Fourth Circuit rules against Charleston landlord

By Nathan Bass | Aug 29, 2013

RICHMOND, Va. – A federal appeals court has upheld a judgment against a landlord who imposed special restrictions against a woman seeking to rent a house in Charleston for herself and her disabled brother.

The three-judge panel of the U.S. Court of Appeals for the Fourth Circuit issued its opinion confirming the order of the Department of Housing and Urban Development on July 5. Judge Albert Diaz wrote the opinion with Judges Andre M. Davis and James A. Wynn, Jr. concurring.

In April 2009, Delores Walker answered an advertisement for a two-bedroom rental house in Charleston. Walker informed the landlord, Michael Corey, that she would be living with her 48-year-old brother if she rented the house, and that her brother suffered from autism and mental retardation.

Walker alleged that Corey responded to the information regarding her brother’s disability by insisting that Walker would need to obtain a bond to protect his property as a condition of her potential tenancy. Alarmed by this requirement, Walker “nevertheless made an appointment to view the house,” the opinion says.

At the viewing, Walker further described her brother as having “severe autism.” Corey expressed reservations about Walker’s potentially renting the house despite Walker’s assurances that her brother had never been violent or aggressive, the opinion says.

“Believing that Mr. Walker posed a liability risk, Corey required Ms. Walker, in order to proceed with the application process, to (1) provide a note from Mr. Walker’s doctor stating that he would not pose a liability threat, (2) obtain a renter’s insurance policy with $1 million in liability coverage, and (3) assume responsibility for any damage Mr. Walker might cause to the property,” the opinion states.

Furthermore, Corey asked Walker if she earned the $2,000 minimum monthly income that he regularly imposed as a condition for renters. Walker affirmed that she did and took an application, but she didn’t turn it in because she felt like Corey would not rent to her, according to the opinion.

A few days later, Corey rented the house to a woman and her son, neither disabled, and he did not require the woman to purchase liability insurance, get a doctor’s note, or meet the monthly income retirement.

The Department of Housing and Urban Development filed a Charge of Discrimination against Corey and on behalf of the Walkers, and the charge was heard by an Administrative Law Judge. HUD alleged that Corey had discriminated against the Walkers based on disability in violation of the Fair Housing Act by “(1) making facially discriminatory statements, in violation of 42 U.S.C. § 3604(c); (2) making housing unavailable because of a disability, in violation of 42 U.S.C. § 3604(f)(1); and (3) imposing discriminatory terms and conditions because of a disability, in violation of 42 U.S.C. § 3604(f)(2).”

Delores Walker alleged that she suffered significant emotional distress for several months and that Corey’s conduct cause her to fear future discrimination against her brother. She suffered sleeplessness, panic attacks and difficulty eating and drinking, she alleged.

The ALJ found that Corey’s requests were reasonable and issued an initial decision concluding that Corey had not violated the FHA. On review, the Secretary reversed the ALJ’s decisions, determining that HUD had offered evidence sufficient to prove each of the charged violations and then the department remanded the case for a hearing on damages and the civil penalty.

The ALJ awarded Ms. Walker $5,000 in emotional distress damages and assessed an additional $4,000 civil penalty against Corey. The ALJ also ordered Corey to provide HUD with certain disability-related information regarding his properties and to participate in fair housing training.

HUD and Corey both petitioned by review of the ALJ’s remand decision, and Corey’s petition was denied while the department was granted a steeper damages award and penalty. Corey appealed.

“Section 3604(c) of the FHA prohibits oral or written statements with respect to the rental of a dwelling that indicate a 'preference, limitation, or discrimination' based on certain protected statuses, including disability,” Diaz wrote.

“Thus, to establish Corey’s liability under § 3604(c), the Department must show that (1) Corey made a statement; (2) the statement was made with respect to the sale or rental of a dwelling; and (3) the statement indicated a preference, limitation, or discrimination on the basis of disability.

“Corey does not deny telling Ms. Walker that he intended to impose special conditions on the Walkers’ prospective tenancy, but disagrees that he violated § 3604(c). He argues that he imposed the conditions only after Ms. Walker’s ‘voluntary and unsolicited statement that her brother suffers from severe autism and mental retardation.’ Corey also notes that he never indicated a flat refusal to rent to the Walkers, ‘only that... risk insurance may be required.’

“Corey’s arguments are unavailing.

“For one, the fact that Ms. Walker disclosed her brother’s disability does not excuse Corey’s discriminatory responsive statements. Nor does it matter that Corey did not refuse to rent to the Walkers; the statute simply prohibits statements to renters that indicate a limitation based on disability, and Corey admits to making such statements. This ends the inquiry, as substantial evidence supports the Secretary’s determination.”

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