408 F.Supp. 489 (S.D.Ohio 1976), C-1-74-153, Laufman v. Oakley Bldg. & Loan Co.

Docket Nº:C-1-74-153
Citation:408 F.Supp. 489
Party Name:Laufman v. Oakley Bldg. & Loan Co.
Case Date:February 13, 1976
Court:United States District Courts, 6th Circuit, Southern District of Ohio
 
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Page 489

408 F.Supp. 489 (S.D.Ohio 1976)

Robert F. LAUFMAN et al., Plaintiffs,

v.

OAKLEY BLDG. & LOAN CO., et al., Defendants.

No. C--1--74--153.

United States District Court, S.D. Ohio, Western Division.

Feb. 13, 1976

Page 490

[Copyrighted Material Omitted]

Page 491

Donald F. Colegrove, Cincinnati, Ohio, for plaintiff; Robert F. Laufman, Cincinnati, Ohio, Jay P. Mulkeen, NCDH, Washington, D.C., of counsel.

Matthew G. Ash, Washington, D.C., amicus curiae for Federal Home Loan Bank Bd.

Frank E. Schwelb, Housing Sec., Civ. Rts. Div., Dept. of Justice, Washington, D.C., amicus curiae for United States of America.

Louis A. Ginocchio, Cincinnati, Ohio, for defendants.

OPINION

DAVID S. PORTER, District Judge:

This Title VII case, involving 'redlining,' is before us pursuant to defendants' motion for summary judgment (Rule 56 of the Federal Rules of Civil Procedure) on the asserted ground that there is no genuine issue as to any material fact, that no cause of action is stated and that defendants are entitled to judgment in their favor as a matter of law. Defendants' motion for summary judgment is not well-taken and is denied for the reasons set forth in this opinion. We find that plaintiffs have stated a cause of action under both 42 U.S.C. ss 3604 and 3605. We also find that plaintiffs have stated a cause of action under 42 U.S.C. s 3617 which provides that 'it shall be unlawful to . . . interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title. . . .' We further find that plaintiffs have stated a cause of action under Title VI of the Civil Rights Act of 1964, 42 U.S.C. s 2000d.

42 U.S.C. ss 3604 and 3605

The principal thrust of plaintiffs' argument is that 'redlining' is prohibited by Sections 804 and 805 of Title VIII of the Civil Rights Act of 1968, 42 U.S.C. ss 3604 and 3605. 1 In pertinent part, these provisions declare:

Section 3604 Discrimination in the sale or rental of housing '. . . it shall be unlawful--(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin.

(b) To discriminate 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 therewith, because of race, color, religion, sex, or national origin.' (Emphasis added.)

Section 3605 Discrimination in the financing of housing

'. . . it shall be unlawful for any bank, building and loan association, insurance company or other corporation . . . to deny a loan or other financial assistance to a person applying therefor for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or to discriminate against him in the fixing of the amount, interest rate, duration, or other terms or conditions of such loan or other financial assistance, because of the race, color, religion, sex, or national origin of such person or . . . of the present or prospective owners, lessees, tenants, or occupants of the dwelling or dwellings in relation to

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which such loan or other financial assistance is to be made or given . . ..' (Emphasis added.)

Plaintiffs contend that 'redlining' is prohibited by the plain language of these provisions; if interpretation is necessary, they add, the Court should give great deference to the interpretation given these provisions by the Department of Housing and Urban Development (HUD) and the Federal Home Loan Bank Board (FHLBB) and should give these provisions a generous interpretation to effectuate the Congressional purpose. Defendants agree that these provisions are clear and unambiguous and that their literal language should be given effect, but they read these provisions not to prohibit 'redlining'. Defendants argue for a narrow reading of the terms of the Fair Housing provisions of the Civil Rights Act of 1968.

Plaintiffs contend that s 3604(a) not only prohibits conduct constituting a refusal to sell or rent, but also conduct that 'otherwise make(s) (dwellings) unavailable.' The 'otherwise make unavailable' language, plaintiffs argue, has been given a broad reading by the courts and applied specifically to a variety of discriminatory conduct having nothing to do with refusals to sell or rent. These situations include rejection by an orphanage of minority orphans, adoption by a municipality of exclusionary ordinances, and racial steering by real estate brokers. United States v. Hughes Memorial Home, 396 F.Supp. 544 (W.D.VA. 1975); United States v. Parma, P.H.E.O.H.Rptr. para. 13,616 (N.D.Ohio 1973); Zuch v. Hussey, 366 F.Supp. 553 (E.D.Mich.1973). Thus, it is argued that s 3604(a) also outlaws 'redlining.'

Plaintiffs also contend that defendants' conduct is prohibited by s 3605 which deals specifically with 'Discrimination in the Financing of Housing.' Plaintiffs assert that 'redlining' is prohibited by the plain meaning of this section. They urge that a narrower reading of s 3605 would reduce the language 'or of the present or prospective owners, lessees, tenants, or occupants of the dwelling or dwellings in relation to which such loan is to be made or given,' to surplusage and redundancy. This construction of s 3605 is also urged so as to be consistent with the broad scope of protection which Congress intended in enacting Title VIII and with the liberal construction that the Supreme Court directed the Act be given.

Defendants contend that only s 3605 is applicable as that provision specifically governs financing in housing. Reliance on s 3604, which principally concerns the sale or rental of housing, they argue, violates the principle that a specific statutory provision controls a general provision. Defendants buttress their position by reference to the title of s 3604, 'Discrimination in the sale or rental of housing,' as contrasted with the title of s 3605, 'Discrimination in the financing of housing.' The titles of legislative enactments are, of course, one indication of legislative intent. First Bank & Trust Co. of Princeton Ky. v. Feuquay, 405 F.2d 990, 993 (6th Cir. 1969). But examination of s 3604 reveals that it not only deals with discrimination in the sale or rental of housing in the broadest possible manner, but also has explicit application to other situations as well, so that its coverage clearly extends beyond the usual purview of the terms 'sale or rental.' For example, s 3604(b) prohibits racial discrimination 'in the provision of services or facilities' in connection with the sale or rental of a dwelling. This has been held to include municipal services such as sewage treatment. United Farm. of Fla. H. Proj., Inc. v. City of Delray Beach, 493 F.2d 799 (5th Cir. 1974); Kennedy Park Homes Ass'n v. City of Lackawanna, D.C., 318 F.Supp. 669, aff'd, 2 Cir. 436 F.2d 108, cert. denied, 401 U.S. 1010, 91 S.Ct. 1256, 28 L.Ed.2d 546 (1971). And s 3604(c) prohibits racially discriminatory advertising practices in connection with the sale or rental of housing. This subsection has been interpreted as prohibiting the recorder of deeds in the District of Columbia from accepting for filing

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instruments that contain racially restrictive covenants, Mayers v. Ridley, 151 U.S.App.D.C. 45, 465 F.2d 630 (1972). In view of the wide applicability of s 3604, defendants' suggestion that s 3604 should be limited to discrimination in the sale or rental of housing in some narrow sense loses much of its force. And in any event, the denial of plaintiffs' loan application in this case in fact occurred in connection with the sale of a dwelling. Thus, reference to the caption is not controlling.

Moreover, s 3605 governs financing arrangements which lie beyond the coverage of s 3604, no matter how broadly s 3604 is read, as well as certain financial arrangements which would appear to come within s 3604's literal terms. In the category of transactions not subject to s 3604 are loans or other financial assistance for the purpose of 'improving, repairing, or maintaining a dwelling,' which the owner or occupant has previously acquired. Also, it is worth noting, the application of s 3604 is limited by ss 3603(a) and 3607, whereas s 3605 is not.

In view of these considerations, it appears that s 3604 is applicable generally to transactions involving the sale or rental of housing and s 3605 is applicable generally to transactions involving extensions of financial assistance in connection with housing. Transactions involving both the sale or rental of a dwelling and real estate loans or other financial assistance in connection with the sale or rental of the dwelling are subject to both provisions. The same conduct may be prohibited by either or both provisions. In other words, we view ss 3604 and 3605 as being collateral provisions entitled to equal weight.

If the plain meaning of s 3604 is observed, it becomes clear that plaintiffs have stated a cause of action under its terms. The cost of housing being what it is today, a denial of financial assistance in connection with a sale of a home would effectively 'make unavailable or deny' a 'dwelling.' When such denial occurs as a result of racial considerations, s 3604(a) is transgressed.

42 U.S.C. s 3605

Whether or not s 3604(a) is applicable, s 3605 is applicable. This section prohibits any building and loan company from denying a loan 'because of the race . . . of the present or prospective owners, lessees, tenants or occupants of the dwelling...

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