Fortune Soc'y v. Sandcastle Towers Hous. Dev. Fund Corp.

• Citation: 388 F.Supp.3d 145
• Decision Date: 03 July 2019
• Docket Number: 14 Civ. 6410 (VMS)
• Parties: The FORTUNE SOCIETY, Plaintiff, v. SANDCASTLE TOWERS HOUSING DEVELOPMENT FUND CORP., Sarasota Gold LLC, Weissman Realty Group LLC, E & M Associates LLC, Defendants.
• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)

388 F.Supp.3d 145

The FORTUNE SOCIETY, Plaintiff,

v.SANDCASTLE TOWERS HOUSING DEVELOPMENT FUND CORP., Sarasota Gold LLC, Weissman Realty Group LLC, E & M Associates LLC, Defendants.

14 Civ. 6410 (VMS)

United States District Court, E.D. New York.

Signed July 3, 2019

Glenn Schlactus, Jia Cobb, John P. Relman, Sasha Minh Samberg-Champion, Relman, Dane & Colfax PLLC, Washington, DC, for Plaintiff.

Larry R. Martinez, Loretta M. Gastwirth, Stephanie Marie Suarez, Meltzer, Lippe, Goldstein & Breitstone, LLP, Mineola, NY, Thomas D. Shanahan, Thomas D. Shanahan, P.C., New York, NY, for Defendants.

MEMORANDUM & ORDER

Vera M. Scanlon, United States Magistrate Judge:

Plaintiff The Fortune Society ("Plaintiff" or "Fortune") brings this action against Sandcastle Towers Housing Development Fund Corp., Sarasota Gold, LLC, E & M Associates, LLC and Weissman Realty Group, LLC (collectively, "Defendants") for injunctive, monetary and declarative relief. Am. Compl. ¶ 1, ECF No. 30. Plaintiff alleges that, in violation of the Fair Housing Act, Defendants' housing policy has the purpose or effect of discriminating against African-American and Latino persons, including Fortune's clients. Id. Before the Court is Plaintiff's partial motion for summary judgment,¹ ECF No. 94, and Defendants' motion for summary judgment, ECF No. 97, both brought pursuant to Federal Rule of Civil Procedure ("Rule") 56. Defendants also move to dismiss for lack of standing pursuant to Rule 12. ECF No. 115. Each side moves to exclude the other side's expert testimony. ECF Nos. 94-1 at 32-33; 97-1 at 7-18; 98 at 35-38.² For the reasons stated herein, the Court: (i) denies Plaintiff's partial motion for summary judgment; (ii) denies in part and grants in part Defendants' cross motion for summary judgment; (iii) denies Defendants' motion to dismiss for lack of standing; (iv) denies Defendants' motion to exclude the expert testimony of Dr. Allan McMillan Parnell; and (v) denies as moot Plaintiff's motion to exclude the expert testimony of Donald Welsch, with leave to renew in a pretrial motion.

I. BACKGROUND

a. Procedural History

Plaintiff commenced this action by filing a complaint alleging that Defendants have a housing policy of automatically excluding any person with a record of a criminal conviction from renting or living³ in an apartment at the Sand Castle apartment complex in Queens, New York (the "Sand Castle"), and that this policy has the purpose or effect of discriminating against African-American and Latino persons, including Fortune's clients, in violation of the Fair Housing Act ("FHA") and New York State and City law. Compl. ¶ 1, ECF No. 1. Plaintiff alleges that the policy resulted in the denial of housing at the Sand Castle for twenty of Fortune's clients and cost Plaintiff $65,000 in additional rent, as well as an unspecified additional amount in brokers' fees. ECF No. 116 at 7. The Parties consented to this Court's jurisdiction in accordance with 28 U.S.C. § 636(c) and Rule 73. ECF No. 26. Plaintiff submitted an amended complaint, ECF No. 30, to add Defendant E & M Associates, LLC, and to add perfecting citations, ECF No. 27. Defendants filed an amended answer. ECF No. 37. The Parties subsequently cross-moved for summary judgment, ECF Nos. 94, 97, which was followed by supplemental motion practice relating to standing, ECF Nos. 115-17, 119, 122, 125, and submission of supplemental authority, ECF Nos. 126, 129.

b. Relevant Facts

After reviewing both Plaintiff's and Defendants' Rule 56.1 statements and the responses thereto, together with the exhibits and submissions of both sides, the Court finds that the following relevant facts are undisputed, unless otherwise indicated.

i. The Sand Castle, Acquisition And Staffing

The Sand Castle is a four-building apartment complex with 917 rental units located at 7-11 Seagirt Avenue in Far Rockaway, Queens. Pl.'s 56.1 Stmt. ¶ 11, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 11, ECF No. 131. In 2006, Defendant Sarasota Gold LLC ("Sarasota Gold"), a New York corporation, acquired the Sand Castle buildings and has since held all equitable interest in the property. Pl.'s 56.1 Stmt. ¶ 12, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 12, ECF No. 131. Sarasota Gold is owned by, among others, Aryeh Ginzberg and Irving Langer, with Mr. Ginzberg as both the corporation's largest shareowner and its managing member. Pl.'s 56.1 Stmt. ¶ 13, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 13, ECF No. 131. Prior to its acquisition by Sarasota Gold, the Sand Castle predominantly provided senior housing. Defs.' 56.1 Stmt. ¶ 12, ECF No. 97-2; Pl.'s Resp. to Defs.' 56.1 Stmt. ¶ 12, ECF No. 98-2. Sarasota Gold, however, made renovations to the building, and, as apartments became available, began to accept residents who paid their rent in whole or in part with governmental rent subsidies, such as Hurricane Sandy victims with FEMA funding. Pl.'s 56.1 Stmt. ¶¶ 14-15, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 14-15, ECF No. 131.

Shortly after acquiring the Sand Castle, Sarasota Gold entered an agreement with Defendant E & M Associates LLC ("E&M") to serve as the Sand Castle's management company, and E&M has since directed and controlled the complex's staff. Pl.'s 56.1 Stmt. ¶¶ 23-24, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 23-24, ECF No. 131. E&M is owned by Mr. Langer, and Mr. Ginzberg is Senior Vice President (each is an owner of Sarasota Gold). Pl.'s 56.1 Stmt. ¶ 25, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 25, ECF No. 131. Since 2009, Defendant Weissman Realty Group, LLC ("Weissman") provided brokerage services for the Sand Castle, and two of Weissman's employees, Melissa Gursky and Heidi Hershkowitz, worked on-site (from 2009-2012 and 2013-present, respectively). Pl.'s 56.1 Stmt. ¶¶ 26-27, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 26-27, ECF No. 131. These on-site employees were under the direction and control of Sarasota Gold and E&M, and later Defendant Sandcastle Towers Housing Development Fund Corporation ("Sandcastle Towers"). Pl.'s 56.1 Stmt. ¶ 29, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 29, ECF No. 131.

The Parties agree that Sarasota Gold's and E&M's senior leadership have minimal-to-no involvement in the day-to-day operations of the Sand Castle. Pl.'s 56.1 Stmt. ¶ 30, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 30, ECF No. 131. Three members of E&M – Phil Goldstein, Meyer Brecher and Sruly Tress – helped manage the Sand Castle during the period relevant to this litigation. Pl.'s 56.1 Stmt. ¶¶ 36-37, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 36-37, ECF No. 131. Mr. Tress has managed the Sand Castle since January 2014, is under the direction and control of E&M, and is on-site once per-week. Pl.'s 56.1 Stmt. ¶¶ 45-46, 48, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 45-46, 48, ECF No. 131.

ii. The Regulatory Agreement

In 2013, Sarasota Gold entered into an agreement with the New York City Housing Development Corporation to become a provider of affordable housing (the "Regulatory Agreement"). Pl.'s 56.1 Stmt. ¶ 16, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 16, ECF No. 131. The Regulatory Agreement requires that 90% of Sand Castle residents earn no more than 125% of the Area Median Income and that 10% of residents earn no more than 135% of the Area Median Income. Pl.'s 56.1 Stmt. ¶ 90, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 90, ECF No. 131. As applied by the Sand Castle staff, this typically means that applicants cannot earn more than $70,000 annually. Pl.'s 56.1 Stmt. ¶ 91, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 91, ECF No. 131. For the sole purpose of facilitating the Regulatory Agreement, the members of Sarasota Gold created Sandcastle Towers, with Mr. Ginzberg as president. Pl.'s 56.1 Stmt. ¶¶ 17-18, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 17-18, ECF No. 131.

iii. Racial Makeup Of The Sand Castle And Surrounding Areas

The Parties dispute the current relevant racial makeup of the Sand Castle and its surrounding area.⁴ Defendants assert that based on the United States Census Bureau, 2010-2014 American Community Survey, the area around the Sand Castle is approximately "50% Black." Defs.' 56.1 Stmt. ¶ 13, ECF No. 97-2. Relying on a tenant roster on which Defendants' employees Rose Campbell and Sonia Forrest assigned a race to each tenant based largely on their own personal assessment (the "Tenant Roster"), Defendants allege that 70% of the Sand Castle's tenants are "Black" – significantly more than the 50% Defendants assign to the surrounding area.⁵ Defs.' 56.1 Stmt. ¶ 14, ECF No. 97-2; Tenant Roster, Ex. E, ECF No. 97-8; Campbell Decl., Ex. Y, ECF No. 97-29; Forrest Decl., Ex. Z, ECF No. 97-30. Plaintiff controverts these numbers by citing to the same Census Survey, which reports that the area surrounding the Sand Castle is 44.3% Black or African-American, 28.3% Hispanic or Latino and 22.1% White, while the Census Block made up entirely of the Sand Castle is 37.4% Black or African-American, 14.9% Hispanic or Latino and 42.6% White. Pl.'s Resp. to Defs.' 56.1 Stmt. ¶ 13, ECF No. 98-2; Ex. D, ECF No. 97-7 at 1-2; Ex. 8, ECF No. 94-5 at 340-42, 347. Neither side provided any information about the current or historical rate of tenant turnover in the Sand Castle, the Census Block or the Census Survey.

iv. The Sand Castle Rental Application Process

Since 2006, the year of acquisition, Sarasota Gold employees Ms. Silvera and Ms. Campbell have been primarily responsible for reviewing Sand Castle rental applications. Pl.'s 56.1 Stmt. ¶ 35, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶ 35, ECF No. 131. Ms. Silvera's tenure ran from 2006 to early 2014, and in December 2013, Ms. Campbell succeeded her. Pl.'s 56.1 Stmt. ¶¶ 38, 56-57, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 38, 56-57, ECF No. 131. Both were under the direction and control of E&M. Pl.'s 56.1 Stmt. ¶¶ 38, 58, ECF No. 94-2; Defs.' Resp. to Pl.'s 56.1 Stmt. ¶¶ 38,...