Lindsay v. Yates

• Citation: 498 F.3d 434
• Decision Date: 15 August 2007
• Docket Number: No. 06-4430.,06-4430.
• Parties: Douglas LINDSAY, Sr.; Tina Lindsay, Plaintiffs-Appellants, v. Brent YATES; JoAnn Yates; The Estate of Gene Yates; Sluss Realty Company; Carol Eicher, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

498 F.3d 434

Douglas LINDSAY, Sr.; Tina Lindsay, Plaintiffs-Appellants, v. Brent YATES; JoAnn Yates; The Estate of Gene Yates; Sluss Realty Company; Carol Eicher, Defendants-Appellees.

No. 06-4430.

United States Court of Appeals, Sixth Circuit.

Argued: July 27, 2007.

Decided and Filed: August 15, 2007.

ARGUED: Edward L. Gilbert, Slater, Zurz & Gilbert, Akron, Ohio, for Appellants. Maura L. Hughes, Calfee, Halter & Griswold, Cleveland, Ohio, for Appellees. ON BRIEF: Edward L. Gilbert, Michael J. Wright, Slater, Zurz & Gilbert, Akron, Ohio, for Appellants. Julia A. Harris, Jeffrey J. Lauderdale, Calfee, Halter & Griswold, Cleveland, Ohio, James L. Childress, Calhoun, Kademenos & Childress, Mansfield, Ohio, for Appellees.

Before: KEITH, MOORE, and COLE, Circuit Judges.

OPINION

R. GUY COLE, JR., Circuit Judge.

Plaintiffs-Appellants Douglas and Tina Lindsay brought suit against Defendants-Appellees JoAnn Yates, the Estate of Gene Yates, and Brent Yates (collectively, the "Yateses"), as well as Sluss Realty Company and realtor Carol Eicher, on the grounds that Defendants terminated a real-estate sales contract with the Lindsays one day after learning that the Lindsays are black. The district court dismissed the Lindsays' complaint, concluding that they failed to plead facts establishing each element of a prima facie case as set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). Although the district court did not address it, the Yateses argued below, and now argue before this Court, that the Lindsays' complaint must be dismissed for the further reason that they failed to plead facts showing that the purchase agreement executed by the parties was valid and enforceable.

For the reasons described below, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

I. BACKGROUND

A. Facts

The Lindsays are an African-American couple who reside in Richland County, Ohio. They allege that on or about August 8, 2004, Gene and JoAnn Yates contracted with Sluss Realty and Sluss realtor, Carol Eicher, to advertise the Yateses' home in Lexington, Ohio, for sale. The Yateses' home is located at 2268 Eckert Road, and the Yateses own several adjacent parcels of property, which were not for sale. In addition, the Yateses' son, Brent, operates a business on one of these adjacent parcels.

Gene Yates died in January 2005, but the Yateses' Eckert Road property remained on the market. The Lindsays allege that Sluss and Eicher told them that Brent Yates was authorized by his mother to negotiate the sale of the property and execute a purchase agreement. On May 12, 2005, the Lindsays signed a purchase agreement to buy the property for an agreed price of $175,000. They tendered the signed purchase agreement to Brent Yates through Eicher and deposited $500 in earnest money with him in the form of a promissory note. Brent Yates signed the purchase agreement as the seller of the property on May 13, 2005.

On May 23, 2005, the Lindsays visited their soon-to-be new home to identify the property lines. At that time, they introduced themselves to Brent Yates. The next day, Sluss and Eicher informed the Lindsays that the Yateses intended to terminate the sales contract because JoAnn Yates wished to keep the house "for sentimental reasons." The Lindsays appeared for the June 10, 2005 scheduled closing, but the Yateses did not.

B. Procedural History

The Lindsays filed suit on June 16, 2005, asserting that Defendants unlawfully refused to sell them the Yateses' property on account of their race. The Lindsays brought claims for violation of federal and state anti-discrimination laws, including (1) the Fair Housing Act ("FHA"), 42 U.S.C. §§ 3603-3604,¹ (2) 42 U.S.C. § 1981,² (3) 42 U.S.C. § 1982,³ and (4) Ohio Revised Code § 4112.02(H)(1), as well as a common-law claim for breach of contract.

Rather than move to dismiss the Lindsays' complaint under Federal Rule of Civil Procedure 12(b)(6), Defendants answered. The Yateses answered on August 22, 2005, and Sluss and Eicher answered on August 29, 2005. The parties then proceeded to discovery. Nearly a year later, on June 13, 2006, the Yateses moved for judgment on the pleadings under Rule 12(c)⁴ on the grounds that the Lindsays were not entitled to relief on any of their claims because the parties had never entered into a valid sales contract. The Yateses argued that the Lindsays' pleading was deficient because they failed to allege facts showing that the owner of the property, JoAnn Yates, had signed the purchase agreement, or that she had authorized her son, Brent, to sign on her behalf.

The district court granted the Yateses' motion on October 17, 2005, but not on the grounds urged by the Yateses or otherwise briefed by the parties.⁵

First, the district court dismissed the Lindsays' claim under 42 U.S.C. § 3603. The district court reasoned that § 3603 does not constitute an independent cause of action under the FHA, but simply works in conjunction with the prohibitions set forth in § 3604 of the Act. Lindsay v. Yates, No. 05-1625, 2006 WL 2988222, slip op. at 3-4 (N.D.Ohio Oct. 17, 2006) ("Dist. Ct. Op.").

Second, the district court sua sponte concluded that the Lindsays failed to plead a prima facie case of racial discrimination because they did not allege facts establishing that the Eckert Road property remained on the market after the Yateses rejected them. Id. at 4-6. The district court therefore dismissed all the Lindsays' federal claims, dismissed the Lindsays' state-law claims without prejudice, and stated that its order was final and appealable. Id. at 6. The district court never ruled on whether the Lindsays adequately pleaded facts regarding the existence of a valid contract, which was the entire premise of the Yateses' Rule 12(c) motion. The Lindsays timely appealed.

II. DISCUSSION

A. Standard of Review

We review a district court's dismissal of a plaintiff's complaint de novo. EEOC v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th Cir.2001). The same standards apply irrespective of whether the complaint has been dismissed under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim or under Rule 12(c) for judgment on the pleadings. Id. We construe the complaint in the light most favorable to the plaintiffs, accept all of the complaint's factual allegations as true, and decide whether the plaintiffs can prove any set of facts in support of their claims that would entitle them to relief. Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp., 399 F.3d 692, 697 (6th Cir.2005).

B. Merits

On appeal, the Lindsays do not challenge the district court's dismissal of their claim under 42 U.S.C. § 3603. Instead, the Lindsays argue that the court erred in dismissing the remainder of their federal claims (which includes their claims asserted under 42 U.S.C. §§ 1981, 1982, and 3604) on the grounds that they failed to plead all the elements of a McDonnell Douglas/Burdine prima facie case. The Lindsays further argue, contrary to the Yateses, that they are not required to plead the existence of a valid sales contract to state a claim for relief. Each of these issues will be discussed in turn.

1. The District Court Erred by Requiring the Lindsays to Plead Facts Establishing a Prima Facie Case Under the McDonnell Douglas/Burdine Framework

The familiar McDonnell Douglas/Burdine analysis applies to federal housing-discrimination claims, whether they are brought under the FHA or 42 U.S.C. §§ 1981 or 1982. Mencer v. Princeton Square Apts., 228 F.3d 631 (6th Cir.2000) (applying the McDonnell Douglas burden-shifting framework to claims brought under the FHA and §§ 1981 and 1982); Selden Apts. v. U.S. Dep't of Housing and Urban Dev., 785 F.2d 152, 159 (6th Cir.1986) (same). First, a plaintiff who alleges discrimination on the basis of race must make out a prima facie case by showing "(1) that he or she is a member of a racial minority, (2) that he or she applied for and was qualified to rent or purchase certain property or housing, (3) that he or she was rejected, and (4) that the housing or rental property remained available thereafter." Mencer, 228 F.3d at 634-35. However, the Supreme Court has instructed that "the precise requirements of a prima facie case can vary depending on the context and were `never intended to be rigid, mechanized, or ritualistic.'" Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 57 L.Ed.2d 957 (1978)).

If the plaintiff satisfies the prima facie requirements, the burden shifts to the defendant to produce evidence of a legitimate, non-discriminatory reason for rejecting the plaintiff. Mencer, 228 F.3d at 634. Finally, the burden shifts back to the plaintiff to show that the defendant's proffered non-discriminatory reason is a pretext. Id. "Although the burden of production shifts between the parties, the plaintiff bears the burden of persuasion throughout the process." Dixon v. Gonzales, 481 F.3d 324, 333 (6th Cir.2007).

The question on appeal is whether, at the pleading stage, a housing-discrimination plaintiff must establish each of the elements of the prima facie case to survive a motion to dismiss the complaint. As described above, the district court held that the Lindsays' complaint failed to state a claim because they did not plead facts showing that the Eckert Road property remained available to other potential buyers, and that therefore the Lindsays did not satisfy the fourth element of the prima facie case. Both the district court and the parties failed to consider controlling Supreme Court authority that contravenes the district court's judgment.

In Swierkiewicz, the Supreme Court unanimously held that a plaintiff who asserted...