___________ No. 95-2980

_____________ Richard D. Carlson; Dale Summy, * * Petitioners, * * v. * Petition for Review of an Order * of the United States Department The United States Department of * of Housing and Urban Housing and Urban Development * Development. (HUD), on behalf of James O. * and Delores Bad Horse and * [UNPUBLISHED] Christina Antelope (minor * child), * *

Respondent. *

___________ Submitted: March 13, 1996 Filed: April 5, 1996

___________ Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.

___________
PER CURIAM.
Richard D . Carlson owned a duplex in Sioux Falls, South Dakota
. After Carlson moved out of state, his friend Dale Summy helped Carlson ren t the duplex to various tenants. On one occasion Summy rented the building' s small upstairs apartment to James O. Bad Horse, who told Summy he would be liv ing in the apartment with his wife and one child. The day the Ba d Horses moved in, a tenant living downstairs called Carlson to complain tha t the Bad Horses had damaged the yard and the buil ding during the move. The complaining tenant also indicated there were fou r or more people living in the upstai rs apartment. Carlson then instructed Summy to ask the Ba d Horses to leave. The Bad Horses moved out as requested and filed a housin g discri mination complaint. After an investigation, the Secretary of th e United States Department of

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Housing and Urban Dev elopment (HUD) charged Carlson and Summy with family statu s discrimination. An Administrative Law Judge (ALJ) initiall y dismis sed the charges, but the Secretary remanded the case fo r reconsideration. On remand the ALJ concluded Carlson and Summy ha d unl awfully enforced a policy having a disparate impact on families wit h children, and Carlsonhad made a statement indicating a preference not to rent to families. The ALJ found no intentional discrimination, however. The ALJ awarded damages to the Bad Horses, imposed civil penalties, an d enjoined future discr imination. Carlson and Summy petition for review of the ALJ's final order. See 42 U.S.C. § 3612(i)(1) (1988). We grant the petition and reverse.

The AL J found Carlson and Summy did not refuse to rent to familie s with children, but enforced a neutral policy of not permitting more than three people to occup y the upstairs apartment. Based on census data, the ALJ concluded the pol icy had a disparate impact on families with children and thus violated the Fair Housing Act. See 42 U.S.C. § 3604(a) (1988); United States v. Badgett , 976 F.2d 1176, 1179 (8th Cir. 1992). Carlson an d Summy contend the ALJ's decision is not supporte d by substantial evidence, and we agree. See Morgan v. Secretary of HUD , 985 F.2d 1451, 1457 (10th Cir. 1993). Carlson concedes he preferred to rent the upstairs apartment to three or fewer people because the apartment is small, but th e overwhelming weight of the evidence shows Carlson never actually limited the numbe r of occupants in the apartment. Carlson and Summy rented th e apartment to anyone w ho wanted to live there, including families of four. In fact, a family of four moved into the apartment shortly after the Bad Horses left.

The Secre tary relies on a letter Carlson wrote HUD which state s Carlson asked the Bad Horses to leave because they had a dispute with the tenant downstairs and because Carlson believed there were four peopl e living in the Bad Horses' apartment. The Secretary also points to a lette r from Summy containing similar

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stateme nts. We must view the letters in light of the whole record, se e id. , including Carlson's continuous practice of renting to any size family , his legitimate concern about the downstairs tenant, and his belief that th e Bad Horses had lied about the number of people who would be living in thei r apart ment. The record simply does not support the ALJ's decision tha t Carlson and Summy were enforcing a three-person maximum when they asked th e Bad Horses to move out.

We also r eject the ALJ's conclusion that Carlson violated 42 U.S.C. § 3604(c) (1988) by making a statement indicatin g a preference not to rent to families with children. The ALJ found Carlson told Summy to rent the upstairs apartment to a "single person, or at most a married couple/tw o sing le persons." Carlson and Summy never mentioned this comment t o prospective tenants or anyone else, and there is no substantial evidence that Summy believed Carlson was asking him not t o rent to families. Summy
was Carlson's personal friend and knew Carlson had rented to families in the past. Summy continued to rent the upstairs apartment to families with children, including t he Bad Horses and the family that moved in after the Bad Horses. We see no violation of § 3604(c).
We grant the petition for review and direct the Secretary to dismiss the charges against Carlson and Summy.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.