McVick LLC v. HUD

Filing 14

ORDER: Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction 1 is denied. Signed on 11/8/12 by Chief Judge Ann L. Aiken. (sln)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
McVICK, LLC and JDV CORPORATION,
Plaintiffs,

Case No. 6:12-cv-01644-HO
ORDER

v.

UNITED STATES DEPARTMENT of
HOUSING and URBAN DEVELOPMENT,
Defendant.
INTRODUCTION
McVick LLC and JDV Corporation,

(plaintiffs) seek to enjoin

defendant, United States Department of Housing and Urban Development
(HUD), from enforcing it's investigative subpoena commanding
plaintiffs to allow inspection of the public use and common areas of
plaintiff's 12-unit apartment complex located at 12th and Market
Street in Salem, Oregon (subject property), as well as the interiors
of four ground units in the subject property.

ORDER - page 1

[#1].

Plaintiffs'

motion is brought subsequent to the Director of HUD's Fair Housing
and Equal Opportunity Office (FHEO), denying plaintiffs' motion to
quash HUD's investigative subpoena 1 on September 10, 2012.

[#8-2].

Plaintiff contends that HUD's inspection should be "banned"
because:

(1) the complainant, Fair Housing Council of Oregon (FHCO),

lacks standing because it is not an "aggrieved person" under the
Fair Housing Act

(FHA);

(2) HUD's prosecution based on the FHCO

complaint is barred by the statute of limitations;

(3) because of

HUD's delay, plaintiff will suffer irreparable harm if the
inspection is allowed and (4) it is in the public interest to
prevent untimely public enforcement of private complaints against
owners of public housing.

[#1-1; #12].
Background

On September 21, 2009, FHCO filed a complaint with HUD alleging
that plaintiffs 2 discriminated on the basis of disability by
designing_and/or constructing the subject property in a manner that
did not comply with the FHA's accessibility requirements in
violation of 42 U.S.C. §3604 (f) (3) (C).

[ # 1-1, p. 2; # 8-2, p. 2] .

The

complaint alleged that the site violated accessibility standards

Plaintiffs sought to quash the subpoena in its entirety
or alternatively to modify it to command inspection of the
exterior of the structure only.
[#8-2,p.1]
2

FHCO original complaint filed on September 21, 2009,
against Boulder Ridge Development Inc., was amended on March 5,
2010 to name McVick LLC the owner of the property, JDV Corp., and
Scott McKinney as additional respondents.
Id.
ORDER - page 2

because: the route from the parking lot to the sidewalk had a
greater than a 5% slope and lacked handrails; the wheelchair ramps
exceeded 8.33%, were greater that 1500 inches long and did not have
space for a wheelchair turnaround; and the units' door knobs were
not appropriately accessible mechanisms.

[#8-p.3, '1!5].

Plaintiffs initially attempted to cooperate with HUD regarding
the exterior issues however, consistently refused to allow HUD to
inspect the interior of the units.

[#1-p.2; #8-p.4; #12-p.3].

From

January through July of 2010, HUD repeatedly attempted (without
success), to obtain the plans for the units as well as plaintiffs'
consent to allow HUD's inspection of the interior of the units.
[#8-p. 6].
On July 16, 2010, FCHO filed a second amended complaint adding
the design and engineering firms to the list of defendants as well
as allegations that "because of the observations of [exterior]
noncompliance .

FCHO believes that noncompliant features may

exist in the interior of the dwelling units."

[ # 8 -p. 6;

#8-1]

.

On

September 9, 2010, plaintiffs responded to the complaint, arguing
that FCHO lacked standing to bring the complaint and requested
dismissal of the complaint by HUD.

[#8-p. 6].

On November 12, 2010, HUD received a copy of the project plans
which raised its general concerns about the accessibility of the
ground floor units.

[#8-pp.6-7].

A pre-subpoena letter was sent to

Mr. Vick on December 9, 2010 responding to his questions about

ORDER - page 3

FHCO's standing, advising him that HUD did have the authority to
conduct an on-site inspection and seeking his voluntary compliance
with its request to inspect the interiors of the four ground floor
units.

[#8-p.7; #12-p.3].

Between September 2010 and July 2011, the Office of Fair
Housing and Equal Opportunity (FHEO) attempted to secure funds to
hire inspectors for various Oregon sites including the subject
property.

[#8-p.8].

On June 29, 2012, LaVerne Myles-Bryant from

FHEO called Mr. Vick to advise him that HUD was prepared to go
forward with its inspection of his property.

[#8-p.8].

reiterated his opposition to any interior inspection.

Mr. Vick
Id.

On August 9, 2012, HUD notified plaintiffs of its intent to
issue an inspection subpoena.

[#8-p.9; #8-2].

HUD served plaintiffs

with its investigative inspection subpoena on August 16, 2012.
p.9; #8-2].

[#8-

Plaintiffs filed a motion to quash the subpoena or

modify it to command access to only the exterior of the structure
with FHEO, on August 13, 2012.

[#8-2-p.1].

On September 10, 2012,

in a 10-page opinion, FHEO denied plaintiff's motion to quash.

[#8-

2 J.

Discussion
The FHA as amended in 1988, prohibits discriminatory housing
practices based on disability or familial status.
§3604(f) (1)and (2).

42 U.S.C.

The FHA seeks to prevent such discrimination by

establishing design and construction requirements for covered

ORDER - page 4

multifamily housing built after March 1991.
§3604 (f) (3) (C).

42 U.S.C.

The parties do not dispute that the FHA as codified

in 42 U.S.C. §3601 et seq, applies to the subject property however,
plaintiffs assert that HUD has exceeded its authority in seeking to
access the interior of the units.

[ #4-p. 6] .

The Supreme Court in setting the standard for judicial
enforcement of administrative subpoenas held that an agency's
investigation is lawful if "the inquiry is within the authority of
the agency, the demand is not too indefinite and the information
sought is reasonably relevant."
338 U.S. 632, 652

(1950).

agency subpoena is narrow.
F.3d 1005, 1007

United States v. Morton Salt Co.,

The scope of the court's inquiry into an
NLRB v. North Bay Plumbing, Inc., 102

(9th Cir.1996).

Generally, the court must ask "(1) whether Congress has granted
the authority to investigate;

(2) whether procedural requirements

have been followed; and (3) whether the evidence is relevant and
material to the investigation."
of N. Cal., 719 F.2d 1426, 1428

EEOC v. Children's Hasp. Med. Ctr.
(9th Cir.1983).

An affidavit from a

government official is sufficient to establish a prima facie showing
that these requirements have been met.

u.s.

353, 360 (1989).

United States v. Stuart,

489

If the agency establishes these factors, the

subpoena should be enforced unless the party being investigated
proves the inquiry is unreasonable because it is overbroad or unduly
burdensome.

Children's Hasp.,

ORDER - page 5

719 F.2d at 1428.

Based on Ms. Myles-Brandt's declaration and HUD's statutory
obligation to investigate complaints of housing discrimination filed
with it, I find that HUD's demand for access to the interior of the
subject property for the purpose of inspection was made pursuant to
its statutory authority and sought for the legitimate purpose of
ascertaining the validity of the complaint alleging that the
property was constructed in violation of accessibility requirements.
Because HUD has established a prima facie case for its
investigative subpoena, the burden of proof shifts to the plaintiff
to establish a defense to enforcement .

.L..

Standing:

Plaintiffs argue that FCHO lacks standing to bring a complaint
because it is not an aggrieved person injured by a discriminatory
housing practice.

[#4-p. 6].

Plaintiffs further contend that while

case law may allow FCHO to sue HUD directly it does not give them
authority to file an initial complaint with HUD.

[#12-pp. 4-5].

FCHO is a nonprofit housing rights advocacy corporation whose
mission is to assure equal access to housing for all persons in
Oregon and southwest Washington.

[ # 7 -pp • 7-8; # 8-2 1 P • 6] •

FHCO

complained that the subject property, as designed and constructed,
was inaccessible to people with disabilities.

[#8-1].

Section 3602(d) of the FHA defines person to include
corporations and associations.

42 U.S.C.

§

3602(d).

As a threshold

matter, FCHO, a non-profit corporation, is therefore a person as

ORDER - page 6

I

I

defined by the statute.
1123, n.1(9th Cir.2001).

Walker v. City of Lakewood, 272 F.3d 1114,

However, FCHO must satisfy the requirement

for individual standing, namely, a concrete and particularized
injury giving FCHO "a personal stake in the outcome of the
controversy."

Baker v. Carr,

369 U.S. 186, 204

(1962).

The Ninth Circuit has established that an organization may
satisfy the Article III requirement of injury in fact if, it can
demonstrate:

(1) frustration of its organizational mission; and (2)

diversion of its resources to combat the particular housing
discrimination in question.

Smith v. Pacific Properties and

Development Corp., 358 F3d 1097, 1105 (Ninth Cir. 2004).

On the face of its complaint, FCHO alleged that it is a nonprofit corporation organized "to assure equal access to housing for
all persons in Oregon and SW Washington." [#8-1,p.3].

FCHO alleges

four possible violations of the FHA that it observed in looking at
the exterior of the subject property.

Id.

Based on those exterior

observations the FCHO alleges that noncompliant features may exist
on the interior of the units.

Id.

A violation of the FHA would frustrate FCHO's mission and the
alleged violations have caused FCHO to divert organizational
resources to investigate and file the instant complaint.

Smith, 358

F3d at 1105(citing Fair Housing of Marin v. Combs, 285 F.3d 899, 905
(Ninth Cir.2002)).

Applying these standards to the allegations in

this matter, I find FCHO has standing to file this complaint.
ORDER - page 7

~

Temporary Restraining Order/Preliminary Injunction:.

A preliminary injunction is "an extraordinary remedy that may
only be awarded upon a clear showing that the plaintiff is entitled
to such relief." Winter v. Natural Res. Def. Council,
Inc.,

555 U.S. 7, 31 (2008).

To obtain a preliminary injunction,

plaintiffs

"must establish that (1) they are likely to succeed on

the merits;

(2) they are likely to suffer irreparable harm in the

absence of preliminary relief;

(3) the balance of equities tips in

their favor; and (4) a preliminary injunction is in the public
interest." Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir
2009) (citing Winter,

555 U.S. at 24-25)).

Plaintiffs argue that they are likely to prevail on the merits
because (1)

FCHO's complaint was untimely filed as it was, before

the units were completed and (2) HUD has unreasonably delayed its
prosecution of the complaint.

[#12-p.6].

This argument was

considered and rejected by the detailed agency opinion.

[#8-2].

agency director found that the last certificate of occupancy was
issued on October 13, 2009, the last date upon which a complaint
alleging section 3604 (f) (3) (C) violations could be filed was
therefore October 13, 2010.

[#8-2,pp.8-9].

complaint on September 21, 2009.
Id.

ORDER - page 8

Id.

FCHO filed their

It was thus, timely filed.

The

1
Plaintiffs also contend that they are likely to prevail on the
merits because HUD did not, as required under 42 U.S.C.
§3601(a) (1) (B) (iv)

3

,

investigate an allegedly discriminatory housing

practice within 100 days of the complaint's filing and did not as
required by 42 U.S.C. §3601(a) (1) (C)

4

,

notify plaintiffs of reasons

for not timely completing its investigations.

However, because the

100-day period is neither mandatory nor jurisdictional, there is no
authority for this court imposing a 100 day statute of limitations.
For this reason,

I conclude that plaintiffs are unlikely to prevail

on this issue.
Plaintiffs further contend that they are likely to prevail on
the scope of the subpoena because, there are no substantive claims
indicating that there are FHA violations within the building and
there is no reasonable cause to believe that the units are not in
compliance with the FHA, given that the City of Salem inspectors

3

42 U.S.C. §3601(a) (1) (B) states that upon the filing of
a complaint .
. (iv) the Secretary shall make an investigation
of the alleged discriminatory housing practice and complete such
investigation within 100 days after the filing of the complaint
(or, when the Secretary takes further action under subsection
(f) (2) of this section with respect to a complaint, within 100
days after the commencement of such further action), unless it is
impracticable to do so.
42 U.S.C. §3601(a) (1) (C): If the Secretary is unable to
complete the investigation within 100 days after the filing of
the complaint (or, when the Secretary takes further action under
subsection (f) (2) of this section with respect to a complaint,
within 100 days after the commencement of such further action),
the Secretary shall notify the complainant and respondent in
writing of the reasons for not doing so.
ORDER - page 9

have issued a certificate of occupancy.

[#12-pp. 7-8].

Plaintiffs

additionally assert they will suffer irreparable harm should HUD's
subpoena be upheld because they are prejudiced by the delay in
enforcement.

[#12-pp.B-9]. Plaintiffs argue that this delay would

prevent them from seeking legal recourse against design and
engineers responsible for any violations that might be found,
thereby forcing the current owner to face the entire financial
burden that FHA compliance might impose.
The record shows that plaintiffs had notice of HUD's concerns
and desire to inspect since 2009, and have engaged in a protracted
dialogue with the agency as it attempted to gain plaintiffs'
permission to inspect the subject property.

I therefore find that

any loss of claims that plaintiffs may have suffered cannot be
attributed to the agency.
Similarly, I find that plaintiffs fail to raise any colorable
indications of irreparable harm likely to be incurred as a result of
allowing inside inspections of the four ground floor units.

Nor do

I agree that the public interests tip in plaintiffs' favor,
especially given the harm the public and the disabled community in
particular, suffer should the alleged FHA violations be allowed to
remain uncorrected.

ORDER - page 10

l
Conclusion
For the reasons detailed above, plaintiff's Motion for
Temporary Restraining Order and Preliminary Injunction[#1] is
DENIED.
IT IS SO ORDERED
DATED this

B/!L

day of November, 2012.

UNITED STATES DISTRICT JUDGE

ORDER - page 11