US v. Tropic Seas, Inc., Civ. No. 94-00317 SPK.

• Citation: 887 F. Supp. 1347
• Decision Date: 12 April 1995
• Docket Number: Civ. No. 94-00317 SPK.
• Parties: UNITED STATES of America, Plaintiff, and Robert L. Sallee and Betty Ann P. Sallee, Plaintiff-Intervenors, v. TROPIC SEAS, INC.; Arthur L. Thayer; and Karl Lillie, Kent Giles, Paula Harper, Joseph Miccio, Frances Fox, Mary Reddin, Jean Campbell, Jack Pennington, Richard Quinn, Robert Muller, Clare Wells, Veronica Worth, Frank Sallee and Byron Mello, in their capacities as members of the Tropic Seas Board of Directors, Defendants.
• Court: U.S. District Court — District of Hawaii

887 F. Supp. 1347

UNITED STATES of America, Plaintiff and Robert L. Sallee and Betty Ann P. Sallee, Plaintiff-Intervenors, v. TROPIC SEAS, INC.; Arthur L. Thayer; and Karl Lillie, Kent Giles, Paula Harper, Joseph Miccio, Frances Fox, Mary Reddin, Jean Campbell, Jack Pennington, Richard Quinn, Robert Muller, Clare Wells, Veronica Worth, Frank Sallee and Byron Mello, in their capacities as members of the Tropic Seas Board of Directors, Defendants.

Civ. No. 94-00317 SPK.

United States District Court, D. Hawai`i.

April 12, 1995.

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Steven Alm, U.S. Atty., Thomas A. Helper, Asst. U.S. Atty., Honolulu, HI, for plaintiff.

Ellen Godbey Carson, Shelby Anne Floyd, Joseph P. Viola, Honolulu, HI, for plaintiffs-intervenors.

Gary W.B. Chang, Honolulu, HI, for defendant Tropic Seas, Inc.

James P. Dandar, Janice Wolf, Honolulu, HI, for defendant Arthur L. Thayer.

April Luria, David M. Louie, Honolulu, HI, for defendants Karl Lillie, Paula Harper, Joseph Miccio, Frances Fox, Mary Reddin, and Jean Campbell.

Randall Yamamoto, John T. Komeiji, Patsy H. Kirio, Honolulu, HI, for defendants Jack Pennington, and Richard Quinn.

Russell H. Ando, Harold Chu, Honolulu, HI, for defendants Robert Muller, Clare Wells, Veronica Worth, and Byron Mello.

Allan F. Suematsu, Virginia M. Chock, Honolulu, HI, for defendant Kent Giles.

Jonathan Ortiz, Carolyn S. Kiyota, Honolulu, HI, for defendant Frank Sallee.

ORDER DENYING MOTION TO ABSTAIN, GRANTING IN PART PLAINTIFF-INTERVENORS' MOTION FOR PARTIAL SUMMARY JUDGMENT, GRANTING DEFENDANTS PENNINGTON AND QUINN'S MOTION, AND DENYING OTHER MOTIONS

SAMUEL P. KING, District Judge.

INTRODUCTION

Nine motions are before the court: (1) Plaintiff-Intervenors Robert and Betty Ann Sallee (the Sallees') Motion for Partial Summary Judgment, (2) Defendant Arthur Thayer's Motion for Abstention, or in the alternative for a Stay, (3) Defendant Kent Giles' Motion for Summary Judgment, (4) Defendants Veronica Worth and Byron Mello's Motion for Summary Judgment, (5) Defendants Karl Lillie, Paula Harper, Joseph Miccio, Frances Fox, Mary Reddin, and Jean Campbell's Motion for Summary Judgment, (6) Defendants Jack Pennington and Richard Quinn's Motion for Partial Summary Judgment, (7) Defendant Frank Sallee's counter-motion for summary judgment, (8) Plaintiff United States' motion to strike Frank Sallee's counter-motion, and (9) Plaintiff United States' motion to strike Tropic Sea's joinder in Thayer's motion for abstention. Various parties submitted appropriate joinders.

Oral argument was held on March 16, 1995. The court heard argument on the Sallees' motion, as well as on portions of some of Defendants' motions. The motions not specifically argued were taken under advisement based upon written submissions. Ellen Godbey Carson, Esq., appeared for the Sallees, and Thomas Helper, Assistant United States Attorney appeared for the United States. Defendants were represented as follows: Gary Chang, Esq., for Tropic Seas, Inc.; James Dandar, Esq., for Thayer; April Luria, Esq., for Lillie, Harper, Miccio, Fox, Reddin, and Campbell; Russell Ando, Esq., for Muller, Wells, Worth, and Mello; Jonathan Ortiz, Esq., for Frank Sallee; Allan Suematsu, Esq., for Kent Giles; and Randall Yamamoto, Esq., for Pennington and Quinn.

For the reasons set forth the court (1) DENIES the motion to abstain, (2) GRANTS the Sallees' Motion for Partial Summary Judgment as to Tropic Seas, Inc., but DENIES the Motion as to the individual defendants, (3) GRANTS Pennington and Quinn's motion as to claims against them as individuals, and (4) DENIES all other motions.

BACKGROUND

In 1973, Robert Sallee acquired a proprietary lease in a studio unit of Tropic Seas, a Waikiki cooperative apartment complex.¹ Robert married Betty Ann a year later. The Sallees then lived together at Tropic Seas. Until 1989, Tropic Seas had an occupancy restriction prohibiting children less than 14 years old. The house rule read:

Children shall be at least 14 years of age and be members of residing OWNERS' families to live at Tropic Seas. In case of occupancy other than by the owner and his family (such as renters, guests during owner's absence, etc.) occupancy shall be limited to single persons 20 years of age or more and to married persons of any age.

In 1986, Betty Ann became pregnant and, due to the occupancy restriction, the Sallees moved.

The record reflects that as far back as 1960 Tropic Seas also had another house rule restricting occupancy:

5. Occupancy. Apartments ordinarily will be limited to occupancy by the following number of persons: studio and one-bedroom apartments, two persons; two-bedroom apartments, three persons. This does not apply to houseguests.

See Section IX for rule on children.

By 1971, the rule had been strengthened. It now reads:

Occupancy shall be limited to not more than two persons for studio and one-bedroom apartments, and to not more than three persons for two-bedroom apartments. (emphasis added).

Tropic Seas also had another house rule in 1989 (which remains in effect today) regarding children. House Rule VII, No. 6 reads:

Children shall not loiter or play in the halls, stairways, elevator or other common areas. Parents and/or hosts of children who are guests are responsible for their behavior. (emphasis added to show sentence revised on 8/16/89).

In 1988, Congress passed the Fair Housing Amendments Act of 1988 (The Act). The Act, among other things, amended the Fair Housing Act, 42 U.S.C. § 3601 et seq., to prohibit discrimination in housing based on "familial status." "Congress found widespread discrimination against families with children and enacted the 1988 Amendments to protect this social institution from discriminatory housing practices. The goal of the Act was to make more housing opportunities available to families with children." United States v. City of Hayward, 36 F.3d 832, 834 (9th Cir.1994). The Act became effective in March of 1989. Id.

Given the Act's impending effective date, Tropic Seas repealed its house rule prohibiting children under 14 years of age on January 16, 1989.² However, Tropic Seas did not repeal the occupancy provision. Also, in August 1989, Tropic Seas modified House Rule VII No. 6 regarding children loitering in common areas (although there is no evidence that the modification was in response to the Act).

Following passage of the Act, the Sallees decided to move back into Tropic Seas after March 1989 (after the Act's effective date). On January 28, 1989, Karl Lillie as President of the Board of Directors of Tropic Seas, wrote the Sallees a letter stating in part:

The Board of Directors of Tropic Seas, Inc. understand it is your intention to occupy Apt. # 306 with your child after March 12, 1989 per the new Fair Housing Amendments Act of 1988, Public Law 100-430.

You have received a copy of the January 16, 1989 resolution deleting Sec. 2 in its entirety to conform with the Public Law which prohibits discrimination respecting people with children living in a unit. There is no problem with that; however, we have received the opinion of our attorney as to the number of persons occupying a studio apartment in our complex and enclose a copy of same for your perusal.

In turn, the opinion letter of Tropic Seas' attorney dated January 23, 1989, reviewing the pertinent house rules regarding occupancy and the Honolulu Housing Code, stated in part:

... I therefore don't believe that the Housing Code has any applicability to the Tropic Seas project. Under the Housing Code, Section 25-4.3(b), if applicable, a 485 square foot studio apartment could be occupied by up to eight persons!....

....

In conclusion, I wish to reiterate that in our opinion, a 485 square foot studio apartment at the Tropic Seas cannot be occupied by more than two persons.

On April 18, 1989, Lillie again wrote to the Sallees. He wrote in part:

May we remind you that when you purchased your apartment you signed an Assignment of Lease (Proprietary Lease), which obligates you to obey the House Rules, an addendum to the Proprietary Lease.

....

Therefore, upon further advice from our attorney ... it is the unanimous decision of the Board of Directors to deny occupancy of Apt. # 306, a studio apartment, by a family of three persons.

On September 27, 1989, Tropic Seas' attorney wrote a letter to the Sallees stating in part:

The Board of Directors of Tropic Seas, Inc. has been advised that your family of three is planning to occupy Apartment No. 306 in the near future.

....

This is to inform you that if you violate the House Rules by moving a family of three into Apartment No. 306, the Board of Directors has requested that we commence legal proceedings against you.

Nevertheless, the Sallees and their son moved back into their unit in October of 1989. After moving back, Tropic Seas through its board, or individual board members, made several statements regarding children at Tropic Seas in general and the Sallees in particular. For example, in March 1990, Defendant Giles as Vice-President of the Tropic Seas Board sent a letter to Jack Kemp, then-Secretary of the United States Department of Housing and Urban Development (HUD). The letter reads in part:

We are shocked ... that HUD has failed to take note of the fact that the Tropic Seas, Inc. apartments, the common areas and the grounds are absolutely unsafe for young children.

....

It is not in anyone's best interest to force the exposure of young children to known safety hazards and the owner occupants of this coop to almost certain financial ruin. The first serious injury or death of a young child due to a known unsafe condition could result in a ruinous multi-million dollar judgement that would relieve many of the present owners of their life savings.

....

The owners of Tropic Seas Inc. are absolutely not in any position to bear the financial burden of the additional tort liability incurred if HUD

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