Opinion ID: 1267966
Heading Depth: 2
Heading Rank: 3

Heading: The Fair Housing Act and Post-Acquisition Claims

Text: The Fair Housing Act, 42 U.S.C. § 3604(b), makes it unlawful to discriminate 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, color, religion, sex, familial status, or national origin. HUD, the agency tasked with implementing the FHA, has enacted regulations relating to § 3604. 24 C.F.R. § 100.65 prohibits failing or delaying maintenance or repairs of sale or rental dwellings or limiting the use or privileges, services, or facilities associated with a dwelling because of discrimination. Plaintiffs' allegations under the FHA are as follows: Defendants have discriminated in the provision of services and facilities in connection with Plaintiffs' housing including but not limited to an ongoing discriminatory failure to provide adequate law enforcement protection and emergency services, and other basic services such as lighting and sidewalks, street maintenance, refuse removal, and drainage to Plaintiffs based in substantial part on the race, ethnicity, ancestry, color or national origin of the residents of the Latino Unincorporated Neighborhoods, in violation of 42 U.S.C. 3604(b). ER 1655, Compl. ¶ 85. As a general matter, FHA claims are evaluated under the burden-shifting framework of the Title VII discrimination analysis and may be brought under theories of both disparate treatment and disparate impact. See Budnick v. Town of Carefree, 518 F.3d 1109, 1114 (9th Cir.2008). To establish a prima facie case of disparate impact, a plaintiff must show at least that the defendant's actions had a discriminatory effect. Keith v. Volpe, 858 F.2d 467, 482 (9th Cir.1988). This requires proof of (1) the occurrence of certain outwardly neutral . . . practices, and (2) a significantly adverse or disproportionate impact on persons of a particular [type] produced by the [defendant's] facially neutral acts or practices. Pfaff v. U.S. Dep't of Housing and Urban Dev., 88 F.3d 739, 745 (9th Cir.1996) (citing Palmer v. United States, 794 F.2d 534, 538 (9th Cir. 1986)). A defendant may then rebut a plaintiff's proof of disparate impact by supply[ing] a legally sufficient, nondiscriminatory reason. Affordable Hous. Dev. Corp. v. City of Fresno, 433 F.3d 1182, 1194 (9th Cir.2006) (quoting Pfaff, 88 F.3d at 746-47). Plaintiffs' FHA claims were dismissed by the District Court in 2004; the court held that plaintiffs could not state an FHA claim because the statute is limited to discrimination in the provision of services in connection with the acquisition of a dwelling, rather than discrimination in the provision of services to existing homeowners and renters. This court, in prior instances where we have considered claims brought under the FHA, has not differentiated between claims based on whether the alleged discrimination occurred at the time of or after the acquisition of the housing. For example, in Ojo v. Farmers Group, Inc., 565 F.3d 1175 (9th Cir.2009), we recently addressed the FHA in the context of discrimination in homeowner's insurance rates. We have also held, in Harris v. Itzhaki, 183 F.3d 1043 (9th Cir.1999), that a plaintiff who claimed she was subject to eviction notices following her complaint of race discrimination could state a claim under the FHA. In Harris, after the plaintiff, an African-American woman, sought the assistance of a local housing organization, the organization employed housing testers to confirm her complaint that the defendant landlord treated prospective African-American and white tenants differently. We held that plaintiff could pursue her FHA claim, finding that she had standing because she was an aggrieved person under the Act and that she had established a prima facie disparate treatment claim under the Act. Again, we did not make any distinction based on the fact that the plaintiff's claim (which was related to her eviction) had necessarily arisen after she acquired the housing. The Seventh Circuit has also grappled with this issue. In Halprin v. Prairie Single Family Homes of Dearborn Park Assoc., 388 F.3d 327 (7th Cir.2004), plaintiffs were Jewish homeowners who contended that their property was vandalized and they were harassed because of their religion. The court concluded that § 3604 of the FHA was generally concerned with the provision of services in connection with access to housing and not problems with the provision of services after the sale or rental. The court did permit, dubitante, plaintiffs' claim to proceed under a different part of the statute. Section 3617 makes it unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of the FHA. Implementing this part of the statute is a regulation which prohibits threatening, intimidating or interfering with persons in their enjoyment of a dwelling because of the race, color, religion, sex, handicap, familial status, or national origin of such persons, or of visitors or associates of such persons. 24 C.F.R. § 100.400(c)(2). The court found that the regulation unmoored § 3617 from its tie to § 3604 and so permitted a claim based on interference with enjoyment of a dwelling that has taken place after the dwelling has been acquired. In so doing, the court expressed doubt as to the validity of this regulation, noting that the language of the regulation may stray too far from its statutory authorization to be permissible, but finding that its validity was, in that case, unchallenged. [13] With regard to § 3604 itself, the court found that [a]s a purely semantic matter the statutory language might be stretched far enough to reach a case of `constructive eviction.' Halprin, 388 F.3d at 329. The Seventh Circuit revisited the issue of post-acquisition claims in Bloch v. Frischholz, 533 F.3d 562 (7th Cir.2008). The plaintiffs in Bloch contended that the removal, pursuant to a rule in the condominium association preventing the placement of objects of any sort on their doorposts, of the mezuzot hanging outside their doors, violated the FHA. The court construed Halprin as holding that harassment of owners or tenants does not violate the Fair Housing Act or its regulations save where harassment so severe that it amounts to constructive eviction might be equated to making a dwelling unavailable. Id. at 563-64. The court found that although plaintiffs claimed they were constructively evicted because they could not live in a place where they could not appropriately display the mezuzot, the rule was in fact a neutral rule and no accommodation was required. One judge dissented. The dissenting judge was of the view that Halprin did not squarely address the § 3604 issue, as that court rested its holding on a regulation implementing § 3617. The Bloch dissent found that nothing in the statute compels an interpretation that limits the statute's application to preacquisition claims. Bloch, 533 F.3d at 571. Further, the dissent observed that even if the statutory language is ambiguous, the HUD regulations, including 24 C.F.R. § 100.65(b)(4) are reasonable and entitled to deference under Chevron v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and that those regulations permit post-acquisition claims. [14] Some courts have followed the Seventh Circuit's decision in Halprin and found that the FHA does not apply to postacquisition claims. See Cox v. City of Dallas, 430 F.3d 734, 745 (5th Cir.2005). Other courts have permitted post-acquisition FHA claims to go forward. See United States v. Koch, 352 F.Supp.2d 970, 977 (D.Neb.2004) (denying defendant landlord's motion for judgment as a matter of law and finding that tenants' post-acquisition sexual harassment claims under § 3604 could proceed); Richards v. Bono, 2005 WL 1065141, -4 (M.D.Fla.2005) (differentiating the rental context, where the discrimination on the rental of the dwelling can be ongoing, from the sale context where the buyer and seller relationship quickly concludes); Landesman v. Keys Condo. Owners Ass'n, 2004 WL 2370638,  (N.D.Cal. Oct.19, 2004) (permitting challenge to condominium association facilities rules alleging discriminating against families with children). For the reasons that follow, we conclude that the FHA reaches post-acquisition discrimination: First, the statutory language does not preclude all post-acquisition claims. The statute prohibits discrimination in the terms, conditions, or privileges of sale or rental of a dwelling, or in provision of services or facilities in connection therewith. 42 U.S.C. § 3604(b). The inclusion of the word privileges implicates continuing rights, such as the privilege of quiet enjoyment of the dwelling. While defendants argue that the provision of services or facilities in connection therewith refers only to services or facilities provided at the moment of acquisition in connection with the sale or the rental, this is hardly a necessary reading. There are few services or facilities provided at the moment of sale, but there are many services or facilities provided to the dwelling associated with the occupancy of the dwelling. Under this natural reading, the reach of the statute encompasses claims regarding services or facilities perceived to be wanting after the owner or tenant has acquired possession of the dwelling. Second, the regulations implementing the FHA, promulgated by the Department of Housing and Urban Development, also support permitting post-acquisition claims. 24 C.F.R. § 100.65, entitled Discrimination in terms, conditions and privileges and in services and facilities, provides, in pertinent part: (a) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to impose different terms, conditions or privileges relating to the sale or rental of a dwelling or to deny or limit services or facilities in connection with the sale or rental of a dwelling. (b) Prohibited actions under this section include, but are not limited to: . . . (2) Failing or delaying maintenance or repairs of sale or rental dwellings because of race, color, religion, sex, handicap, familial status, or national origin. . . (4) Limiting the use of privileges, services or facilities associated with a dwelling because of race, color, religion, sex, handicap, familial status, or national origin of an owner, tenant or a person associated with him or her. The sections prohibiting [f]ailing or delaying maintenance or repairs of sale or rental dwellings and [l]imiting the use of privileges, services or facilities associated with a dwelling appear to embrace claims about problems arising after the tenant or owner has acquired the property. In common parlance, issues relating to maintenance or repairs or services or facilities associated with a dwelling tend to be issues arising after the tenant or owner has come into possession of the dwelling and sought out maintenance, repair, or services. See, e.g., Landesman, 2004 WL 2370638,  (discussing regulation in the context of challenge to condominium association rules placing restrictions on use of the swimming pool by children). Additionally, limiting the FHA to claims brought at the point of acquisition would limit the act from reaching a whole host of situations that, while perhaps not amounting to constructive eviction, would constitute discrimination in the enjoyment of residence in a dwelling or in the provision of services associated with that dwelling. Under so limited a reading of the statute: . . . it would not violate § 3604(b) for a condominium owners' association to prevent a disabled person from using the laundry facilities or for a landlord to refuse to provide maintenance to his Hispanic tenants. Similarly, it would not violate § 3604(b) for a landlord to sexually harass a tenant or to raise the rent of only Jewish tenants. It would not violate § 3604(c) for a landlord to use racial slurs to or about existing tenants or to spray-paint such a slur on an occupant's door. Nor would it violate § 3604(c) for a homeowners association to print up flyers denigrating a particular resident due to her religious faith and post them throughout the neighborhood. All of these behaviors would be beyond the law's purview solely because of when they occurred. Rigel Oliveri, Is Acquisition Everything? Protecting the Rights of Occupants Under the Fair Housing Act, 43 Harv. C.R.-C.L.Rev. 1, 32-33 (2008) (asserting that pre- Halprin case law found post-acquisition claims under § 3604 permissible, criticizing the Halprin decision, and proposing a framework that focuses less on the point of acquisition and more on the identity of the defendant and the relationship between the parties). See also Bloch, 533 F.3d at 571 (7th Cir.2008) (Wood, J., dissenting) (noting that permitting post-acquisition claims will ensure that member of protected groups do not win the battle (to purchase or rent housing) but lose the war (to live in their new home free from invidious discrimination)). In our view, the FHA does apply to post-acquisition discrimination, and the District Court erred in deciding otherwise. However, we will not reinstate plaintiffs' FHA claims in this case in their entirety. Plaintiffs' factual averments supporting the alleged violations of the FHA are largely the same as the allegations supporting plaintiffs' claims that their rights to equal protection were violated by defendants' actions with regard to municipal services. [15] To the extent the complaint alleged additional violations related to other municipal services, plaintiffs are bound by the 2005 agreement limiting their claims regarding services to the areas of sewer access, police services, and bilingual assistance. We have already concluded that plaintiffs have not put forth evidence of disparate impact with regard to the provision of sewer services or infrastructure. As a result, remanding those claims would be futile because the evidence of the FHA violations would be the same statistical evidence rejected in the course of resolving the equal protection claims. We therefore limit reinstatement of plaintiffs' FHA claims to those regarding the timely provision of law-enforcement personnel.