Dussault v. RRE Coach Lantern Holdings

STATE OF MAINE SUPERIOR COURT

CUMBERLAND, ss. CIVIL ACTION

DOCKETNO: CV-10-347

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NICOLE DUSSAULT,

Plaintiff,

v. ORDER

RRE COACH LANTERN

HOLDINGS, LLC

and

RESOURCE REAL ESTATE

MANAGEMENT, Inc.,

Defendant

Defendants RRE Coach Lantern Holdings, LLC and Resource Real Estate

Management, Inc. move jointly for summary judgment upholding their right to

refuse to attach a Section 8 Tenancy Addendum to their lease as landlords.

Plaintiff Nicole Dussault cross-moves for summary judgment declaring that the

defendants unlawfully discriminated against her in violation of the public

assistance provisions of the Maine Human Rights Act, 5 M.R.S. § 4582.

BACKGROUND

I. Housing Choice Voucher Program - Section 8

Under the Housing Choice Voucher Program, commonly known as

Section 8, the United States Department of Housing and Urban Development

("HUD") provides funds to subsidize housing for low-income families and

individuals. 42 U.S.C. § 1437, et seq. Section 8 is administered by State or local

agencies called "public housing authorities" ("PHA"), to which HUD provides

the actual housing assistance funds. 24 C.F.R. § 982.1(a)(1). In a case of tenant-

1

based assistance, like in this case, the individual selects a suitable unit and, if the

unit is acceptable to the PHA, the PHA then enters into a contract with the owner

or landlord to make rent subsidy payments on behalf of the family. Id. §

982.1(a)(2).

Under federal law, [Section 8] is a voluntary program and property

owners will be bound by a contract only if "the owner is willing to

lease the unit under the program." 24 C.F.R. § 982.302(b) (2009).

But "[n]othing in part 982 is intended to pre-empt operation of

[s]tate and local laws that prohibit discrimination against a Section

8 voucher-holder because of status as a Section 8 voucher-holder."

24 C.F.R. § 982.53(d) (2009). Thus, "[t]he Federal statute merely

creates the scheme and sets out the guidelines for the funding and

implementation of the program ... through local housing

authorities. It does not preclude [s]tate regulation." Attorney Gen.

v. Brown, 400 Mass. 826, 511 N.E.2d 1103, 1105 (Mass. 1987).

Edwards v. Hopkins Plaza L.P., 783 N.W.2d 171, 176 (Minn. App. 2010).

As part of the regulatory requirements, any landlord accepting Section 8

housing vouchers must include a BUD-prescribed tenancy addendum to its

standard lease form. 24 C.F.R. § 982.308(b)(2). Coach Lantern asserts that it is

unwilling to attach an Addendum to any of its leases because of the additional

conditions contained within. (Defs.' S.M.F. CJI 24.) By signing the Addendum the

landlord agrees, in part:

• to maintain the unit and premises in accordance with the PHA's Housing

Quality Standards (Pl.'s S.M.F. CJI 17; Decker Aff. CJI 4, Ex. B);

• not to raise the rent during the initial lease term (Decker Aff. CJI 4, Ex. B.);

• to charge no more rent than what HUD determines is "reasonable" or the

"fair market value" for the community or metropolitan area (Defs.' S.M.F.

CJI 17, as qualified by Pl.'s Opp. S.M.F. CJI 17);

2

• not to evict a tenant for the sole reason that PHA did not pay its share of

the contract rent (Defs.' S.M.F. <][ 18, as qualified by Pl.'s Opp. S.M.F. <][ 18;

Pl.'s S.M.F. <][ 19);

• not to evict a tenant who is a victim of domestic violence based on an act

of domestic violence committed against her (Defs.' S.M.F. <][ 19, as qualified

by Pl.'s Opp. S.M.F. <][ 19);

• to open the premises to inspection by a PHA inspector at the beginning of

the lease, upon any complaint by a tenant, and after the landlord has

remedied a problem identified in 'a prior inspection (Defs.' S.M.F. <][ 20);

• to allow PHA to not begin payments until they make an initial inspection

(Pl.'s Opp. S.M.F. <][ 22; Pl.'s S.M.F. <][ 21);

• to notify PHA as least sixty days prior to any rent increase (Defs.' S.M.F. <][

23).

Ms. Dussault asserts that the Addendum does not alter the landlord's

obligations already existing under state law. (Pl.'s Opp. S.M.F. <][ 24_)1

II. Facts Relevant to Ms. Dussault's Claim

On July 14, 2008, Avesta Housing, a non-profit organization that

administers HUD Section 8 housing vouchers as a contract agency for the Maine

State Housing Authority ("MSHA"), issued a Section 8 Housing Choice Voucher

to Ms. Dussault. (Defs.' S.M.F. <][ 4; Pl.'s S.M.F. <][ 2.) On August 5, 2008, Ms.

Dussault called Coach Lantern2 to inquire about renting an apartment in

Scarborough to maintain the special education services that her son received.

1

Ms. Dussault failed to support this statement with a record citation. (See Defs.' Rep.

S.M.F.<[24.) However, this is an issue of law for the court to decide.

2

Resource Real Estate Management, Inc. is an affiliate of Coach Lantern. (Defs.' S.M.F. <[

2.)

3

(Defs.' S.M.F. <JI 5; Pl.'s S.M.F. <JI 3.) The rent for the apartment was within Section

8limits. (Pl.'s S.M.F. <JI 5.) According to Ms. Dussault, an individual at Coach

Lantern told Ms. Dussault that it did not accept Section 8 vouchers. (Defs.'

S.M.F. <JI 6.) Somebody at Coach Lantern also told Ms. Dussault's caseworker,

Christina Griffin ("Ms. Griffin"), that it did not accept Section 8 vouchers. (Defs.'

S.M.F. <JI 7.)

Approximately two weeks later, Ms. Dussault again called Coach Lantern

to inquire about a three-bedroom apartment. (Defs.' S.M.F. <JI 8; Pl.'s S.M.F. <JI 6.)

This time, Ms. Dussault did not tell Coach Lantern that she would be using a

Section 8 voucher. (Defs.' S.M.F. <JI 9; Pl.'s S.M.F. <JI 6.) Ms. Dussault visited the

apartment and filled out an application. (Defs.' S.M.F. <JI<JI 10-11; Pl.'s S.M.F. <JI<JI

7-9.) Thereafter, Ms. Griffin sent a letter to Coach Lantern stating that Ms.

Dussault would be using a Section 8 voucher and urged Coach Lantern to accept

Ms. Dussault as a tenant. (Defs.' S.M.F. <JI 12; Pl.'s S.M.F. <JI 11; Decker Aff. <JI 3,

Ex. A.) Ms. Griffin also forwarded a "landlord packet'' that contained a copy of

the voucher indicating that Coach Lantern would need to sign a lease

addendum. (Defs.' S.M.F. <JI 13; Pl.'s S.M.F. <JI 12; Decker Aff. <JI 3, Ex. A.) Though

willing to rent to Ms. Dussault, Coach Lantern was unwilling to attach a BUD-

prescribed Tenancy Addendum ("Addendum") to its standard lease. (Defs.'

S.M.F. <JI 28; Pl.'s S.M.F. <JI<JI 13-14.)

When Coach Lantern refused to attach the Addendum to Ms. Dussault's

lease, she filed a complaint with the Maine Human Rights Commission

("Commission"). (Defs.' S.M.F. <JI 28; Pl.'s S.M.F. <JI 15.) On April13, 2009, the

Commis~ion unanimously determined that there were reasonable grounds to

believe that unlawful discrimination occurred. (Pl.'s S.M.F. <JI 16.)

4

Ms. Dussault filed a two-count complaint with the court alleging

violations of the Maine Human Rights Act against Coach Lantern and Resource

Real Estate. (Compl. <J[<J[ 27-30.)3 The issue in this case is whether a landlord's

refusal to attach a Section 8 Tenancy Addendum to the landlord's lease

constitutes unlawful discrimination in violation of the public assistance

provisions of the Maine Human Rights Act, 5 M.R.S. § 4582.

DISCUSSION

I. Standard of Review

Summary judgment is appropriate where there are no genuine issues of

material fact and the moving party is entitled to judgment as a matter of law.

M.R. Civ. P. 56( c); see also Levine v. R.B.K. Caly Corp., 2001 ME 77, <J[ 4, 770 A.2d

653. A motion for summary judgment must be supported by citations to record

evidence of a quality that would be admissible at trial. Levine, 2001 ME 77, <J[ 6,

770 A.2d 653 (citing M.R. Civ. P. 56( e)). An issue of "fact exists when there is

sufficient evidence to require a fact-finder to choose between competing versions

of the truth at trial." Inkell v. Livingston, 2005 ME 42, <J[ 4, 869 A.2d 745 (quoting

Lever v. Acadia Hasp. Corp., 2004 ME 35, <J[ 2, 845 A.2d 1178). Any ambiguities

"must be resolved in favor of the non-moving party." Beaulieu v. The Aube Corp.,

2002 ME 79, <J[ 2, 796 A.2d 683 (citing Green v. Cessna Aircraft Co., 673 A.2d 216,

218 (Me. 1996)).

II. The Maine Human Rights Act (MHRA)

The MHRA declares that every individual should have the right "to

secure decent housing in accordance with the individual's ability to pay" as a

3

Ms. Dussault subsequently withdrew her request for injunctive relief. (Defs.' S.M.F. <J[

29' Pl.'s Opp. Mem. at 21.)

5

civil right. 5 M.R.S. § 4581 (2010). The MHRA makes it unlawful "[f]or any

person furnishing rental premises or public accommodations to refuse to rent or

impose different terms of tenancy to any individual who is a recipient of federal,

state or local public assistance, including ... housing subsidies4 primarily

because of the individual's status as recipient .... " 5 M.R.S. § 4582 (2010).

According to the defendants, when read together, the MHRA requires only that

landlords treat low-income individuals and families the same as any other

potential tenant, and not rely on stereotypes about public assistance recipients.

(Defs.' Mem. at 6.)

The '"primary purpose in interpreting a statute is to give effect to the

intent of the Legislature."' Allied Res., Inc. v. Dep't of Pub. Safety, 2010 ME 64, <JI 11,

999 A.2d 940 (quoting Rich v. Dep't of Marine Res., 2010 ME 41, <JI 7, 994 A.2d 815).

In 2007, the Commission led an effort to amend the MHRA to make it unlawful

discrimination to refuse to rent to Section 8 voucher holders because of the

burdens associated with the Section 8 program. See L.D. 685 (123d Legis. 2007).

The Legislature refused to adopt the proposed amendment.

In response to the Legislature's refusal, the Commission stated:

The fact that the Judiciary Committee amended LD 685 to omit the

change to § 4582, however, should not be interpreted to mean that §

4582 does not require landlords to comply with the requirements of

public assistance programs. On the contrary, it is possible that the

Committee felt that the potential! y controversial amendment was

unnecessary in light to the possibility that the requirement was

already in the existing language.

4

Though it is not clear whether the parties disagree on this, the court finds that Section 8

is a "housing subsidy" under the MHRA.

6

Dussault v. RRE Coach Lantern, H08-0612-A, <JI 12. Alternatively, the defendants

argue that the Legislature did not want to amend the law to make participation

in programs such as Section 8 mandatory. (Defs.' Mem. 7.)

The Commission investigates, advises, and enforces the MHRA. 5 M.R.S.

§ 4566; "About Us," Maine Human Rights Commission, available at

http:/ I www.maine.gov I mhrc/ about.html (last visited September 20, 2011).

"[T]he Commission's function is generally that of an investigator and

conciliator." Tomer v. Me. Human Rights Comm'n, 2008 ME 190, <JI 12, 962 A.2d

335. The Commission regularly reviews cases involving tenants and prospective

tenants who allege unlawful housing discrimination on the basis of tenant-based

housing subsidies.

"Considerable deference is given 'to the agency's interpretation of its own

rules, regulations, and procedures, and [we] will not set aside the agency's

findings unless the rule or regulation plainly compels a contrary result."'

Mulready v. Bd. of Real Estate Appraisers, 2009 ME 135, <JI 13, 984 A.2d 1285

(quoting Beauchene v. Dep't of Health & Human Servs., 2009 ME 24, <JI 11,965 A.2d

866 (quotation marks omitted)). The court "will not 'second-guess the agency on

matters falling within its realm of expertise."' Mulready, 2009 ME 135, <JI 13, 984

A.2d 1285 (quoting Wood v. Superintendent of Ins., 638 A.2d 67, 71 (Me. 1994)).

Though the Commission may be entitled to deference, especially given

their undoubted expertise in housing discrimination cases, the Commission's

ruling is not controlling. As discussed below, the court can decide Ms.

Dussault's case on summary judgment despite the Commission's interpretation

of the statute.

7

III. Direct Evidence

The court finds that there is not direct evidence of discrimination, despite

Ms. Dussault's contention otherwise. (Pl.'s Mem. at 10.) Under the mixed-

motive analysis, which the Law Court utilizes for employment discrimination, "a

plaintiff's burden is tempered so that she need prove only that the discriminatory

action was a motivating factor in an adverse employment decision. The

defendant then may 'assert an affirmative defense, bearing the burdens of

production and persuasion that it would have taken the same action in the

absence of the impermissible motivating factor."' Patten v. Wal-Mart Stores E.,

Inc., 300 F.3d 21, 25 (1st Cir. 2002) (quoting Weston-Smith v. Cooley Dickinson

Hosp., 282 F.3d 60, 64 (quotations omitted)); see Doyle v. Dep't of Human Servs.,

2003 ME 61, <JI 14 n.6, 824 A.2d 48.

The defendants contend that they are not treating Ms. Dussault differently

than those who do not receive public assistance. (Defs.' Rep. Mem. at 3.) Since

they are offering Ms. Dussault an apartment at the same terms as other tenants,

they are not discriminating against her on the basis of her status as a recipient of

public assistance. (Id.) Instead, the defendants assert, and Ms. Dussault admits,

that if it were not for the requirement to attach the Addendum the defendant

would have rented Ms. Dussault the apartment, regardless of her status as a

recipient of public assistance. (Defs.' S.M.F. 28; Opp. Defs.' S.M.F. 27.)

Therefore, the court finds that the mixed-motive analysis is not applicable in this

case.

IV. Disparate Treatment

"Federal law guides our construction of the MHRA." Cookson v. Brewer

Sch. Dep't, 2009 ME 57, <JI 14, 974 A.2d 276 (citations omitted). Accordingly, the

8

court will apply the McDonnell Douglas burden-shifting analysis. Id. (citing

McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-805 (1973)); see Doyle, 2003l\1E

61, <]I 14, 824 A.2d 48. The plaintiff has the burden of establishing that (1) she was

on public assistance, (2) that the defendants refused to rent to her, and (3) that

there is a causal link between her status and the defendants' refusal to rent to

her. Cookson, 2009l\1E 57, <]I 14, 974 A.2d 276; McDonnell Douglas, 411 U.S. at 802.

If the tenant meets her burden there is a presumption of unlawful discrimination

and the burden then shifts to the landlord to articulate a legitimate, non-

discriminatory reason for refusing to rent to her. Id. "If the [landlord] produces

such evidence, the presumption of discrimination is rebutted, and the inquiry

shifts to the ultimate burden of persuasion on the issue of intentional

discrimination, which remains at all times with" the tenant. Cookson, 2009 :ME 57,

<]I 14, 974 A.2d 276 (citing St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 507-508

(1993)). "To meet this burden, the [tenant] must demonstrate that the reason

asserted by the [landlord] was a pretext and that the true reason was illegal

discrimination." Id. For the purposes of the instant motion for summary

judgment, the defendants assume that Ms. Dussault can set forth a prima facie

case for unlawful discrimination. The defendants claim, however, that they have

a legitimate, non-discriminatory reason for refusing to rent to Ms. Dussault and

that there is no evidence that those reasons are pre-textual. (Defs.' Mem. at 8.)

The defendants claim that the costs and burdens associated with accepting

Section 8 housing vouchers constitute a legitimate business reason for not renting

to individuals who have their rent subsidized. (Defs.' Mem. at 8.) As outlined

above, the defendants assert that the Addendum imposes upon landlords certain

obligations that are not present under State law, and the Addendum significantly

9

impairs their rights under State law. For example, under the Addendum, the

landlord waives its right to evict a tenant under certain circumstances. Compare

Addendum with 14 M.R.S. § 6002 (2) (landlord may bring a forcible entry and

detainer action if the rent is as little as seven days overdue, as long as it gives the

tenant an opportunity to cure). Additionally, the Addendum further requires

that the landlord notify the PHA at least 60 days prior to any rent increase,

whereas State law requires the landlord to give only 45 days' notice. 14 M.R.S. §

6015 (2010). 0

"Although trial courts should exercise caution in resolving issues of

pretext on summary judgment in ... discrimination cases, the presence of the

issue of motivation or intent does not relieve the plaintiff of her or his burden of

producing evidence sufficient to create a question of fact on that issue." Cookson,

2009 ME 57, 'IT 17, 974 A.2d 276 (internal citations omitted). "One way to meet

this burden is to demonstrate through affirmative evidence 'such weaknesses,

implausibilities, inconsistencies, incoherencies, or contradictions in the

[landlord's] proffered legitimate reasons for its action that a reasonable factfinder

could rationally find them unworthy of credence and ... infer that the [landlord]

did not act for the asserted non-discriminatory reasons."' Id. (quoting Billings,

515 F.3d at 55-56 (quotation marks omitted)).

Ms. Dussault asserts that the defendants are overstating the burdens

associated with participating in the Section 8 housing voucher program.

According to Ms. Dussault, the alleged burdens are not enough to excuse non-

participation. Accord Franklin Tower One v. N.M., 157 N.J. 602, 621, 725 A.2d 1104,

1114 (N.J. 1999) ("Landlords in New Jersey are already subject to numerous

regulations concerning the maintenance of their properties and relations with

10

their tenants."). Ms. Dussault asserts that a landlord's state law rights are

constrained by state laws, local zoning ordinances, and the MHRA. (Pl.'s Opp.

Mem. at 18.) For example, as Ms. Dussault claims, Maine law limits a landlord's

right to evict for nonpayment of rent. Ms. Dussault equates the Addendum

restrictions to the affirmative defense available for tenants who withhold rent for

habitability problems. See 14 M.R.S. § 6002(3) (2010) (allowing a tenant to bring

an affirmative defense of breach of warranty of habitability if a landlord brings

an action to terminate the rental agreement, and the landlord has actual or

constructive knowledge of the alleged violation).

In Maine, few cases have addressed public assistance discrimination. In

Catir v. Commissioner of the Department of Human Resources, a nursing home

decided to withdraw from the Medicaid system. 543 A.2d 356, 357 (Me. 1988).

It notified its residents on Medicaid that they would have to pay the higher

private rate. Id. The plaintiffs, former Medicaid patients, brought a suit claiming

that the MHRA prohibits the nursing home from withdrawing from the

Medicaid program. Id. The Law Court disagreed. Id. at 357-58. The Court

noted that the MHRA makes it unlawful discrimination to "refuse[] to rent or

impose[] different terms of tenancy on Medicaid recipients." Id. (quotations

omitted). However, the plaintiffs in Catir could only "establish that the nursing

home refused to accept the lower Medicaid payment and subjected the recipients

to the same terms of tenancy offered to any other individual." Id. at 358. The

Court noted, "[t]he equality of housing access secured by the Maine Human

Rights Act is premised upon the assumption that the persons seeking the

housing have the ability to pay. Id. (citing 5 M.R.S. § 4581 (1979)). The

defendants assert that Catir is squarely on point here. Like in Catir, the

11

defendants will not accept Section 8 housing vouchers and will subject Section 8

recipients to the same terms of tenancy as other residents.

The MHRA states that it is unlawful discrimination to refuse to rent to a

person primarily because of his or her status as a recipient of housing assistance,

as opposed to solely because of his or her status. The statements of material facts

clearly show that the defendants refused to rent to Ms. Dussault primarily

because of the burdens associated with the Section 8 program instead of her

status as a Section 8 recipient. Ms. Dussault admitted that the defendants

contacted Avesta to see whether they could rent Ms. Dussault the apartment

without attaching the Addendum to her lease, and they would have rented the

apartment to Ms. Dussault if it were not for the necessity of the Addendum.

(Defs.' S.M.F. <J[<J[ 26, 28; Opp. Defs.' S.M.F. <J[<J[ 25, 27.) The defendants asserted

that they were burdened by the requirements in the Addendum and those

burdens gave them a legitimate business reason to reject any prospective tenant

who required the Addendum. Although Ms. Dussault argues that not all of the

burdens are as great as the defendants allege they are still sufficient to justify a

business necessity. Accordingly, the court cannot deny the defendants' motion

for summary judgment on this record.

v. Disparate Impact 0

Under the disparate impact burden-shifting framework, to make her

prima facie case, the plaintiff must identify a facially neutral practice that in fact

affects one group more harshly than another. Me. Human Rights Com. v. City of

Auburn, 408 A.2d 1253, 1264 (Me. 1979) (citing Albemarle Paper Co. v. Moody, 422

U.S. 405, 426 (1975)). To counter the plaintiff's prima facie case, the defendants

must establish that their process is justified by a business necessity, and not

12

merely a business convenience. City of Auburn, 408 A.2d at 1265 (citing Griggs v.

Duke Power Co., 401 U.S. 424, 431 (1971)). If there is evidence that the landlord's

selection process is justified by a business necessity, the last step is for the

plaintiff to show that the landlord's justification is a pretext or that there are

alternative methods for selecting tenants that has a less discriminatory impact.

City of Auburn, 408 A.2d at 1268 (citing Albemarle Paper Co., 422 U.S. at 425). Once

again, the defendants assume, for the purposes of summary judgment, that Ms.

Dussault can make a prima facie case of unlawful discrimination.

As above, the defendants assert that the burdens of participating in the

Section 8 voucher program constitute a business necessity, not a mere business

convenience. 5 Also, as above, the defendants' proffered reason for refusing to

attach the Addendum is not disputed on the summary judgment record.

Therefore, summary judgment in the defendant's favor is appropriate at this

time.

The entry is: The defendant's motion for summary judg

complaint is granted.

DATE:~ 1, ~oil

Rol dA. Cole

STATEOFM Ju tice, Superior Court

Cumberland ss Cle~klt;!E

' · r ~Office

NO_V_Og 2011

______

5

The Second, Six~(S~t~.l£cuits have all recognized that the burdens of

participating in the 'S~~dr{ig:fl~oucher program are legitimate reasons for the

landlord not to participate, as evidenced by the voluntary nature of the program under

Federal law. See Salute v. Stratford Greens Garden Apartments, 136 F.3d 293, 300-301 (2d

Cir. 1988); Knapp v. Eagle Prop. Mgmt. Corp., 54 F.3d 1272, 1280 (7th Cir. 1995); Graoch

Assoc. #33 v. Louisville I Jefferson Cnty. Metro Human Relations Comm'n, 508 F.3d 366, 372

(6th Cir. 2007). These cases, however, address the Federal Fair Housing Act, which does

not protect recipients of public assistance or prevent discrimination based on a person's

lawful source of income.

0

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NICOLE DUSSAULT VS RRE COACH LANTERN HOLDINGS ET AL

UTN:AOCSsr -2010-0065749 CASE #:PORSC-CV-2010-00347

01 0000002831 ENDER PATRICIA

39 GREEN STREET PO BOX 2429 AUGUSTA ME 04338-2429

F NICOLE DUSSAULT PL RTND 06/29/2010

~----------~~--~~~~~

02 0000003559 ~L~E~P~A~GE~,~MAR~~G~AR~E~T~--------------------------------------

MERRILLS WHARF 254 COMMERCIAL ST PORTLAND ME 04101

F RESOURCE REAL ESTATE MANAGEMENT INC

--~~~~~----=---~~=--=~-=~-----

DEF RTND 06/29/2010

F RRE COACH LANTERN HOLDINGS DEF RTND 06/29/2010

------------------------~-------------

03 0000009163 ~M~C~G~OV~E~RN~~,~KA~T~H~E~R~I~N~E~-----------------------------------

88 FEDERAL ST PO BOX 547 PORTLAND ME 04112

F ~N=I=C~OL=E~D~U~S~S~A~U~L~T~----------------------- _P=L__________R~T~N_D____0~6~/_2_9_/~2_0_1~0