Court Opinion

ID: 2681746
Source: CourtListenerOpinion
Date Created: 2014-07-02 20:41:37.875799+00
Date Added: 2024-06-11T13:12:18.114793
License: Public Domain

Case: 13-12014     Date Filed: 07/01/2014   Page: 1 of 13

                                                              [DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                  No. 13-12014
                            ________________________

                    D.C. Docket No. 8:11-cv-01368-JDW-TGW

TOUCAN PARTNERS, LLC,
a Florida Limited Liability Company,

                                                                            Plaintiff,

NARCONON SPRING HILL, INC.,
a Florida Corporation,

                                                                 Plaintiff-Appellant,

                                        versus

HERNANDO COUNTY, FLORIDA,
a political subdivision of the State of Florida,

                                                               Defendant-Appellee.

                            ________________________

                    Appeal from the United States District Court
                        for the Middle District of Florida
                          ________________________

                                    (July 1, 2014)

Before WILSON, JORDAN and BLACK, Circuit Judges.

PER CURIAM:
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      This case requires us to determine whether the district court erred by

instructing the jury that a plaintiff alleging intentional discrimination under the Fair

Housing Act (FHA) has a duty to mitigate damages. We conclude the district court

erred by giving a mitigation instruction on this record because (1) no evidence

regarding mitigation was adduced at trial and (2) even if mitigation is an available

defense under the FHA, the proposed mitigation in this case was not reasonable.

Accordingly, we reverse the district court’s judgment and remand for a new trial

on damages.

                                 I. BACKGROUND

      In 1992, the Hernando County Planning and Zoning Commission approved

an application for a special use permit for a development in Spring Hill, Florida,

known as the Ponderosa Pines development. The development was approved as an

adult congregate living facility and was located on an 11.6 acre lot in an area zoned

for residential use. The 1992 permit authorized 150 beds on the property, but

required submission of another application to Hernando County (the County) for

approval to build any structures not constructed within five years. Sometime after

the 1992 permit was issued, the property was divided into smaller lots.

      In 2008, Eric Mitchell, a chemical dependency counselor, decided to open

Narconon Spring Hill, Inc. (Narconon). Narconon is a drug and alcohol

rehabilitation organization focused on helping individuals recover from substance

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abuse and addiction without the use of prescription medications. In conjunction

with the owner of Toucan Partners, LLC (Toucan Partners), Narconon decided to

open the Spring Hill facility on one of the parcels from the former Ponderosa Pines

development which had two structures on it covered by the 1992 special use

permit. Prior to opening the facility, Narconon obtained a zoning verification letter

from the County indicating that, consistent with the 1992 special use permit, the

property could be used to provide drug and alcohol rehabilitation services.

Narconon subsequently opened the Spring Hill facility on December 15, 2008, and

experienced an immediate need for additional space.

      Accordingly, on January 28, 2009, Toucan Partners and Narconon submitted

an application to the County for permission to build additional structures on the

property. The application sought permission to construct three new buildings in

order to increase the number of beds from 22 to 54, and also sought approval to

build outdoor recreational facilities. The staff of the County planning department

concluded the permit application should be approved, and the chief of the planning

department recommended approval to the Planning and Zoning Commission.

After the Planning and Zoning Commission unanimously approved the application,

the Board of County Commissioners (the Board) chose to review the commission’s

decision. On June 9, 2009, the Board held a hearing at which it discussed

Narconon’s application. At the hearing, community members objected to the

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proposed expansion, voicing concern over Narconon’s clientele. The Board

ultimately denied the application.

       On June 20, 2011, Narconon and Toucan Partners filed a complaint against

the County, alleging in pertinent part that the County intentionally discriminated

against them in violation of the FHA when it denied their application to expand the

Spring Hill facility. 1

       At trial, Tammy Strickling, Narconon Spring Hill’s chief executive officer,

testified that the facility had two 2,500 square foot buildings on site. One of the

buildings was used as a dormitory for male clients and contained dining and

student lounge facilities, while the other building served as the dormitory for

female clients and housed several programs. Strickling testified that Narconon

also rented two houses in the community for staff and training housing and

explained that, when the onsite facilities reached capacity, the houses would be

used to accommodate clients as necessary. Strickling further testified that she

rented a van to transport overflow clients back and forth and that the clients would

travel from the onsite to offsite locations three times per day.

       1
         The complaint also alleged that the County (1) violated the FHA by failing to provide a
reasonable accommodation, (2) intentionally discriminated in violation of the Americans with
Disabilities Act (ADA), and (3) violated the ADA by failing to provide a reasonable
accommodation. These claims are not before us on appeal because the jury found against
Narconon on its reasonable accommodation claims, and Narconon has abandoned its intentional
discrimination claim under the ADA by failing to raise any argument on the issue in its initial
brief. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004).
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      Narconon’s damages expert, Lloyd Morgenstern, testified Narconon suffered

$6,244,108 in damages from not being able to expand due to the denial of its 2009

application. Morgenstern also estimated that from 2012 onward, Narconon would

lose approximately $731,422 per year due to the denial of its application to expand.

Conversely, the County’s damages expert, J. Clay Singleton, testified that

Narconon did not suffer any damages. Singleton explained that Narconon’s

proposed expansion would cost at least an additional $140,000 in rent per year and

that it would take a substantial amount of time for the facility to generate enough

clients to pay for the expansion. In addition, Singleton assumed a slower growth

rate in clientele than Morgenstern, and Singleton’s calculations extended only to

the year 2014.

      At the charge conference, the County requested a mitigation of damages

instruction and indicated it was pursuing the issue as an affirmative defense. After

Narconon objected to the instruction, the County explained that:

      [T]he mitigation argument is what we’ve heard in trial, which is that
      Narconon, while enjoying this property, has the ability to expand its
      service by renting homes, having their clients stay in those
      homes. . . . And they can mitigate their damages through – through
      that way.

The district court asked the County whether its “defense [was] based on the

availability of the[] offsite homes,” to which the County responded, “[c]orrect.”

After a further colloquy with counsel, the district court indicated it did not think a

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mitigation instruction was appropriate. The next day, however, the district court

reconsidered and decided to give a mitigation instruction.

       During closing arguments, the County did not discuss mitigation as an

affirmative defense.2 Instead, the County mentioned mitigation only in passing

when it argued it was not liable for intentional discrimination. Specifically,

counsel for the County argued:

       [W]e’ve allowed [Narconon] to mitigate their damages. To the extent
       that they can’t have everybody on the same property, we’re the ones
       who have permitted them to lease houses and use houses offsite so
       that they could continue to use this facility to get the counseling
       services that they say they need.

       Following closing arguments, the district court instructed the jury in

pertinent part that:

       Damages must not be based on speculation or guesswork because it is
       only actual damages that are recoverable. Thus, while a plaintiff
       seeking to recover damages must ordinarily prove the fact of injury
       with a reasonable certainty, proof of the amount of damages may be
       based on a reasonable estimate.

       You’re also instructed that any person who claims damages as a result
       of an alleged wrongful act on the part of another has a duty under the
       law to mitigate those damages, that is, to take advantage of any
       reasonable opportunity that may have existed under the circumstances
       to reduce or minimize the loss or damage.

       So if you find from a preponderance of the evidence that a plaintiff or
       the plaintiffs within the limitations of any disabilities sustained failed

       2
         The County acknowledged during oral argument before this Court that it did not make
any argument during its closing statements regarding mitigation of damages as an affirmative
defense.
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       to seek out or take advantage of a business opportunity that was
       reasonably available under all of the circumstances shown by the
       evidence, then you should reduce the amount of the plaintiffs’
       damages by the amount that could have been reasonably realized if
       the plaintiff had taken advantage of such opportunity.

       The jury found the County liable under the FHA for intentionally

discriminating against Narconon and awarded Narconon $74,490 in damages.

After the entry of judgment, Narconon filed the instant appeal. 3

                              II. STANDARD OF REVIEW

       “We review jury instructions de novo to determine whether they misstate the

law or mislead the jury to the prejudice of the party who objects to them.” State

Farm Fire & Cas. Co. v. Silver Star Health & Rehab, 739 F.3d 579, 585 (11th Cir.

2013) (brackets and internal quotation marks omitted). Although our review is de

novo, the standard is deferential, and we will reverse “only where we are left with a

substantial and ineradicable doubt as to whether the jury was properly guided in its

deliberations.” Id. (internal quotation marks omitted).

                                     III. DISCUSSION

       Narconon argues the district court erred by instructing the jury that a

plaintiff has a duty to mitigate its damages under the FHA. According to

Narconon, requiring plaintiffs to obtain housing anywhere in a community in order

to mitigate their damages would frustrate the central purpose of the FHA, which is

       3
          The jury found that the County was not liable to Toucan Partners, and Toucan Partners
is not a party to this appeal.
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to afford individuals with handicaps the right to live in the dwellings of their

choice. Narconon contends a mitigation instruction in this case was particularly

unjustified because the County’s theory of mitigation was that Narconon could

have used offsite locations to house clients, but it would not have been reasonable

for it to change the nature of its program from an inpatient residential treatment

facility to an outpatient program.

       The Fair Housing Act, 42 U.S.C. § 3601, et seq., “broadly prohibits

discrimination in housing throughout the Nation.” Gladstone Realtors v. Vill. of

Bellwood, 441 U.S. 91, 93, 99 S. Ct. 1601, 1605 (1979); see also 42 U.S.C. § 3604.

In 1988, Congress amended the FHA to prohibit discrimination in housing against

individuals with handicaps. Schwarz v. City of Treasure Island, 544 F.3d 1201,

1212 (11th Cir. 2008); see also Fair Housing Amendments Act of 1988, Pub. L.

No. 100-430, 102 Stat. 1619. 4 Accordingly, § 3604 makes it unlawful “[t]o

discriminate in the sale or rental, or to otherwise make unavailable or deny, a

dwelling to any buyer or renter because of a handicap” of the buyer or renter, a

       4
          The parties do not dispute that Narconon’s Spring Hill facility is a covered dwelling
within the meaning of the FHA or that those recovering from drug addiction are protected under
the statute. See Pac. Shores Props., LLC v. City of Newport Beach, 730 F.3d 1142, 1156 (9th
Cir. 2013) (“It is well established that persons recovering from drug and/or alcohol addiction are
disabled under the FHA and therefore protected from housing discrimination.”); H.R. Rep. No.
100-711, at 22 (1988), reprinted in 1988 U.S.C.C.A.N. 2173, 2183 (“The Committee does not
intend to exclude individuals who have recovered from an addi[c]tion or are participating in a
treatment program or a self-help group such as Narcotics Anonymous. . . . Depriving such
individuals of housing, or evicting them, would constitute irrational discrimination that may
seriously jeopardize their continued recovery.”).
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person residing or intending to reside in the dwelling, or any person associated

with the buyer or renter. 42 U.S.C. § 3604(f)(1). It is also illegal to discriminate

against such persons “in the terms, conditions, or privileges of sale or rental of a

dwelling, or in the provision of services or facilities in connection with such

dwelling.” Id. § 3604(f)(2).

      For the purposes of this appeal, the County’s liability for intentionally

discriminating against Narconon within the meaning of the FHA has been

established by the jury’s verdict. The question we must resolve is whether the

district court erred by instructing the jury that a plaintiff has a duty to mitigate its

damages when it has suffered intentional discrimination under the FHA. On this

record, we conclude the district court erred by giving such an instruction for two

reasons.

      First, the district court erred because no evidence was presented at trial to

support a mitigation instruction. A jury instruction is warranted only if there is a

factual basis for it, see Christopher v. Cutter Labs., 53 F.3d 1184, 1194 (11th Cir.

1995), and the jury instructions must not have any “tendency to confuse or to

mislead the jury with respect to the applicable principles of law,” SEC v. Yun, 327
F.3d 1263, 1281 n.39 (11th Cir. 2003) (internal quotation marks omitted). “If the

instructions do not accurately reflect the law, and the instructions as a whole do not

correctly instruct the jury so that we are left with a substantial and ineradicable

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doubt as to whether the jury was properly guided in its deliberations, we will

reverse and order a new trial.” Yun, 327 F.3d at 1281 n.39 (internal quotation

marks omitted).

      The County points only to Strickling’s testimony that Narconon used two

offsite houses to hold overflow clients as the factual basis for its requested

instruction, but that testimony did not support a mitigation instruction. Strickling

testified that Narconon rented two houses in the community and that one of the

offsite residences could hold eight people while the other residence could hold six

people. No evidence was adduced (from Strickling or any other witness) regarding

the revenue generated from clients’ temporary stays in the offsite housing, the

availability of additional offsite housing beyond the two residences Narconon

already rented, or the feasibility of maintaining offsite housing in addition to the

onsite facilities. In addition, as it conceded at oral argument before this Court, the

County did not present to the jury any numbers or otherwise attempt to quantify

the damages Narconon could have avoided by using offsite housing. Thus, when

the district court instructed the jurors that they should reduce the amount of the

plaintiff’s damages by the amount that could have been reasonably realized if the

plaintiff had taken advantage of reasonable opportunities to reduce or minimize its

loss, we have no doubt they were confused and misled. After examining the

totality of the instructions and having carefully reviewed the record, we are left

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with a substantial and ineradicable doubt that the jury was properly guided in its

deliberations, and we conclude the district court erroneously instructed the jury on

a standard not supported by the evidence adduced at trial. See Christopher, 53
F.3d at 1195.

       Second, even assuming that mitigation might be an available defense under

the FHA, the steps the County would have had Narconon take to mitigate its

damages were not reasonable. 5 As the Supreme Court has explained, tort law

generally recognizes the doctrine of avoidable consequences “under which victims

have a duty to use such means as are reasonable under the circumstances to avoid

or minimize the damages that result from” a legal wrong. See Pa. State Police v.

Suders, 542 U.S. 129, 146, 124 S. Ct. 2342, 2354 (2004) (internal quotation marks

omitted); see also Restatement (Second) of Torts § 918 (1979) (“[O]ne injured by

the tort of another is not entitled to recover damages for any harm that he could

have avoided by the use of reasonable effort or expenditure after the commission

of the tort.”). The doctrine of avoidable consequences, however, requires plaintiffs

to do no more than is reasonable under the circumstances to mitigate or avoid

further harm flowing from a tortfeasor’s actions.

       5
         Because a mitigation instruction was not warranted on the specific facts of this case, we
do not decide whether a plaintiff who suffered intentional discrimination under the FHA must
mitigate its damages in every possible factual scenario.
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      In this case, the County’s sole theory of mitigation was that Narconon could

have procured additional buildings at offsite locations to house its clients.

Contrary to the County’s arguments, it was not reasonable to expect Narconon to

fundamentally alter its treatment and program model from an onsite, residential

service to an offsite program with facilities scattered throughout the community.

Strickling testified that the onsite facilities provided clients with one-on-one

monitoring from staff members 24 hours per day, seven days per week, that the

success rate of outpatient programs is not as high as residential programs, and that

Narconon’s residential program was designed to provide therapeutic benefits by

mimicking family life in that clients would work, eat, and enjoy recreational

activities together. Forcing Narconon to procure offsite housing, change its

treatment model, and set up the attendant transportation and staffing infrastructure

to run multiple offsite locations was not a reasonable option. Cf. Silver Sage

Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 825 (9th Cir. 2001)

(assuming without deciding that Fair Housing plaintiffs have a duty to mitigate and

concluding that purchasing property without the benefit of a loan was not a

reasonable mitigation option).

      Accordingly, the district court’s instructions did not “properly express the

law applicable to the case,” and we are left with a substantial and ineradicable

doubt as to whether the jury was properly guided in its deliberations. State Farm

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Fire & Cas. Co., 739 F.3d at 585 (internal quotation marks omitted). On this

record, we are convinced the district court’s mitigation instruction was not

harmless, and we reverse the district court’s judgment and remand for a new trial

on damages. See Yun, 327 F.3d at 1281 n.39; Christopher, 53 F.3d at 1195.6 On

remand, the district court should not give a mitigation instruction.

                                    IV. CONCLUSION

       For the foregoing reasons we reverse the district court’s judgment and

remand for further proceedings consistent with this opinion.

       REVERSED AND REMANDED.

       6
         Because we conclude a new trial is necessary on the damages issue due to the improper
mitigation jury instruction, we do not address Narconon’s argument that the district court erred
by allowing the County to ask Morgenstern about the hypothetical effect of the issuance of a
permit sometime in the future.
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