United States v. Reece

• Decision Date: 10 April 1978
• Docket Number: No. CV-75-98-BLG.,CV-75-98-BLG.
• Citation: 457 F. Supp. 43
• Parties: UNITED STATES of America, Plaintiff, v. Bert D. REECE and Cleone J. Reece, Defendants.
• Court: U.S. District Court — District of Montana

457 F. Supp. 43

UNITED STATES of America, Plaintiff, v. Bert D. REECE and Cleone J. Reece, Defendants.

No. CV-75-98-BLG.

United States District Court, D. Montana, Billings Division.

April 10, 1978.

COPYRIGHT MATERIAL OMITTED

Daniel Patrick O'Hanlon, Atty. Housing Section, Civ. Rights Div., Dept. of Justice, Washington, D. C., Robert T. O'Leary, U. S. Atty., D. Mont., Butte, Mont., for plaintiff.

Charles E. Snyder, Billings, Mont., for defendant Bert D. Reece.

Paul G. Olsen, Jones, Olsen & Christensen, Billings, Mont., for defendant Cleone J. Reece.

MEMORANDUM AND ORDER

BATTIN, District Judge.

This case arose out of a fair housing complaint filed with the Secretary of Housing and Urban Development ("HUD") by two airmen stationed at Logan Field near Billings, Montana, alleging that they were denied housing in an apartment owned by the defendants on the basis of race. After investigating the complaint, HUD determined to resolve the matter through its informal conciliation procedure. An agreement was worked out between the complainants, the defendants, and representatives of HUD, whereby defendants agreed to desist from any racially discriminatory policy, take certain affirmative steps, and pay each of the complainants $500 plus attorney's fees of $75. The defendants have admittedly failed to comply with the terms of this agreement, and the United States has filed a complaint under 42 U.S.C. § 3613, seeking mandatory relief to enjoin defendants from the discriminatory practices and compel them to perform the conciliation agreements.

Discovery undertaken pursuant to this complaint led the plaintiff to file an amended complaint alleging that, in addition to the racial discrimination outlined above, defendant Cleone Reece has maintained certain policies which allegedly discriminate on the basis of sex in violation of 42 U.S.C. § 3604. Presently pending is the motion of the United States for partial summary judgment on the issues of sex discrimination and enforcement of the conciliation agreement.¹

Both defendants contend that the conciliation agreement is unenforceable on the ground that it was fraudulently induced. It is contended that representatives of HUD, particularly one Kerrigan, represented to the defendants that they were the subjects of a verified complaint, when in fact, defendants allege, no such complaint existed.

Regarding the sex discrimination action, to which only Cleone Reece is subject,² she argues that her policies are not discriminatory, in that the decision not to rent to certain single women is based on a salutary motive, and in that she in fact does not discriminate against divorced women receiving alimony and child support.

I. Conciliation Agreement

The incident which gave rise to the conciliation agreement involved negotiations for the rental of an apartment between the two airmen complainants and Nola Ann Reece,³ the daughter of the defendants. The airmen individually filed complaints on a HUD form, verified before a HUD officer, naming Nola Ann Reece as the "defendant" and Bert Reece as a party who also may have violated the law. Cleone Reece was not mentioned in the complaints. At the time the incident took place, Bert and Cleone were living apart and apparently contemplating divorce.⁴ Bert Reece had assumed full control and carried out all management duties at the time of the incident, assisted from time to time by Nola Reece. The alleged discriminatory refusal to rent occurred when Nola told one of the complainants that "We don't rent to blacks" upon learning that the airman had a black roommate.⁵

The defendants strenuously argue that the conciliation agreement may not be enforced against them since they are not named as defendants in the HUD administrative complaint. This argument is framed in terms of jurisdiction and in terms of fraud. Thus, defendants contend that HUD lacks jurisdiction to negotiate with parties not named as defendants and, in the alternative, that HUD fraudulently induced the defendants to enter the agreement by leading them to believe that they were named defendants in the administrative proceeding.

Plaintiff contends that the fact that Bert and Cleone Reece were not named as "defendants" in the HUD complaint does not constitute a defect in HUD's jurisdiction to negotiate a conciliation agreement. It is argued that the complaint is only required for purposes of notice. Since both Bert and Cleone Reece undeniably received notice of the complaint,⁶ plaintiff argues that its jurisdiction to resolve the dispute was perfected.

Plaintiff's argument appears to be well taken. As the Ninth Circuit has recognized, the conciliation provisions of § 3610 are not designed to be the equivalent of a full-blown adversary litigation. Rather, "section 3610 contemplates the resolution of disputes in the slower, less adversary context of administrative reconciliation and mediation." TOPIC v. Circle Realty, 532 F.2d 1273, 1276 (9th Cir. 1976). The construction urged by the plaintiff is fully consistent with this philosophy, and has been adopted by at least one court. Taylor v. Fletcher Properties, Civil Action No. 74-H-850 (S.D.Tex., Sept. 18, 1975) (unreported opinion, copy attached as Appendix I). In contrast, defendants cite absolutely no authority for the proposition that HUD may not mediate a conciliation agreement between a complainant and a party not named in the complaint. I therefore conclude that the agreement is not unenforceable on this ground.⁷

Since the Court concludes that a verified complaint naming these parties is not a prerequisite to the conciliation agreement, the defendants' claim of fraudulent inducement must also fail. Defendants contend that they were induced to sign the conciliation agreements by representations of HUD agents that the defendants were nominal parties in a verified complaint. Assuming arguendo that the misrepresentation occurred, I am unable to see how it would be material to their entering the conciliation agreements. Defendants had notice of the complaint alleging that discrimination had occurred regarding rental of property which they owned. As the Taylor case indicates, ownership is sufficient to subject defendants to the informal administrative procedure. Further, the deposition of Bert Reece⁸ suggests that a major impetus to the conciliation agreement was the desire to avoid litigation. Since the defendants would be subject to suit whether they were named in the HUD complaint or not,⁹ any misrepresentation as to the status of such a complaint loses its impact. This is particularly true where, as here, the defendants signed the agreements with the advice of counsel.

Cleone Reece also contends that the Attorney General may not bring suit under the Fair Housing Act absent a "pattern or practice" of discrimination. While this may be true of suits under 42 U.S.C. § 3613, defendants cite no authority for the proposition that a pattern or practice of discrimination must be shown before HUD can sue through the United States to enforce a conciliation agreement to which it is a party. On the contrary, it appears obvious that the conciliation agreement would be of little value as a tool for resolution of minor fair housing disputes if it were held to be unenforceable by suit in the nature of specific performance.

In short, the conciliation agreement appears to satisfy all the requisites of the contract. It is reduced to a writing which clearly expresses the terms agreed upon. The mutual promises of the parties—that complainants would refrain from suing in exchange for certain affirmative action— appear to supply sufficient consideration. That the parties were aware of the contents and consequences of the agreement should be presumed from the fact that the agreement was entered on the advice of counsel. I find no reason in any of defendants' arguments to decline enforcement.

II. Sex Discrimination

The sex discrimination claim against Cleone Reece was brought pursuant to 42 U.S.C. § 3613, which provides:

Whenever the Attorney General has reasonable cause to believe that any person . . . is engaged in a pattern or practice of resistance to the full enjoyment of any rights granted by the Fair Housing Act, or that any group of persons has been denied any of the rights granted by the Fair Housing Act and such denial raises an issue of general public importance, he may bring a civil action in any appropriate United States district court . . . requesting such preventive relief . . . as he deems necessary . . ..

Here, the amended complaint alleges that Cleone Reece has engaged in a pattern or practice of sex discrimination, and that an issue of public importance is raised.¹⁰ The allegation is based on statements by Cleone Reece in her deposition¹¹ and answers to interrogatories, and admissions made in defendant's brief, to the effect that defendant refused to rent certain apartments to single women without cars, and that defendant did not consider alimony and child support payments in determining whether a divorced woman would meet the defendant's requirements regarding ability to pay rent.

Defendant apparently does not dispute the fact that she adheres to the above-described policies. However, she does deny that the policies contravene the provisions of 42 U.S.C. § 3604, which provides:

It shall be unlawful—

(a) to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin.

In particular, defendant argues that she requires certain of her single woman tenants to have cars for their own protection,¹² and that she doesn't discriminate against divorced women.

It is somewhat difficult to perceive the impact of defendant's alimony-child support argument, since it has been poorly briefed by defense counsel. The only defense offered is a statement in Cleone...