United Farm Bureau Mut. Ins. Co., Inc. v. Metropolitan Human Relations Com'n

• Decision Date: 23 May 1994
• Docket Number: No. 93-1739,93-1739
• Citation: 24 F.3d 1008
• Parties: UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Plaintiff-Appellant, v. METROPOLITAN HUMAN RELATIONS COMMISSION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1008

24 F.3d 1008

UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Plaintiff-Appellant, v.METROPOLITAN HUMAN RELATIONS COMMISSION, Defendant-Appellee.

No. 93-1739.

United States Court of Appeals Seventh Circuit.

Argued Dec. 2, 1993.

Decided May 23, 1994.

Carolyn W. Spengler(argued), Kathleen A. Kilar, Hunt, Suedhoff, Borror & Eilbacher, Fort Wayne, IN, for United Farm Bureau Mut. Ins. Co.

Samuel L. Bolinger, Asst. Atty. Gen., Fort Wayne Metropolitan Human Relations Com'n, Fort Wayne, IN (argued), for Metropolitan Human Relations Com'n.

Stephen M. Dane, Cooper, Straub, Walinski & Cramer, Toledo, OH, for Nat. Fair Housing Alliance, amicus curiae.

Before LAY, ^*CUDAHY and KANNE, Circuit Judges.

LAY, Circuit Judge.

Richard P. Kesterke("Kesterke") filed a complaint with the Metropolitan Human Relations Commission of the City of Fort Wayne, Indiana ("Metro"), claiming that United Farm Bureau Mutual Insurance Company, Inc.("Farm Bureau") refused to renew his homeowner's insurance policy because he lived in a racially mixed neighborhood.Pursuant to the contractual relationship between Metro, which is a local civil rights agency, and the United States Department of Housing and Urban Development("HUD"), Kesterke was able to file through Metro a complaint under the Fort Wayne fair housing ordinance and also under Title VIII of the Civil Rights Act of 1968(the Fair Housing Act), as amended, 42 U.S.C. Secs. 3601-3631(1988 & Supp. IV 1992).When Metro began investigating Kesterke's complaint, Farm Bureau brought suit in state court against Metro to enjoin its investigation, arguing that Metro lacked proper jurisdiction.Metro removed the suit to federal court, and the district court subsequently denied Farm Bureau's motion to remand the suit to state court.Upon cross-motions for summary judgment, the district court decided that Metro had jurisdiction under the local ordinance to investigate Kesterke's complaint.Farm Bureau appeals the district court's finding of subject matter jurisdiction and the granting of summary judgment in favor of Metro.We affirm in part, modify in part, and remand.

I.BACKGROUND

In June of 1989, Farm Bureau gave notice to its insured, Kesterke, that it would not renew his homeowner's insurance policy.Kesterke's policy had been in effect since 1984 and he had made two claims for theft losses, in April of 1987 and January of 1989, totaling $2,567.45.In July of 1989, Kesterke filed complaints with Metro alleging that Farm Bureau declined to renew his policy because he lived in a racially mixed neighborhood with a perceived high crime rate.Kesterke, who is white, alleged that Farm Bureau was engaging in the impermissible practice of "redlining."This court has described redlining as "charging higher rates or declining to write insurance for people who live in particular areas."NAACP v. American Family Mut. Ins. Co., 978 F.2d 287, 290(7th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2335, 124 L.Ed.2d 247(1993).

Metro's mission, in part, is to "assist in the elimination of discrimination in the City of Fort Wayne."Fort Wayne, Ind., Gen. Ordinance G21-78, art. III(1978).Its creation was made possible by the Indiana Civil Rights Act, which contains general policy statements and authorizes local governments to enact ordinances establishing local human rights commissions.SeeInd.Code Ann. Secs. 22-9-1-12.1(b),22-9-1-2 (Burns Supp.1993).¹Pursuant to these statutes, the City of Fort Wayne enacted General Ordinance G21-78, which creates Metro and details Metro's powers and duties.The local ordinance prohibits discrimination in the sale or rental of housing or other real property.Fort Wayne, Ind., Gen. Ordinance G21-78, art. IV, Sec. 2.It is virtually identical to the relevant provisions of the federal Fair Housing Act.See42 U.S.C. Sec. 3604(a)-(b)(1988).²Metro is a "certified" agency, which means that HUD has determined that the Fort Wayne General Ordinance under which Metro operates is "substantially equivalent" to the federal Fair Housing Act.Seeid.Sec. 3610(f)(3)(A)(1988).³HUD can enter into agreements with certified local agencies by which the agencies, on behalf of HUD, process and investigate complaints made pursuant to the federal Fair Housing Act.Seeid.Sec. 3616(1988).HUD and Metro have entered into such a contractual relationship, allowing a person to file with Metro a complaint under both the local ordinance and the federal Fair Housing Act.⁴

Kesterke did just that: he filed, with Metro, complaints under Fort Wayne General Ordinance G21-78 and also under the federal Fair Housing Act.In August of 1989, Metro began its investigation of Kesterke's complaint.Farm Bureau filed its answer to the complaint, denying the charges and arguing that Metro did not have subject matter jurisdiction over Kesterke's complaint.Farm Bureau's position essentially was that the complaint involved insurance, which is separately regulated by Indiana law, and that redlining is not a housing matter and is thus outside of Metro's authority.Farm Bureau filed a motion for dismissal on the basis that Metro lacked subject matter jurisdiction over the complaint and also filed a motion for stay of proceedings pending a ruling on the motion for dismissal.In September of 1989, Metro denied Farm Bureau's motion for stay.Metro has yet to rule on the motion for dismissal.

Farm Bureau subsequently attempted to obtain an injunction in Indiana state court.It sought a determination that Metro did not have jurisdiction to investigate Kesterke's complaint and requested that Metro be enjoined from conducting an investigation.Metro removed the case to federal court and the parties stipulated that Metro would not pursue the investigation of Kesterke's complaint until Farm Bureau's action for an injunction was decided.The district court denied Farm Bureau's motion to remand to state court, finding that it had federal question jurisdiction because Kesterke's complaint against Farm Bureau was "dual filed" under the local ordinance and the federal Fair Housing Act.

Farm Bureau and Metro filed cross-motions for summary judgment in March of 1990.Farm Bureau argued that Metro did not have subject matter jurisdiction over a complaint alleging discriminatory acts by an insurance company regarding the nonrenewal of a homeowner's policy, and that HUD, acting pursuant to the Fair Housing Act, could not confer jurisdiction upon Metro that is broader than that provided by state law.Metro responded that it possessed jurisdiction under state law to investigate an allegation of redlining.

The cross-motions for summary judgment were taken under advisement by the district court pending a ruling in NAACP v. American Family Mutual Insurance Co., 978 F.2d 287(7th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2335, 124 L.Ed.2d 247(1993), on the issue of whether redlining in the insurance business is a form of racial discrimination violating the federal Fair Housing Act.On October 20, 1992, this court issued its opinion, in which it held that "[s]ection 3604 [of the Fair Housing Act] applies to discriminatory denials of insurance, and discriminatory pricing, that effectively preclude ownership of housing because of the race of the applicant."Id. at 301.

Relying on this court's decision in American Family, the district court concluded that Metro had jurisdiction under Indiana law to investigate Kesterke's claim of redlining.The court granted summary judgment on behalf of Metro and denied Farm Bureau's motion for summary judgment.Farm Bureau brought this appeal, claiming (1) that the district court should have remanded the case because there is no federal question subject matter jurisdiction; (2) that Metro did not have jurisdiction over Kesterke's complaint under the Indiana Civil Rights Act, and thus the district court erred in denying its motion for summary judgment; (3) that the district court should have certified to the Indiana Supreme Court the question of Metro's jurisdiction; and (4) that the federal Fair Housing Act does not encompass a claim of redlining by a white property owner living in a racially mixed neighborhood.

II.SUBJECT MATTER JURISDICTION

In allowing Metro to remove the case to federal court, the district court determined that Farm Bureau's request for injunctive relief presented a claim "arising under" the laws of the United States.See28 U.S.C. Sec. 1331(1988).Farm Bureau argues that the district court erred in refusing to remand the case.According to Farm Bureau, there is no federal question at issue and its mention of the federal Fair Housing Act in its complaint was simply an anticipated defense.Furthermore, even if HUD had jurisdiction to investigate Kesterke's complaint, under Indiana state law Metro did not have such jurisdiction, and thus HUD could not refer investigation of a matter to Metro that was outside of Metro's own jurisdiction.

We agree with the district court that Farm Bureau's request for injunctive relief involves a claim that arises under the laws of the United States and thus a federal question is at issue.Kesterke's complaint was "dual filed" under the local ordinance and under the federal Fair Housing Act.Metro undertook to investigate Kesterke's claims under both acts; indeed, in its initial letter to Farm Bureau, Metro stated that Kesterke's complaint was jointly filed with Metro and HUD and that HUD would defer the investigation of its complaint to Metro in accordance with HUD's and Metro's agreement made pursuant to the federal Fair Housing Act.

In response to Metro's investigation, Farm Bureau went to state court attempting to enjoin Metro from conducting an investigation of Kesterke's complaint under state law and under the federal Fair Housing Act.In its complaint, Farm Bureau alleged that Kesterke filed a complaint with Metro and with HUD and that Metro "lacks subject matter jurisdiction over Richard...