Inclusive Cmtys. Project, Inc. v. Lincoln Prop. Co., No. 17-10943

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: KURT D. ENGELHARDT, Circuit Judge
• Citation: 920 F.3d 890
• Parties: The INCLUSIVE COMMUNITIES PROJECT, INCORPORATED, Plaintiff-Appellant v. LINCOLN PROPERTY COMPANY; Legacy Multifamily North III, L.L.C.; CPF PC Riverwalk, L.L.C.; HLI White Rock, L.L.C.; Brick Row Apartments, L.L.C., Defendants-Appellees
• Docket Number: No. 17-10943
• Decision Date: 09 April 2019

920 F.3d 890

The INCLUSIVE COMMUNITIES PROJECT, INCORPORATED, Plaintiff-Appellant
v.
LINCOLN PROPERTY COMPANY; Legacy Multifamily North III, L.L.C.; CPF PC Riverwalk, L.L.C.; HLI White Rock, L.L.C.; Brick Row Apartments, L.L.C., Defendants-Appellees

No. 17-10943

United States Court of Appeals, Fifth Circuit.

FILED April 9, 2019

Michael Maury Daniel, Laura Beth Beshara, Daniel & Beshara, P.C., Dallas, TX, for Plaintiff-Appellant.

Charles Baruch, Johnston Tobey Baruch, P.C., Addison, TX, Jennifer L. Owen, Thomas William Kniest, II, Higier, Allen & Lautin, P.C., Dallas, TX, for Defendant-Appellee Lincoln Property Company.

Tonya M. Gray, Hunton Andrews Kurth, L.L.P., Dallas, TX, for Defendants-Appellees Legacy Multifamily North III, L.L.C., HLI White Rock, L.L.C.

Arthur Elex Anthony, Esq., Taylor Freytag Brinkman, Locke Lord, L.L.P., Dallas, TX, for Defendant-Appellee CPF PC Riverwalk, L.L.C.

Valeri C. Williams, Esq., Counsel, Cathlynn H. Cannon, Esq., Wilson, Elser, Moskowitz, Edelman & Dicker, L.L.P., Dallas, TX, for Defendant-Appellee Brick Row Apartments, L.L.C.

Jon Marshall Greenbaum, Esq., Director, Lawyers' Committee for Civil Rights Under Law, Washington, DC, for Amicus Curiae Lawyers' Committee for Civil Rights Under Law.

Before DAVIS, JONES, and ENGELHARDT, Circuit Judges.

KURT D. ENGELHARDT, Circuit Judge:

920 F.3d 895

With this appeal, we review the district court’s dismissal with prejudice, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, of Fair Housing Act claims – including claims of "disparate treatment" and "disparate impact" – asserted against the owners and management company of apartment complexes in the greater Dallas, Texas area that decline to participate in the federal "Section 8" Housing Choice Voucher Program. For the reasons stated herein, we affirm.

I.

The plaintiff, The Inclusive Communities Project ("ICP"), "is a fair housing focused nonprofit organization working with households seeking access to housing in predominately non-minority locations in the Dallas area."¹ In furtherance of its mission, ICP provides "counseling, financial assistance, and other services to Black or African American households participating in the [federal] Section 8 Housing Choice Voucher (HCV or voucher) Program administered by the Dallas Housing Authority (DHA)." According to ICP, its voucher clients seek assistance in finding and obtaining "dwelling units in safe and secure communities with higher median incomes, good schools, low poverty rates, and adequate public and private serve and facilities (high opportunity areas)."

The financial assistance offered by ICP may include the payment of landlord incentives or bonus payments (to encourage leasing to voucher participant households), application fees, and security deposits. ICP also offers landlords in higher opportunity areas the option of a contract with ICP as a guarantor for voucher households or with ICP as the sub-lessor for voucher households. ICP alleges that it proposed these alternative contractual arrangements in response to reasons stated by landlords and landlord associations for refusing to negotiate with or rent to voucher households.

ICP identifies Defendants-Appellees Legacy Multifamily North III, LLC ("Legacy"), CPF PC Riverwalk, L.L.C. ("Riverwalk"); HLI White Rock, L.L.C.

920 F.3d 896

("White Rock"); and Brick Row Apartments, L.L.C. ("Brick Row") (collectively, "Owners") as owners of apartment complexes in the "higher opportunity" or "high opportunity" areas identified by ICP. Defendant-Appellee Lincoln Property Company (Lincoln) manages these complexes in addition to managing or owning and operating numerous other properties in "the Dallas metropolitan area."²

ICP contends "its ability to assist its voucher clients in obtaining dwellings in high opportunity areas is obstructed by Defendants’ discriminatory housing practices." ICP alleges that Lincoln has a general policy that it will not negotiate with, rent to, or otherwise make units available in "White non-Hispanic areas" to voucher households; moreover, Lincoln’s written advertisements state that housing vouchers, Section 8 vouchers, and any government-subsidized rent programs are not accepted. According to ICP, the only apartment complexes for which Lincoln will negotiate with and rent to voucher households are those in predominately minority locations. These apartment complexes include complexes required by law or contract to not discriminate against voucher households based on their status as voucher program participants.

Lincoln’s general "no vouchers" policy is applied at approximately 43 apartment complexes, located in majority white census tracts, that have at least some units available at rents payable under the voucher program. These complexes include the units owned by the Owners. ICP further contends that it has black voucher clients who are otherwise eligible under Lincoln’s application criteria, and with whom ICP would have entered into subleases, but for Lincoln’s policy against voucher tenants.

ICP alleges that it has attempted, on several occasions, to negotiate with Lincoln on behalf of voucher clients seeking rental units in properties that Lincoln manages and/or owns in majority white areas. The most recent requests, ICP reports, were letters that ICP sent to Lincoln, in 2015 and 2016, asking that it "reconsider" its policy of not accepting voucher families as tenants at the aforementioned apartment complexes.³ According to ICP, neither Lincoln nor the Owners responded to ICP’s request to negotiate and rent under the sublease/guarantor proposal. At least one Defendant-Appellee notes, however, that ICP alleges its transmittal of the letters but not their receipt. Nor is it clear when the Owners, as opposed to Lincoln, the manager, became aware of the letters and/or ICP’s requests to discuss the "no vouchers" policy.

ICP asserts that the "no vouchers" policy forces voucher households in the Dallas metro area to seek housing in areas where vouchers are accepted, which are "racially concentrated [predominately minority] areas

920 F.3d 897

of high poverty that are marked by substantially unequal conditions." Further, ICP contends, Lincoln’s refusal to negotiate with or rent to voucher holders disparately impacts black households in the Dallas area. In short, ICP maintains that landlords who accept vouchers are disproportionately located in minority areas of Dallas, and property management companies located in non-minority areas disproportionately refuse vouchers. The waiting lists for the area voucher programs also are disproportionately black.

To support its disparate impact contentions, ICP references the most recent United States Department of Housing and Urban Development (HUD) "Picture of Subsidized Housing" reporting a total of 30,745 voucher households in the Dallas-Irving-Plano Metropolitan Division. According to ICP, 90% of those households are minorities, with the total breakdown being 81% black, 6% Hispanic, and 10% white non-Hispanic (white). Approximately 17,000 of the 30,745 voucher households in the Dallas-Irving-Plano Metropolitan Division participate in the program through the DHA, which has a voucher population that is 86% black and 6% white. The voucher households in the City of Dallas are 87% Black and 94% minority.

ICP likewise characterizes the voucher program in the Dallas metro area as racially segregated into predominantly minority census tracts. On average, voucher households in the Dallas metro area are located in 74% minority census tracts; voucher households in the City of Dallas are located in 88% minority and 33% poverty census tracts.

ICP also alleges the following facts regarding individual apartment complexes that the Defendants-Appellees own or manage:

• Park Central at Flower Mound Complex

• No Black renters in the "small census tract block group" containing this complex;

• 307 units in the complex; and

• Zero voucher households in the census tract containing this complex.

• McKinney Uptown Complex

• No Black renters in the "small census tract block group" containing this complex;

• 144 units in the complex; and

• No voucher households in the census tract containing this complex.

• Parkside at Legacy Complex

• Black renters are 14% of the 630 renter-occupied units in the "small census tract block group" containing this complex;

• 293 units in the complex; and

• No voucher households in the census tract containing this complex.

• White Rock Lake Apartment Villas

• Black renters are 11% of the 1,022 renter-occupied units in the "small census tract block group" containing this complex;

• 296 units in the complex; and

• No voucher household in the census tract containing this complex.

• Brick Row Apartments, LLC

• Black renters are 11% of the 532 renter-occupied units in the "small census tract block group" containing this complex;

• 500 units in the complex;

• 45 voucher households in the census tract containing this complex; and

• Majority of the voucher households in the census tract live in

920 F.3d 898

single family or semi-detached structures.

Finally, ICP attaches city maps to...