Cleveland v. Caplaw Enterprises, Docket No. 05-4643-CV.

Decision Date15 May 2006
Docket NumberDocket No. 05-4643-CV.
Citation448 F.3d 518
PartiesBrandon CLEVELAND and Isiah Jackson, Plaintiffs-Appellants, v. CAPLAW ENTERPRISES, Defendant-Appellee.
CourtU.S. Court of Appeals — Second Circuit

McLAUGHLIN, Circuit Judge.

Brandon Cleveland and Isiah Jackson, both African-Americans, sued Caplaw Enterprises in the United States District Court for the Western District of New York (Siragusa, J.). While they did not charge Caplaw with discrimination, they sought to hold it vicariously liable for the allegedly discriminatory renting of an apartment by Caplaw's brokers. The district court dismissed the complaint on the pleadings prior to discovery. Because we find that plaintiffs have adequately pled facts that could support a finding of vicarious liability against Caplaw, we vacate and remand for further proceedings consistent with this opinion.


In February 2003, Cleveland and Jackson tried to rent an apartment together in Rochester, New York. They eventually decided upon an apartment shown to them by Heather Stauber, an employee of LC Properties of Rochester, LLC ("LC Properties"). LC Properties managed the apartment building and was the property's exclusive leasing agent pursuant to a Property Management Agreement (the "Agreement") with its owner, Caplaw.

Plaintiffs executed a one-year lease, and each put down $100 towards the $650 security deposit. The lease permitted them to take possession of the premises the next month. Shortly before their move-in date, plaintiffs contacted LC Properties to obtain the keys to the apartment. Stauber was away on vacation, so plaintiffs dealt with another LC Properties representative, Lou Thyroff.

Thyroff told plaintiffs that they would need to put down a larger deposit before moving in. Thyroff also expressed reservations that plaintiffs were not "the right fit" for the apartment building, because the "professional" living downstairs would not like having unruly college-age tenants living above him.

Suspecting discrimination, plaintiffs called a local housing agency. After the agency contacted LC Properties on their behalf, plaintiffs were shocked to learn that the apartment had already been rented to another tenant. When plaintiffs went to recoup their security deposit, Stauber told them that the "professional" tenant at the property had called LC Properties to ask why the apartment was being shown to "two black hoodlums," and had volunteered that he would not be happy if the apartment was rented to African-Americans. Stauber said that this was probably the reason why plaintiffs had not been allowed to move in.

In July 2003, plaintiffs filed suit under the Fair Housing Act ("FHA") in the United States District Court for the Western District of New York. They named as defendants LC Properties, two LC Properties representatives, and Charles Bisuito, a general partner of Caplaw (sued as "Charles Bisuito d/b/a Caplaw Enterprises"). After discovery, the district court dismissed Bisuito from the suit, holding that Caplaw itself was the owner of record, and that the "doing business as" designation was insufficient to name Caplaw as a defendant.

Rather than amending their complaint to add Caplaw as a defendant, plaintiffs commenced the present action under the FHA against Caplaw in the same court before the same judge in January 2005. Plaintiffs contended that under traditional agency principles Caplaw should be held vicariously liable for the allegedly discriminatory acts of LC Properties.

In June 2005, the district court granted Caplaw's motion for judgment on the pleadings before discovery and dismissed plaintiffs' complaint. The court found that plaintiffs had not pled sufficient facts to support: (1) a finding of agency necessary to support a claim for vicarious liability; and (2) the owner's knowledge of a prospective renter's racial identity which in the court's belief was required by our decision in Mitchell v. Shane, 350 F.3d 39 (2d Cir.2003).

Plaintiffs now appeal.


Plaintiffs contend that the district court erred in dismissing their complaint on the pleadings. We agree.

As a threshold matter, Caplaw suggests that the district court actually converted its motion for judgment on the pleadings into a motion for summary judgment. See Fed.R.Civ.P. 12(c); Fed. R.Civ.P. 56. Accordingly, it contends that plaintiffs could not be content to rest upon their complaint, but were required to offer evidence "beyond the paper allegations of the pleadings." Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir.2000). This argument is without merit.

A court may indeed convert a motion for judgment on the pleadings into a motion for summary judgment if "matters outside the pleadings are presented to and not excluded by the court." Fed.R.Civ.P. 12(c). Although each side submitted excerpts from depositions taken in the earlier case against LC Properties, the district court categorically stated that "the Court finds it unnecessary to convert this motion." In its decision, the district court relied only upon the pleadings and the Agreement, which was incorporated into the pleadings by reference. See, e.g., Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005) (documents incorporated by reference may be considered on a motion to dismiss without triggering conversion). While we understand that "matters outside the pleadings [were] presented to . . . the court," they were "excluded" (within the meaning of Rule 12(c)) by the district court's explicit refusal to consider the outside materials.

Accordingly, the district court's decision is properly addressed solely as a grant of a motion for judgment on the pleadings under Rule 12(c).

A. Standard of Review

This Court reviews de novo a district court's decision to grant judgment on the pleadings. Karedes v. Ackerley Group, Inc., 423 F.3d 107, 113 (2d Cir.2005).

The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim. Id. In each case, the court must "accept[ ] as true the complaint's factual allegations and draw[ ] all inferences in the plaintiff's favor." Id. A complaint should not be dismissed on the pleadings unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir.1994) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "This standard is applied with particular strictness when the plaintiff complains of a civil rights violation." Irish Lesbian & Gay Org. v. Giuliani, 143 F.3d 638, 644 (2d Cir.1998) (citing Branum v. Clark, 927 F.2d 698, 705 (2d Cir.1991)).

B. Agency

It is noteworthy that plaintiffs do not claim that Caplaw itself discriminated against them. Instead, they seek to hold Caplaw vicariously liable for the allegedly discriminatory acts of its property manager, LC Properties. See, e.g., Meyer v. Holley, 537 U.S. 280, 285-89, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003) (applying traditional rules of vicarious liability to housing discrimination cases). Here, whether Caplaw can be haled into court to answer for the alleged malfeasance of LC Properties depends exclusively on whether LC Properties was serving as Caplaw's agent.

"In order to avoid predicating liability for Title VIII [of the Civil Rights Act of 1968] violations on the vagaries of state law, the question whether an agency relationship exists for purposes of the Fair Housing Act is determined under federal law." Cabrera v. Jakabovitz, 24 F.3d 372, 386 n. 13 (2d Cir.1994).

Agency is a legal concept that depends on the existence of three elements: (1) "the manifestation by the principal that the agent shall act for him"; (2) "the agent's acceptance of the undertaking"; and (3) "the understanding of the parties that the principal is to be in control of the undertaking." Id. at 385; see also Restatement (Second) of Agency § 1 cmt. b (1958). The question whether an agency relationship exists is highly factual, however, and can turn on a number of factors, including:

the situation of the parties, their relations to one another, and the business in which they are engaged; the general usages of the business in question and the purported principal's business methods; the nature of the subject matters and the circumstances under which the business is done.

Columbia Broad. Sys., Inc. v. Stokely-Van Camp, Inc., 522 F.2d 369, 375-76 (2d Cir. 1975).

The parties agree that the first two elements of agency are satisfied by the Agreement. Thus, only control is at issue. It is clear that "the right of control by the principal may be exercised by prescribing what the agent shall or shall not do before the agent acts, or at the time when he acts, or at both times." Restatement (Second) of Agency § 14 cmt. a. Nevertheless, the control asserted need not "include control at every moment; its exercise may be very attenuated and, as where the principal is physically absent, may be ineffective." Id.

Here, the district court erred by concluding that plaintiffs had not raised allegations which, if proven, would establish that Caplaw exercised control over LC Properties. The complaint alleges that LC Properties "acted as agents for Caplaw Enterprises . . . at all times relevant to this lawsuit, pursuant to a Property Management Agreement." The Agreement, which was incorporated into the complaint by reference, notes that LC Properties would "perform all reasonable services requested by [Caplaw] in regards to...

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