519 East Front Street Butte, Montana 59701 (406) 782-2573 / 1-800-929-2611 Montana Relay: 711 - Fax: (406) 782-2781 E-mail: inquiry@montanafairhousing.org

(FHA Admendment Acts of 1988 part 4)

23. Vicarious liability

In action under 42 USCS § 3604 against real estate firm, 2 of its sales agents, and sellers for alleged racial discrimination in sale of real estate, trial court erroneously instructed jury that if any defendants were liable, then all defendants must be found liable; however, error is harmless except as to agents, since agents cannot be held liable for discriminatory acts by their principals. Green v Century 21 (1984, CA6 Ohio) 740 F2d 460.

District court did not err in holding real estate agency liable for Fair Housing Act (42 USCS §§ 3601 et seq.) violations of its agents, despite agency's contention that its agents were independent contractors, over whom it has no control, where agency's managerial personnel had knowledge of fair housing violations by its agents and failed to take corrective action. Heights Community Congress v Hilltop Realty, Inc. (1985, CA6 Ohio) 774 F2d 135.

In cases of racial discrimination in housing, principal is liable for wrongful acts of its agents; however, principal is liable for punitive damages for discriminatory acts of agent only if principal knew of or ratified such acts. Hamilton v Svatik (1985, CA7 Ill) 779 F2d 383.

Finding by magistrate that corporation violated 42 USCS §§ 3601 et seq. by refusing to rent apartment to plaintiffs on account of their race was not inconsistent with jury verdict in favor of defendant president of corporation, where defendants were not alleged to be jointly liable and were not similarly situated, and where corporation defaulted and thereby admitted liability. Douglas v Metro Rental Services, Inc. (1987, CA7 Ill) 827 F2d 252.

For purposes of claim of sex discrimination in rental housing in violation of FHA, duty of property owner not to discriminate in lease or sale of property is nondelegable. Walker v Crigler (1992, CA4 Va) 976 F2d 900.

Complaint by black couple against owner of apartment building and bank holding it in trust is dismissed where discrimination against black couple was perpretrated by rental agents for building and where uncontroverted evidence clearly demonstrates that owner and bank never authorized rental agents to act as their agents or to do any act in violation of any federal statute or regulation; owner of piece of realty or bank holding in it trust is not liable for damages under 42 USCS § 3604, absent actual and personal involvement in act of discrimination. Hollins v Kraas (1973, ND Ill) 369 F Supp 1355.

Under 42 USCS § 3604, all practices which have effect of denying dwellings on prohibited grounds are unlawful; therefore, imposition of more burdensome application procedures, of delaying tactics, and of various forms of discouragement by resident managers and rental agents constitutes violation of § 3604 not only by those who impose these procedural roadblocks, but also by top management and owners who fail to set forth objective and reviewable procedures for apartment application and rental. United States v Youritan Constr. Co. (1973, ND Cal) 370 F Supp 643, affd in part and remanded in part on other grounds (CA9 Cal) 509 F2d 623, 10 BNA FEP Cas 1438.

Finding that employee of defendant mortgage company is liable to plaintiff for violations of 42 USCS §§ 3604, 3605, and 3617 impels same judgment against mortgage company and its president, for their duty not to discriminate is nondelegable and corporation and its officers are responsible for acts of subordinate employee, even though these acts are neither directed nor authorized. Harrison v Otto G. Heinzeroth Mortg. Co. (1977, ND Ohio) 430 F Supp 893.

Multiple listing service is not vicariously liable for "racial steering" practices of real estate brokers under 42 USCS 3604 where brokers did not act on behalf, at behest or for benefit of multiple listing service and where such service exercised control only with regard to terms upon which services provided by it would be made available to broker. Wheatley Heights Neighborhood Coalition v Jenna Resales Co. (1978, ED NY) 447 F Supp 838.

Real estate broker is liable under 42 USCS § 3604 where real estate salesman acting as broker's agent with authority to contract refused to contract with prospective buyer because of race; real estate broker is liable under 42 USCS § 3604 where salesman discouraged prospective buyers from inspecting dwelling because of race of prospective buyers and real estate broker ratified salesman's actions by approving of salesman's actions in later discussion with salesman. Bradley v John M. Brabham Agency, Inc. (1978, DC SC) 463 F Supp 27.

In applying imputed or vicarious liability theories in housing discrimination cases under 42 USCS § 3604, finding that agent or employee acted with corporate defendant's approval or at his specific direction is not necessary to hold owner liable where owner has been found to have power to control acts of his agents or employees; imputed liability may be found where license of real estate broker or agent inures to benefit of corporation and enables it to engage in business of selling real estate, and acts of sales agent or employee clearly carried out within scope of his employment and for benefit of corporate employer are properly imputed to corporate defendant; requisite elements of control of and intent to benefit from acts of licensee of real estate company are absent where, although company has right to exercise certain amount of control over licensee, including right to conduct annual audit, there is no provision for any direct input into licensee marketing activities; there is in such case no basis for imputing liability to licensor in housing discrimination action under 42 USCS § 3604. Whitfield v Century 21 Real Estate Corp. (1979, SD Tex) 484 F Supp 984.

Broker under contract with its agents has nondelegable duty to obey Fair Housing Act, and thus real estate agency was liable for imputed acts and statements of agents who participated in 8 violations of § 3604(a), and also §§ 3604(c) and (e) violations. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Broker may be held liable for racial steering of its agents, and thus, if individual sales agent engages in act of racial steering, and if that act or statement is made within sales agent's course and scope of employment with real estate broker, it may be imputed to broker. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Status as president and chief operating officer of real estate company did not render owner of part of stock thereof personally liable for acts of corporation or its agents or employees in action alleging violations of Fair Housing Act. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

To impose vicarious liability upon president and chief operating officer for acts of agents who participated in continuing violations found by court, it was essential to show that he participated in acts or knew of and ratified their acts and statements. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Defendant as overall manager of development company managing apartments is responsible for acts of agents and employees, even though he did not personally engage in racial discrimination practiced by resident managers. Re Moore (1979, BC CD Cal) 1 BR 52.

24. Relief

Trial court properly ordered specific performance of sale of house to black purchasers where sales agent negotiated agreement for purchase of house and subsequently broke off that agreement, based in part upon race of purchasers, and where owner was responsible for actions of sales agent. Moore v Townsend (1975, CA7 Ill) 525 F2d 482.

Punitive damages may be recoverable, as well as injuctive relief obtained, upon proper showings in action under 42 USCS § 3604. Wharton v Knefel (1977, CA8 Mo) 562 F2d 550.

Federal equitable relief must be carefully tailored to be no more intrusive than is necessary to remedy proved statutory violation; district court did not venture outside permissible boundaries by requiring that construction of proposed housing project proceed as planned without further interference, in action under 42 USCS § 3604. Resident Advisory Board v Rizzo (1977, CA3 Pa) 564 F2d 126, cert den 435 US 908, 55 L Ed 2d 499, 98 S Ct 1457, 98 S Ct 1458 and later proceeding (ED Pa) 503 F Supp 383.

Plaintiff is entitled to injunctive relief where flagrant evidence of defendant's discriminatory practices under 42 USCS § 3604 is provided by undisputed "coding" of any black applicant for rental housing followed by denial of his application. Sandford v R. L. Coleman Realty Co. (1978, CA4 NC) 573 F2d 173.

Plaintiffs who prevail on their individual claims under both 42 USCS § 1982 and 42 USCS § 3604 should be allowed to benefit from more liberal recovery provisions applicable to violations of 42 USCS § 1982. Dillon v AFBIC Development Corp. (1979, CA5 Ala) 597 F2d 556.

Relief normally granted under 42 USCS § 3604 in exclusionary zoning cases is site-specific relief, that is, opening up of particular parcel to low- or moderate-income multiple housing on case-by-case basis; such relief ordinarily runs counter to local zoning or other legislation, but given national open housing policy established by Congress, state or local legislation must yield to that policy. Metropolitan Housing Development Corp. v Arlington Heights (1980, CA7 Ill) 616 F2d 1006.

Where municipality violated 42 USCS § 3604 by withdrawing from multi-municipality housing authority, which effectively blocked construction of 50 units of low-income housing, District Court exceeded traditional scope of its equity power in ordering municipality itself to construct and maintain 50 public housing units from its own locally-generated funds. Smith v Clarkton (1982, CA4 NC) 682 F2d 1055.

In action under 42 USCS §§ 3604 and 3617 in which it was established that city blocked, with racially discriminatory intent, development of racially integrated low-income senior citizen and family housing by private corporation, District Court exceeded its remedial authority by enjoining city from engaging in "any conduct" that interferes with construction project, since injunction should be limited to prohibition of conduct because of race; however, District Court did not abuse its discretion in permitting private corporation to obtain additional extensions of contract for sale of project site by petitioning court, since condition merely leaves door open to insure that appropriate efforts can be expended to make whole victims of city's discriminatory conduct. United States v Birmingham (1984, CA6 Mich) 727 F2d 560.

District court did not err in failing to grant injunctive relief against real estate agency and agents who committed unlawful "racial steering" practices in violation of Fair Housing Act (42 USCS §§ 3601 et seq.), since court properly concluded that plaintiffs had not proven that defendants were likely to continue to commit steering violations in future; award of nominal damages to non-profit corporation which has as its primary objective promotion and maintenance of city as open and integrated community was not error, where court found that corporation had suffered non-quantifiable injury at hands of defendants. Heights Community Congress v Hilltop Realty, Inc. (1985, CA6 Ohio) 774 F2d 135.

In housing discrimination action under 42 USCS § 3604 in which plaintiff obtained judgment against owners and managers of trailer park, along with lessee of available trailer and pad at park, District Court did not err in refusing to grant plaintiff's motion for damages against lessee under Rule 54(c) of Federal Rules of Civil Procedure, where plaintiff did not explicitly pray for damages against lessee, and where lessee proceeded to trial without attorney present in belief that plaintiff would not seek damages against him. Stewart v Furton (1985, CA6 Tenn) 774 F2d 706.

In action by black woman who established prima facie case of racial discrimination in housing under 42 USCS § 3604 against apartment building manager who refused to rent apartment to plaintiff, award of $12,000 in compensatory damages against building manager for humiliation, emotional distress, and embarassment, was not excessive, and award of $5,000 in punitive damages against building manager is not excessive; however, award of $2,500 in punitive damages against building owner is not supported in record where no evidence was presented that owner acted wilfully or wantonly. Hamilton v Svatik (1985, CA7 Ill) 779 F2d 383.

In housing discrimination case brought under 42 USCS § 1982 and Fair Housing Act (42 USCS §§ 3601 et seq.) which resulted in agreement among parties on all issues except attorneys' fees, district judge did not have authority to enforce proposed stipulation of agreement in all other respects and award attorneys' fees to plaintiff class over defendant's objections. Huertas v East River Housing Corp. (1987, CA2 NY) 813 F2d 580.

Award of $40,000 compensatory damages plus $75,000 punitive damages against corporation which violated 42 USCS §§ 3601 et seq. by refusing to rent apartment to plaintiffs because they were black was grossly excessive, where plaintiffs later moved into apartment at issue and received approximately $13,000 from apartment owner, and compensatory amount would be reduced to $10,000 and punitive damage amount to $20,000. Douglas v Metro Rental Services, Inc. (1987, CA7 Ill) 827 F2d 252.

Site specific relief would be granted to private developers who had successfully sued, under 42 USCS §§ 3601 et seq., town which had refused to amend ordinance to allow construction of multi-family minority housing in white neighborhood, where litigation had spanned over 7 years, town had demonstrated little good faith in assisting development of low-income housing, other possible parcels were not yet zoned for multi-family housing, and developers would otherwise have had to seek amendment of zoning ordinance to develop other parcels also outside of town's urban renewal area. Huntington Branch, NAACP v Huntington (1988, CA2 NY) 844 F2d 926.

Prospective injunctive relief in default judgment against apartment owner engaged in pattern or practice of making apartments unavailable to persons because of race in violation of 42 USCS §§ 3601 et seq. was proper, where apartment owners did not take steps to remove any of offending rental agents, owners refused to sign affidavits saying they would comply with law, and incidents of discrimination found by magistrate were much more recent when suit was filed, so that defendants would not be allowed to turn self-occasioned delay to their advantage. United States v Di Mucci (1989, CA7 Ill) 879 F2d 1488.

Award of $2500 to each black plaintiff for emotional distress suffered as result of viewing housing ads portraying only white models was proper, where court found that emotional distress sustained by plaintiffs was not so severe as to justify larger award. Ragin v Harry Macklowe Real Estate Co. (1993, CA2 NY) 6 F3d 898.

Evidence was sufficient to support emotional distress award of $22,000 in sexual harassment action by tenant against landlord under Fair Housing Act, where tenant testified regarding persistent harassment and touching by landlord in full view of her children, and expert testimony was not required. Krueger v Cuomo (1997, CA7) 115 F3d 487.

First Amendment does not necessarily prohibit rendering of injunction to enforce 42 USCS § 3604(e). United States v Mitchell (1971, ND Ga) 327 F Supp 476.

Consent decree which enjoins discrimination in rental or dwelling units and proscribes use of quotas or racial or religious criteria in rentals is approved; provision for adjustment period during which percentage goals of white to non-white tenants will be achieved aids to application of underlying principle of nondiscrimination at end of such period. Williamsburg Fair Housing Committee v New York City Housing Authority (1978, SD NY) 450 F Supp 602.

Further injunctive relief against city whose zoning ordinance violates 42 USCS § 3604 by impeding instruction of low-income housing project is improper, even though delay involved in adjudicating validity of ordinance results in increased construction costs to point where it is no longer feasible to construct proposed project, where plaintiffs submitted no evidence as to feasibility or efficacy of various forms of suggested further injunctive relief. Park View Heights Corp. v Black Jack (1978, ED Mo) 454 F Supp 1223.

Real estate agency and individual brokers who violated 42 USCS §§ 1982 and 3604 by intentionally discriminating against black couple in purchase of home are jointly and severally liable to plaintiffs for $10,000 compensatory damage award and $2,000 punitive damage award. Hobson v George Humphreys, Inc. (1982, WD Tenn) 563 F Supp 344.

Owners and operators of apartment complex, along with rental agents employed by complex, are liable to prospective black tenants for appropriate injunctive relief, actual and punitive damages, along with costs and attorney fees, where defendants willfully engaged in systematic practice of discrimination against black applicants and homeseekers that frustrated counseling and referral services, drained resources and hindered mission of non-profit corporation organized to further goals of Fair Housing Act; defendants are also liable to non-profit corporation for both actual and punitive damages. Davis v Mansards (1984, ND Ind) 597 F Supp 334.

Nonprofit agency promoting racial integration could not recover moneys expended for monitoring real estate agency's actions where it was not shown that there was causal connection between expenditures and violations of § 3604; injunction against real estate agency violating Fair Housing Act was not appropriate where it was not shown that agency had recently violated Act and agency was not likely to again violate act. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Finding of 8 racial steering incidents constituted prima facie evidence of real estate agency's continuing practice of making dwellings unavailable because of race, and 15 incidents in which steering was not found could not diminish or vitiate 8 violations, considered individually, or continuing unlawful practice represented by 8 violations; however, 15 incidents could affect nature of relief to be awarded. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Village is enjoined from delaying or refusing any permit on ground that its zoning ordinance does not permit proposed facility to provide therapeutic program for traumatically brain injured adults, where such facility does not need state license to operate, and does not need to be "occupied on permanent basis" since no other facilities in similarly zoned areas are required to be, because there is reasonable likelihood that village's enforcement of ordinance has discriminatory effect on handicapped persons facility intends to serve, in violation of 42 USCS § 3604(f)(3)(B). North Shore-Chicago Rehabilitation, Inc. v Skokie (1993, ND Ill) 827 F Supp 497, 2 ADD 435, motion den (ND Ill) 2 ADD 1074.

Jury verdict finding real estate agency and agent liable for violation of 42 USCS § 3604(a) may stand, but $280,000 compensatory damage award will be set aside, where agent apparently agreed to rent house to white woman, but took back key and refused rental upon discovering that her husband was African-American, because, although no overt discrimination took place, jury reasonably chose not to believe defendants' story and to infer racial motivation behind actions of agent. Portee v Hastava (1994, ED NY) 853 F Supp 597.

25. Moot questions

Appeal on denial of preliminary injunction is rendered moot upon showing that plaintiff, who subsequently purchased property anyway, never contacted company's representative by telephone, visited company's office, or made actual offer to purchase prior to filing suit. Pegues v Bakane (1971, CA5 Ala) 445 F2d 1140.

In civil rights action brought by citizens of Chinese ancestry allegedly denied opportunity to purchase vacant lot in all-white development because they were not Caucasians, case is not rendered moot by fact that plaintiffs' offer of purchase expired prior to defendants' response thereto where there is at least possibility that plaintiffs' offer was not accepted before it expired or, alternatively, that defendants failed to make acceptable counteroffer because of defendants' reluctance to sell to nonwhites. Wang v Lake Maxinhall Estates, Inc. (1976, CA7 Ind) 531 F2d 832.

HUD plan to transfer over and under-housed tenants, and to create agenda for further desegregation, did not establish that action against HUD alleging agency maintained system of racially segregated housing was moot, inasmuch as plan only showed that agency had begun process which might lead to desegregation. Young v Pierce (1985, ED Tex) 628 F Supp 1037.

26. Limitations

Where at least one of 8 racial steering incidents occurred within 100-day limitations period, unlawful practice continued into limitations period and complaint was timely and each of 8 incidents was rendered timely. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Where last of card solicitations violating prohibition of § 3604(e) against racial solicitation was within limitations period, action was within 100-day limitations period. Heights Community Congress v Hilltop Realty, Inc. (1983, ND Ohio) 629 F Supp 1232.

Claims of racial steering under 42 USCS § 3604 are dismissed for those alleged violations which occurred outside 180-day limitation period, since "continuing violation" theory does not apply to claims based on tester standing; however, 42 USCS § 1982 allegations are still viable since discrimination against individuals' property rights have been alleged and 42 USCS §§ 1982 and 3604 claims are independent and concurrent. Bellwood v Gorey & Associates (1987, ND Ill) 664 F Supp 320.

UNITED STATES CODE SERVICE

Copyright 1998, LEXIS Law Publishing, a division of Reed Elsevier Inc.

All rights reserved.

*** THIS SECTION IS CURRENT THROUGH 105-153, APPROVED 12/17/97 ***

TITLE 42. THE PUBLIC HEALTH AND WELFARE

CHAPTER 45. FAIR HOUSING

GENERALLY

42 USCS § 3605 (1997)

§ 3605. Discrimination in residential real estate-related transactions

(a) In general. It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.

(b) Definition. As used in this section, the term "residential real estate-related transaction" means any of the following:

(1) The making or purchasing of loans or providing other financial assistance--

(A) for purchasing, constructing, improving, repairing, or maintaining a dwelling; or

(B) secured by residential real estate.

(2) The selling, brokering, or appraising of residential real property.

(c) Appraisal exemption. Nothing in this title prohibits a person engaged in the business of furnishing appraisals of real property to take into consideration factors other than race, color, religion, national origin, sex, handicap, or familial status.

HISTORY: (Apr. 11, 1968, P.L. 90-284, Title VIII, § 805, 82 Stat. 83; Aug. 22, 1974, P.L. 93-383, Title VIII, § 808(b)(2), 88 Stat. 729.)

(As amended Sept. 13, 1988, P.L. 100-430, § 6(c), 102 Stat. 1622.)

HISTORY; ANCILLARY LAWS AND DIRECTIVES

REFERENCES IN TEXT:

"This title", referred to in this section, is Title VIII of Act Apr. 11, 1968, P.L. 90-284, 82 Stat. 81, which is popularly known as the Fair Housing Act, and appears generally as 42 USCS §§ 3601 et seq. For full classification of such Title, consult USCS Tables volumes.

AMENDMENTS:

Act Aug. 22, 1974, inserted ", sex"

1988. Act Sept. 13, 1988 (effective on the 180th day beginning after enactment, as provided by § 13(a) of such Act, which appears as 42 USCS § 3601 note) substituted this section for one which read:

"After December 31, 1968, it shall be unlawful for any bank, building and loan association, insurance company or other corporation, association, firm or enterprise whose business consists in whole or in part in the making of commercial real estate loans, to deny a loan or other financial assistance to a person applying therefor for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or to discriminate against him in the fixing of the amount, interest rate, duration, or other terms or conditions of such loan or other financial assistance, because of the race, color, religion, sex, or national origin of such person or of any person associated with him in connection with such loan or other financial assistance or the purposes of such loan or other financial assistance, or of th

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