472 F.Supp. 1106 (S.D.Ohio 1979), C-3-78-105, Dunn v. Midwestern Indem., Mid-American Fire and Cas. Co.

Docket Nº:C-3-78-105.
Citation:472 F.Supp. 1106
Party Name:Austin DUNN et al., Plaintiffs, v. The MIDWESTERN INDEMNITY MID-AMERICAN FIRE AND CASUALTY COMPANY et al., Defendants.
Case Date:June 20, 1979
Court:United States District Courts, 6th Circuit, Southern District of Ohio

Page 1106

472 F.Supp. 1106 (S.D.Ohio 1979)

Austin DUNN et al., Plaintiffs,



No. C-3-78-105.

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

June 20, 1979

Page 1107

Ashley C. Brown, Dayton, Ohio, for plaintiff.

Robert C. Alexander, Neil F. Freund, Dayton, Ohio, for Midwestern.

Douglas K. Ferguson, Dayton, Ohio, for Borchers Ins. Co.

David W. Peck, Cincinnati, Ohio, for Commercial Union.

David C. Greer, Dayton, Ohio, for Hartford Ins.

Thomas E. Jenks, Dayton, Ohio, for American States Ins. Co.

Robert P. Bartlett, Dayton, Ohio, for P. Borden Grethouse.


CARL B. RUBIN, District Judge.

This matter is before the Court on the motion of defendant Midwestern Indemnity Company (Midwestern) for reconsideration of the Court's denial of Midwestern's 12(b)(6) motion.

On August 25, 1978, Midwestern's motion under Federal Rule of Civil Procedure 12(b)(6) was treated by the Court as a motion for summary judgment; and as a motion for summary judgment it was denied. Now, Midwestern moves to exclude all extraneous material and decide, as a matter of law, whether plaintiffs have stated a claim under the Fair Housing Act (the Act), 42 U.S.C. ss 3601 Et seq. 1 In view of Midwestern's withdrawal of all matters outside the pleadings, the Court shall reconsider its prior order, but limited to the following question: Whether plaintiffs have stated a claim upon which relief can be granted against Midwestern under the Fair Housing Act, 42 U.S.C. ss 3601 Et seq. 2

The facts which generated this dispute as gleaned from plaintiffs' complaint may be briefly stated. Plaintiffs are black homeowners residing in a predominantly black neighborhood. In 1955, they purchased homeowner's insurance from defendant Midwestern through defendant Borchers Insurance Company (Borchers). Coverage was maintained until December 9, 1977, when Midwestern notified plaintiffs that their policy would not be renewed. Nonrenewal of plaintiffs' policy was predicated upon Midwestern's decision to terminate Borchers' business portfolio. Plaintiffs were advised by Midwestern to seek substitute coverage under the Ohio FAIR plan.

Plaintiffs contend that the decision to terminate Borchers' business portfolio was based on the fact that the portfolio included "a significant portion of black homeowners and/or persons residing in predominantly black neighborhoods." Plaintiffs charge that this practice, referred to as "insurance redlining", 3 is prohibited by Title VIII of the Civil Rights Act of 1968, 42 U.S.C. ss 3601 Et seq.

Page 1108

In contrast, defendant Midwestern contends that Congress has considered the problems of insurance redlining and acted by passage of the McCarran Act, Urban Property and Protection Reinsurance Act of 1968 and the state FAIR plans. In addition, Midwestern asserts that neither the language of the Fair Housing Act nor the legislative history indicates an intent to include insurance redlining.

I. Applicable Law

A. Standard for Dismissal Under Federal Rule of Civil Procedure 12(b)(6).

It is axiomatic that a complaint should not be dismissed for failure to state a claim upon which relief can be granted unless it is clear that the plaintiff can prove no state of facts in support of its allegations that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1952). Thus, in considering a 12(b)(6) motion to dismiss, all material allegations of the complaint are to be taken as true and the complaint is to be construed in a light most favorable to the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969).

B. Fair Housing Act of 1968.

Plaintiffs have charged that insurance redlining by defendant Midwestern constitutes a violation of ss 3604, 3605 and 3617 of the Fair Housing Act. In construing this language as used by Congress, it is necessary to afford the provisions "a generous construction." Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 212, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972).

The Fair Housing Act 4 defines its policy "to provide within constitutional limitations, for fair housing throughout the United States. 5 In general, the Act prohibits discriminatory housing practices. A discriminatory housing practice is defined as "(any) act that is unlawful under Sections 3604, 3605, or 3606 of this title. " 6 Although these sections do not explicitly proscribe insurance redlining, plaintiffs contend that the terms and history of ss 3604(a) and (b), 3605 and 3617 establish an intent by Congress to embrace insurance redlining within the ambit of the Act.

1. Section 3604

a. Section 3604(a)

Section 3604(a) makes it unlawful "(t)o 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." The phrase, "otherwise make unavailable or deny" has been broadly construed, and several courts have concluded that this language is "as broad as Congress could have made it." E. g., United States v. Youritan Construction Co., 370 F.Supp. 643, 648 (N.D.Cal.1973), Aff'd. as modified, 509 F.2d 623 (9th Cir. 1975); Zuch v. Hussey, 366 F.Supp. 553, 557 (E.D.Mich.1973). Among others, s 3604(a) has been construed to proscribe the following practices: refusal to provide financing in racially integrated areas, "mortgage redlining," (Laufman v. Oakley Bldg. & Loan Co., 408 F.Supp. 489 (S.D.Ohio 1976); the adoption of exclusionary ordinances by a municipality (United States v. City of Parma, P.H.E.O.H.Rptr. P 13,616 (N.D.Ohio 1973)); the rejection by a noncommercial orphanage of minority orphans (United States v. Hughes Memorial Home, 396 F.Supp. 544 (W.D.Va.1975)); the assignment of lower appraisal values to homes in racially integrated neighborhoods (United States v...

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