102 F.3d 781 (6th Cir. 1996), 95-1231, Smith & Lee Associates, Inc. v. City of Taylor, Mich.

Docket Nº:95-1231.
Citation:102 F.3d 781
Party Name:SMITH & LEE ASSOCIATES, INC.; United States of America, Plaintiffs-Appellees, v. CITY OF TAYLOR, MICHIGAN, Defendant-Appellant.
Case Date:December 16, 1996
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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102 F.3d 781 (6th Cir. 1996)

SMITH & LEE ASSOCIATES, INC.; United States of America,

Plaintiffs-Appellees,

v.

CITY OF TAYLOR, MICHIGAN, Defendant-Appellant.

No. 95-1231.

United States Court of Appeals, Sixth Circuit.

December 16, 1996

Argued April 11, 1996.

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Gregory J. Bator, argued, Bator & Zartarian, Birmingham, MI, for Smith & Lee Associates, Inc.

David K. Flynn, Gregory B. Friel, argued and briefed, U.S. Department of Justice, Civil Rights Division, Appellate Section, Washington, DC, Barbara Burr, U.S. Department of Justice, Civil Rights Division, Washington, DC, L. Michael Wicks, Asst. U.S. Attorney, Office of the U.S. Attorney, Detroit, MI, for U.S.

Patrick B. McCauley, Patrick J. Burkett, argued and briefed, Sommers, Schwartz, Silver & Schwartz, Southfield, MI, for City of Taylor, Mich.

David M. Davis, briefed, Hardy, Lewis & Page, Birmingham, MI, for amicus curiae Michigan Municipal League.

Before: KENNEDY and SILER, Circuit Judges; ALDRICH, District Judge. [*]

KENNEDY, J., delivered the opinion of the court, in which SILER, J., joined. ALDRICH, J. (pp. 799-804), delivered a separate opinion concurring in part and dissenting in part.

KENNEDY, Circuit Judge.

The City of Taylor, Michigan appeals the District Court's judgment that the City violated the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3604(f)(1)(B) & (3)(B), by intentionally discriminating against and failing to make reasonable accommodations for the handicapped. The City also appeals the Court's order requiring the City to amend its zoning ordinance, pay an adult foster care home $284,000 in damages, and pay a $20,000 fine. For the following reasons, we affirm in part and reverse in part.

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I

Smith & Lee Associates, Inc. ("Smith & Lee") is a for-profit Michigan corporation that owns and operates Adult Foster Care ("AFC") homes in the State of Michigan. AFC homes provide twenty-four hour supervised care to dependent adults who require ongoing supervision but not continuous nursing care. Smith & Lee was organized for the purpose of purchasing the residential home at dispute in this case, Mortenview Manor ("Mortenview"), in Taylor, Michigan ("the City" or "Taylor").

Mortenview specializes in care for the elderly disabled. It houses six elderly disabled residents who suffer from Alzheimer's disease and other forms of dementia, organic brain syndrome, and other ailments. Whereas other AFCs known as "contract" homes, which house persons with other types of disabilities, receive subsidies from state or community social service agencies, homes for the elderly disabled like Mortenview must rely solely on payments from their residents to cover operating costs. Mortenview is a one-story dwelling that includes a kitchen, living room, dining room, six bedrooms, two full baths, and a small office; its circular driveway provides parking for visitors and staff.

Mortenview is located in a residential neighborhood in Taylor that is zoned for single-family use. Smith & Lee has authority to house six unrelated disabled adults in Mortenview by virtue of Mich. Comp. Laws Ann. § 125.583b(2) (West 1986), 1 which permits AFC homes for six or fewer residents to operate in all residential zones, including single-family neighborhoods. Before an AFC facility may house more than six residents, however, it must receive the municipality's approval before Michigan will issue it a license.

From the time it purchased Mortenview, Smith & Lee sought to house twelve residents. Michael Manore, then Director of Taylor's Office of Development Services, informed Smith & Lee that the home could not operate with twelve residents unless the City rezoned the property from R-1A, which is the City's designation for single-family use, to RM-1, which is its designation for multiple-family use. The City issued Smith & Lee a building permit, albeit with an express limitation listed on the permit: "SINGLE FAMILY RESIDENTIAL USE ONLY." Smith & Lee's owners increased Mortenview's capacity from a three bedroom to a six bedroom ranch by converting the garage into additional bedrooms. After inspecting the home, the Michigan Department of Social Services ("MDSS") licensed Mortenview for six residents, and it opened in December of 1990.

In January of 1990, Smith & Lee petitioned the City to rezone Mortenview from R-1A to RM-1. Taylor officials referred the petition to the City's planning consultant, Wade/Trim Impact, which recommended that Smith & Lee's petition be denied for three reasons: (1) RM-1 zoning would be inconsistent with the established zoning pattern of the neighborhood; (2) RM-1 zoning would allow for land uses that are incompatible with the established single-family residential character of the neighborhood; and (3) the request was inconsistent with the City's Master Land Use Plan 2000.

On February 21, 1990, the City's Planning Commission held a public hearing on Smith & Lee's zoning proposal. No residents voiced objections to Smith & Lee's rezoning

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petition. The Commission voted to recommend that the City Council deny Smith & Lee's petition. At a March 5, 1990 study session, the City Council discussed the petition. Smith & Lee advised the City Council members that denial of the rezoning petition might violate the Fair Housing Amendments Act. A representative of the Michigan Residential Care Association made a presentation on behalf of Smith & Lee and explained the potential impact of the federal statute. At its March 6, 1990 meeting, the Council denied the zoning request, citing spot zoning concerns and the proposal's incompatibility with the City's master development plan.

Relying on advice from an MDSS official, Marjorie Murrell, who informed Smith & Lee that the State would issue a license to Smith & Lee to operate a twelve-person AFC home if the City sent a letter indicating that it was not opposed, and that it was thus unnecessary for the City to actually rezone the Mortenview parcel, Smith & Lee sought such a letter from the City at a study session of the City Council, on March 19, 1990. The City Council did not accede to Smith & Lee's request that the letter proposal be brought up for a vote at the next City Council meeting, on March 20, 1990.

II

On May 10, 1991, Smith & Lee brought suit alleging that the City had violated Section Six of the Fair Housing Amendments Act of 1988 ("FHAA"), 42 U.S.C. § 3604(f)(1)(B) & (3)(B), by intentionally discriminating against and failing to make reasonable accommodations for the handicapped. The United States filed a similar action on June 28, 1991, and the suits were consolidated for trial. 2

A

After a bench trial, the District Court held that Taylor intentionally discriminated and failed to make reasonable accommodations. United States v. City of Taylor, Mich., 798 F.Supp. 442 (E.D.Mich.1992).

In reaching its conclusion that Taylor had intentionally discriminated, the District Court found that Taylor's 1981 suit for declaratory judgment against the State, in which it sought to have a Michigan statute defining group homes of six or fewer residents as a family for zoning purposes 3 declared unconstitutional, was historical evidence of the City's discriminatory animus toward the handicapped. The Court also found that City officials' fears of increased traffic and parking problems, and their objections to spot zoning, were pretextual because the various officials offered very similar testimony:

Th[e] constant repetition of the parking, police, fire and zoning matters seriously destroyed the credibility of all members of the City Council who testified.

City of Taylor, 798 F.Supp. at 447. It also noted the City's failure to commission studies on the actual impact of a twelve-person AFC home on parking and traffic.

The Court also found that the City had set up procedural roadblocks when it informed Smith & Lee that it would have to get the City Council to rezone the Mortenview property from single-family to multiple-family use. Mortenview did not necessarily need to be rezoned, the Court noted, because the ordinance did not expressly mention AFC homes. The Court believed that Mortenview was ineligible for R-1A zoning only because of its for-profit status. Yet, the Court noted, the City tolerated other for-profit home businesses on the same street and in the same area.

The Court also found that Taylor had failed to make reasonable accommodations. The Court rejected the City's fears about increased traffic and parking problems as having no basis in fact. The Court held that the City simply could have sent a letter informing MDSS that it was not opposed to Smith & Lee's proposal to operate Mortenview as a twelve-person AFC home.

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The Court ordered the City to send such a letter to MDSS. It also ordered Taylor to pay a $50,000 fine to the United States and to pay Smith & Lee $152,000 for profits it would have earned had the City permitted it to operate with twelve residents.

B

After the City appealed, a panel of this Court reversed and remanded the action for further proceedings. Smith & Lee Assoc., Inc. v. City of Taylor, Mich., 13 F.3d 920 (6th Cir.1993). 4 After noting that local municipalities have wide-ranging discretion in regulating land use, we held that the City zoning ordinance's definition of family, 5 which excluded Smith & Lee's operation of a for-profit AFC home housing more than six residents in an area zoned for single-family use, was "a constitutional exercise of its legislative discretion to zone a residential neighborhood." Smith & Lee, 13 F.3d at 925.

We held that the District Court had erred in viewing the City's...

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