4th Circuit panel vacates dismissal of housing discrimination case

A federal District Court erred by dismissing all claims in a long-running dispute about whether a private, gated community’s efforts to block a group home for elderly people with disabilities constituted discrimination, the 4th U.S. Circuit Court of Appeals has held.

In response to community concerns, the homeowners association refused to grant a reasonable accommodation from its restrictive covenant and required several conditions for approval. The District Court dismissed claims of fair housing violations, discrimination and retaliation.

4th Circuit Judge Pamela A. Harris said that the record here was “not sufficiently ‘one-sided’ for either party to prevail on summary judgment.”

“Specifically, it is for a jury to determine whether, as the Corporation argues, an exemption for Lussi’s project would be unduly burdensome and thus ‘unreasonable’ if approved without the four disputed conditions – or whether, as Lussi maintains, those conditions are themselves unreasonable,” the judge wrote.

A jury must also decide whether the conditions were imposed for legitimate reasons or were pretexts for unlawful retaliation and discrimination.

Joined by Judges Paul V. Niemeyer and Nicole G. Berner, Harris vacated and remanded Group Home on Gibson Island LLC v. Gibson Island Corporation (VLW 025-2-261).

Gibson Island

Craig Lussi operates three assisted living group homes for seniors with disabilities in Anne Arundel County, Maryland. He is also a long-time homeowner in a private, gated community on Gibson Island in that county; the Gibson Island Corporation is the homeowners association.

When Lussi moved forward in 2020 with a plan to open the first group home for elderly people with disabilities on Gibson Island, the community immediately expressed their distress to the Corporation, which proposed a “360 degree” strategy to block the project.

The Corporation invoked a restrictive covenant prohibiting the use of Gibson Island homes for business purposes without its approval. Lussi requested a reasonable accommodation. The Corporation demanded several conditions, four of which Lussi viewed as unreasonable.

When no resolution was reached, Lussi filed suit alleging that the Corporation violated the federal and state fair housing laws by refusing to reasonably accommodate his group home. He also claimed retaliation and discrimination.

Finding no direct linkage between Lussi’s project and the provision of an equal housing opportunity for people with disabilities as required for a reasonable accommodation claim, the district court granted summary judgment to the Corporation.

Similarly, the district court found no evidence from which to infer the Corporation’s discriminatory intent or evidence of retaliation. Lussi appealed.

None of the attorneys involved with this matter responded to a request for comment

‘The wrong question’

Communities like Gibson Island “cannot enforce their generally applicable housing policies ‘in a manner that denies people with disabilities access to housing on par with that of those who are not disabled,’” Harris explained.

“Instead, they may be required to make exceptions to accommodate the needs of people with disabilities – including exceptions for group homes that otherwise would be barred by zoning regulations or covenants like Gibson Island’s,” the judge said, citing Oconomowoc Residential Prog. v. City of Milwaukee from the 7th U.S. Circuit Court of Appeals.

Here, Lussi bore the burden of showing that an accommodation was both reasonable and necessary to afford disabled persons an equal opportunity for housing. The district court focused on necessity, which requires a direct linkage between accommodation and housing opportunities.

The district court reasoned that removal of the four disputed conditions on approval of Lussi’s project was not necessary to allow for the use of the proposed group home by future residents with disabilities.

“For instance, the district court found, Lussi’s compliance with the proposed septic condition – annual certifications and daily monitoring – would in no way compromise the enjoyment of his property by a disabled resident, making removal of the condition ‘unnecessary’ as a matter of law,” Harris pointed out, adding that “the district court was asking the wrong question.”

“What matters under the necessity prong is whether a proposed accommodation is necessary to provide equal housing opportunities,” the judge made clear.

Not ‘semantics’

Having found that the district court erred, Harris said the right question was whether an exception to the business-purpose covenant for Lussi’s proposed group home was necessary to provide prospective residents with an equal opportunity to use and enjoy their housing of choice.

“This is not just semantics,” she wrote. “Under the district court’s logic, a community would be free to impose all kinds of burdensome conditions on accommodation approvals even if they have no relationship to the needs of future residents with disabilities, because removing such conditions – say, a condition that a group home’s windows be washed daily – would not be ‘necessary’ for enjoyment of the facility by a disabled resident.”

There was no dispute that some elderly individuals with disabilities need services and support in a group home, or that telling them to live in a different neighborhood was an alternative, and no evidence suggested that such assistance might be found elsewhere on Gibson Island.

“Under these circumstances, the necessity inquiry is straightforward,” Harris said.

“The requested exemption from the business-purpose covenant is ‘necessary’ because without it, Lussi will not be able to operate what would be the only facility that would allow elderly and disabled people an equal opportunity to enjoy the housing of their choice,” she said.

Septic focus

“Whether a proposed accommodation is ‘reasonable’ is a highly fact- and context-specific inquiry,” Harris pointed out. This involves weighing multiple factors, such as the accommodation’s benefits versus burdens to the community, and more efficient alternatives.

And while a reasonable jury may agree that Gibson Island’s septic condition addressed genuine concerns, the judge said one may conclude that its actual purpose was to burden Lussi’s project by making it more expensive.

Rather than find undue burden — and given the parties’ dealings — Harris said “a jury might also question whether these conditions reflect an honest assessment of litigation risk or are part of the Corporation’s ‘360 degree’ strategy to ‘block’ the proposed group home.”

Harris found that neither party was entitled to summary judgment on Lussi’s reasonable accommodation claims because the material factual dispute regarding reasonableness presented a jury question.

Retaliation

Lussi was required to show an adverse action which could dissuade a reasonable person from exercising rights had a causal link to his advocacy of accommodations for disabled persons. The district court found that Lussi failed to show any adverse action.

“But the court failed to give due weight, in this part of its analysis, to the adverseness of the actions it recognized elsewhere: the Corporation’s efforts to have the permit for Lussi’s project revoked and to otherwise delay the opening of the group home,” Harris pointed out.

Nor did the court address whether the Corporation’s refusal to grant the accommodation was itself an adverse action.

“As we have explained already, a jury could credit, but also could question, the Corporation’s stated rationales for refusing to approve Lussi’s project without the four disputed conditions,” the judge said.

Harris said it was important to note how the Corporation’s rationale that many of its conditions were grounded in its litigation history with Lussi “could be understood as implicating protected activity.”

The district court also erred by refusing to consider Lussi’s allegations of personal retaliation against himself and his family as part of the retaliation inquiry due to Lussi’s LLCs being the sole plaintiffs.

“[T]he Supreme Court has deemed it ‘obvious,’ in a similar context, that a reasonable person might be dissuaded from engaging in protected activity by a threat to someone closely related,” the judge said, looking to Thompson v. North American Stainless, LP.

Discrimination

Finally, Harris rejected the district court’s holding that there was no direct or circumstantial evidence from which a reasonable jury could find discriminatory intent behind the Corporation’s refusal to approve Lussi’s accommodation.

A reasonable jury could find that the rationale for denying Lussi’s accommodation was unworthy of credence and infer that both the Corporation and community harbored hostility to housing the disabled and trafficked stereotypes about the difficulties it posed.

Noting the Corporation’s early strategizing to block Lussi’s accommodation, as well as community statements that were negative to persons with disabilities, Harris said “a jury could find that the Corporation acted in response to these community views, so that they may be attributed to the Corporation for these purposes.”