358 F.3d 1097 (9th Cir. 2004), 03-15656, Smith v. Pacific Properties and Development Corp.

Docket Nº:03-15656.
Citation:358 F.3d 1097
Party Name:Ronald Ray SMITH, Plaintiff, and Disabled Rights Action Committee, a Utah non-profit corporation, Plaintiff-Appellant, v. PACIFIC PROPERTIES AND DEVELOPMENT CORPORATION, a Nevada corporation, Defendant-Appellee.
Case Date:January 26, 2004
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1097

358 F.3d 1097 (9th Cir. 2004)

Ronald Ray SMITH, Plaintiff,

and

Disabled Rights Action Committee, a Utah non-profit corporation, Plaintiff-Appellant,

v.

PACIFIC PROPERTIES AND DEVELOPMENT CORPORATION, a Nevada corporation, Defendant-Appellee.

No. 03-15656.

United States Court of Appeals, Ninth Circuit

January 26, 2004

Argued and Submitted Dec. 5, 2003.

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[Copyrighted Material Omitted]

Page 1099

Richard F. Armknecht, Armknecht & Cowdell, Lindon, UT, for Plaintiff-Appellant Disabled Rights Action Committee.

Glenn F. Meier, Howard, Meier & Fine, Las Vegas, NV, for Defendant-Appellee.

Appeal from the United States District Court for the District of Nevada Lloyd D. George, District Judge, Presiding. D.C. No. CV-01-01277-LDG.

Before: HAWKINS, PAEZ, and BERZON, Circuit Judges.

MICHAEL DALY HAWKINS, Circuit Judge.

In a case of first impression, we must decide whether a disabled person seeking to enforce rights created by § 3604(f)(2) of the Fair Housing Amendments Act ("FHAA"), Pub.L. No. 100-430, 102 Stat. 1619 (codified as amended at 42 U.S.C. §§ 3601-3619, 3631 (1988)), must have an interest in actually purchasing or renting a particular property or dwelling in order to allege a discriminatory violation. See 42 U.S.C. § 3604 (1988). We also face a related question: whether Plaintiff-Appellant Disabled Rights Action Committee ("DRAC") may have organizational standing to allege FHAA violations based on its own articulated "injury in fact." Because we answer the first question in the negative and the second in the affirmative, we reverse the district court's dismissal for failure to state a claim and denial of motion to reconsider, and remand for further proceedings. We do, however, agree with the district court that disgorgement, one of the remedies sought by Appellant, is inappropriate in any case and therefore also affirm in part.

FACTS AND PROCEDURAL HISTORY

The nature of the district court's dismissal requires us to accept as true the factual allegations of DRAC's complaint and to construe those facts in the light most favorable to the plaintiff. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

In late 1997 and early 1998, Robert Ray Smith, a wheelchair-bound polio victim, began investigating multi-family housing developments in Clark County, Nevada, as part of a program to test compliance with the FHAA.1 The tester program of which Smith was a part was organized and implemented by DRAC, a non-profit organization promoting the rights of disabled persons in Utah and Nevada. As a result of his investigations, Smith discovered discriminatory design and construction defects in four properties designed and built by Defendant-Appellee Pacific Properties Development Corporation ("Pacific Properties").2 These defects included, inter alia, inaccessible interior doorways, pathways and thermostats.

Based on these discoveries, Smith and DRAC filed administrative complaints with the United States Department of Housing and Urban Development ("HUD"). HUD conducted its own investigation, confirmed the existence of apparent FHAA violations and instituted compliance litigation resulting in a consent decree with Pacific Properties. Under the decree, Pacific agreed to make certain adjustments to the four housing developments in accordance with an injunction prohibiting discrimination on the basis of disability in violation of 42 U.S.C. § 3604(f)(3)(C). Uninformed of the terms of the consent decree, Smith visited another Pacific development, Savannah at

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Silverado Ranch, after the decree was entered and again encountered "various architectural barriers in the common areas."

Dissatisfied with a lack of notice of the entry of the decree as well as its scope and reach, Smith and DRAC initiated the instant litigation in district court, claiming that conditions in all five Pacific Properties developments violated § 3604(f)(2)'s prohibition of discrimination "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 with such dwelling, because of a handicap of--[ inter alios ] that person."3

On motion of Pacific Properties, the district court dismissed the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim, determining that neither a tester in Smith's circumstance nor an organization like DRAC had standing to assert rights under the FHAA.4 DRAC subsequently moved for reconsideration under Fed.R.Civ.P. 59(e). In that motion, DRAC alerted the court that Smith had passed away, and asked that the court reconsider its motion to amend the complaint to include supplemental facts in support of its own representational and organizational standing in light of Smith's death.

The district court denied DRAC's reconsideration motion without articulating the basis for denial. DRAC appeals both the dismissal and the denial of the motion for reconsideration. We have jurisdiction over both orders under 28 U.S.C. § 1291 because the post-judgment denial of reconsideration is an "integral part" of the final judgment on the merits, even though not entered concurrently with that judgment. See United States v. One 1986 Ford Pickup, 56 F.3d 1181, 1184-85 (9th Cir. 1995) (per curiam).

STANDARD OF REVIEW

We review the denial of a motion for reconsideration for abuse of discretion, Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). The same standard of review applies to denial of leave to amend. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002). Whether such a denial rests on an inaccurate view of the law and is therefore an abuse of discretion, see United States v. State of Washington, 98 F.3d 1159, 1163 (9th Cir. 1996), requires us to review the underlying legal determination de novo. See Southwest Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003) (en banc) (per curiam).

Because it is the only facially viable basis for denial of DRAC's motion to reconsider, we assume that denial was premised on the futility of amendment in light of the district court's legal ruling on the scope of § 3604(f)(2).5 As the Supreme Court has explained:

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In the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.--the leave sought should, as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). There is no allegation or evidence of delay, bad faith, or prejudice in the record. Because DRAC alleges on appeal that the court's legal ruling buttressing the denial of amendment was in error, we review de novo the district court's determination that § 3604(f)(2) of the FHAA requires that a disabled person have an interest in actually renting or purchasing a dwelling in order to allege a violation. See Southwest Voter Registration Educ. Project, 344 F.3d at 918.

With regard to the dispute over DRAC's standing separate and apart from any tester injury, we review de novo the district court's conclusion that DRAC lacked organizational standing to bring the instant litigation. See Fair Housing of Marin v. Combs, 285 F.3d 899, 902 (9th Cir. 2002), cert. denied, 537 U.S. 1018, 123 S.Ct. 536, 154 L.Ed.2d 425 (2002).

DISCUSSION

DRAC has asserted two bases for its standing. First, it claims standing as a representative of its members, see Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977), including testers like Smith, who were allegedly subjected to limited housing opportunities and overtly discriminatory conditions stemming from Pacific Properties' failure to comply with the law. Second, DRAC claims organizational standing in its own right, alleging that Pacific Properties' discriminatory practices negatively impacted its organizational mission and caused DRAC to redirect scarce resources to combat discrimination by Pacific Properties. See, e.g., Fair Housing of Marin, 285 F.3d at 905. While DRAC's representational standing is contingent upon the standing of its members to bring suit, see Hunt, 432 U.S. at 343, 97 S.Ct. 2434, DRAC's organizational standing is separate from the standing of its members, turning instead on whether the organization itself has suffered an injury in fact. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 378-79, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982). We address each of these bases for DRAC's standing separately below.

A. Representational Standing

To establish representational standing...

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