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New Horizons Rehabilitation, Inc. v. State

United States District Court, S.D. Indiana, New Albany Division

July 19, 2019




         This matter is before the Court on cross-motions for summary judgment. Plaintiff New Horizons Rehabilitation, Inc. (“New Horizons”) initiated this action alleging Defendants, the State of Indiana (the “State”) and the Executive Director of the Indiana Department of Homeland Security (“DHS”) in his official capacity (collectively, “Defendants”), issued a zoning decision that violates the Equal Protection Clause of the Fourteenth Amendment; the Rehabilitation Act, 29 U.S.C. § 794 (the “Rehabilitation Act”); the Fair Housing Amendments Act, 42 U.S.C. § 3604(f) (“FHAA”); and the Americans with Disabilities Act, 42 U.S.C. § 12132 (“ADA”). (Filing No. 1 at 9.) On October 27, 2017, this Court granted New Horizons a preliminary injunction and enjoined DHS from classifying New Horizons' proposed dwelling as a Class 1 structure. (Filing No. 43.) In the fall of 2018, New Horizons filed a Motion for Summary Judgment (Filing No. 60) and Defendants filed a Cross-Motion for Summary Judgment (Filing No. 66). For the following reasons, the Court grants in part and denies in part each parties' Motion for Summary Judgment. The result of this ruling grants New Horizons a permanent injunction.

         I. BACKGROUND

         For the most part, the material facts are undisputed. New Horizons is an Indiana not-for-profit corporation that assists persons who have intellectual and developmental disabilities in the southeastern Indiana counties of Ripley, Dearborn, Ohio, Franklin, Decatur, and Switzerland. (Filing No. 22-1.) It provides a variety of a services for its clients, including community-based employment services through job training, placement, and follow-along services, individualized home and community-based services, day-program services, respite care, family support, pre-vocational training and work opportunities in an industrial setting. Id. at 1-2. New Horizons owns six supported living homes located in Lawrenceburg, Batesville, Peppertown, and Oldenburg, Indiana. (Filing No. 60-1 at 11, 42.)

         No more than four adults are allowed to live in a home full time, and they are assisted by New Horizons staff. (Filing No. 22-1 at 2.) Between five and seven staff are employed at each home, and a staff person is on-site 24 hours a day, seven days a week, but staff does not live at the home. (Filing No. 26-2 at 22; Filing No. 60-1 at 29.) The homes are recognized by the Bureau of Developmental Disabilities within Indiana's Division of Disability and Rehabilitative Services as “supported living service arrangements.” (Filing No. 22-1 at 2.)

         The residents of New Horizons' homes have either physical or mental impairments that substantially limit one or more of their daily activities so that they cannot live on their own and require the assistance of staff. Id. at 3; Filing No. 60-1 at 22-23. New Horizons offers residential living as an option for clients who wish to live with the greatest possible degree of independence. (Filing No. 22-1 at 2.) The staff assures the safety of the residents of the homes and provides support to assist them in acquiring and maintaining skills to attain as much self-sufficiency as possible. Id.

         New Horizons' homes are single-family dwellings and comply with all local land-use requirements imposed on single-family residences. Id. at 3. They are located in neighborhoods and are physically indistinguishable from the surrounding single-family homes. Id. They provide permanent housing for the residents and are not intended for transient stays. Id. The residents of the homes live much like a nuclear family would-they eat together, grocery shop together, engage in activities together, pool their money, and live together with no locks on their bedroom doors. Id.; Filing No. 26-2 at 64-65, 68; Filing No. 60-1 at 18. Residents of these homes live with each other for years and form attachments and close relationships similar to a family and genuinely care for each other. (Filing No. 60-1 at 65-66.) New Horizons considers the residents to be families and attempts to create homes in which the residents feel that they are family. Id.

         Because they are disabled, New Horizons' residents receive either Social Security Disability (“SSD”) or Supplemental Security Income (“SSI”) payments (Filing No. 22-1 at 3-4.) They use these payments to pay for their food, shelter costs, and other personal items and expenses. Id. New Horizons is the representative payee for those residents' who are unable to write checks and personally manage their benefits. (Filing No. 60-1 at 9-10.) A portion of residents' SSD or SSI payments go to New Horizons pursuant to a lease that it has with each resident. Id. at 59; Filing No. 22-1 at 10. New Horizons does not rent to the public at large; it only assists persons with an intellectual or developmental disability. (Filing No. 60-1 at 38-39.) It screens potential residents to make sure they are compatible with one another. Id. at 54-55. Residents may stay in a New Horizon home for their entire life and would never see an increase in rent, even if their SSD or SSI payments increase. (Filing No. 26-2 at 64, 70.) New Horizons is a certified “Medicaid home provider, ” meaning it receives some of its funding from Medicaid and its residents are eligible for Medicaid benefits. (Filing No. 60-1 at 43-44.)

         Before a resident moves into a New Horizon home, a contractor hired by the Bureau of Developmental Disabilities will complete an inspection check list to make sure the overall environmental conditions are satisfactory. Id. at 49-51, 96-97. Among other things, the inspections ensure there is a working fire extinguisher in each home. Id. at 96. All New Horizons' residences have fire extinguishers, smoke detectors, and CO2 detectors. Prior to the opening of any home, New Horizons invites the local fire department to come to the home and do a walk through to familiarize themselves with the layout and to do a visual check for any risks. (Filing No. 60-3.) Once the home is opened, residents will engage in five safety drills on a staggered schedule-drills for fire, bomb, medical, tornado, and intruder. (Filing No. 60-2 at 20-21.) During the fire drill, which may occur in the evening hours after the residents' bedtime, staff members will assist the resident to get to a designated area across the street. Id. at 16-17. It takes about five minutes to get to the designated area, but only about half that time for the residents to get out of the house. Id. at 20.

         In 2013, New Horizons was donated an unimproved piece of real estate in Lawrenceburg, Indiana, on the condition that it would build a supported living home for adults with intellectual and developmental disabilities on the property. (Filing No. 22-1 at 4.) The donors are parents of an adult who will reside in the home once it opens. Id. at 4-5. As with all New Horizons homes, the residents will be persons with intellectual or developmental disabilities and are limited in one or more of their major life activities. Id. at 5. The property is located within what Lawrenceburg's zoning ordinance characterized as an “R-1” district, which is zoned for single, two, and multi-family homes. Id. The house will be indistinguishable from the homes surrounding it, and it will conform to all the requirements Lawrenceburg imposes on single-family homes. Id.

         New Horizons initially struggled with the city of Lawrenceburg to zone the home in the same manner as all other single-family residences. After litigation with the city, New Horizons persuaded Lawrenceburg to zone its proposed home as a single-family residence. Id. at 5-6; New Horizons Rehabilitation, Inc. v. City of Lawrenceburg, No. 4:16-cv-00169-RLY-DML (S.D. Ind.).

         While New Horizons was attempting to negotiate with Lawrenceburg, its Executive Director, Marie Dausch (“Dausch”), was informed that the planned home had to be approved by DHS because it was deemed to be a commercial building. (Filing No. 22-1 at 5-6.) She was also informed that plans for the home had to be drawn up by an architect, as opposed to the builder who had drawn up the then-existing plans. Id.

         In 2015, New Horizons paid an architect $2, 200.00 to make changes to the original plans to conform to what DHS required and the plans were submitted to the Plan Review Section of the Division of Fire and Building Safety within DHS. Id. at 6; Filing No. 26-2 at 58-59. That department issued the architect a construction design release specifying that plans for a fire suppression system had to be submitted before the release could be issued. (Filing No. 22-1 at 6.) New Horizons had never previously been required to put such a system in any of the other homes it operated, including an existing home in Lawrenceburg. (Filing No. 22-1 at 6.) Dausch attempted to submit a variance request so that the home could be built without the costly commercial fire suppression system. Id. But she did not understand the process of filing the request and therefore abandoned it. Id.

         On January 26, 2017, New Horizons settled its lawsuit with the city of Lawrenceburg, which agreed to treat the proposed New Horizons home the same way it would treat any single-family dwelling for zoning purposes. Id. at 5. But in February 2017, DHS informed Lawrenceburg officials that the planned home was a Class 1 structure that had to be submitted to DHS for review and release. (Filing No. 22-2 at 56.) Of primary concern to New Horizons was the Class 1 requirement that New Horizons must install a commercial fire suppression system in the home. (Filing No. 26 at 5; Filing No. 22-2 at 38-39.)

         New Horizons applied for a variance from the Fire Prevention and Building Safety Commission (“Commission”) in hopes that they would not be required to install a commercial fire suppression system in the proposed home. (Filing No. 34-3.) Appearing before the Commission, Dausch reported that she had fielded an estimate of $12, 000.00 for a fire-suppression system. Id. at 2. The Commission advised her that estimate was too high-the cost for the fire-suppression system in the proposed home should be between $6, 000.00 to $8, 000.00 Id. at 3. One commissioner explained that a variance would only be granted for financial hardship and if the cost of the fire-suppression system was less than 10% of the total cost of building the home, no variance would be granted in any case. Id. The Commission tabled New Horizons' request so that Dausch could obtain a new estimate. Id.

         Dausch contacted the builder New Horizons was planning to use and asked for an estimate on the cost of the fire-suppression system. Id. The builder estimated the cost to be $9, 800.00. Id. Dausch returned to the Commission with her new estimate, but the Commission denied her request for a variance. Id. at 4. The commissioners told Dausch that the builder had quoted her a price for the wrong sprinkler system, and the correct estimate would not be more than $9, 800.00. Id. at 3-4. The Commission denied her request because to obtain a variance because the cost of the fire-suppression system would have to be over 10% of total building costs, but here the cost was about 5% of total building costs. Id. at 4.

         New Horizons filed its Complaint for Declaratory and Injunctive Relief and Damages against the Defendants on March 14, 2017. (Filing No. 1.) The Court granted New Horizons' motion for preliminary injunction on October 27, 2017. (Filing No. 43.) The home continued construction during this litigation and was scheduled to be open and ready for occupancy in October or November of 2018. (Filing No. 61 at 6; Filing No. 60-3). It will not contain a fire suppression system, although it will contain fire extinguishers and smoke and CO2 detectors. (Filing No. 60-3.) And, like other New Horizons homes, the local fire department will be invited to tour and inspect it. Id. In late November 2016, shortly before New Horizons settled its dispute with Lawrenceburg, the estimated cost of building the home was $207, 900.00. Id. at 2. By December 2017, the estimate had risen to $236, 100.00. Id. Additionally, because DHS labelled the proposed home a Class 1 structure, New Horizons had to pay $2, 200.00 in architect expenses that it would not have incurred had the home been classified as a Class 2 structure. (Filing No. 26-2 at 59.)

         In the fall of 2018, the parties filed these cross-motions for summary judgment. (Filing No. 60; Filing No. 66.) Because of the preliminary injunction, New Horizons was able to build the new home in Lawrenceburg without being subject to the Class 1 structure requirements, particularly the requirement that a commercial fire suppression system be installed. (Filing No. 61 at 32.) New Horizons seeks a permanent injunction to prevent DHS from imposing the Class 1 requirements, even after the home is open. Id. It is also seeking monetary damages resulting from the delay in building the home. Defendants on the other hand, deny any discrimination, challenge New Horizons standing and contend that awarding damages would in no way benefit the disabled individuals that the relevant federal statutes intend to protect. (Filing No. 69 at 29.)


         The purpose of summary judgment is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment is only appropriate by the terms of Rule 56 where there exists “no genuine issue as to any material facts and … the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. This notion applies equally where, as here, opposing parties each move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir. 1996). Indeed, the existence of cross-motions for summary judgment does not necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment Serv., Inc. v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 6477th Cir. 2003). Rather, the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. “With cross-motions, [the court's] review of the record requires that [the court] construe all inferences in favor of the party against whom the motion under consideration is made.” O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).

         A court is not permitted to conduct a paper trial on the merits of a claim and may not use summary judgment as a vehicle for resolving factual disputes. Ritchie v. Glidden Co., ICI Paints World-Grp., 242 F.3d 713, 723 (7th Cir. 2001); Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Indeed, a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003) (“these are jobs for a factfinder”); Hemsworth v., Inc.¸476 F.3d 487, 490 (7th Cir. 2007). Instead, when ruling on a summary judgment motion, a court's responsibility is to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial. Id.


         As previously stated, for the most part, the material facts are not in dispute. New Horizons challenges the constitutionality of the zoning determination regarding its single-family dwelling unit that it built and operates in Lawrenceburg. It alleges the State's zoning determination is in violation of the Equal Protection Clause of the United States Constitution; the Fair Housing Amendments Act, 42 U.S.C. § 3604(f); the Rehabilitation Act, 29 U.S.C. 794; and the American with Disabilities Act, 42 U.S.C. § 12132. New Horizons seeks a permanent injunction and damages. Defendants seek summary judgment arguing that New Horizons lacks standing, is unable to prove discrimination and dispute the validity and foundation for the damages that New Horizons proposes.

         A. The Statutes

         New Horizons makes claims under the Rehabilitation Act, 29 U.S.C. § 794; the Fair Housing Amendments Act, 42 U.S.C. § 3604(f); and the Americans with Disabilities Act, 42 U.S.C. § 12132. (Filing No. 1 at 9.) The Fair Housing Act, enacted in 1968, prohibits housing discrimination on the basis of race, color, religion, or national origin. The FHAA, passed in 1988, extends protections to persons with disabilities. The current Fair Housing Act 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.” 42 U.S.C. § 3604(f)(1). Title II of the ADA provides that “no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of services, programs, or activities of a public entity, or be subjected to discrimination by any such entity. Id. § 12132. And, under the Rehabilitation Act, “[n]o otherwise qualified individual with a disability … shall, solely by reasons of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” 29 U.S.C. § 794(a).

         The Seventh Circuit has said that “all three statutes apply to municipal zoning decisions, ” and the briefing does not address whether they apply to zoning decisions made by the state. Valencia v. City of Springfield, 883 F.3d 959, 967 (7th Cir. 2018). But New Horizons also brings a claim under the Fourteenth Amendment, and the Supreme Court has made clear that the ADA is a proper vehicle for vindicating Fourteenth Amendment rights violated by a state. See U.S. v. Georgia, 546 U.S. 151, 159 (2006) (“insofar as Title II [of the ABA] creates a private cause of action for damages against the States for conduct that actually violated the Fourteenth Amendment, Title II validly abrogates state sovereign immunity”). The Court need not conduct a separate analysis for claims brought under the FHAA, ADA, and Rehabilitation Act because “the same analysis generally applies under all three statutes.” Valencia at 967.

         B. Zoning

         Indiana law divides structures into two classes. Ind. Code § 22-12-1-4, -5. Class 1 is the more commercial of the two classes, and a structure within it is:

         A building or structure that is intended to be or is occupied or otherwise used ...

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