Fair Hous. Rights Ctr. in Se. Pa. v. Post Goldtex GP, LLC

• Decision Date: 17 May 2016
• Docket Number: No. 15–1366.,15–1366.
• Citation: 823 F.3d 209
• Parties: FAIR HOUSING RIGHTS CENTER IN SOUTHEASTERN PENNSYLVANIA, Appellant v. POST GOLDTEX GP, LLC; Post Goldtex, L.P.; KlingStubbins, LLP; KlingStubbins, Inc.
• Court: U.S. Court of Appeals — Third Circuit

823 F.3d 209

FAIR HOUSING RIGHTS CENTER IN SOUTHEASTERN PENNSYLVANIA, Appellant

v.POST GOLDTEX GP, LLC; Post Goldtex, L.P.; KlingStubbins, LLP; KlingStubbins, Inc.

No. 15–1366.

United States Court of Appeals, Third Circuit.

LAR 34.1a Oct. 6, 2015.

Filed: May 17, 2016.

Submitted Under Third Circuit

Stephen F. Gold, Esq., Philadelphia, PA, Rocco J. Iacullo, Esq., Disability Rights Network of Pennsylvania, Philadelphia, PA, for Appellant.

Walter S. Zimolong, III, Esq., Philadelphia, PA, for Appellee Post Goldtex.

Anthony W. Hinkle, Esq., Kathryn E. Pettit, Esq., Kevin B. Watson, Esq., Cipriani & Werner, Blue Bell, PA, Barbara W. Mather, Esq., Pepper Hamilton, Philadelphia, PA, for Appellee KlingStubbins.

Before FUENTES, SMITH, and NYGAARD, Circuit Judges.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Today, we address a somewhat abstruse question of federal housing law: do the design and accessibility requirements of the Fair Housing Act (FHA), 42 U.S.C. § 3604(f)(3)(C), apply to a commercial building that was originally constructed before the requirements' effective date, but converted into residential units after that date? The District Court noted the near absence of precedent on this question, an absence our own research confirms. Perhaps the lack of precedent on this question has something to do with the clear guidance offered by the United States Department of Housing and Urban Development (HUD) and, in one instance, the United States Department of Justice (DOJ) on this issue, which answers the question in the negative.

To resolve this matter, the District Court relied on the familiar two-step analysis set out in Chevron, USA v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In doing so, the District Court first found that Congress, speaking through § 3604(f)(3)(C), left unanswered the precise question at issue here. Second, owing to this ambiguity, the District Court concluded that HUD's interpretation of the provision—which exempts converted buildings from the accessibility requirements¹ if they were constructed prior to March 13, 1991—was entitled to deference. Based on this determination, the District Court dismissed the complaint for failure to state a claim. We will affirm that ruling.

I.

Because this is an appeal from the granting of a motion to dismiss, we take the following factual background directly from the complaint and accept as true all facts set forth therein, drawing all reasonable inferences from such allegations in favor of the Appellant. Mammaro v. New Jersey Div. of Child Protection and Permanency, 814 F.3d 164, 166 (3d Cir.2016) (citing James v. City of Wilkes–Barre, 700 F.3d 675, 679 (3d Cir.2012) ). Appellant Fair Housing Rights Center in Southeastern Pennsylvania (FHRC), a non-profit corporation, provides counseling, reference, advocacy, and dispute resolution services to individuals who may have suffered from discriminatory housing practices throughout southeastern Pennsylvania. This organization also receives grants and contracts HUD, under 42 U.S.C. § 3616, to investigate and monitor potentially discriminatory housing practices, and to enforce HUD policies. One of the housing projects investigated by the FHRC was the Goldtex Apartment Building, located on North 12^th Street in the city of Philadelphia. That building was developed and owned by Appellees Post Goldtex GP, LLC and Post Goldtex, L.P. (collectively referred to as “Goldtex”). Appellees KlingStubbins, LLP and KlingStubbins, Inc., (collectively referred to as “KlingStubbins”), designed the apartment complex.

The building, constructed in 1912, was known originally as the Smaltz Building and was used first as a factory, and later for other manufacturing and business pursuits until the mid–1990s. By the end of that decade, the Smaltz Building was abandoned and had fallen into disrepair. Goldtex purchased the Smaltz Building in 2010 and hired KlingStubbins to design a plan to convert the entire building into rental apartment units and retail space. Pursuant to KlingStubbins' design, the building—now known as the Goldtex Building—was almost gutted. This included the removal of walls and windows, and the cladding of the exterior with new materials. Other features, such as floors, remained intact. The result was the conversion of a building originally used for manufacturing into a residential building with 163 apartment units and ground floor retail space. The Goldtex Building began accepting tenants in 2013.

The FHRC conducted a site visit at the Goldtex Building in April of 2014 and reviewed the common areas of the facility as well as three different-sized rental units. This investigation identified numerous violations of the FHA's design and construction requirements.² The FHRC sent these findings, in detail, to Goldtex, along with a request that the violations be removed and/or repaired. Goldtex responded, indicating their position that the Goldtex Building was exempt from the FHA requirements cited by the FHRC.

The FHRC filed suit against Goldtex and KlingStubbins in July of 2014, alleging violations of the FHA which, in turn, constituted housing discrimination against persons with disabilities.³ Goldtex and KlingStubbins filed motions to dismiss, which the District Court granted.⁴ The FHRC timely appealed.

II.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court's decision to grant a motion to dismiss under a plenary standard. Fowler v. UPMC Shadyside, 578 F.3d 203, 206 (3d Cir.2009). That means we are “required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn from them after construing them in the light most favorable to the nonmovant.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 154 n. 1 (3d Cir.2014) (quotation marks and citations omitted). In Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme Court explained, however, that this tenet “is inapplicable to legal conclusions.” Questions of statutory interpretation are subject to de novo review. Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 113 (3d Cir.2003).

III.

In suing Goldtex and KlingStubbins, the FHRC's complaint alleged that the Appellees discriminated against persons with disabilities by violating the design and construction requirements of the FHA, as set forth in that Act's § 3604(f)(3)(C). The FHRC also alleged housing discrimination pursuant to 42 U.S.C. § 3604(f)(1) and § 3604(f)(2), and asked the District Court for a declaratory judgment that Goldtex and KlingStubbins' actions and omissions violated the FHA, for a permanent injunction requiring Goldtex to bring the building into compliance, and for monetary damages, attorney fees and costs.

Goldtex and KlingStubbins filed motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). The Appellees argued that the complaint should be dismissed because the plain language of § 3604(f)(3)(C), as well as HUD guidance on that provision, exempted the Goldtex Building from compliance. In its response in opposition to the motions to dismiss, the FHRC argued that HUD's regulatory interpretations were invalid because, under Chevron, they are contrary to the unambiguous language of the statute. The Appellees, in reply, argued that the FHRC could not raise a challenge to HUD's interpretation of the provision unless through its complaint, and then could only do so via a claim under the Administrative Procedures Act, 5 U.S.C. § 701, et seq. KlingStubbins also raised a standing argument.⁵ The District Court did not address these arguments, but instead saw this case as governed by Chevron and proceeded directly to analyze the FHCA's claim under that decision.

Like the District Court, we too will apply Chevron to resolve the merits of this appeal. At Step One, we “question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842, 104 S.Ct. 2778. We move on to the second step only “if the statute is silent or ambiguous with respect to the specific issue.” Id. at 843, 104 S.Ct. 2778. There, “the question for the court is whether the agency's answer is based on a permissible construction of the statute,” and the regulation must be given deference unless it is “arbitrary, capricious, or manifestly contrary to the statute.” Id. at 843, 844, 104 S.Ct. 2778.

Both parties tell us that we can decide this case at Step One because Congress answered the precise question at issue in the plain language of the provision. The problem, however, is that they do not agree on what that answer was. The FHRC, for example, maintains that the plain language of the provision, as well as its general context, reveal Congress' intention that the FHA's accessibility requirements apply to any dwellings constructed and first occupied after the provision's effective date—regardless of when the actual building was constructed. For their part, the Appellees argue that the language of § 3604(f)(3)(C) unambiguously supports their contention that Congress did not intend to limit the term “occupancy” to residential occupancy. They assert, for example, that because the language does not specifically limit the term “occupancy” to a residential context, Congress unambiguously intended the design and construction provision to apply to any building—residential, commercial, or otherwise.

To determine whether a statute is unambiguous under Step One, “court[s] should always turn first to one cardinal canon before all others [:] we have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” Geisinger Cmty. Med. Ctr. v. Sec'y U.S. Dep't of Health and Human Servs., 794 F.3d 383, 391 (3d Cir.2015) (quoting Conn. Nat'l Bank v. Germain, 503 U.S....