A brand new decision from Northern California, Hintz v. Chase, 17-CV-02198-JCS, 2017 WL 3421979 (N.D. Cal. Aug. 9, 2017) reminds both property owners and sales or leasing agents that no one can escape responsibility for making the right decision in cases under the Fair Housing Act. This is an especially important reminder for those in the market for single family residences unacquainted with the subtleties of disability discrimination and the notion of reasonable accommodation and modification.
The plaintiff in Hintz was a disabled individual who wanted to keep her service dog in a rental house. The owners where a couple who had apparently moved but decided to keep the house as an investment. The defendants were Sothby’s, which specializes in high end rentals and sales, along with the individual employee responsible for this particular account. When the plaintiff was in the process of renting the house the service dog issue came up. The agent passed the request along to the owner, who said “no.” The leasing agent then passed this bad news on to the tenant, who naturally sued.
Sothby’s and the agent had a simple defense. They were just the messenger. The owner did the discriminating, and Sothby’s had no power to do anything but pass along the message. The court did not agree. Citing other cases with similar situations it held that a leasing agent can be just as liable as the owner for an FHA violation. The court quoted an earlier case repeating a standard legal principle: “an agent who assists his principal in committing a tort is himself liable as a joint tortfeasor.”* The court rejected the claim that merely writing a note passing along the information from the owner was not discriminatory. This particular decision came early in the case on a motion to dismiss, and at that point in a lawsuit the plaintiff only has to allege a plausible claim, not prove the claim is true.
The court’s refusal to dismiss the case was, as a practical matter, the kiss of death for Sothby’s. Early dismissal is the one way to end a lawsuit before the legal fees become unacceptably high in a single property case like this. I don’t know if Sothby’s will settle, and of course they can still win, but the cost of winning is likely to exceed the cost of settlement. This is one reason leasing agents must be careful to avoid anything that looks like discrimination – close calls are likely losses.
Another reason is the owner may not be in the case at all. For a plaintiff with a choice the leasing agent is likely to be local and more likely to have money than the owner. The owner may also be able to assert the “Mrs. Murphy” defense in 42 U.S.C. Section 3603(b)(1). This provision exempts small property owners from most FHA claims.
The agent in case like this may feel he or she has no choice, but there are alternatives to getting sued. The owner makes the decisions in the end, but part of the agent’s job is to help the owner understand the law. It seems that in this case the agent was too willing to pass along a wrong response to the plaintiff’s request. Explaining why “no” is not an acceptable answer helps both the agent and the owner avoid liability.** The agent also has the choice of resigning rather than aiding in the discriminatory conduct. Giving up a commission is hard, but not as hard as paying a lawyer to defend an FHA lawsuit.
Owners also need to understand that they will, in every case, be responsible for the misconduct of their agents, and that in most cases they are not entitled to indemnity for that misconduct. Hiring the right agent and confirming that the agent has an up-to-date knowledge of the FHA is critical to avoiding liability for discrimination that occurs because of ignorance. Under the FHA, every participant in a decision concerning disabled tenants is likely to held liable, so owners and agents need to be careful.
*A “tort” for the non-lawyers is a legal wrong of any kind that causes some injury. Tort law goes back hundreds of years, and federal courts have compared discrimination to these holder kinds of wrongs.
** The agent has to know when “no” is the wrong answer, of course. Most states require FHA training as a condition to getting a real estate license, but in the area of disability rights the law is more complex than the standard training may recognize.