Butler v. Sundo Capital, LLC

559 F.Supp.3d 452

Ashley BUTLER and Fair Housing Partnership of Greater Pittsburgh, Plaintiffs,

v.SUNDO CAPITAL, LLC, Michael Sundo, and Sladack Holdings, LLP, Defendants.

2:20-cv-1607-NR

United States District Court, W.D. Pennsylvania.

Signed September 10, 2021

Kevin L. Quisenberry, Community Justice Project, Pittsburgh, PA, for Plaintiffs.

Christopher J. Azzara, Gretchen E. Moore, Kathleen M. Mannard, Strassburger, McKenna, Gutnick & Gefsky, Pittsburgh, PA, for Defendants.

MEMORANDUM OPINION

J. Nicholas Ranjan, United States District Judge

Plaintiffs Ashley Butler and the Fair Housing Partnership of Greater Pittsburgh bring this case against Defendants Sundo Capital, LLC, Michael Sundo, and Sladack Holdings, LLP for violating the Fair Housing Act, 42 U.S.C. §§ 3601, et seq. , and various Pennsylvania statutes.

Ms. Butler is a victim of domestic violence¹ and stalking by her ex-husband. When she informed Defendants that her ex-husband's behavior had caused her to fear for her life at her residence, they refused to let her out of her lease without penalty. Ms. Butler still surrendered possession of the property to Mr. Sundo, which triggered an early termination clause in the lease that accelerated all remaining rental payments. When she didn't pay, Defendants filed a landlord-tenant action to recover this accelerated rent and other damages. Ms. Butler then pursued an administrative housing complaint with the Pennsylvania Human Relations Commission against Defendants. Soon after, Defendants responded by filing an amended pleading in their landlord-tenant action that Plaintiffs allege contained "new, false" claims for more damages.

From these core allegations, Plaintiffs bring claims under the Fair Housing Act and various Pennsylvania statutes. For their FHA claims, Plaintiffs allege that the early termination clause is discriminatory because it has a disparate impact on domestic violence victims the majority of whom are women, that Defendants retaliated against Ms. Butler for filing her administrative complaint, and that Plaintiffs are entitled to punitive damages because of Defendants’ discriminatory conduct.

Defendants argue that all of Plaintiffs’ FHA claims fail as a matter of law for four reasons. First, the disparate impact claim fails because "domestic violence victim" is not a protected class that is recognized under the FHA. Second, Plaintiffs failed to meet the "robust causality" requirement for a disparate impact claim because they have not pled facts or statistics connecting Defendants’ challenged policy to the alleged disparate impact. Third, Defendants never retaliated against Mr. Butler because they were simply following the rules of civil procedure in pursuing their claims in their landlord-tenant action. Fourth, punitive damages under the FHA are unavailable because there is no viable predicate offense.

Separately, Defendants argue that without viable FHA claims, the Court should not exercise supplemental jurisdiction over the pendant state-law claims. Defendants also claim that Plaintiffs have improperly sued Mr. Sundo and Sladack Holdings because neither is a party to the lease that Ms. Butler and her ex-husband signed, and therefore the Court should dismiss them.

Applying the familiar and well-settled standard of review for a Rule 12 motion, the Court will deny Defendants’ motion in all respects for the reasons discussed below.

DISCUSSION & ANALYSIS ²

I. Plaintiffs have adequately pled their sex discrimination claim under a disparate impact theory.

The FHA prohibits discrimination based on "race, color, religion, sex, familial status, or national origin" in various real estate-related transactions. 42 U.S.C. § 3604. A plaintiff can bring unlawful discrimination claims under three distinct legal theories: "disparate treatment, disparate impact and failure to reasonably accommodate." Sharpvisions, Inc. v. Borough of Plum , 475 F. Supp. 2d 514, 522 (W.D. Pa. 2007) (citation omitted). Plaintiffs’ discrimination claim focuses exclusively on the disparate impact theory. ECF 1, ¶¶ 34-100.

To establish a disparate impact claim under the FHA, the plaintiff must show (1) the occurrence of certain outwardly neutral practices, (2) which have a significantly adverse or disproportionate impact on members of the protected class. Lapid-Laurel, L.L.C. v. Zoning Bd. of Adjustment of Twp. of Scotch Plains , 284 F.3d 442, 467 (3d Cir. 2002). Disparate impact claims "do not require proof of discriminatory intent," and "permit federal law to reach conduct that has the necessary and foreseeable consequence" of causing discrimination by burdening a particular group. Mt. Holly Gardens Citizens in Action, Inc. v. Twp. of Mt. Holly , 658 F.3d 375, 381 (3d Cir. 2011).

Here, Plaintiffs allege that Defendants’ facially neutral policy of "[r]efusing early lease termination in cases involving domestic violence has an inherent disparate impact on female tenants." ECF 1, ¶ 97. Defendants agree that their policy is neutral on its face. See ECF 9, p. 11. Thus, this dispute comes down to the second element—whether the early termination clause, as applied to cases involving domestic violence, has a significantly adverse or disproportionate impact on a protected class.

On this score, Defendants make two core arguments. First, Ms. Butler is not a member of a recognized protected class under the FHA. Second, Plaintiffs have insufficiently pled that the challenged policy caused the alleged disparate impact. After careful consideration, the Court finds neither of these arguments persuasive at this early stage of the proceedings.

A. Ms. Butler is a member of a "protected class" under the FHA.

Defendants argue that "domestic violence victims or survivors" are only treated as members of a "protected class" for purposes of the FHA under "certain eviction circumstances." ECF 9, p. 9. Since this "is not an eviction situation," Defendants contend that Plaintiffs cannot bring their disparate impact claim. Id. at pp. 9-10. Defendants’ view, however, conflicts with both the existing case law and the broad, remedial purpose of the FHA.

It is true that the "FHA does not expressly include domestic violence victims or survivors as protected classes." Wilson v. Guardian Mgmt., LLC, 383 F. Supp. 3d 1105, 1108 (D. Or. 2019). That said, there is "substantial case law and scholarship ... suggesting that claims alleging discrimination based on status as a victim of domestic violence are not per se invalid." Id. at 1109. Moreover, in 2011, the then-HUD Deputy Assistant Secretary for Enforcement and Programs issued a report that explained that discrimination against victims of domestic violence "because of their history or the acts of their abusers" may be illegal under the FHA. HUD, Assessing Claims of Housing Discrimination against Victims of Domestic Violence under the Fair Housing Act (FHA) and the Violence against Women Act (VAWA) , available a t https://www.hud.gov/sites/documents/FHEODOMESTICVIOLGUIDENG.pdf (last visited on Sept. 10, 2021).

These claims are not per se invalid because domestic violence victims tend to overwhelmingly be women. The U.S Department of Justice reports that 85% of victims of intimate partner violence nationwide are women. ECF 1, ¶ 91 (citation omitted). So, essentially, discrimination against domestic violence victims is likely to be discrimination against women, and therefore the effects of that discrimination are more acutely felt by women. Id. at ¶¶ 93-94 (citations omitted).

Although the Third Circuit has not weighed in on this issue, most district courts that have addressed it have found that domestic violence victims are members of a protected class and may bring a claim for housing discrimination under the FHA through a theory of sex discrimination. See, e.g. , Wilson , 383 F. Supp. 3d at 1110 ("Summary judgment against Plaintiff's housing discrimination claims is not warranted simply because those claims are based on her status as a domestic violence victim"); Dickinson v. Zanesville Metro. Hous. Auth. , 975 F. Supp. 2d 863, 872 (S.D. Ohio 2013) (finding that use of plaintiff's status as a domestic violence victim to evict could support a claim of sex discrimination under the FHA); Meister v. Kansas City , 2011 WL 765887, at *6 (D. Kan. Feb. 25, 2011) ("[E]vidence that defendant knew that domestic violence caused damage to plaintiff's housing unit would help support a claim that she was evicted under circumstances giving rise to an inference of sex discrimination.").³

Defendants argue that while these cases recognize domestic violence victims’ membership in a protected class under the FHA, they limit that membership to eviction cases. See ECF 9, p. 9. That is not correct. While most of these cases were decided in the context of evictions, there is nothing in those decisions that specifies that domestic violence victims can only bring cases challenging evictions. Indeed, in Dickinson , the court held that plaintiff could bring a discrimination claim based on defendant's act of sending negative reference letters to other landlords. 975 F. Supp. 2d at 872. This broader scope of potential claims makes sense given "the well established principle that in interpreting the Fair Housing Act, courts are to give effect to the broad remedial intent of Congress embodied in the Act." Fair Hous. Council, Inc. v. Village of Olde St. Andrews, Inc. , 210 F. App'x 469, 480 (6th Cir. 2006) (cleaned up).

Plaintiffs are therefore not barred from bringing their disparate impact claim based on Defendants’ allegedly discriminatory enforcement of their early termination and rent acceleration provisions.

B. Plaintiffs have adequately pled causation.

The "Supreme Court [has] emphasized that courts should only use disparate-impact claims to remove artificial, arbitrary, and unnecessary barriers, rather than displace valid governmental and private priorities." Reyes v. Waples Mobile Home Park Ltd. P'Ship , 903 F.3d 415, 424-25 (4th Cir. 2018) (cleaned...