unit and applying for financing to achieve this end. Once she was

denied credit, she accepted benefits from the implementation of the

plan: the Co-op canceled the debt she owed it and paid her $7,121.89.

The Mouzons did not vote in favor of the plan (or against it), but neither did they oppose it at any time prior to its completion. Like Ms.

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Williams, the Mouzons endorsed the plan in an agreement to participate, and, when the credit terms they were offered did not satisfy

them, the Mouzons exchanged their shares for relief of a substantial

debt obligation to the Co-op. Hence, they too received benefits from

the conversion plan.

Appellants seem to concede that principles of estoppel and acquiescence ordinarily would not permit them to challenge a transaction

they supported fully, only after it was a fait accompli. Nor do they

appear, at least directly, to argue that the mere fact that Mr. and Mrs.

Mouzon failed to cast a vote automatically rescues them from the bar

against suit. Instead, appellants contend that this bar should not apply

here, because they claim the vote (and, by implication, subsequent

decisionmaking) were hampered by incomplete disclosure of material

facts. Appellants urge that shareholders who cast uninformed votes in

support of a transaction or, in ignorance, take affirmative measures to

participate in the transaction should not be precluded from later

attacking the transaction. They identify the following facts as ones of

which they should have been aware, but of which the Board allegedly

failed to inform them. First, appellants state that they were not told

that there was a strong possibility that some shareholders would be

excluded from participation by virtue of their inability to obtain

credit. Second, they express surprise at the fact that the Board members would personally benefit from passage of the conversion plan.

Third, appellants contend they did not know that the price they would

receive for their units depended to some extent on the financial

resources of the Condominium Association. Fourth, appellants assert

that no Board member pointed out that the plan varied from By-law

82.

To determine the effect of these alleged omissions, we must look

to Delaware state law. Appellants are correct that under Delaware law

appellees cannot invoke their approval of the conversion plan if the

Board failed properly to inform appellants of all material facts and,

as a consequence, appellants' support for the plan was based on reasonable misunderstanding. Delaware law defines an omitted fact as

material "if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. . . . [or

if] disclosure of the omitted fact would have been viewed by a reasonable investor as having significantly altered the`total mix' of infor-

 10
mation made available." Bershad v. Curtiss-Wright Corp., 535 A.2d

840, 846 (Del. Super. Ct. 1987) (citations omitted).

Appellees contend that three of the four omissions"should have

been eminently clear to any rational adult with a modicum of sense."

Appellees' Br. at p. 21. We agree, but with the qualification that all

four "omissions" are aptly described by this characterization. Each of

the four facts was sufficiently apparent that none of them can provide

a basis for the assertion that informational deficiencies undermined

the vote or the affirmative actions taken by appellants inconsistent

with their present challenge. The "omission" treated separately from

the others by appellees is appellants' complaint that the divergence

between By-law 82 and the conversion plan was not brought to their

attention. This variance relates to compensation methods: By-law 82

anticipated compensation would be based on the value of nonparticipating units after conversion (i.e., the appraised condominium value)

and the conversion plan displaced this measure in favor of one based

on the value of the units before conversion (i.e., the appraised cooperative value). Appellees emphasize that this difference was not concealed from the shareholders. More than that, copies of the conversion

plan, containing only nine paragraphs and spanning just four pages,

warned that "[t]he purchase the [sic] price to be paid by the [Condominium Association] for any [nonparticipating] apartment units (and

appurtenances thereto) will be their appraised fair market value as

cooperative units . . . ." Plan of Complete Liquidation and Dissolution

of the Co-op ¶ 5. This is prosaic language, unencumbered by fancy

twists and turns; it is clear and its meaning easily grasped. The provision is listed precisely under the paragraph one would expect--that

entitled "Purchase of Units by [the Condominium Association]." Ms.

Williams is an attorney, Mr. Mouzon has a masters degree in business

from the University of Virginia, and Mrs. Mouzon is a school teacher.

With these qualifications, appellants must be assumed to have

reviewed the terms of the plan and to have comprehended the meaning of the quoted passage. Therefore, while the measure of compensation is surely material information, it was, or should have been,

known by appellants.

Even less plausible still are appellants' assertions of informational

deficiencies based on the other three factors. With unmistakable clarity, the conversion plan required the Condominium Association to

 11
purchase defaulting and nonparticipating units; it is no long leap from

this fact to the conclusion that the price the Condominium Association would offer had to depend at least to some degree on its wealth.

Similarly, because the ability to obtain financing is a function of the

individual shareholder's wealth (whether in terms of income or credit

history), there could be little doubt that shareholders with low income

or poor credit history might not be able to secure financing. The

Board never represented that appellees would offer credit to shareholders otherwise denied access to loans, and, in fact, the conversion

plan specifically contemplated the possibility that some shareholders

would be unable to participate for failure "to obtain . . . adequate

financing." Id. ¶ 5. Finally, since the Board members were also shareholders of the Co-op, and all participating shareholders expected to

benefit from the conversion, appellants could not have reasonably

missed the fact that the Board members hoped to derive personal gain

from purchasing their units. Therefore, all of the information allegedly undisclosed by appellees was, or should have been, fully understood by appellants. Left without any other reason to bypass the

doctrines of estoppel and acquiescence, we hold that Ms. Williams is

estopped from litigating this claim by her vote in favor of the plan,

and that all appellants are barred by their acquiescence in the conversion plan. Accordingly, the district court properly granted summary

judgment in favor of appellees on appellants' state law claims.

AFFIRMED

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