City of Chicago v. Matchmaker Real Estate Sales Center, Inc.

Decision Date25 January 1993
Docket Number91-3861,Nos. 91-2491,s. 91-2491
Citation982 F.2d 1086
PartiesCITY OF CHICAGO, a municipal corporation, Leadership Council for Metropolitan Open Communities, a not-for-profit Illinois corporation, Glenn Brewer, Karen Haskins-Brewer, Victor Crown, Melvin Dillard, Queen Frazier, Sandi Gaffen, William McCarthy, and Sharon Swan, Plaintiffs-Appellees, v. MATCHMAKER REAL ESTATE SALES CENTER, INCORPORATED, an Illinois corporation, Daniel King, Sara Munoz, Carol Scarpiniti, Alan M. Walker, and Erwin Ernst, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Joel D. Stein, Corp. Counsel, Elizabeth Sklarsky, Chicago, IL, for City of Chicago in No. 91-3861.

James R. Beyer, Jeffrey K. Ross (argued), Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for plaintiffs-appellees in No. 91-3861.

John L. Gubbins (argued), Monfort, WI, for defendants-appellants.

John P. Relman, Paul M. Smith, Joel I. Klein, Klein, Farr, Smith & Taranto, DC, for National Fair Housing Alliance, amicus curiae.

Lawrence Rosenthal, Deputy Corp. Counsel, Benna R. Solomon, Mardell Nereim (argued), Kelly R. Welsh, Asst. Corp. Counsel, Appeals Div., for City of Chicago, in No. 91-2491.

James R. Beyer, Jeffrey K. Ross (argued), Brenda A. Russell, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL for plaintiffs-appellees in No. 91-2491.

Laurene K. Janik (argued), Joshua J. Nathan, National Ass'n of Realtors, Chicago, IL, Robert D. Butters, Cichocki & Armstrong, Oak Park, IL, for Illinois Ass'n of Realtors, National Ass'n of Realtors and Chicago Bd. of Realtors, amicus curiae.

Before BAUER, Chief Judge, FLAUM, Circuit Judge, and WOOD, Jr., Senior Circuit Judge.

BAUER, Chief Judge.

Plaintiffs, consisting of the City of Chicago (the "City"), the Leadership Council for Metropolitan Open Communities (the "Leadership Council"), and individual "testers," sued Matchmaker Real Estate Sales Center, Inc. ("Matchmaker"), its sole shareholder Erwin Ernst, and its sales agents, Daniel King, Sara Munoz, Carol Scarpiniti, and Alan Walker. Plaintiffs sought recovery for violations of the Civil Rights Act of 1866, 42 U.S.C. § 1982 ("Section 1982"), 1 and the 1968 Fair Housing Act, 42 U.S.C. §§ 3604(a), (b), and (d) ("Section 3604"). 2 Pursuant to 28 U.S.C. § 636(c), the parties consented to trial before a magistrate judge. After a bench trial, the magistrate judge found the defendants liable. She awarded the plaintiffs compensatory damages, punitive damages, and attorneys' fees. For the reasons set forth below, we affirm in part and reverse in part.

I. FACTS

In 1987, the Leadership Council suspected that the defendants were engaging in the illegal practice of racial steering. 3 The Leadership Council therefore conducted a series of tests of defendants' activities. Pairs of black and white "testers"--individuals who posed as homeseekers--went to Matchmaker and inquired about buying homes on the southwest side of Chicago or nearby suburbs. 4 The Leadership Council closely matched the black and white teams for financial qualifications (including income and possible down payments) and housing needs (such as family size and preferences). Beginning in July of 1987, the Leadership Council, through its testers, began the first of five tests.

A. Test One

In July of 1987, Rosalinda Castillo, a white tester, called Matchmaker and spoke to defendant Daniel King. She requested information about houses for sale priced in the $70,000 range. King ascertained Castillo's family size and available downpayment ($10,000). Tr. at 245-46. On July 25, 1987, Castillo met King at the Matchmaker office. They discussed financing and possible mortgage lenders. Castillo and her white co-tester, Kenneth Govas, told King their combined income was $39,000. King suggested that they look in the West Lawn and Garfield Ridge areas. Tr. at 247. Both are white neighborhoods. King had a Multiple Listing Service ("MLS") list of many homes with prices up to $75,000 which provided addresses, neighborhoods, and other general information.

King crossed out two houses on the list. Both houses were in areas that had virtually a 100% black population. King advised the testers that if they saw a house in West Lawn, West Elsdon, or Garfield Ridge (all white areas), they should move quickly because those houses generally sell fast, unlike the homes in the Gage Park and Chicago Lawn areas along Western Avenue (which were either racially mixed or black areas). King also gave the white testers a detailed computer printout list of six houses in the West Lawn and West Elsdon areas.

Also in July of 1987, Deborah Bennett, a black tester, called Matchmaker's office and spoke with King. Tr. at 343. Bennett requested information about houses for sale in the $70,000 price range. Bennett informed King that her family income was $51,000 and that their available down payment was $12,000. Tr. at 344. On July 25, 1987, Bennett and her black co-tester, Maurice Bennett, met with King. King told them they should have no problem obtaining financing, but he made no specific suggestions about obtaining financing as he did with the white testers. King showed the black testers a picture of a house available for $39,900 in a racially mixed area. Tr. at 346. King did this despite the black testers' specific request for houses in the $70,000 price range. King also gave the black testers a listing of about 40 houses in Gage Park and Chicago Lawn (both racially mixed or black areas). The houses on the list ranged in price from $45,900 to $52,000, well below the requested $70,000 price range. Tr. at 571.

B. Test Two

In August of 1987, Rita Ernst, a white tester, called Matchmaker and spoke to Alan Walker. She requested information about houses for sale priced in the $65,000 to $70,000 range, with easy access to and from Peoria. Ms. Ernst informed Walker that she and her family had moved from Georgia and had rented a house in Hazelcrest, a Chicago suburb. Tr. at 225. Ernst stated that her family's income was $42,000 and that their available down payment was $9,000. Tr. at 224. On August 13, 1987, Walker called Rita Ernst and told her about five houses he had selected. All of the houses were located in white areas west of Kedzie Avenue. 5 On August 15, 1987, Walker met Rita Ernst and her white co-tester, Joseph Ernst, to inspect the houses he had selected. After Rita Ernst asked Walker about the absence of "For Sale" signs in front of the houses, he responded that "these were nice neighborhoods and that they want to keep the neighborhoods nice." Tr. at 229. He also said that the signs were missing in order to discourage "certain parties [who] want to come in." Tr. at 1009.

In March of 1988, the Ernsts met Walker again and viewed two additional homes he had selected. Tr. at 371-72. Both houses were in their price range and located in white areas west of Kedzie. Also, Walker told the white testers that he had a third house in Gage Park that was "nice" but that he would not show it to them because it was "east of Kedzie" (in a black area) and they "wouldn't want to live there." Tr. at 376-78.

Also in August of 1987, Lynda Hale, a black tester, called Matchmaker and spoke to King. Hale requested information about homes in the $70,000 to $75,000 range in southern Gage Park and Chicago Lawn between 55th and 71st Streets west of Western Avenue. She also told King that she preferred a home near Midway Airport because her husband travelled from there often. Tr. at 387-88. When Ms. Hale and her black co-tester, James Hill, arrived for their appointment on August 16, 1987, King had already selected four homes south of 71st Street, three of which were east of Western Avenue. All of the homes were in racially mixed areas and priced well below the black testers' requested price ranges. When the black testers renewed their request to see homes which were located north of 71st Street and west of Western, King did not shift his focus to the west. Instead, he selected two homes located near Western Avenue, priced between $57,000 and $57,999, more than $12,000 below the low end of the testers' price range and located in racially mixed areas. Tr. at 391. At the time the black testers visited Matchmaker, homes were available in the requested $70,000 to $75,000 price range, as the white testers in Test One had been given listings for West Lawn and West Elsdon (both white areas) in that price range less than two weeks earlier. Also, the West Lawn and West Elsdon areas are significantly closer to Midway Airport.

C. Test Three

In late October of 1987, Elvia Fernandez, a white tester, telephoned Matchmaker's office and asked about a house located in West Lawn (a white area) that had been advertised for sale. She spoke to Alan Walker and told him she was married with one child and had a household income of $40,000. Tr. at 300-01. He provided her with information about the advertised house and also suggested that Fernandez drive by another house in the area that was not yet advertised. On October 31, 1987, Fernandez and her white co-tester, Manolo Castillo, met with Walker and told him that they wanted to inspect the unadvertised house. Walker asked the white testers about their preference in housing, their price range ($60,000 to $70,000), and down payment. Tr. at 301. Walker also set up an appointment for the white testers to inspect the house. He showed the white testers the house and advised them to call him as soon as they made a decision.

On the same day the white testers called, Theresa Prim, a black tester, telephoned Matchmaker and requested information about homes advertised in the same advertisement the white testers had called about. Prim spoke with Matchmaker agent Sara Munoz. Tr. at 990. The first house Prim asked about was in West Elsdon (a white area). The second house was in West Lawn (also a white...

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