FAIR HOUSING CENTER OF CENTRAL INDIANA et al v. GRANDVILLE COOPERATIVE INC. et al
ORDER on 72 Motion for Judgment on the Pleadings. The Court GRANTS Defendants' Second Motion for Judgment on the Pleadings pursuant to Rule 12(c) with respect to Plaintiffs' claim for negligence in the Amended Complaint and DENIES the Motion to Dismiss with respect to all other claims. Accordingly, Plaintiffs' claim for negligence is DISMISSED WITH PREJUDICE. (See Order.) Signed by Judge Larry J. McKinney on 1/9/2017. (LDH)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
FAIR HOUSING CENTER OF CENTRAL
INDIANA, et al.,
GRANDVILLE COOPERATIVE INC.,
ORDER ON DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
This matter comes before the Court on Defendants’, Grandville Cooperative Inc.
(“Grandville”), Karen Mitchell, and Kirkpatrick Management Company, Inc. (“Kirkpatrick”)
(collectively “Defendants”), Second Motion for Judgment on the Pleadings (“Motion”)
pursuant to Federal Rule of Civil Procedure 12(c) (“Rule 12(c)”) (Dkt. 72) on Plaintiffs’,
Fair Housing Center of Central Indiana (“Fair Housing Center”), Virginia Morton, Sharna
McFarland, and Lindsay Adams (collectively “Plaintiffs”), Third Amended Complaint
The Amended Complaint alleges that the Defendants (1)
committed discriminatory housing practices in violation of both the Fair Housing Act
(“FHA”), 42 U.S.C § 3601, et seq., and the Indiana Fair Housing Act (“IFHA”), Ind. Code
§ 22-9.5; (2) discriminated against the Plaintiffs in the operation of Grandville in violation
of the Rehabilitation Act, 29 U.S.C. § 794; and (3) committed negligence by failing to
adequately train, monitor, and supervise employees to ensure compliance with the FHA,
IFHA, and Rehabilitation Act. 1 Dkt. 62. For the reasons set forth below, the Court
GRANTS IN PART AND DENIES IN PART Defendants’ Motion.
A. GRANDVILLE COOPERATIVE
Grandville is a 156-unit housing complex located in Indianapolis, Indiana. Id., ¶
16. It receives federal housing funds as well as financing and was constructed using the
United States Department of Housing and Urban Development (“HUD”) Section 236
Id., ¶ 17.
Grandville has a Section 8 Project-Based Rental
Assistance contract, which it utilizes to make rent affordable to lower income tenants. Id.
Grandville is a cooperative corporation property, which provides each member of
the cooperative one share and one vote in the cooperative. Id., ¶ 18. The cooperative
holds title to the property. Id. Grandville members elect a Board of Directors that
establishes policies, sets forth rules, and determines how money is spent. Id., ¶ 19.
Prospective residents must meet the standards set forth by the Grandville Board of
Directors. Id., ¶ 20.
Kirkpatrick is a property management company in Indianapolis.
Id., ¶ 21.
Kirkpatrick provides services to Grandville and is identified as the property manager on
Grandville’s materials. Id., ¶ 22. Kirkpatrick has provided onsite staff to direct the
management and direction of Grandville. Id. Kirkpatrick is responsible for ensuring that
Grandville’s board and staff act in compliance with fair housing laws. Id., ¶ 23. Kirkpatrick
also provides guidance for screening and selecting prospective residents, including the
The claims brought under the Rehabilitation Act and for negligence are only alleged
against Kirkpatrick and Grandville. Dkt. 62, ¶¶ 86-87, 90-91.
creation of forms used by Grandville.
Id., ¶ 24.
Kirkpatrick’s name is prominently
displayed on a variety of Grandville materials, including Grandville’s website. Id.
B. SHARNA MCFARLAND AND VIRGINIA MORTON
Morton is quadriplegic. Id., ¶ 26. Morton relies on her daughter, McFarland, as
well as a part-time at-home nurse for assistance. Id., ¶ 27. In December 2014, McFarland
visited the Grandville front office and expressed an interest in living there. Id., ¶ 28.
Specifically, McFarland sought a two-story townhouse, with three bedrooms upstairs and
the living space downstairs, including a half bathroom, kitchen, dining room, and living
room. Id., ¶ 29. McFarland and her two children intended to use the upstairs bedrooms
while Morton planned on staying in the downstairs living room because she is largely
confined to a hospital bed due to her paralysis. Id. During the visit in December 2014,
McFarland was informed that she needed to fill out an application and pay $20.00 to
secure a spot on the waitlist, which she did. Id., ¶ 30.
Several months later, Grandville inquired as to whether McFarland was still
interested in a residence and she responded that she was.
Id., ¶ 31. McFarland visited
Grandville once more and asked if Grandville required Morton to fill out a separate
application. Id. ¶ 32. Camille Mitchell, one of Karen Mitchell’s daughters who works as
a leasing agent for Grandville, informed McFarland that she needed to fill out a separate
application on Morton’s behalf and submit another $20.00, which she did. Id. A few
weeks later, McFarland received a letter from Grandville that stated: “This Letter is to
notify you that Grandville Cooperatives’ Board of Directors has scheduled a mandatory
New Member Orientation, time listed below.” Id., ¶ 33.
On August 5, 2015, McFarland attended the orientation. Id., ¶ 36. Karen Mitchell
and two other board members were also in attendance. Id., ¶ 37. During the meeting,
McFarland mentioned that Morton could not climb stairs. Id., ¶ 38. McFarland was then
asked why and she explained that Morton was quadriplegic. Id. The directors then asked
several questions about Morton’s disability, including how Morton became quadriplegic,
how long she had quadriplegia, and who takes care of her. Id. Karen Mitchell then told
McFarland that this was not a “New Member Orientation” but a “Pre-Interview” meeting.
Id. ¶ 39.
On the same day as the “New Member Orientation Meeting,” Karen Mitchell circled
“rejected” on the “Grandville Coop Application Cover Page” for Morton and McFarland’s
application. Id. ¶ 74. The document provides check boxes corresponding to various
reasons for denying an application. Id. ¶ 75. Neither the box for “We are not accepting
applications for the unit size your household requires” nor the box for “You have provided
insufficient or inaccurate information on your application” is checked. Id. The form does
not state why Morton and McFarland’s application was rejected. Id.
A few days after the meeting, McFarland received a letter from Grandville dated
August 5, 2015, the same day as the meeting. Id. ¶ 40. The letter was signed by Camille
Mitchell and identified Camille as “Office Staff, Property Manager / Agent for Owner.” Id.
The letter read: “We are sorry to let you know that we must reject your application. At this
time, Grandville Cooperative is not handicap accessible and it will be a liability to offer
you a unit that is not accommodating to everyone in the household.” Id.
Karen Mitchell discussed the rejection of McFarland and Morton’s applications with
her daughter Tia Mitchell. Id. ¶¶ 63, 65. Karen Mitchell told Tia that she rejected
McFarland and Morton’s applications because Morton needed a hospital bed in the living
room, which she believed was “tacky.” Id. ¶¶ 66, 67.
Karen Mitchell also discussed McFarland and Morton’s application with Bill Kersey,
a maintenance employee and resident of Grandville. Id. ¶¶ 69, 70. Mitchell inquired with
Kersey as to what would be required for a quadriplegic person to move in. Id. ¶ 72. He
believed they might need to widen doorways or install a ramp, to which Mitchell
responded, “no, that’s not going to work” and also stated that “with her living downstairs
in the living room and her daughter upstairs, we don’t want that around here.” Id. ¶¶ 71,
C. THE FAIR HOUSING CENTER OF CENTRAL INDIANA
After receiving the rejection letter, McFarland contacted the Fair Housing Center.
Id. ¶ 44. The Fair Housing Center is a private, non-profit corporation that seeks to ensure
equal hosing opportunities by eliminating housing discrimination.
Id. ¶ 6.
interviewing McFarland, the Fair Housing Center sent a letter to Grandville indicating that
it would be investigating McFarland’s allegations. Id. ¶ 45.
During its investigation, the Fair Housing Center interviewed two dozen Grandville
residents, twenty of whom reported discrimination against families with children. Id. ¶ 48.
Fourteen residents reported that children are not allowed to play on the grass, fourteen
other residents reported that children are not allowed to play out in front of residences,
and six residents reported that Karen Mitchell would yell and even swear at children
whenever she thought the children were violating the rules. Id. ¶, 49. Bill Kersey also
reported seeing Mitchell yell at children approximately six times, and hearing her swear
at children on a few occasions. Id. ¶ 73.
The Fair Housing Center obtained various materials from Grandville residents that
set forth Grandville’s rules restricting children’s use of common areas (“Rules”). Id. ¶ 50.
The Rules stated that (1) children could not play in front of the residences (“play-in-front
rule”), (2) children under the age of 10 are not to be outside on the grounds without any
supervision (“supervision rule”), and (3) no children should be in the common areas after
9:00 p.m. (“curfew rule”). Id. ¶¶, 50, 51; Dkts. 36-6, 36-7, 36-8.
D. LINDSAY ADAMS
Adams is one of the Grandville residents who reported the Rules to the Fair
Housing Center. Id. ¶ 54. Adams has lived at Grandville with her young children since
2013. Id. She has repeated received notices from Grandville that contain the three Rules
regarding children. Id. ¶ 55. The Rules have been enforced against both Adams and her
children. Id. ¶¶ 58, 59. Adams has also received multiple notices, often threatening
eviction, which informed her that she or her children have violated the Rules. Id. ¶ 59.
One notice from June 20, 2014, informed Adams about recent violations to the Rules
about children. Id. ¶ 76. The notice’s purpose was “to serve as a reminder and warning
to those members it applies to, if there are continued complaints of unsupervised children
then individual households will receive a violation notice. Any violation can be cause for
termination of membership.” Id. Because of this notice, and other notices threatening
eviction, Adams stopped allowing her children to play outside. Id. ¶ 59.
Adams believes the Rules are unreasonable, particularly with respect to the playin-front rule, denying children a perfect place to play. Id. ¶¶ 56, 57.
Defendants have moved, pursuant to Rule 12(c), to dismiss the allegations set
forth in Plaintiffs’ Amended Complaint. Dkt. 72. Specifically, Defendants argue that the
Plaintiffs have failed to state a valid claim: (1) for negligence; (2) against Mitchell in her
individual capacity; (3) for familial status discrimination under the FHA; or (4) for disability
discrimination under the FHA. Dkt. 73.
“After the pleadings are closed … a party may move for judgment on the
pleadings.” Rule 12(c). A motion for judgment on the pleadings is governed by the same
standard as a motion for failure to state a claim under Federal Rule of Procedure 12(b)(6)
(“Rule 12(b)(6)”). Buchanan-Moore v. Cty. of Milwaukee, 570 F.3d 824, 827 (7th Cir.
2009). Rule 12(b)(6) permits the dismissal of a claim for failure to state a claim upon
which relief can be granted in the pleadings. The Court construes “the complaint in the
light most favorable to the nonmoving party and will grant the motion only if it appears
beyond doubt that the plaintiff cannot prove any facts that would support his claim for
relief.” Buchanan-Moore, 570 F.3d at 827 (internal quotation marks omitted).
A pleading must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not
required, but a plaintiff’s complaint may not merely state “an unadorned, the defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rather,
“a complaint must contain sufficient factual matter … to ‘state a claim to relief that is
plausible on its face.’” Id. (quoting Bell Atlantic Corp v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged[,]” not when the plaintiff only raises a “sheer possibility that the defendant has
“[T]he height of the pleading requirement is relative to the
circumstances[,]” Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir. 2009), and
“[d]etermining the plausibility of a claim is a context-specific task that requires [the Court]
to draw on [its] judicial experience and common sense.” Brown v. JP Morgan Chase
Bank, 334 Fed. Appx. 758, 759 (7th Cir. 2009).
Defendants first assert that the Plaintiffs’ negligence claim against Kirkpatrick and
Grandville must fail as a matter of law. The Amended Complaint alleges negligence
against Kirkpatrick and Grandville for failure to train, monitor, and supervise both Camille
and Karen Mitchell, and to ensure compliance with the fair housing statutes and
applicable regulations. In support, Defendants argue that Plaintiffs are unable to establish
a duty of care owed by either Grandville or Kirkpatrick to any of the Plaintiffs. Plaintiffs
respond that Indiana’s three-part balancing test to determine a duty favors such a finding
here. Plaintiffs ask this Court to find that Defendants have a duty to educate employees
about the strictures set forth by the FHA, IFHA, and Rehabilitation Act.
To prevail on their negligence claim, Plaintiffs must show: “(1) duty owed to the
plaintiff by defendant, (2) breach of duty by allowing conduct to fall below the applicable
standard of care, and (3) compensable injury proximately caused by defendant’s breach
of duty.” Caesars Riverboat Casino, LLC v. Kephart, 934 N.E.2d 1120, 1123 (Ind. 2010).
“Absent a duty there can be no negligence or liability based upon the breach.” Id. Indiana
uses a “three-part balancing test to determine whether a duty exists when it has not been
declared or otherwise articulated.” Spierer v. Rossman, 798 F.3d 502, 510-11 (7th Cir.
2015) (citing N. Ind. Pub. Serv. Co. v. Sharp, 790 N.E.2d 462, 465 (Ind. 2003)). The three
parts are: (1) the relationship between the parties; (2) the foreseeability of the occurrence;
and (3) public policy concerns. Spierer, 798 F.3d at 511. “Whether a duty exists is
generally a question of law for the court.” Yost v. Wabash College, 3 N.E.3d 509, 515
“A duty of reasonable care is not, of course, owed to the world at large, but arises
out [of the] relationship between the parties.” Clary v. Dibble, 903 N.E.2d 1032, 1038
(Ind. Ct. App. 2009). Such an inquiry “focuses on whether or not the defendant … owes
a duty to the particular plaintiff.” Rodriguez v. United States Steel Corp., 24 N.E.3d 474,
477 (Ind. Ct. App. 2014) (quotations omitted).
Here, Plaintiffs have failed to allege any duty of reasonable care that Grandville or
Kirkpatrick owed to any particular Plaintiff beyond the speculative level.
assertion that Grandville and Kirkpatrick failed to supervise the Mitchells in compliance
with housing laws is far too attenuated to establish a particular duty to the Plaintiffs.
Indeed, Plaintiffs set forth no factual allegations with respect to the training of either of the
Mitchells, except for the fact that Kirkpatrick is responsible for such training. Thus,
Plaintiffs bare assertion fails to allow the Court to “draw the reasonable inference that the
defendant[s] [are] liable for the misconduct alleged[,]” and merely raises a “sheer
possibility that the defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.
Moreover, Plaintiff cites to no authority that would establish the presence of a duty
to train or supervise employees under the FHA, IFHA, or Rehabilitation Act. Indeed,
courts in other jurisdictions have rejected similar claims. See, e.g. Matarese v. Archstone
Pentagon City, 761 F. Supp. 2d 346, 365 (E.D. Va. 2011) (granting summary judgment
on plaintiff’s negligence claim predicated on a common law duty to train employees on
FHA reasonable accommodations); Hand v. Gilbank, 752 N.Y.S.2d 501, 502 (N.Y. Sup.
Ct. 2002) (finding that the FHA “was not intended to create a standard of care in
negligence litigation”); Fair Hous. Council of Or. v. Brookside Vill. Owners Ass’n, No. 3:08cv-3127, 2012 WL 8017842, at *27-28 (D. Or. Oct. 19, 2012) adopted, No. 3:08-cv-03127
2013 WL 1914378 (D. Or. May 8, 2013) (rejecting plaintiff’s assertion that the Oregon
fair housing statute, which is interpreted consistently with the FHA, “is intended to impose
a common law duty on housing developments … to train their employees in fair housing
The Plaintiffs acknowledge that this duty is not recognized by several other courts
as stated by the Defendants. Nonetheless, Plaintiffs cite three cases for this same
argument, all three of which are wholly inapplicable. Dkt. 77 at 27 (citing Woods v.
Forester, 884 F. Supp. 1169, 1178 (N.D. Ill. 1995) (holding that a “duty exists to refrain
from employing individuals that the employer knows, or should know, are a danger to
others.”); McAlister v. Essek Prop. Tr., 504 F. Supp. 2d 903, 911 (C.D. Cal. 2007)
(Defendants did not contest that they were liable for breach of duty to reasonably
accommodate a tenant’s disability); So. Cal. Hous. Rights Ct. v. Los Feliz Towers
Homeowners Ass’n, 426 F. Supp. 2d 1061, 1069 (C.D. Cal. 2005) (precluding summary
judgment for determination on whether reserving parking space was reasonable
accommodation and necessary for use and enjoyment of a dwelling)). Thus, the Plaintiffs
have failed to allege sufficient factual allegations to state a claim for negligence that is
plausible on its face. Iqbal, 556 U.S. at 678.
B. FAMILIAL STATUS DISCIMINATION
Defendants further allege that Plaintiffs have failed to state a claim for familial
status discrimination, which is defined as “‘discrimination against parents or other
custodial persons domiciled with children under the age of 18.’” City of Edmonds v.
Oxford House, Inc., 514 U.S. 725, 728 n. 1 (1995) (citing 42 U.S.C. § 3602(k)).
Defendants rely on Halprin v. The Prairie Single Family Homes of Dearborn Park Assoc.
to argue that the FHA does not protect against post-acquisition discrimination, i.e.
discrimination that takes place after the purchase or lease of a dwelling. 388 F.3d 327,
329-30 (7th Cir. 2004). Indeed, the Halprin court found that the FHA, in both its language
and legislative history, was only concerned with access to housing, with the sole focus
was on exclusion of minority classes. Id. at 330.
A full panel of the Seventh Circuit revisited Halprin in Bloch v. Frischolz, which
found that “in some circumstances homeowners have an FHA cause of action for
discrimination that occurred after they moved in.” 587 F.3d 771, 772 (7th Cir. 2009) (en
banc). The Defendants briefly address the Bloch holding, but only do so with respect to
Section 3604(a), while Plaintiffs seek redress under Sections 3604(b) and (c). Dkt. 73 at
13-14. Importantly, the court in Bloch found that a plaintiff could pursue a post-acquisition
claim under Section 3604(b). Bloch, 587 F.3d at 780-81. The court found that the Blochs’
agreement to subject their rights to the restrictions set forth by the housing board was a
“condition” of their purchase; “the Board’s power to restrict unit owners’ rights flows from
the terms of the sale. And the Blochs alleged that the Board discriminated them in
wielding that power.” Id. at 780. In making this finding, the court found persuasive the
HUD regulations that prohibit “[l]imiting the use of privileges, services or facilities
associated with a dwelling because of … familial status.” Id. at 780-81 (citing 24 C.F.R.
Assuming all facts in the Plaintiffs’ favor yields a similar result as that proposed in
Bloch. Plaintiffs allege that the Rules limit the use of the privileges and facilities of
Grandville for families with children. Under Bloch and the Rule 12(b)(6) standard, this is
sufficient to state a plausible claim of relief under the FHA.
The Defendants argue two more grounds for dismissal of Plaintiffs’ familial status
The Defendants first argue that Plaintiffs did not plead that Defendants
intentionally discriminated against them, which Defendants allege – for the first time in
their reply brief – is required to pursue a claim for post-acquisition discrimination under
Section 3604(b). Dkt. 79 at 6.
This argument was not addressed in Defendants’ initial
brief and is therefore waived. Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011) (“[I]t
is well established that arguments raised for the first time in a reply brief are waived.”).
Defendants focused their arguments for dismissal of the familial status claims solely on
the Halprin analysis, which fails at this stage in the proceedings for the reasons already
Defendants’ final argument concerns the Rules themselves.
essentially argue that the Rules are facially neutral and that none of the Plaintiffs has
established a causal connection between the Rules and any injury. 2 But the Rules
Defendants also argue that the supervision rule should be dismissed because it is “novel
to every jurisdiction across the country (except California) [and therefore] should be
rejected and dismissed as a matter of law.” They also argue that the curfew rule mirrors
Ind. Code §§ 31-37-3-3 and 31-37-3-4 and therefore cannot form the basis for a
discrimination claim. Defendants conclusory remarks are unaccompanied by any
applicable legal support and are therefore waived. See Puffer v. Allstate Ins. Co., 675
themselves are not the issue; rather, the Rules are merely a vehicle by which the
Defendants discriminate against families with children. Plaintiffs need only show that
discrimination is plausible, not the manner in which each and every rule has injured the
Plaintiffs. See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (“Specific facts are not
necessary, the statement need only ‘give the defendant fair notice of what the … claim is
and the grounds upon which it rests.’”) (quoting Bell Atlantic v. Twombly, 550 U.S. 544,
Plaintiffs have alleged that more than twenty individuals reported
discrimination against families with children by and through the Rules that limit their use
of the facilities at Grandville. Dkt. 62, ¶¶ 48, 49. This states a plausible claim for relief
for familial status discrimination.
See Bloch, 587 F.3d at 780-81; 24 C.F.R. §
C. DISABILITY DISCRIMINATION
Defendants also claim that Plaintiffs’ Amended Complaint fails to state a claim for
disability discrimination relief under the FHA, IFHA, or Rehabilitation Act. Defendants first
allege that the Amended Complaint does not specifically recite the elements of the claims
and does not contain sufficient facts to indicate a theory for discrimination. Such an
argument attempts to impose a greater burden on the Plaintiffs than is necessary at this
phase of the proceedings, for “[i]t does not take much to allege discrimination[.]”
Wigginton v. Bank of Am. Corp., 770 F.3d 521, 522 (7th Cir. 2014). Plaintiffs need only
allege the type of the discrimination, by whom, and when the discrimination took place.
See Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010); see also Huri v. Office
F.3d 709, 718 (7th Cir. 2012) (arguments are waived “if they are undeveloped,
conclusory, or unsupported by law.”).
of the Chief Judge of the Circuit Court of Cook Cty., 804 F.3d 826, 834 (pleading for
discrimination need only “describe events that could have happened and which discovery
can be reasonably expected to reveal.”).
Plaintiffs have met this threshold in the instant case. Plaintiffs also pled that that
Morton has quadriplegia, which renders her disabled. Dkt. 62, ¶¶ 1, 7. Plaintiffs pled that
Defendants became aware of this disability at the meeting with McFarland. Id., ¶¶ 36-40.
Plaintiffs further pled that Defendants sent a rejection letter explicitly stating that it would
not rent to Morton or McFarland due to Morton’s disability. Id., ¶ 40. Nothing more is
D. AUGUST 5, 2015, LETTER AND INQUIRY INTO DISABILITY
Defendants argue that Plaintiffs present two theories in their response brief that
are not set forth in the Amended Complaint, which in turn does not provide them adequate
notice and therefore should be dismissed. The first theory concerns the August 5, 2015,
letter to Morton and McFarland, which the Plaintiffs allege in their response violates 42
U.S.C. § 3604(c). Section 3604(c) makes it unlawful “to make, print, or publish, … any
notice, statement, or advertisement, with respect to the sale or rental of a dwelling that
indicates any preference, limitation, or discrimination based on … handicap [or] familial
Defendants urge the Court to apply the standard set forth in Hamilton v. Svatik, which
requires a Plaintiff to establish that: (1) she belongs to a minority; (2) Defendants were
aware of her minority status; (3) Plaintiff was ready and able to accept Defendants’ offer
to rent; and (4) Defendants refused to deal with the Plaintiff. 779 F.2d 383, 387 (7th Cir.
1985). Specifically, Defendants contend that Plaintiffs have failed to allege that Morton
and McFarland were ready and able to accept Defendants’ offer. Even assuming,
arguendo, that this analysis applied, Plaintiffs sufficiently pled that Morton and McFarland
were ready to accept the unit by pleading that they applied for that unit, paid an application
fee, and even provided detail as to how they intended to occupy it. Dkt. 32, ¶¶ 29, 30,
status …, or an intention to make any such preference, limitation or discrimination.”
Second, Defendants contend that Plaintiffs’ assertion that the Defendants’ inquiry into
Morton’s disability constituted a discriminatory housing practice. Pursuant to 24 C.F.R. §
100.202(c), it is a discriminatory housing practice to “make an inquiry to determine
whether an applicant for a dwelling … has a handicap or to make inquiry as to the nature
or severity of a handicap of such a person.”
Defendants believe that neither of these legal theories were adequately presented
in the Amended Complaint. But Plaintiffs are not required to plead specific provisions or
legal theories. See Del Marcelle v. Brown Ct. Corp., 680 F.3d 887, 909 (7th Cir. 2012)
(en banc) (per curiam) (“[P]laintiff’s are not required to plead legal theories, even in the
new world of pleading that is developing in the wake of … Twombly … and … Iqbal.”). At
this stage, Plaintiffs need only state a plausible claim that allows the Court to draw a
reasonable inference that the Defendants’ actions are discriminatory in nature. See Iqbal,
556, U.S. at 678 (“A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.”) Plaintiffs quoted the allegedly discriminatory language from the
letter in the Amended Complaint and also stated that the Defendants inquired into
Dkt. 62, ¶¶ 38, 40.
This is sufficient for the Court to make a
reasonable inference of discrimination.
E. KAREN MITCHELL
Defendants also move to dismiss all claims against Karen Mitchell in her individual
capacity, and argue that she is immune from liability because she acted in her capacity
as director of Grandville at all times. In support, Defendants cite Clarke v. Universal
Builders for the proposition that the corporate identity is to be kept intact absent
“exceptional circumstance.” 409 F. Supp. 1274, 1281 (N.D. Ill. 1976). The Defendants
also cite to City of Chi. v. Matchmaker Real Estate Sales Ctr., Inc., which provides that
“where common ownership and management exists, corporate formalities must not be
rigidly adhered to when inquiry is made of civil rights violations.” 982 F.2d 1086, 1098
(7th Cir. 1992) (internal quotations omitted). Matchmaker found that the sole owner/chief
executive officer of a corporation was personally liable for violating the FHA because he
supervises the day-to-day operations of his company and its agents. Id. The Defendants
also claim that Mitchell is immune from Plaintiffs’ state law claims under Indiana’s
Nonprofit Corporations Act, which provides immunity to volunteer directors for actions
taken in their capacity for the corporation. Ind. Code § 23-17-13-1. A director may only
be held personally liable under the Nonprofit Corporations Act when she has not
exercised “business judgment in good faith, with the care of an ordinarily prudent person,
in a manner reasonably believed to be in the best interests of the corporation, and the
breach or failure to perform constitutes willful misconduct or recklessness.” Rodriguez v.
Tech Credit Union Corp., 824 N.E.2d 442, 447 (Ind. Ct. App. 2005) (citing Ind. Code §
The Plaintiffs respond that “exceptional circumstances” exist to hold Mitchell
personally accountable for the allegations in the Amended Complaint. They state that
Mitchell personally engaged in the discriminatory acts and therefore acted outside the
scope of her capacity as director of Grandville. Moreover, the Plaintiffs argue that the
Amended Complaint sufficiently alleges that Mitchell’s conduct constitutes willful
misconduct or recklessness and that she failed to use the care of an ordinarily prudent
person. The Court agrees.
Taking all facts in the Plaintiffs favor demonstrates that Mitchell participated in the
discrimination alleged by the Plaintiffs and thereby shed any immunity that her position
may have afforded. See Matchmaker, 982 F.2d at 1096 (agents held individually liable
for compensatory damages for violation of 42 U.S.C. § 3604 since they personally
engaged in discriminatory practices). The Amended Complaint alleges that it was Mitchell
who circled “rejected” on the “Grandville Coop Application Cover Page” associated with
Morton and McFarland’s applications without checking any one of the enumerated
reasons on the form. Dkt. 62, ¶¶ 74-75. The Amended Complaint alleges that it was
Mitchell who informed McFarland that the meeting was not New Member Orientation, but
rather a “Pre-Interview” meeting. Id., ¶ 39. It also states that Mitchell informed her
daughter Tia Mitchell that she rejected McFarland and Morton’s application because it
would be “tacky” to have a hospital bed in the living room. Id., ¶¶ 66-67. Mitchell also
told a Grandville maintenance employee that Morton and McFarland’s living arrangement
was “not going to work” and “we don’t want that around here.” Id., ¶ 72. The Court finds
that the Plaintiffs have set forth sufficient factual matter to state a plausible claim of
discrimination against Karen Mitchell in her individual capacity and outside the scope of
her role as director of Grandville. Iqbal, 556 U.S. at 678.
Finally, Defendants claim that the Amended Complaint fails to allege sufficient
factual matter to support a claim against Kirkpatrick. The Defendants further argue that
“Plaintiffs once again offer no argument in response to Defendants’ request for dismissal
of Kirkpatrick, and when a party fails to address an argument, it is proper for the court to
conclude that the party has abandoned it.” Dkt. 79 at 2. This would be true, but the
Defendants first raise this argument in their reply brief, thereby denying the Plaintiffs the
opportunity to respond. The only mention in Defendants’ initial brief is found in the fact
section and states that the Amended Complaint “merely lump[s]” Kirkpatrick in with other
Defendants and “is devoid of any allegations that support their claims that Kirkpatrick
violated the Fair Housing Act, Rehabilitation Act, or Indiana Fair Housing Act.” Dkt. 73 at
2. Nowhere in their legal analysis section do the Defendants provide any legal justification
for Kirkpatrick’s dismissal. “Because the argument was not raised or developed in the
opening brief, it is waived.” United States v. Dabney, 498 F.3d 455, 460 (7th Cir. 2007).
Nonetheless, an examination of Defendants arguments in this regard would yield
the same result. The Amended Complaint alleges violations of the FHA, IFHA, and the
Rehabilitation Act, and Kirkpatrick is responsible for ensuring compliance with these laws.
Dkt. 62, ¶ 23. Kirkpatrick is also responsible for providing guidance and direction with
respect to the screening and selection of residents, which would include the denial of the
applications of Morton and McFarland. Id., ¶ 24. Plaintiffs have adequately pled that
Kirkpatrick is involved in the predicate actions underlying the Amended Complaint. This
is enough to spell out Kirkpatrick’s potential involvement under the Rule 12(b)(6)
For the reasons stated herein, the Court GRANTS Defendants’ Second Motion for
Judgment on the Pleadings pursuant to Rule 12(c) with respect to Plaintiffs’ claim for
negligence in the Amended Complaint and DENIES the Motion to Dismiss with respect
to all other claims. Accordingly, Plaintiffs’ claim for negligence is DISMISSED WITH
IT IS SO ORDERED this 9th day of January, 2017
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
BRANCART & BRANCART
Thomas R. Kayes
BRANCART & BRANCART
INDIANA PROTECTION & ADVOCACY SERVICES
Thomas E. Crishon
INDIANA PROTECTION & ADVOCACY SERVICES
Brian P. Nally
REMINDER CO., L.P.A.
Lyndsay I. Ignasiak
REMINGER CO., LPA - College Park
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