Mabry et al v. City of East Chicago et al

Filing 153

AMENDED REPORT AND RECOMMENDATIONS re 129 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by East Chicago Housing Authority, Tia Cauley, City of East Chicago, Anthony Copeland. The Court hereby RECOMMENDS that the District Cou rt GRANT Defendants' Motion to Dismiss [DE 129] and dismiss Counts III, IV, V, and VII and dismiss counts VIIi and IX insofar as they assert claims for the personal liability of Anthony Copeland and Tia Cauley for the Fair Housing Act disparate impact claims, the claim for violation of Section 1982, and the claim for violation of due process. Objections to R&R within 14 days. Signed by Magistrate Judge John E Martin on 10/20/2021. (jdb)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
KENDRA MABRY, et al.,
Plaintiffs,
v.
CITY OF EAST CHICAGO, et al.,
Defendants.

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CAUSE NO.: 2:16-CV-402-JVB-JEM

AMENDED FINDINGS, REPORT AND RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE PURSUANT TO
28 U.S.C. § 636(b)(1)(B) & (C)
This matter is before the Court on Defendants’ Motion to Dismiss [DE 129], filed by
Defendants City of East Chicago, Anthony Copeland, East Chicago Housing Authority and Tia
Cauley on May 26, 2021. Plaintiffs filed a response on June 28, 2021, and on July 19, 2021,
Defendants filed a reply. On August 5, 2021, the Court held a hearing and granted Plaintiffs leave
to file a surreply. Plaintiffs filed that surreply on August 13, 2021, and on August 26, 2021,
Defendants filed a response to the surreply.
On May 27, 2021, District Court Judge Joseph Van Bokkelen entered an Order [DE 132]
referring Defendants’ Motion to Dismiss to the undersigned Magistrate Judge for a report and
recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). This Report constitutes the undersigned
Magistrate Judge’s combined proposed findings and recommendations pursuant to 28 U.S.C. §
636(b)(1)(C).
For the following reasons, the Court recommends that the District Court grant the motion
to dismiss.

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I.

Background
Plaintiffs, residents of the East Chicago Housing Authority (“ECHA”) affordable housing

development known as the West Calumet Housing Complex (“Complex”) in East Chicago,
Indiana, filed a Complaint on September 15, 2016. It included claims against Defendants for
violations of the Fair Housing Act (“FHA”), the Fourteenth Amendment right to due process of
law, the Fourteenth Amendment right to equal protection, and of Plaintiffs’ property rights under
the Civil Rights Act (42 U.S.C. § 1982), all arising out of the eviction and closure of the Complex
in the summer of 2016. Plaintiffs allege that Defendants knew or should have known that the
Complex was contaminated with toxic substances, including arsenic and lead, but hid the extent
of the contamination from the Complex’s residents. In June or July of 2016, tenants received a
directive signed by East Chicago Mayor Anthony Copeland stating that the City of East Chicago
and ECHA had recently been informed of the contamination and that the Complex residents
needed to relocate quickly. They allege that Tia Cauley, the director of ECHA, was involved in
the decision to issue the directive.
Defendants all filed motions to dismiss the original Complaint, and a number of claims
were dismissed, with leave to file motions to amend in part. On March 24, 2021, Plaintiffs’ motion
to amend was granted in part, and an Amended Complaint was filed on April 21, 2021. Defendants
now move to dismiss several of the claims in the Amended Complaint.
II.

Standard of Review
To survive a Rule12(b)(6) motion to dismiss for failure to state a claim, the complaint must

first provide “a short and plain statement of the claim showing that the pleader is entitled to relief,”
Fed. R. Civ. P. 8(a)(2), such that the defendant is given “fair notice of what the . . . claim is and
the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)

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(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Ashcroft v. Iqbal, 556 U.S. 662, 67778 (2009). Second, the “complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at
570); see also Tamayo v. Blagojevich, 526 F.3d 1074, 1082 (7th Cir. 2008). In ruling on a motion
to dismiss, a court accepts as true all of the well-pleaded facts alleged by the plaintiff and all
reasonable inferences that can be drawn therefrom. See Twombly, 550 U.S. at 555-56; Tamayo,
526 F.3d at 1082.
III.

Analysis
Defendants agree that Plaintiffs have adequately alleged a claim for disparate treatment

under the Fair Housing Act and an equal protection claim under the 14th Amendment. They argue
that the disparate impact claim under the FHA in Counts III and IV fails because it is based on an
alleged one-time decision to close the Complex rather than on a broader policy, that the civil rights
claim in Count V fails because the Complex was demolished and no housing remained available
after it was denied to Plaintiffs, and that the due process claim in Count VII fails because a state
court breach of contract claim provides sufficient process for their claim of alleged breach of lease.
Defendants also argue that the related individual claims against Defendants Cauley and Copeland
should also be dismissed.
A.

Disparate Impact
Defendants argue that Plaintiffs’ claim for disparate impact under the Fair Housing Act

fails because it is based on a one-time decision to close the Complex rather than a broader policy.
The Fair Housing Act makes it unlawful to refuse to rent to, to “otherwise make unavailable or
deny,” and “[t]o discriminate against any person in the terms, conditions, or privileges of sale or
rental of a dwelling, or in the provision of services or facilities in connection therewith because of

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race, color, religion, sex, familial status, or national origin.” 42 U.S.C. § 3604(a), (b). “A violation
of the FHA can be proven against a city or other locality by demonstrating that a city policy or
practice either has a discriminatory intent or, under some circumstances, a discriminatory effect,
or disparate impact” City of Joliet v. Mid-City Nat’l Bank of Chi., No. 05 CV 6746, 2014 WL
4667254, at *22 (N.D. Ill. Sept. 17, 2014), aff’d sub nom. City of Joliet, Ill. v. New W., L.P., 825
F.3d 827 (7th Cir. 2016).
In this case, Plaintiffs have sufficiently alleged that the closure of the Complex had a
discriminatory effect. Defendants now argue that Plaintiffs’ disparate impact claim fails because
they have not alleged a locality policy or policies caused the discriminatory effect, since the onetime decision to close the Complex is not a policy. In particular, Defendants argue that there is no
zoning law or ordinance alleged to be responsible for the harm in this case, but that tenants were
displaced from the Complex as a result of a single decision. Plaintiffs argue that the Complaint
includes allegations of a scheme that includes building the Complex on contaminated land, failing
to warn occupants of the contamination, and then evicting Plaintiffs to make the land more
profitable. However, a multi-decade scheme involving a series of decisions by many different
actors is not the sort of zoning law or housing restriction the FHA is intended to address.
“[A] disparate-impact claim that relies on a statistical disparity must fail if the plaintiff
cannot point to a defendant’s policy or policies causing that disparity.” Texas Dep’t of Hous. &
Cmty. Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519, 542, 135 S. Ct. 2507, 2523, 192
L. Ed. 2d 514 (2015). As the Supreme Court explained, “[t]he FHA . . . was enacted to eradicate
discriminatory practices within a sector of our Nation’s economy. These unlawful practices include
zoning laws and other housing restrictions that function unfairly to exclude minorities from certain
neighborhoods without any sufficient justification.” Id. at 539. Accordingly, “[d]isparate-impact

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analysis looks at the effects of policies, not one-off decisions.” City of Joliet, Ill. v. New W., L.P.,
825 F.3d 827, 830 (7th Cir. 2016) (finding no disparate impact because “condemnation of
Evergreen Terrace is a specific decision, not part of a policy to close minority housing in Joliet”);
see also Texas Dep’t of Hous., 576 U.S. at 543, 544 (“For instance, a plaintiff challenging the
decision of a private developer to construct a new building in one location rather than another will
not easily be able to show this is a policy causing a disparate impact because such a one-time
decision may not be a policy at all” and “as to governmental entities, they must not be prevented
from achieving legitimate objectives, such as ensuring compliance with health and safety codes.”).
Defendants argue that the decision to close the Complex was a one-time decision, not a
policy of closing housing for members of protected classes. Plaintiffs have alleged that they were
treated badly by a variety of different actors, apparently motivated by greed and either racial
animus or lack of concern that their actions had a disproportionate negative impact on members of
protected classes. However, the Amended Complaint does not point to a specific policy or policies
causing the discriminatory effect. Cf. Cty. of Cook, Ill. v. Wells Fargo & Co., 314 F. Supp. 3d 975,
992 (N.D. Ill. 2018) (finding claim for disparate impact sufficiently alleged where “[f]irst . . . the
County identifies a set of related statistical disparities . . and [s]econd, . . . the County identifies a
policy—Wells Fargo’s equity-stripping practice—to which it attributes the alleged statistical
disparity”). Furthermore, to the extent that Plaintiffs are arguing that there was a policy of allowing
them to live on contaminated land, that is not a claim for deprivation of housing. Plaintiffs have
only identified individual decisions, not a policy or policies to which they attribute the statistical
disparity, and have therefore failed to state a claim for disparate impact under the FHA.
Accordingly, the Court recommends that the claims for disparate impact under the Fair Housing
Act in Counts III and IV be dismissed.

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B.

Section 1982
Defendants argue that Plaintiffs fail to state a claim for housing discrimination under the

Civil Rights Act because the Complex was closed, making it unavailable to anyone for housing.
The Civil Rights Act provides, “All citizens of the United States shall have the same right, in every
State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold,
and convey real and personal property.” 42 U.S.C. § 1982. “To state a claim under § 1982,
plaintiffs must allege that the defendant[s] had a racial animus, intended to discriminate against
the plaintiff[s], and deprived the plaintiff[s] of protected rights because of the plaintiff[s’] race.”
Whisby-Myers v. Keikenapp, 293 F. Supp. 2d 845, 850 (N.D. Ill. 2003) (citations omitted).
Defendants argue that the Section 1982 claim consists of bare conclusions that do not meet
the pleading requirements, and that read in the context of the Amended Complaint, the claim fails
because housing or rental opportunities must remain available and offered to others in order for
there to be a Section 1982 violation. See Phillips v. Hunter Trails Cmty. Ass’n, 685 F.2d 184, 190
(7th Cir. 1982) (“To make out their prima facie case under the Fair Housing Act, they had only to
show that they were black, that they applied for and were qualified to buy the Broderick house,
that they were rejected, and that the Broderick house remained on the market.”) Plaintiffs argue
that there was a period of time during which housing in the Complex remained available to others
after Plaintiffs were evicted and before the Complex was demolished. However, the Amended
Complaint specifically alleges that the Civil Rights Act was violated because “[Defendants] did
not invite White citizens to lease and enjoy defective, substandard and dangerous housing and then
evict them under pretext.” ¶ 135. Because the housing was not available to anyone after all of the
tenants were evicted, Plaintiffs have not stated a claim for violation of the Civil Rights Act, and
the Court recommends that Count V be dismissed.

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C.

Due Process
Defendants argue that Plaintiffs’ due process claim is based on an alleged breach of lease,

and that because there is a state law cause of action they have not suffered any lack of sufficient
process. Plaintiffs allege in Count VII that they were ordered to leave their homes without due
process, depriving them of property rights without notice and the opportunity to be heard.
Defendants do not dispute that Plaintiffs had a property interest in the Complex because of their
leases, but argue that Plaintiffs can obtain the process they are due through a state law action.
Plaintiffs argue that a judgment of eviction was required but was not obtained and that Plaintiffs
have therefore not had the opportunity to be heard. District Court Judge James Moody addressed
a similar due process claim in another case involving the Complex closure and concluded: “Any
process to which [the displaced tenants] were due is adequately served by a state-law breach of
contract claim.” Walker v. E I Du Pont De Nemours & Co., No. 2:16 CV 367, 2018 WL 6198447,
at *4 (N.D. Ind. Nov. 27, 2018) (citing Lafayette Linear v. Vill. of Univ. Park, Ill., 887 F.3d 842,
844 (7th Cir. 2018); Kay v. Bd. of Educ. of City of Chi., 547 F.3d 736, 739 (7th Cir. 2008); Ind
Land Co. v. City of Greenwood, 378 F.3d 705, 710 (7th Cir. 2004)).
Indeed, “for someone who relies on a property interest created by a contract with a public
body, the process due when the government arguably has broken its promise is the opportunity to
seek damages from a state court.” Lafayette Linear, 887 F.3d at 844; see also Taake v. Cty. of
Monroe, 530 F.3d 538, 542-43 (7th Cir. 2008) (“When a state actor breaches a contract it has with
a private citizen, and the subject matter of that contract does not implicate fundamental liberty or
property interests, the state acts just like any other contracting private citizen, the proper tribunal
to adjudicate issues arising from the contract (or alleged contract) is a state court, because contract
law is a creature of state law . . . As for procedural due process, the Fourteenth Amendment's Due

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Process Clause affords state citizens with the right to notice and an opportunity to be heard before
being deprived of ‘property’ as defined by state law. Taake used the words ‘procedural due
process’ in his complaint, but the remedies he seeks belie any suggestion that Taake is interested
in notice and a hearing on the County’s decision not to sell him the land . . . Taake wanted the
land—not a hearing at which the County would give Taake an opportunity to contest the County's
decision not to sell him the land.”); Khan v. Bland, 630 F.3d 519, 531–32 (7th Cir. 2010) (“Where
a postdeprivation hearing not only is feasible but will give the deprived individual a completely
adequate remedy due process does not necessarily require a predeprivation hearing.”) (internal
quotation marks omitted) (quoting Chi. United Indus., Ltd. v. City of Chi., 445 F.3d 940, 944 (7th
Cir.2006)) (citing Ellis v. Sheahan, 412 F.3d 754, 758 (7th Cir.2005); Indiana Land Co. v. City of
Greenwood, 378 F.3d 705, 710 (7th Cir.2004)); Goros v. Cty. of Cook, 489 F.3d 857, 860 (7th Cir.
2007) (§ 1983 may not be used to determine whether some statute or contract creates a property
interest in the abstract; unless the plaintiff maintains that the state actor had to offer a hearing to
resolve some contested issue of fact, the dispute belongs in state court under state law.”). In short,
like the plaintiffs in Taake and Walker, in this case “plaintiffs do not want process . . . They do not
allege that they were entitled to a hearing to resolve a contested issue of fact” prior to the Complex
being closed for environmental contamination. Walker, 2018 WL 6198447, at *4. The Court
recommends that Count VII, Plaintiffs’ due process claim, be dismissed, because process is still
available to Plaintiffs through a state court action.
D.

Individual Defendants
Defendants also request that the claims for Anthony Copeland’s and Tia Cauley’s personal

liability be dismissed insofar as they are based on the claims described above. Because Plaintiffs’
claims for disparate impact under the Fair Housing Act, for violation of Section 1982, and for

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violation of due process fail for the reasons described above, the Court recommends that the claims
for personal liability against the individual defendants based on those claims also be dismissed.
IV.

Conclusion
For the foregoing reasons, the Court hereby RECOMMENDS that the District Court

GRANT Defendants’ Motion to Dismiss [DE 129] and dismiss Counts III, IV, V, and VII and
dismiss counts VIIi and IX insofar as they assert claims for the personal liability of Anthony
Copeland and Tia Cauley for the Fair Housing Act disparate impact claims, the claim for violation
of Section 1982, and the claim for violation of due process.
This Report and Recommendation is submitted pursuant to 28 U.S.C. § 636(b)(1)(C).
Pursuant to 28 U.S.C. § 636(b)(1), the parties shall have fourteen (14) days after being served with
a copy of this Recommendation to file written objections thereto with the Clerk of Court. The
failure to file a timely objection will result in waiver of the right to challenge this Recommendation
before either the District Court or the Court of Appeals. Willis v. Caterpillar, Inc., 199 F.3d 902,
904 (7th Cir. 1999); Hunger v. Leininger, 15 F.3d 664, 668 (7th Cir. 1994); The Provident Bank
v. Manor Steel Corp., 882 F.2d 258, 260-261 (7th Cir. 1989); Lebovitz v. Miller, 856 F.2d 902,
905 n.2 (7th Cir. 1988).
SO ORDERED this 20th day of October, 2021.
s/ John E. Martin_____________________
MAGISTRATE JUDGE JOHN E. MARTIN
UNITED STATES DISTRICT COURT
cc:

All counsel of record

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