Patel v. Holley House Motels

• Decision Date: 03 December 1979
• Docket Number: Civ. A. No. 78-654-H.
• Citation: 483 F. Supp. 374
• Parties: Harshad M. PATEL; Bindu H. Patel; Laurence W. Karst; M. Janice Karst; and David L. Karst, Plaintiffs, v. HOLLEY HOUSE MOTELS, a corporation; Holley Midgley; and Sue B. Midgley, all separately and severally, Defendants/Third-Party Plaintiffs, v. ROBERTS BROTHERS, INC., a corporation, Counterclaim-Defendant/Third-Party Defendant.
• Court: U.S. District Court — Southern District of Alabama

483 F. Supp. 374

Harshad M. PATEL; Bindu H. Patel; Laurence W. Karst; M. Janice Karst; and David L. Karst, Plaintiffs, v. HOLLEY HOUSE MOTELS, a corporation; Holley Midgley; and Sue B. Midgley, all separately and severally, Defendants/Third-Party Plaintiffs, v. ROBERTS BROTHERS, INC., a corporation, Counterclaim-Defendant/Third-Party Defendant.

Civ. A. No. 78-654-H.

United States District Court, S. D. Alabama, S. D.

December 3, 1979.

Gregory B. Stein, Mobile, Ala., for plaintiffs.

Willis C. Darby, Jr., Paul D. Myrick, Mobile, Ala., for defendants/third-party plaintiffs.

Broox G. Holmes, E. B. Peebles, III, and Kirk C. Shaw, Mobile, Ala., for counterclaim-defendant/third-party defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW AND ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT

HAND, District Judge.

Defendants Holley Midgley, Sue B. Midgley and Holley House Motels (referred to collectively as Midgleys), have made a Motion For Partial Summary Judgment on the ground that there is no genuine issue as to any material fact and that the Midgleys are entitled to judgment as a matter of law with respect to the following issues:

1. Plaintiffs have failed to establish a claim under 42 U.S.C. § 3601 et seq. (Fair Housing Act of 1968), because the Palms Motel is not a "dwelling" as defined in 42 U.S.C. § 3602(b).

2. Plaintiffs' claims based upon "national origin" discrimination are not cognizable under 42 U.S.C. § 1981 and § 1982.

3. Plaintiffs have failed to demonstrate that a factor in the refusal to sell the Palms Motel was an intent to discriminate on account of race in violation of 42 U.S.C. § 1981 and § 1982.

The court has fully considered the pleadings, depositions, answers to interrogatories, the "Agreed Facts" contained in the "Stipulation of Fact" executed by counsel for Plaintiffs and counsel for Defendants, and the Briefs and oral arguments of counsel for the respective parties. Based upon the foregoing, the court enters the following Findings Of Fact And Conclusions Of Law.

FINDINGS OF FACT

1. Plaintiff Harshad M. Patel is a native of India. He is a dark-skinned citizen of the United States and of the State of Tennessee. (Agreed Facts ¶ 1)¹

2. Plaintiff Bindu H. Patel is a native of India. She is a dark-skinned resident of the United States and of the State of Tennessee. Harshad M. Patel and Bindu H. Patel are husband and wife. (Agreed Facts ¶ 2)

3. Plaintiff Laurence W. Karst is a native-born citizen of the United States and of the State of Tennessee. (Agreed Facts ¶ 3)

4. Plaintiff M. Janice Karst is a native-born citizen of the United States and of the State of Tennessee. Laurence W. Karst and M. Janice Karst are husband and wife. (Agreed Facts ¶ 4)

5. Plaintiff David L. Karst is a native-born citizen of the United States and of the State of California. David L. Karst is the son of Laurence W. Karst and M. Janice Karst. (Agreed Facts ¶ 5)

6. Defendant Holley House Motels is an Alabama corporation having its principal place of business in Mobile, Alabama. At all times Holley House Motels has held title to the motel doing business as the Palms Motel at 3944 Government Boulevard, Mobile, Alabama. (Agreed Facts ¶ 7)

7. Defendant C. Holley Midgley is an officer and fifty percent shareholder of Holley House Motels. (Agreed Facts ¶ 8)

8. Defendant Sue B. Midgley is an officer and fifty percent shareholder of Holley House Motels. Holley Midgley and Sue B. Midgley are husband and wife. (Agreed Facts ¶ 9)

9. Counterclaim Defendant/Third-Party Defendant Roberts Brothers, Inc. (Roberts Brothers), is an Alabama corporation having its principal place of business in Mobile, Alabama. Roberts Brothers is a licensed real estate broker corporation under the Alabama Real Estate License Law of 1951, as amended, Code of Ala. 1975, § 34-27-30 et seq. (Agreed Facts ¶ 10)

10. John Pat Flynn (Flynn) is a real estate salesman associated with Roberts Brothers. (Agreed Facts ¶ 11)

11. Richard E. Miller (Miller) is a real estate salesman associated with Roberts Brothers. (Agreed Facts ¶ 12)

12. Through Holley House Motels, Holley Midgley and Sue B. Midgley have owned and operated the Palms Motel for approximately ten years. The Palms Motel is a relatively small, independently owned and operated motel, termed by Holley Midgley as a "mom and pop" operation. Unlike a national franchise such as Holiday Inns of America, the Palms Motel has no national or local referral system to refer guests to the motel. Many of the guests of the Palms Motel are traveling businessmen who are repeat guests. Holley Midgley is the manager of the Palms Motel; Sue B. Midgley serves as a receptionist at the front desk. (Holley Midgley at 5-6, 18-19; Sue B. Midgley at 23; Denniston at 35-37)

13. Holley Midgley and Sue B. Midgley do not reside at the Palms Motel and there is no evidence that the motel was ever intended or used as a family residence. Plaintiffs testified that they sought to purchase the Palms Motel as a commercial investment and that no Plaintiff intended to reside in the Palms Motel after the purchase. (Sue B. Midgley at 5; Laurence Karst at 43-44; Harshad Patel at 9-10; Richard Miller at 29-30; Bindu Patel at 11, 53; David Karst at 16; Janice Karst at 8)

14. Prior to the transaction involved in this action, traveling businessmen, who regularly stayed at the Palms Motel, had informed Holley Midgley that they had previously stayed in motels in other cities which were purchased and managed by persons of Indian origin, that such motels had been poorly managed, and that they had ceased staying at such motels for that reason. (Holley Midgley at 19-22)²

15. Based upon such information, the Midgleys formed the belief that persons of foreign origin were unfamiliar with the customs and mores of this part of the country and that such unfamiliarity, combined with a language barrier, would prevent persons of foreign origin from properly managing a small non-franchised motel in the Mobile area. (Agreed Facts ¶ 22; Holley Midgley at 18-23, 85, 126-127; Sue B. Midgley at 12, 21-22; Laurence Karst at 43; Pat Flynn at 86-87)

16. Prior to the time the Midgleys listed the Palms Motel for sale, Holley Midgley and Sue B. Midgley had been contacted by persons of Indian origin regarding a possible sale of the Palms Motel. The Midgleys had refused to respond to a written offer from a person of Indian origin named Amrut Patel, both because the offer was too low and because the offeror was of foreign origin. (Agreed Facts ¶ 17 and ¶ 18; Sue B. Midgley at 36; Holley Midgley at 33-34, 40, 83-84)

17. In early 1978, the Midgleys decided to list the Palms Motel for sale because Holley Midgley and Sue B. Midgley intended to retire from the motel business. The Midgleys believed that they could not afford to sell the Palms Motel for cash because of the adverse federal income tax consequences of a cash sale. Furthermore, the Midgleys desired a steady flow of retirement income. Consequently, the Midgleys determined to list the Palms Motel for sale on an installment contract basis with the Midgleys financing the purchasers over an extended period of time. The Midgleys believed that for purchasers to be successful and make the installment payments over an extended period of time, participation of the purchaser in the daily management of the Palms Motel would be required. The Midgleys did not believe the business could be successful with absentee management. (Agreed Facts ¶ 14; Holley Midgley at 70, 78, 103-104, 126-129; Sue B. Midgley at 15, 31-33; Denniston at 28-31, 35-36, 41-46)

18. Pursuant to a "Sales Authority" dated July 13, 1978, Holley Midgley and Sue B. Midgley retained Roberts Brothers to procure a purchaser for the Palms Motel. The Sales Authority provided for an installment sale of the Palms Motel. (Agreed Facts ¶ 13; Harshad Patel Exh. 1)

19. Prior to September 28, 1978 (the date of the "Offer of Purchase" from Plaintiffs Laurence Karst, Janice Karst and David Karst), Holley Midgley had refused to deal with one or more prospective purchasers of the Palms Motel who were of Indian origin because Holley Midgley stated he did not believe that such persons could properly manage the Palms Motel. (Agreed Facts ¶ 18)

20. Sometime prior to September 28, 1978, Flynn advised Holley Midgley that a Mr. Patel, who had been referred by Herman Maisel Real Estate Agency, had expressed an interest in making an offer to purchase the Palms Motel (Other "Patels" referred to herein are unrelated to Harshad M. Patel and Bindu H. Patel, who are Plaintiffs in this action). Holley Midgley asked Pat Flynn if Mr. Patel was of Indian origin, and when Flynn responded in the affirmative Holley Midgley stated to Pat Flynn that Holley Midgley did not want to sell to Indians or foreigners. Holley Midgley subsequently informed Pat Flynn that the reason he did not wish to sell to Indians or foreigners was because he did not believe they were acquainted with the customs of the people in this part of the country and Holley Midgley did not believe they could do an adequate job of managing the Palms Motel. Flynn advised Mr. Patel and the representative of Herman Maisel Real Estate Agency that Holley Midgley would not sell to persons of Indian origin. No written offer was made on the Palms Motel. (Agreed Facts ¶ 14)

21. Tony Brown, a representative of Herman Maisel Real Estate Agency, subsequently contacted Flynn regarding three gentlemen named "Patel" who were interested in purchasing the Palms Motel. Although Flynn informed Tony Brown that Holley Midgley had stated he would not sell to persons of Indian origin, Brown subsequently contacted Flynn and stated that the three gentlemen named Patel were coming to Mobile to review the information on the Palms Motel. The three Patels met with Flynn and Tony Brown at the offices of Roberts Brothers. Flynn advised the three that Holley Midgley did not wish to sell to foreigners. The three Patels still indicated an interest in...