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Fair Housing Center of Central Indiana v. Grandville Cooperative Inc.

United States District Court, S.D. Indiana, Indianapolis Division

January 9, 2017

FAIR HOUSING CENTER OF CENTRAL INDIANA, et al., Plaintiffs,
v.
GRANDVILLE COOPERATIVE INC., et al., Defendants.

          ORDER ON DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

          LARRY J. McKINNEY, JUDGE

         This matter comes before the Court on Defendants', Grandville Cooperative Inc. (“Grandville”), Karen Mitchell, and Kirkpatrick Management Company, Inc. (“Kirkpatrick”) (collectively “Defendants”), Second Motion for Judgment on the Pleadings (“Motion”) pursuant to Federal Rule of Civil Procedure 12(c) (“Rule 12(c)”) (Dkt. 72) on Plaintiffs', Fair Housing Center of Central Indiana (“Fair Housing Center”), Virginia Morton, Sharna McFarland, and Lindsay Adams (collectively “Plaintiffs”), Third Amended Complaint (“Amended Complaint”). The Amended Complaint alleges that the Defendants (1) committed discriminatory housing practices in violation of both the Fair Housing Act (“FHA”), 42 U.S.C § 3601, et seq., and the Indiana Fair Housing Act (“IFHA”), Ind. Code § 22-9.5; (2) discriminated against the Plaintiffs in the operation of Grandville in violation of the Rehabilitation Act, 29 U.S.C. § 794; and (3) committed negligence by failing to adequately train, monitor, and supervise employees to ensure compliance with the FHA, IFHA, and Rehabilitation Act.[1] Dkt. 62. For the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion.

         I. BACKGROUND

         A. GRANDVILLE COOPERATIVE

         Grandville is a 156-unit housing complex located in Indianapolis, Indiana. Id., ¶ 16. It receives federal housing funds as well as financing and was constructed using the United States Department of Housing and Urban Development (“HUD”) Section 236 mortgage program. Id., ¶ 17. Grandville has a Section 8 Project-Based Rental Assistance contract, which it utilizes to make rent affordable to lower income tenants. Id.

         Grandville is a cooperative corporation property, which provides each member of the cooperative one share and one vote in the cooperative. Id., ¶ 18. The cooperative holds title to the property. Id. Grandville members elect a Board of Directors that establishes policies, sets forth rules, and determines how money is spent. Id., ¶ 19. Prospective residents must meet the standards set forth by the Grandville Board of Directors. Id., ¶ 20.

         Kirkpatrick is a property management company in Indianapolis. Id., ¶ 21. Kirkpatrick provides services to Grandville and is identified as the property manager on Grandville's materials. Id., ¶ 22. Kirkpatrick has provided onsite staff to direct the management and direction of Grandville. Id. Kirkpatrick is responsible for ensuring that Grandville's board and staff act in compliance with fair housing laws. Id., ¶ 23. Kirkpatrick also provides guidance for screening and selecting prospective residents, including the creation of forms used by Grandville. Id., ¶ 24. Kirkpatrick's name is prominently displayed on a variety of Grandville materials, including Grandville's website. Id.

         B. SHARNA MCFARLAND AND VIRGINIA MORTON

         Morton is quadriplegic. Id., ¶ 26. Morton relies on her daughter, McFarland, as well as a part-time at-home nurse for assistance. Id., ¶ 27. In December 2014, McFarland visited the Grandville front office and expressed an interest in living there. Id., ¶ 28. Specifically, McFarland sought a two-story townhouse, with three bedrooms upstairs and the living space downstairs, including a half bathroom, kitchen, dining room, and living room. Id., ¶ 29. McFarland and her two children intended to use the upstairs bedrooms while Morton planned on staying in the downstairs living room because she is largely confined to a hospital bed due to her paralysis. Id. During the visit in December 2014, McFarland was informed that she needed to fill out an application and pay $20.00 to secure a spot on the waitlist, which she did. Id., ¶ 30.

         Several months later, Grandville inquired as to whether McFarland was still interested in a residence and she responded that she was. Id., ¶ 31. McFarland visited Grandville once more and asked if Grandville required Morton to fill out a separate application. Id. ¶ 32. Camille Mitchell, one of Karen Mitchell's daughters who works as a leasing agent for Grandville, informed McFarland that she needed to fill out a separate application on Morton's behalf and submit another $20.00, which she did. Id. A few weeks later, McFarland received a letter from Grandville that stated: “This Letter is to notify you that Grandville Cooperatives' Board of Directors has scheduled a mandatory New Member Orientation, time listed below.” Id., ¶ 33.

         On August 5, 2015, McFarland attended the orientation. Id., ¶ 36. Karen Mitchell and two other board members were also in attendance. Id., ¶ 37. During the meeting, McFarland mentioned that Morton could not climb stairs. Id., ¶ 38. McFarland was then asked why and she explained that Morton was quadriplegic. Id. The directors then asked several questions about Morton's disability, including how Morton became quadriplegic, how long she had quadriplegia, and who takes care of her. Id. Karen Mitchell then told McFarland that this was not a “New Member Orientation” but a “Pre-Interview” meeting. Id. ¶ 39.

         On the same day as the “New Member Orientation Meeting, ” Karen Mitchell circled “rejected” on the “Grandville Coop Application Cover Page” for Morton and McFarland's application. Id. ¶ 74. The document provides check boxes corresponding to various reasons for denying an application. Id. ¶ 75. Neither the box for “We are not accepting applications for the unit size your household requires” nor the box for “You have provided insufficient or inaccurate information on your application” is checked. Id. The form does not state why Morton and McFarland's application was rejected. Id.

         A few days after the meeting, McFarland received a letter from Grandville dated August 5, 2015, the same day as the meeting. Id. ¶ 40. The letter was signed by Camille Mitchell and identified Camille as “Office Staff, Property Manager / Agent for Owner.” Id. The letter read: “We are sorry to let you know that we must reject your application. At this time, Grandville Cooperative is not handicap accessible and it will be a liability to offer you a unit that is not accommodating to everyone in the household.” Id.

         Karen Mitchell discussed the rejection of McFarland and Morton's applications with her daughter Tia Mitchell. Id. ¶¶ 63, 65. Karen Mitchell told Tia that she rejected McFarland and Morton's applications because Morton needed a hospital bed in the living room, which she believed was “tacky.” Id. ¶¶ 66, 67.

         Karen Mitchell also discussed McFarland and Morton's application with Bill Kersey, a maintenance employee and resident of Grandville. Id. ¶¶ 69, 70. Mitchell inquired with Kersey as to what would be required for a quadriplegic person to move in. Id. ¶ 72. He believed they might need to widen doorways or install a ramp, to which Mitchell responded, “no, that's not going to work” and also stated that “with her living downstairs in the living room and her daughter upstairs, we don't want that around here.” Id. ¶¶ 71, 72.

         C. THE FAIR HOUSING CENTER OF CENTRAL INDIANA

         After receiving the rejection letter, McFarland contacted the Fair Housing Center. Id. ¶ 44. The Fair Housing Center is a private, non-profit corporation that seeks to ensure equal hosing opportunities by eliminating housing discrimination. Id. ΒΆ 6. After interviewing McFarland, the Fair Housing Center sent a letter to ...


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