Saunders v. General Services Corp.

• Decision Date: 12 May 1987
• Docket Number: Civ. A. No. 86-0229-R.
• Citation: 659 F. Supp. 1042
• Parties: Renee J. SAUNDERS and Housing Opportunities Made Equal, Plaintiffs, v. GENERAL SERVICES CORPORATION and Jonathan Perel, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

659 F. Supp. 1042

Renee J. SAUNDERS and Housing Opportunities Made Equal, Plaintiffs, v. GENERAL SERVICES CORPORATION and Jonathan Perel, Defendants.

Civ. A. No. 86-0229-R.

United States District Court, E.D. Virginia, Richmond Division.

May 12, 1987.

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Timothy M. Kaine, Little, Parsley & Cluverius, P.C., Richmond, Va., William H. Jeffress, Jr., Rory K. Little, Miller, Cassidy, Larroca & Lewin, Washington, D.C., Kerry A. Scanlon, Washington Lawyers' Committee for Civil Rights Under Law, Washington, D.C., for plaintiffs.

James Patrick McElligott, Jr., Richmond, Va., and Scott S. Cairns, McGuire, Woods, Battle & Boothe, for defendants.

MEMORANDUM

MERHIGE, District Judge.

This cause, which has been tried and the issues briefed, is now ripe for disposition.

The Parties

Renee Saunders, a black female who resides in Richmond, Virginia, is an individual plaintiff in the instant action. Plaintiff Housing Opportunities Made Equal ("HOME") is a non-profit corporation organized under Virginia law and supported by private contributions, grants, and contracts with the City of Richmond. Its purposes are to further the goals of the Fair Housing Act and to promote equal housing opportunities in the Richmond area.

Defendant General Services Corporation ("GSC") is a Virginia corporation which operates and manages fourteen apartment complexes in the Richmond area. Defendant Jonathan Perel, a white male, is President of GSC and has a financial interest in each of the entities owning the complexes managed by GSC.

Background

The claims in the instant action fall into two basic categories and groups of facts. First, plaintiff HOME claims violations concerning a 1983 conciliation agreement entered into between HOME and GSC. HOME essentially alleges that the defendants committed fraud which induced HOME to sign the contract, and that they have breached various advertising provisions contained in the agreement. Second, both plaintiffs claim that certain of defendants' advertising practices violate the Fair Housing Act, 42 U.S.C. § 3601 et seq. and the Civil Rights Act of 1866, 42 U.S.C. §§ 1981, 1982.

Facts

Based on the evidence produced at trial, the Court finds the facts as summarized below and as discussed at various times in this memorandum when applying the law. In 1981, HOME, along with several individual complainants, including two former GSC employees, filed administrative complaints with the Virginia Real Estate Commission ("VREC") and the U.S. Department of Housing and Urban Development ("HUD"). They alleged that GSC, through its supervisory employees, had committed various acts of housing discrimination aimed at discouraging or preventing blacks from renting housing in GSC apartment complexes. Many of such allegations focused on the conduct of a GSC Property Manager, John Hunt.

The Court heard and credits the testimony of both Lynn Graybill and Jean Mann, complainants in the 1981 action, concerning the events that formed the basis of the 1981 complaints. While the subject matter of such complaints is not a part of the instant action, their testimony provides relevant background information concerning GSC's attitude toward fair housing and the credibility of Mr. Hunt's testimony.

Both Graybill and Mann testified that Hunt instructed them on various occasions to treat black tenants and prospective tenants less favorably than whites, including discouraging GSC-sponsored social activities that might attract black tenants and "turning off the charm" to prospective black tenants. Mann also testified that defendant Perel was present at meetings at which Hunt recommended such action and did not express any disagreement. Further, she informed Perel of her concerns about Hunt's discriminatory actions after she was terminated by GSC, but he took no action once Hunt disclaimed her allegations.

After VREC conducted its investigation and issued reasonable cause determinations as to Graybill's and Mann's complaints, Dr. Barbara Wurtzel, HOME's Executive Director in 1982-83, and the Assistant Director, Linda Harms, made the decision to attempt conciliation of its complaints with GSC.

The evidence establishes that HOME considered negotiation of affirmative advertising provisions, in conformity with HUD regulations, to constitute a crucial element of its conciliation agreement with GSC, as with all such cases. As such, a standard provision in all of its proposed agreements required that all advertising and other printed materials contain an equal housing opportunity slogan or logo within thirty days of the effective date of the conciliation agreement. Such provision was proposed by HOME to GSC as part of its proposed agreement submitted to GSC's attorneys on August 30, 1982.

In reaction to HOME's proposal, GSC's attorney submitted a letter to HOME's attorney dated October 12, 1982, which outlined its concerns with the proposed agreement in order to facilitate the parties' next negotiating meeting. Concerning the affirmative advertising provisions, the letter represented that:

GSC will undertake some affirmative action in advertising so long as the agreement recognizes economic reality. Although classified newspaper advertising is relatively easy to change, advertising that involves layout by professional advertisers can only be changed at considerable expense. In addition, advertising other than through newspapers is printed in bulk and used over a period of time. Any changes in such advertising could not be adopted until the current store of materials has been distributed.

Both Linda Harms and Dr. Wurtzel testified that they were concerned by GSC's reaction to the 30-day provision because the affirmative advertising provisions were a major component of the agreement and a 30-day limit was customary in such agreements. Based on this concern, both Harms and Wurtzel recalled asking defendants' counsel in a negotiating session the extent of GSC's "current store of materials" because they believed allowing depletion of the current supply would be acceptable only so long as such supply was not extensive and compliance would be achieved in a reasonably short time. Both witnesses remember counsel representing to them that the supply was not large and would be depleted in a matter of months, and less than a year. Wurtzel's testimony, to which the Court gives credence, is somewhat more exact, with her recollection that such representation occurred in approximately March 1983 and was that GSC had approximately a two-month supply. While counsel's representation may have been premised on an honest belief at the time, subsequent conduct of the defendants supports the Court's conclusion that they acted in an unlawful manner. Ms. Harms further testified that Marianne Phillips, GSC Operations Manager at that time, confirmed that GSC's supply was not extensive.

Both Harms and Wurtzel testified that such representation was crucial to their acceptance of GSC's modification to the agreement, providing that a slogan or logo would be included in GSC's advertising materials, other than newspapers, "when those materials are reprinted."

The only rebuttal evidence offered by defendants concerning such representation was Marianne Phillips' statement that she didn't recall whether she had represented that GSC's current supply was small.

While the agreement was finally executed between July 13 and 18, 1983, the testimony indicates that, as one would expect in contract negotiations, individual provisions within the agreement were agreed upon at various points in late 1982 to mid-1983. Both Harms and Wurtzel testified that agreement on the affirmative advertising provisions was reached early in the negotiating process. Dr. Wurtzel testified that such agreement was reached in approximately March 1983, and that after that date, the remaining negotiations focused on confidentiality and content of the news release. Her recollection is reinforced by her negotiating notes of March 2 and 9, 1983.

While defendants argue generally that there was no legal agreement at all until the final agreement was signed in July 1983, they offer no evidence contradicting plaintiff's evidence that the advertising provisions had been agreed upon by the parties by March 1983.

HOME's attorney sent copies of the final conciliation agreement agreed to by HOME and GSC to VREC and HUD on June 20, 1983. This agreement was executed by VREC, HOME, the individual complainants, GSC, Perel, Hunt, and Betsy King, GSC's marketing director, between July 13 and 18, 1983, and became effective on July 18, 1983.

It included affirmative advertising provisions by which GSC agreed to include an EHO slogan or logo in all future newspaper advertising and "in other future printed advertising materials when those materials are reprinted." Such affirmative advertising provisions were to remain in effect for two years.

As part of the agreement, HOME released GSC and Perel from all claims which it had ever had against them up until the date of the agreement, including claims for violations of the Fair Housing Act and 42 U.S.C. §§ 1981-82.

HOME subsequently discovered, in approximately April 1985, that GSC had ordered 134,000 copies of its Lifestyle brochure without any EHO logo or slogan on approximately June 15, 1983 — just days before signing the conciliation agreement. Such order went to press beginning on June 19, 1983, and was completed by July 23, 1983. Doug Ziegler, owner of the advertising agency which GSC uses, testified that he submitted a formal purchase order for 134,000 copies of Lifestyle on June 30, 1983, that he would have discussed price quotations and quantity of the order with GSC prior to that date, and that it would have taken approximately three weeks to print the order although he did not know the exact date on which printing was begun or completed.

Marianne Phillips testified that on June...