Covey v. Hollydale Mobilehome Estates

• Citation: 116 F.3d 830
• Parties: 97 Cal. Daily Op. Serv. 4576, 97 Daily Journal D.A.R. 7607 Anthony J. COVEY; Caren F. Covey; Anthony Pegnatori; Karen Pegnatori, Robert J. Linn, Plaintiffs-Appellants, v. HOLLYDALE MOBILEHOME ESTATES; Hub City Construction, Inc., a California corporation; Elizabeth Scott; W.H. Stauder; The C. Paul Scott and Louise Mary Scott Trust dated
• Decision Date: 02 November 1970
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 830

116 F.3d 830

97 Cal. Daily Op. Serv. 4576, 97 Daily Journal

D.A.R. 7607

Anthony J. COVEY; Caren F. Covey; Anthony Pegnatori Karen Pegnatori, Robert J. Linn, Plaintiffs-Appellants, v. HOLLYDALE MOBILEHOME ESTATES; Hub City Construction, Inc. a California corporation; Elizabeth Scott; W.H. Stauder The C. Paul Scott and Louise Mary Scott Trust dated November 2, 1970, individually and d/b/a Hub City Construction Co. and d/b/a Hollydale Mobilehome Estates; Paul J. Scott Jean Ann Crilley; Defendants-Appellees.

No. 96-55056.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 8, 1997.

Decided June 18, 1997.

Kurt Delsack, Corona Del Mar, CA, and Paul E. Fisher, Fisher & Associates, Newport Beach, CA, for plaintiffs-appellants.

Robert S. Coldren, Hart, King & Coldren, Santa Ana, CA, for Hollydale Mobile, etc, et al., and Jim P. Mahacek, Callahan & Blaine, Irvine, CA, for Jean Ann Crilley.

Appeal from the United States District Court for the Central District of California; Alicemarie H. Stotler, District Judge, Presiding. D.C. No. CV-93-01183-AHS.

Before: FLETCHER and PREGERSON, Circuit Judges, and WEXLER, ^* District Judge.

FLETCHER, Circuit Judge:

Anthony Covey, Caren Covey, Anthony Pegnatori, and Karen Pegnatori ("Appellants") lived in a mobile home park where children were unwelcome. They sued Hollydale Mobile Home Estates ("the Park") and its owners, trustees and employees (collectively, "Appellees"), claiming that Appellees discriminated against them on the basis of familial status, in violation of the Fair Housing Act ("FHA"), because they had children living in their mobilehomes. During the pendency of Appellants' action, the Department of Housing and Urban Development ("HUD") changed the regulations applicable to housing that could qualify as senior housing. After this appeal was filed, Congress amended the FHA to eliminate the challenged requirement for qualified senior housing. Because we conclude that neither the new regulations nor the statutory amendment apply to this case, we reverse the district court's summary judgment order and remand for trial.

I. BACKGROUND

A. FACTS

The Park is a 134-unit mobilehome park located in a rustic area of Brea, California. Until September 1988, the Park operated as an adult park and required all residents to be over eighteen years of age. When Congress amended the FHA to prohibit discrimination based on familial status, the Park elected to become a senior citizens' community. On September 1, 1988, the Park notified its residents that after March 1, 1989, they could sell their units only to persons aged fifty-five or older; existing residents would be "grandfathered in." The Park amended its rules and regulations to reflect its new status as a "senior citizens' community." ¹

Anthony Covey had moved into the Park in 1984. Caren (Floyd) Covey moved in with him in 1991. They later married, and on May 17, 1993, their daughter Kaitlyn was born and began living in the Coveys' mobilehome.

Anthony and Karen Pegnatori began residing in the Park on August 1, 1988. In March 1991, their adult daughter Holly temporarily moved back to the Pegnatoris' mobilehome; in August 1993, Holly became a permanent resident of the Pegnatoris' home. Holly has a minor daughter, Nina, who resides at least semi-permanently in the Pegnatoris' mobilehome.

In October 1994, the Park converted to an all-ages park. In December 1994, the Park was sold. As of approximately September 1995, neither the Coveys nor the Pegnatoris still resided in the Park.

B. STATUTORY AND REGULATORY FRAMEWORK

The Fair Housing Act prohibits discrimination on enumerated bases in the sale or rental of public or private housing. 42 U.S.C. § 3604 (1994). In 1988, Congress amended the FHA to prohibit housing discrimination based on "familial status," defined as one or more individuals (who have not attained the age of 18 years) being domiciled with--

(1) a parent or another person having legal custody of such individual or individuals; or

(2) the designee of such parent or other person having such custody with the written permission of such parent or other person.

Id. § 3602(k).

However, Congress recognized that many senior citizens wish to live in senior-oriented communities and that the prohibition against familial status discrimination might reduce the availability of affordable senior housing. Congress therefore exempted "housing for older persons" from compliance with the FHA's familial status provisions. Id. § 3607(b)(1). The FHA includes three types of exempted "housing for older persons:" housing provided under a state or federal program to assist elderly persons; housing intended for and solely occupied by persons 62 years of age or older; and housing intended and operated for occupancy by at least one person 55 years of age or older per unit. Id. § 3607(b)(2). This case involves "55 or older" housing.

Under the 1988 amendments, housing qualifies for the "55 or older" exemption if it demonstrates:

(i) the existence of significant facilities and services specifically designed to meet the physical or social needs of older persons, or if the provision of such facilities and services is not practicable, that such housing is necessary to provide important housing opportunities for older persons; and

(ii) that at least 80 percent of the units are occupied by at least one person 55 years of age or older per unit; and

(iii) the publication of, and adherence to, policies and procedures which demonstrate an intent by the owner or manager to provide housing for persons 55 years of age or older.

Id. § 3607(b)(2)(C) (West Supp.1995). Housing facilities in which fewer than 80% of the units were occupied by at least one person 55 years of age or older on September 13, 1988, may qualify so long as new residents meet the age requirement. Id. § 3607(b)(3).

Congress charged the Department of Housing and Urban Development ("HUD") with implementing the FHA. Id. § 3614a. On January 23, 1989, HUD issued regulations implementing the 1988 amendments, including the "housing for older persons" exemption. 54 Fed.Reg. 3232, 3290 (Jan. 23, 1989). ²

HUD's definition and interpretation of the "significant facilities and services" requirement proved difficult to implement. That requirement became the source of numerous administrative complaints, and housing providers had great difficulty proving compliance. See S.Rep. No. 172, 104th Cong., 1st Sess. 2, 1996 U.S.C.C.A.N. 778 (Nov. 9, 1995) (Report on Pub.L. No. 104-76); id. at 10 (Statement of Senator Kyl). In 1992, Congress ordered HUD to issue within 180 days a revised rule containing a workable definition of "significant facilities and services." Housing and Community Development Act of 1992, Pub.L. No. 102-550, 106 Stat. 3883 (Oct. 28, 1992) § 919. HUD's initial proposed rule, issued in July 1994, was widely criticized. See 59 Fed.Reg. 34902 (July 7, 1994). After reviewing thousands of comments and holding hearings across the country, HUD issued a substantially revised proposal, which it published as a final rule on August 18, 1995. 60 Fed.Reg. 43322 (Aug. 18, 1995).

The 1995 regulations expressly placed the burden of proving qualification on the housing provider claiming the exemption. Id. at 43327 (amending 24 C.F.R. § 100.304(b)). ³ They also required the housing provider to "affirmatively demonstrate[ ] through credible and objective evidence that facilities and services specifically designed to meet the needs of older persons are 'significant.' " Id. at 43328 (publishing 24 C.F.R. § 100.306(a)). The 1995 regulations defined "significant facilities and services specifically designed for older persons" as "those which actually or predictably benefit the health, safety, social, educational, or leisure needs of older persons." Id.

The new regulations provided twelve categories listing numerous facilities and services. Id. at 43328-29 (publishing 24 C.F.R. § 100.306(d)). A housing provider could establish that it met the "significant facilities and services" criterion by making available, directly or indirectly, at least two facilities and services in at least five categories, including at least two facilities in either category 10 (leisure needs) or 11 (health/safety needs). Id. at 43328 (publishing 24 C.F.R. § 100.306(c)). The rule also listed criteria for HUD's evaluation of whether a provider's facilities and services, in the aggregate, were "significant." Id. at 43329 (publishing 24 C.F.R. § 100.306(f)). The new rule did not substantially change the "impracticability" test, the 80% requirement, or the intent requirement. ⁴

The new regulations took effect on September 18, 1995. Three months later, Congress amended the FHA to eliminate the "significant facilities and services" requirement from the housing for older persons exemption. Pub.L. No. 104-76, 109 Stat. 787 (Dec. 28, 1995) (codified at 42 U.S.C. § 3607(b)(2)(C) (1996)). HUD subsequently revised its implementing regulations to reflect the amendment. See 24 C.F.R. § 100.304 (1996); 61 Fed.Reg. 18249 (Apr. 25, 1996).

C. PROCEDURAL HISTORY

On December 1, 1993, the Coveys filed a complaint against Hollydale Mobile Home Estates, Hub City Construction Company, Elizabeth Scott, William Stauder, and ten unnamed defendants. The Coveys alleged that the defendants were discriminating against them based on familial status in violation of the FHA. The complaint included two federal law causes of action for discrimination and declaratory relief and five state law causes of action for various tort and contract claims. The Coveys sought compensatory and punitive damages in amounts to be proven at trial, injunctive relief, and declaratory relief.

On March 9, 1994, the district court granted the Coveys a preliminary injunction barring the defendants from evicting them or attempting to prevent their daughter from residing in the Park during the action's pendency.

In July 1994, the district...