Court Opinion

ID: 4265041
Source: CourtListenerOpinion
Date Created: 2018-04-18 15:08:45.333241+00
Date Added: 2024-06-11T07:49:15.648549
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 16-1534
                               Filed April 18, 2018

THERESA SEEBERGER,
    Petitioner-Appellee/Cross-Appellant,
vs.

DAVENPORT CIVIL RIGHTS COMMISSION,
    Respondent-Appellant/Cross-Appellee,
and
MICHELLE SCHREURS,
     Intervenor-Appellant/Cross-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Michael D. Huppert,

Judge.

      The Davenport Civil Rights Commission and Michelle Schreurs appeal and

Theresa Seeberger cross-appeals a district court ruling on Seeberger’s petition for

judicial review. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

ON APPEAL; AFFIRMED ON CROSS-APPEAL.

      Latrice L. Lacey, Davenport, for appellant Davenport Civil Rights

Commission.

      Dorothy A. O’Brien of O’Brien and Marquard, P.L.C., Davenport, for

appellant Michelle Schreurs.

      Randall D. Armentrout and Katie L. Graham of Nyemaster Goode, P.C.,

Des Moines, for appellee.

      Heard by Potterfield, P.J., and Mullins and Bower, JJ.
                                         2

MULLINS, Judge.

       The Davenport Civil Rights Commission (Commission) and Michelle

Schreurs appeal a district court ruling on Theresa Seeberger’s petition for judicial

review following an agency determination of Schreurs’s housing-discrimination

complaint.   The Commission contends the district court erred in concluding

Schreurs’s complaint was not filed under the federal Fair Housing Act (FHA) and

the Davenport Municipal Code (2014) does not authorize an award of attorney fees

in the context of discriminatory housing practices. Schreurs argues the district

court erred in concluding the municipal code and FHA do not entitle her to an award

of attorney fees incurred during administrative proceedings and abused its

discretion in refusing to award her attorney fees in the judicial-review proceeding.

       Theresa Seeberger cross-appeals the same ruling.          She asserts that

holding her liable for her discriminatory statements violates the First Amendment

to the United States Constitution and article I, section 7 of the Iowa Constitution

because the statements she made amount to protected speech.

I.     Background Facts and Proceedings

       Seeberger purchased a three-bedroom residential property in Davenport,

Iowa in 2011. After living in the residence for approximately one year, Seeberger

married in October 2012 and moved into her spouse’s home. Seeberger owned

four cats at this time, but her spouse was allergic to them. Seeberger was not

willing to give up her house or her cats, so she decided to retain ownership of the

home and rent the rooms to tenants. After she began renting the property to

tenants, she visited the property nearly every day to feed her cats. She also kept

much of her clothing and many of her furnishings in the home. In or about August
                                         3

2013, Schreurs and her daughter moved into the property as tenants; the tenancy

was not memorialized in a written agreement. At that time, there were also two

other tenants residing in the home. Also around that time, Seeberger separated

from her spouse and moved to a nearby apartment, where she lived until the end

of August 2014. By mid-2014, Schreurs and her daughter were the only tenants

in the home. Seeberger testified that, overall, Schreurs and her daughter were

good tenants.

       On or about September 16, 2014, Seeberger visited the home and

discovered a bottle of prenatal vitamins on the kitchen counter. Seeberger took a

photograph of the bottle, text messaged it to Schreurs, and questioned,

“Something I should know about?” The following day, Seeberger returned to the

home and asked Schreurs if she had received the text message. When Schreurs

responded in the negative, Seeberger showed her the photograph of the prenatal

vitamins. Schreurs excitedly advised Seeberger her daughter, around fifteen years

old at the time, was pregnant. Seeberger, after contemplating the situation for

“thirty seconds to a minute,” angrily advised Schreurs, “You guys will have to be

out in thirty days.” Seeberger then stated, “You don’t pay rent on time the way it

is, now you’re bringing another person into the mix.” Seeberger also stated “she’s

taking prenatal vitamins, . . . . obviously you’re going to keep the baby.” Seeberger

testified she was disappointed with Schreurs for her irresponsibility in allowing her

young daughter to become pregnant. Seeberger also asserted she terminated the

tenancy because she wanted her house back to herself. Seeberger testified she

began drafting a notice to terminate Schreurs’s tenancy on September 15, but she

did not tender the notice to Schreurs until after her discovery of the prenatal
                                          4

vitamins. In her interview with the Commission, however, she stated she did not

draft this notice until September 18. This notice advised Schreurs she needed to

vacate the property by October 19. Seeberger subsequently advised Schreurs

she would start staying at the home on September 26.

         On October 1, Seeberger, via text message, asked Schreurs whether one

of her ex-boyfriends was the father of her grandchild-to-be. Schreurs came to the

home with her boyfriend. At this time, Seeberger, who was at the home, confronted

Schreurs, repeating her inquiry. This exchange upset Schreurs. Schreurs and her

daughter were completely moved out of the home by October 5. After Schreurs

and her daughter’s eviction, Seeberger allowed another tenant to live in the home.

         In November 2014, Schreurs filed a housing-discrimination complaint with

the Commission alleging Seeberger discriminated against her on the basis of her

familial status by making discriminatory statements. The complaint was amended

in February 2015 and again in March. Her complaint and amended complaints

noted they were filed pursuant to Davenport Municipal Code section 2.58.305(C)

and Section 804(c) of the FHA.1 Following its investigation, the Commission

issued a probable cause finding of discrimination.

         The matter proceeded to a public hearing before an administrative law judge

(ALJ) in November. The ALJ concluded, with regard to Seeberger’s statements

on September 16 and 17, that “[a]n ordinary listener listening to [her] statements

would find her statements discriminatory on the basis of familial status” and

“Seeberger engaged in a discriminatory housing practice by making the

1
    Codified at 42 U.S.C. § 3604(c).
                                             5

statements.”     The ALJ awarded Schreurs $35,000.00 in emotional-distress

damages and imposed a civil penalty in the amount of $10,000.00. The ALJ

subsequently awarded Schreurs $23,881.80 in costs and attorney fees pursuant

to Davenport Municipal Code section 2.58.350(G).2 The Commission approved

the ALJ’s decision in its entirety, with the exception of the award of damages, which

it reduced to $17,500.00.

       In February 2016, Seeberger filed a petition for judicial review. In her

subsequent brief in support of her petition, Seeberger argued, among other things,

that the agency action was unconstitutional because it violated her freedom-of-

speech rights and the Davenport Municipal Code does not provide for an award of

attorney fees prior to judicial review.          In their briefings, Schreurs and the

Commission argued Seeberger’s statements were not protected speech and

Schreurs was entitled to attorney fees under municipal code section

2.58.175(A)(8)3 or, in the alternative, the FHA.

       The district court entered a written ruling in July 2016. The court concluded

(1) Seeberger’s discriminatory statements amounted to commercial speech, their

utterance was illegal, and they were therefore not protected by the First

Amendment and (2) Davenport Municipal Code section 2.58.175(A)(8) “does not

clearly authorize an award of attorney fees in the context of a discriminatory

housing practice.” The court therefore vacated the attorney fee award.

2
  This section, entitled “Fair Housing – Judicial Review,” provides: “The [ALJ] or the court
may at its discretion allow the prevailing party, other than the commission, reasonable
attorney fees and costs resulting from any administrative proceeding brought under this
section, any court proceeding arising therefrom, or any civil action.”
3
  Schreurs and the Commission did not argue on judicial review that Schreurs was entitled
to fees under the municipal code provision the ALJ actually awarded them, section
2.58.350(G).
                                         6

       Schreurs moved for additional findings. In her motion, she requested the

court to reconsider her entitlement to attorney fees under the municipal code and

expand its ruling to consider her argument that she was also entitled to attorney

fees under the FHA. The Commission also moved for additional findings and

requested the court to consider Schreurs’s entitlement to attorney fees under

Davenport Municipal Code section 2.58.350(G) and the FHA. Thereafter, pursuant

to Davenport Municipal Code sections 2.58.175(A)(8) and 2.58.350(G) and the

FHA, Schreurs requested an award of attorney fees incurred in the judicial-review

proceeding.

       Following a hearing, the district court denied all pending motions. With

regard to Schreurs’s entitlement to attorney fees under the FHA, the court ruled

“the mere fact that the . . . complaint was cross-filed with the federal authorities

does not expand the [Commission’s] authority to award attorney fees beyond what

is allowed by the city ordinance” and fees under the FHA “were unavailable to

[Schreurs] in her state court proceeding.” The court further concluded that the

issue of Schreurs’s entitlement to fees under municipal code section 2.58.350(G)

was waived because the parties “chose not to argue this statutory basis for any

claim for fees, relying instead entirely on § 2.58.175[(A)](8).” The court declined

to reconsider its determination as to Schreurs’s entitlement to fees under section

2.58.175(A)(8).   Finally, the court declined both Seeberger and Schreurs’s

requests for attorney fees on judicial review. As noted, all parties appeal.

II.    Standards of Review

       We review constitutional claims under the First Amendment de novo. See

Mitchell Cty. v. Zimmerman, 810 N.W.2d 1, 6 (Iowa 2012). The sole question on
                                          7

appellate review of a district court’s judicial review of an agency determination is

whether the district court correctly applied the law. See Foods, Inc. v. Iowa Civil

Rights Comm’n, 318 N.W.2d 162, 164 (Iowa 1982). “To the extent we are asked

to engage in statutory interpretation, our review is for correction of errors at law.”

DuTrac Cmty. Credit Union v. Hefel, 893 N.W.2d 282, 289 (Iowa 2017). Review

of the district court’s decision to not award attorney fees in the district court

proceeding is for an abuse of discretion. See Fennelly v. A-1 Mach. & Tool Co.,

728 N.W.2d 163, 167 (Iowa 2006).

III.   Freedom of Speech

       Seeberger lodges an as-applied challenge to Davenport Municipal Code

section 2.58.305(C), which provides it shall be unlawful to:

       Make, print, or publish, or cause to be made printed or published any
       notice, statement or advertisement, with respect to the sale or rental
       of a dwelling that indicates any preference, limitation, or
       discrimination based on . . . familial status . . . or an intention to
       make any such preference, limitation or discrimination.

Seeberger argues her statements are not subject to the commercial-speech

doctrine because they were inextricably intertwined with fully-protected speech or,

in the alternative, if her statements amount to commercial speech, then the

statements are still protected speech because they relate to a lawful activity.

       The United States Supreme Court has recognized a “distinction between

speech [involving] a commercial transaction, which occurs in an area traditionally

subject to government regulation, and other varieties of speech.” Cent. Hudson

Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 562 (1980) (quoting

Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 455–56 (1978)). These other

varieties of speech generally include communications concerning “politics,
                                            8

nationalism, religion, or other matters of opinion.” See Agency for Int’l Dev. v. All.

for Open Soc’y Int’l, Inc., 133 S. Ct. 2321, 2332 (2013) (quoting W.V. State Bd. of

Educ. v. Barnette, 319 U.S. 624, 642 (1943)). “The Constitution . . . accords a

lesser protection to commercial speech than to other constitutionally guaranteed

speech.” Cent. Hudson, 447 U.S. at 563. However, where some commercial

speech and some protected speech are “inextricably intertwined” as “component

parts of a single speech,” courts “cannot parcel out the speech, applying one test

to one phrase and another test to another phrase.” Riley v. Nat’l Fed’n of the Blind

of N.C., Inc., 487 U.S. 781, 798 (1988). Under such circumstances, the test for

fully-protected speech is applicable. Id.

       Seeberger does not contest that her statements were discriminatory and

related to a commercial transaction. Instead, she contends her discriminatory,

commercial statements to Schreurs were inextricably intertwined with fully-

protected speech that she thought Schreurs was an irresponsible parent.

Seeberger’s first statement—by text message, and later in person—was,

“Something I should know about?” The obvious context of the question was based

on Seeberger’s status as a landlord and Schreurs’s status as a tenant. The

exchange between them that followed cements the conclusion that all of

Seeberger’s remarks were in the context of their relationship as landlord and

tenant. Although Seeberger also made reference to a history of Schreurs paying

rent late, the context makes clear Schreurs’s changing familial status was the basis

for the termination of the tenancy. While Seeberger may hold political, religious,

or other beliefs the expression of which might be protected in some contexts, the
                                           9

statements made to Schreurs were plainly directed at telling Schreurs her tenancy

was being terminated because of her familial status.

       Seeberger testified she was disappointed with Schreurs for her

irresponsibility in allowing her young daughter to become pregnant.4 Seeberger’s

statements, on their face, do not indicate that her speech was non-commercial in

nature or was otherwise based on a matter of religion, ideology, or philosophy, or

on a position concerning responsible parenting.           Rather, her September 17

statements purely amounted to her pronouncement to Schreurs that her familial

status was the primary basis for terminating Schreurs’s tenancy. We conclude

Seeberger’s statements were not inextricably intertwined with any form of fully-

protected speech. Seeberger’s concession that the statements terminating the

tenancy were commercial in nature, together with our conclusion that such

statements were not inextricably intertwined with protected speech, necessitate

the application of the commercial-speech analysis laid out in Central Hudson.

       For commercial speech to be protected by the First Amendment, “it at least

must concern lawful activity and not be misleading.” Cent. Hudson, 447 U.S. at

566.5 Our only concern in this case is whether the statement concerned a lawful

activity. Seeberger concedes that her statements were in violation of Davenport

Municipal Code section 2.58.305(C), which prohibits all landlords from making

discriminatory statements in relation to the rental of a dwelling. She argues,

4
  Our analysis is based on the words spoken to Schreurs in the course of Seeberger’s
termination of the tenancy, and not on Seeberger’s later testimonial characterizations.
5
  “The four parts of the Central Hudson test are not entirely discrete. All are important
and, to a certain extent, interrelated: Each raises a relevant question that may not be
dispositive to the First Amendment inquiry, but the answer to which may inform a judgment
concerning the other three.” Greater New Orleans Broad. Ass’n, Inc. v. United States,
527 U.S. 173, 183–84 (1999).
                                         10

however, because she owned fewer than four single-family homes, the actual

termination of Schreurs’s tenancy on the basis of her familial status was not illegal

and, as such, the statement concerned a lawful activity. See Davenport, Iowa

Mun. Code § 2.58.310(A)(1)(a) (“Nothing in subsection 2.58.305 of this Chapter

other than subsection 2.58.305(C) shall apply to . . . [a]ny single-family house sold

or rented by an owner provided that . . . [t]he private individual owner does not own

more than three (3) such single-family houses at any one time.” (emphasis

added)). For the purposes of Seeberger’s as-applied challenge, we will assume

without deciding that her statements concerned a lawful activity.

         The next step in the Central Hudson test “asks whether the asserted

governmental interest served by the speech restriction is substantial.” Greater

New Orleans Broad. Ass’n, Inc., 527 U.S. at 185. The Commission argues the

interest in prohibiting discriminatory statements in housing is substantial. The Iowa

Supreme Court has stated the government has a substantial interest in preventing

discrimination in employment. Baker v. City of Iowa City, 867 N.W.2d 44, 54 (Iowa

2015).     We conclude the government’s interest in preventing discriminatory

statements in housing is at least equally substantial to its interest in preventing

discrimination in employment.

         Finally, we are required to determine if the ordinance advances the

objective of preventing discriminatory statements in housing and, if so, whether it

is more extensive than necessary. Cent. Hudson, 447 U.S. at 566. The ordinance

clearly advances the objective of preventing the making of discriminatory

statements in housing. This is so even though the ordinance does not effectually

prohibit discrete discrimination in all housing transactions. As applied in this case,
                                         11

the ordinance simply renders it unlawful to make any statement with respect to the

“rental of a dwelling that indicates any preference, limitation, or discrimination

based on” familial status “or an intention to make any such preference, limitation

or discrimination.” Davenport, Iowa Mun. Code § 2.58.305(C). As Seeberger

correctly points out, landlords owning no more than three single-family homes may

legally discriminate in housing decisions on the basis of familial status, so long as

they do not make a statement to that effect. Id. §§ 2.58.305(C), .310(A)(1)(a). The

challenged ordinance merely prohibits landlords from subjecting prospective

tenants to the stigmas associated with knowingly being discriminated against. For

these reasons, we find the ordinance is not more extensive than necessary to

serve the substantial interest of preventing discriminatory statements in housing

transactions.

       As such, we conclude the ordinance is not an unconstitutional infringement

upon Seeberger’s freedom-of-speech rights.         We therefore affirm the district

court’s decision to uphold Seeberger’s liability under the ordinance.

IV.    Attorney Fees

       A.       Administrative Proceedings

       Schreurs and the Commission contend Schreurs was entitled to attorney

fees incurred in the administrative proceeding under Davenport Municipal Code

sections 2.58.175(A)(8) and 2.58.350(G) or, in the alternative, the FHA.        The

district court considered the argument under section 2.58.350(G) waived and

concluded fees under the FHA were unavailable. The court also concluded section

2.58.175(A)(8) “does not clearly authorize an award of attorney fees in the context

of a discriminatory housing practice.”       The court reasoned section 2.58.175,
                                           12

entitled “Remedial Action,” only concerns unfair or discriminatory practices in areas

other than housing.

       Chapter 258 of the municipal code is set out in three divisions: (1) general

provisions, (2) unfair practices, and (3) fair housing. We first focus on division two,

unfair practices, which is comprised of sections 2.58.100 through 2.58.190.

Section 2.58.175 falls within division two. The first four sections concern unfair

practices in employment, accommodations or services, credit, education, and

aiding or abetting. See id. §§ 2.58.100, .110, .120, .125, .130. The next section

relates to retaliation, and specifically includes housing matters, as does the

following section, which concerns complaint procedures. Id. §§ 2.58.140, .150.

The next two sections govern conciliation and public hearing; neither section

excludes housing complaints, and our review of the record indicates both sections

applied in this case. See id. §§ 2.58.160, .170. The public hearing provision

provides that, if

       the hearing officer determines that the respondent has engaged in a
       discriminatory or unfair practice, the hearing officer shall . . . issue an
       order in writing requiring the respondent . . . to take the necessary
       remedial action as in the judgment the hearing officer will effectuate
       the purposes of this chapter.

Id. § 2.58.170(J) (emphasis added). Thereafter, the Commission reviews the

decision and, if in agreement with the hearing officer, “shall issue an order requiring

the respondent . . . to take necessary remedial action as in the judgment of the

commission will carry out the purposes of this chapter.”              Id. § 2.58.170(L)

(emphasis added).

       Next is the remedial action provision, which provides, “The remedial action

ordered by the Commission may include . . . [p]ayment to the complainant of . . .
                                         13

reasonable attorney fees [and] payment of costs of hearing.” Id. § 2.58.175(A)(8)–

(9). Another provision in the remedial action section allows the Commission to

order, obviously in relation to housing cases, the “[s]ale, exchange, lease, rental,

assignment or sublease of real property to an individual.” Id. § 2.58.175(A)(4).

The section also provides specific remedial actions in relation to employment,

credit, education, and public accommodations. Id. § 2.58.175(A)(1), (2), (3), (5),

(7).   The final two sections of division two govern judicial review and court

enforcement. See id. §§ 2.58.180, .190. Again, housing complaints are not

specifically exempted from these provisions.

       On the other hand, division three of chapter 258, governing fair housing,

includes a provision that, “[i]f the administrative law judge finds that a respondent

has engaged in or is about to engage in a discriminatory housing practice, such

administrative law judge shall promptly issue an order for such relief as may be

appropriate, which may include actual damages and injunctive or other equitable

relief.” Id. § 2.58.340(F)(3) (emphasis added).

       Despite these dual and differing modes for relief, based on the plain

language and statutory scheme of the ordinance, we conclude the remedial action

provision in division two, section 2.58.175, encompasses all areas of

discrimination, including housing. Because the section provides specific remedies

for each of the differing areas, we conclude the overall remedies included in

subsections 8 and 9 cover all of those differing areas. We therefore reverse the

district court’s determination that Schreurs was not entitled to the attorney fees

incurred in the administrative proceeding. Because the district court noted its

“disposition render[ed] moot [Seeberger’s] alternative argument that the fee award
                                          14

was excessive,” we remand the case to the district court to determine whether the

attorney-fee award was excessive. See De Stefano v. Apartments Downtown,

Inc., 879 N.W.2d 155, 191 (Iowa 2016). This disposition makes it unnecessary for

us to decide whether Schreurs was entitled to attorney fees under 2.58.350(G) or,

in the alternative, the FHA.

       B.     Judicial-Review Proceeding

       Finally, Schreurs argues the district court abused its discretion in refusing

to award her attorney fees in the judicial-review proceeding.            Pursuant to

Davenport Municipal Code section 2.58.350(G), “the court may at its discretion

allow the prevailing party . . . reasonable attorney fees and costs resulting from” a

judicial-review proceeding. (Emphasis added.) “[F]ee provisions using the word

‘may’ place the decision about whether to award any attorney fees within the sound

discretion of the district court.” Lee v. State, 874 N.W.2d 631, 644 (Iowa 2016).

Similar to the FHA, an award of attorney fees in a judicial-review proceeding under

the Davenport Municipal code is not mandatory. See id. at 644–45 (noting that

when a “fee provision employs the word ‘shall’ instead of the word ‘may,’ it requires

the district court to award attorney fees”); see also 42 U.S.C. § 3612(p). Because

the ordinance renders any award of attorney fees discretionary, “[r]eversal is

warranted only when the court rests its discretionary ruling on grounds that are

clearly unreasonable or untenable.” GreatAmerica Leasing Corp. v. Cool Comfort

Air Conditioning & Refrigeration, Inc., 691 N.W.2d 730, 732 (Iowa 2005) (quoting

Gabelmann v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000)).

       In its ruling on attorney fees, the district court noted its prior affirmance of

the determination concerning Seeberger’s liability, but also its reversal of the
                                           15

Commission’s award of damages and remand for reconsideration.                 With this

dichotomy in mind, the district court determined neither party was the “prevailing

party” in the judicial-review proceeding and therefore entitled to attorney fees. We

do not find this ground for denying an award of attorney fees clearly unreasonable

or untenable. We therefore affirm the district court’s denial of Schreurs’s request

for attorney fees in the judicial-review proceeding.

V.     Conclusion

       In sum, we conclude the challenged ordinance is not an unconstitutional

infringement upon Seeberger’s freedom-of-speech rights and affirm the agency

and district court’s findings of liability. We reverse the district court’s determination

that Schreurs was not entitled to the attorney fees incurred in the administrative

proceeding and remand the matter to the district court to consider whether the

attorney-fee award was excessive.          We affirm the district court’s denial of

Schreurs’s request for attorney fees in the judicial-review proceeding.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED ON

APPEAL; AFFIRMED ON CROSS APPEAL.