Hallmark Developers, Inc. v. Fulton County, Ga.

• Decision Date: 12 October 2006
• Docket Number: No. 05-15633.,05-15633.
• Citation: 466 F.3d 1276
• Parties: HALLMARK DEVELOPERS, INC., Charles Garrison, Plaintiffs-Appellants, v. FULTON COUNTY, GEORGIA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

466 F.3d 1276

HALLMARK DEVELOPERS, INC., Charles Garrison, Plaintiffs-Appellants, v. FULTON COUNTY, GEORGIA, Defendant-Appellee.

No. 05-15633.

United States Court of Appeals, Eleventh Circuit.

October 12, 2006.

Kathryn M. Zickert, Marcia M. Ernst, Smith, Gambrell & Russell, LLP, Atlanta, GA, for Plaintiffs-Appellants.

Lauren MacLeod Hansford, Steven E. Rosenberg, Atlanta, GA, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before EDMONDSON, BIRCH and ALARCÓN,^* Circuit Judges.

ALARCÓN, Circuit Judge:

I

Appellants Hallmark Developers, Inc. and Charles Garrison (collectively, "Hallmark") appeal from (1) the summary judgment in favor of Appellee Fulton County, Georgia ("the County") on their intentional discrimination claim based on the Fair Housing Act, 42 U.S.C. § 3601, et seq. ("FHA"); and (2) the judgment entered following a bench trial on the merits on their discriminatory impact claim based on the FHA.

The District Court concluded that Hallmark had failed to adduce evidence that the County had intentionally discriminated on the basis of race when it refused to re-zone a parcel of property in order for Hallmark to build, inter alia, homes affordable to households with low and moderate incomes. The District Court also concluded that Hallmark failed to demonstrate that the re-zoning decision had a significant disparate impact on minorities. Hallmark argues that (1) the District Court failed to consider relevant evidence of discriminatory intent; (2) was clearly in error in its finding regarding disparate impact; and (3) considered expert testimony that should have been excluded under Rule 702 of the Federal Rules of Evidence.

II

For many years, Chris Doughtie, president of Hallmark, received literature and invitations to attend business functions in South Fulton County, Georgia. This literature identified South Fulton County as a "development target and advised developers of the incentives to encourage development in the corridor."

Accordingly, Hallmark and Appellant Charles Garrison acquired property in South Fulton County ("the Property") with the express intention of developing it for a mixture of uses, including commercial, office, and residential. Specifically, they hoped to construct a large development consisting of apartments, townhomes single-family homes, and office space. The townhomes and single-family homes would be built under the control of Hallmark. The apartments would be built by a contractor subject to conditions imposed by Hallmark. Hallmark intended that a large percentage of the homes would be "affordable," as defined by the Department of Housing and Urban Development ("HUD").¹ The Property would have to be re-zoned from AG-1 (agricultural) to MIX (mixed use) in order for this development to take place.

In early 2001, Mr. Doughtie arranged for a visit to Chestnut Lake, a low-income, single-family subdivision that Hallmark had developed in DeKalb County, Georgia. Among others, he invited Fulton County Commissioner William Edwards, Fulton County Assistant Director of Comprehensive Planning Beth McMillan, and Fulton County Economic Development Director Joseph Johnson. The purpose of the visit was to acquaint these county officials with the sort of development Hallmark intended to make on the Property.

Chestnut Lake contains 700 lots. The homes initially were priced in the range of $89,000 to $130,000, but after changes were made, the price range was from approximately $120,000 to $150,000. The homes were built by Mayfield Homes, which is owned in part by Mr. Doughtie and his son. Mr. Doughtie told the county officials that Mayfield Homes would build the single-family homes on the Property as well, and that the homes on the Property would be similar in appearance and layout to those at Chestnut Lake.

During this visit, none of the county officials expressed any concern regarding the quality of the Chestnut Lake development.² Commissioner Edwards, however, cautioned Mr. Doughtie to involve South Fulton community associations in the re-zoning process to "get the community happy." Among the community groups Commissioner Edwards listed were the South Fulton Parkway Alliance, the Cliffondale Community Association, and Green South Fulton ("the community groups").

On October 30, 2001, Hallmark filed an application with the Fulton County Department of Environment and Community Development seeking to re-zone the Property. Kathryn Zickert appeared before the Board of Commissioners ("the Board") on behalf of Hallmark at a public hearing on February 6, 2002. The Board granted a 60-day deferral to allow Hallmark to engage in discussions with the community groups regarding the proposed development.

On April 3, 2002, Ms. Zickert appeared before the Board on behalf of Hallmark a second time. After the public hearing, Commissioner Edwards (who is commissioner of the district where the Property is located) moved to deny Hallmark's re-zoning application "based on the quality of what [he'd] seen and things [he'd] heard." Chairman Mike Kenn supported Commissioner Edwards's motion. He stated that the development was "probably one of the poorest-designed, laid out subdivisions [he'd] ever seen." Another commissioner made a substitute motion for an additional 60-day deferral, and the Board granted the deferral so that Hallmark could continue to discuss unresolved issues with the community groups.

On June 5, 2002, Ms. Zickert appeared before the Board on behalf of Hallmark a third and final time. Commissioner Edwards moved to deny the application due to the lack of improvement "in terms of the quality of the site plan and the site plan design." Hallmark's re-zoning application was denied.

While Hallmark's application for re-zoning was pending, Mr. Doughtie, his colleagues, and his attorneys met with the community groups as suggested by Commissioner Edwards. During the meetings, community group members expressed opposition to the proposed development on the Property. Three community leaders, Abby Jordan, Dave Robinson, and Larry Hyde stated that they opposed the proposed development because it was likely to attract "blacks" and families with children to the area. Another community activist, Bruce Moody, stated that he did not want poor black people moving into low-rent, lower priced homes in South Fulton County.

On January 26, 2001, at a meeting with a community group, Hallmark's counsel heard Commissioner Edwards say to Ms. Jordan, "I know a lot of your objections to projects like [Hallmark's] proposed development, is a black issue." The community groups also objected to the quality of the proposed homes, "made demands which drove up the prices of homes," and "did not want apartments in anything but luxury form." Hallmark agreed to many of the changes in the quality of the development that the community groups suggested.

Hallmark did not produce evidence that any racist remarks were made at the hearings in front of the Board. Although Hallmark contends that "subtle remarks were made by no fewer than three activists" to the Board at the second hearing on April 3, 2002, Hallmark does not state exactly what the remarks were.³ The County points out that one member of the community stated:

What I'm saying is that we have no choices that are over [$150,000, with reference to the price of the homes]. And what I'm trying to get at is if we just keep building houses that are all under 150, we will never raise the bar in South Fulton. We will never bring in the kind of development that I thought this Commission envisioned.

The same community member later referred to the "apartment challenge" and "the transient part of that." Commissioner Emma Darnell responded:

That's a bad argument to bring to me. Let the approach have something to do with some objective measurement of the quality of life. Talk to me about environment. Talk to me about traffic. Let's not bring our personal aesthetic prejudices and biases to the table ... this County Commission is not going to close its doors to ordinary working people who also want to live and have nice houses.

Commissioner Nancy Boxill stated: "I don't want to participate in a zoning process that starts to say what kind of person gets to live where." Commissioner Edwards stated:

Let me just add, too, because I want to thank both my colleagues for bringing out a very good point and a sensitive point because you understand my motion [to deny the re-zoning application] has nothing to do with price ... But we do talk about price and a lot of times I think we should change that to quality and other things. And that was the basis of my denial.

Another community member said something about keeping South Fulton Parkway "pristine." Commissioner Boxill stated that the community members were describing a "redlining" practice.

The County's Planning Staff, Community Zoning Board, the Atlanta Regional Commission, and the Georgia Regional Transportation Authority reviewed and repeatedly recommended approval for Hallmark's zoning application. Nevertheless, Commissioner Edwards voted to deny the re-zoning. He was apparently influenced by the opposition of the community groups in this decision. He stated in his deposition that ninety percent of the zonings that happen in South Fulton County are "done real simple between the community and the developer." Zoning applications opposed by such community groups are usually not approved. Actual voting records confirm that in eighty-nine of ninety-five instances, Commissioner Edwards's vote reflected the community's position. Typically other commissioners show "district courtesy" to each other. If a proposed project is located within one commissioner's district, the other commissioners defer to that commissioner's wishes.

Following the denial of its application, Hallmark filed a complaint under the FHA, contending that the County discriminated on the basis of race in denying...