Viens v. Am. Empire Surplus Lines Ins. Co.
| Decision Date | 23 June 2015 |
| Docket Number | Civil No. 3:14cv952 (JBA). |
| Citation | 113 F.Supp.3d 555 |
| Court | U.S. District Court — District of Connecticut |
| Parties | Jeffrey J. VIENS, et al., Plaintiffs, v. AMERICA EMPIRE SURPLUS LINES INS. CO., Defendant. |
Jean Zachariasiewicz, Stephen M. Dane, Relman, Dane & Colfax, P.L.L.C., Washington, DC, Greg J. Kirschner, Hartford, CT, for Plaintiff.
Diane Curran Polletta, Jill M. O'Toole, Shipman & Goodwin, Stamford, CT, Hartford, CT, for Defendant.
RULING DENYING DEFENDANT'S MOTION TO DISMISS
Defendant American Empire Surplus Lines Insurance Company moves [Doc. # 37] to dismiss the Second Amended Complaint [Doc. # 30] in which Plaintiffs Jeffrey Viens, Pamela Viens, Karen Wellikoff, Finney Lane Realty Associates, LLC, and the Connecticut Fair Housing Center allege discrimination in violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq. ("FHA") and the Connecticut Fair Housing Act, Conn. Gen.Stat. § 46a–63 et seq. ("CFHA") by Defendant's insurance underwriting criteria that charge higher premiums or deny coverage to landlords who rent apartments to tenants receiving Section 8 housing assistance. Plaintiffs contend that this practice has a disparate impact on racial minorities and is impermissible discrimination under state law against those receiving housing assistance. For the reasons that follow, Defendant's motion is denied.
Mr. and Mrs. Viens and Ms. Wellikoff, through Finney Lane Realty Associates, are landlords who rent apartments to tenants receiving assistance under the Section 8 Existing Housing Program administered by the United States Department of Housing and Urban Development ("HUD") in which participants find apartments in the private market and pay in rent 30 to 40 percent of their gross income while HUD pays the landlord a subsidy equaling the remainder of the rent. (2d Am. Compl. ¶¶ 4–7, 13–14.)
Mr. Viens owns three properties in Willimantic, Connecticut, each of which has a Latino tenant who uses a Section 8 voucher. (Id. ¶¶ 28–31.) Starting in April 2013, Mr. Viens' properties were insured under a property policy issued by Defendant. In January 2014, however, he received a written notice of non-renewal from Defendant, stating that the policy would be canceled effective April 2014 for the stated reason that "RISK NO LONGER MEETS CARRIER UNDERWRITING GUIDELINES" with a handwritten note stating, "Subsidized Housing—Section 8." (Id. ¶¶ 33–43.) The Viens were later informed that the non-renewal was the result of the number of tenants receiving Section 8 assistance at their properties. (Id. ¶ 45.) Because of this non-renewal, the Viens were forced to acquire replacement insurance coverage that provided less favorable terms and cost considerably more. (Id. ¶¶ 52–53.)
Ms. Wellikoff, through Finney Lane Realty Associates, is a partial owner and property manager of a three-unit property located at 10 Finney Lane in Stamford, Connecticut, which has rented to tenants receiving Section 8 assistance over the years, each of whom was Latino or African–American. (Id. ¶ ¶ 54–56, 7, 59–60.) In November 2012, an inspector employed by Defendant visited the Finney Lane property and asked Ms. Wellikoff whether any "Section 8 tenants" resided there. (Id. ¶¶ 67–68.) Shortly after Ms. Wellikoff confirmed that she rented to Section 8 tenants, an underwriter from American Empire told Ms. Wellikoff that Defendant had understood there to be no Section 8 tenants at the property and because two of the three units were occupied by such tenants, she would have to pay an additional yearly premium of $575 or face cancelation of both her property and liability policies. (Id. ¶¶ 71–73.) Ms. Wellikoff responded that the demand "constituted illegal discrimination on the basis of lawful source of income" and refused to pay the additional premiums. (Id. ¶ 73.) After Ms. Wellikoff refused demands for increased premiums in April, May, June, and July of 2013, Defendant sent her a notice of cancelation of the policy, listing the reason as "non payment of premium for endo[r]sement to agent." (Id. ¶¶ 74–77.) As a result, Ms. Wellikoff was forced to operate the Finney Lane property without insurance for three months and eventually had to obtain a replacement policy that was more expensive and provided less favorable coverage. (Id. ¶¶ 79–81.)
Plaintiff the Connecticut Fair Housing Center ("CFHC") is a "nonprofit civil rights organization dedicated to ensuring that all people have equal access to housing opportunities in Connecticut," which "focuses on the intersection of housing discrimination and poverty." (Id. ¶ 82.) CFHC has received a "high volume" of complaints about discrimination based upon lawful source of income and Defendant's use of discriminatory underwriting criteria have "frustrated and continue to frustrate CFHC's mission of ensuring that all people have equal access to housing opportunities in Connecticut" and required it to "divert its scarce resources and staff away from other activities and direct them towards investigating and counteracting" the practice. (Id. ¶¶ 85–86.)
Plaintiffs seek certification of a class action lawsuit on behalf of "all similarly situated landlords of residential rental units in the state of Connecticut who are prohibited by state law from refusing to rent to tenants because of the tenants' use of Section 8 vouchers" and "who have been potentially subject to the defendant's unlawful underwriting criteria resulting in either termination of their insurance or increased premiums due." (Id. ¶ 90.)
Plaintiffs assert claims in Count One under the CFHA for (1) discrimination "in the terms, conditions, or privileges of rental of a dwelling, or in the provision of services or facilities in connection therewith, because of" lawful source of income, Conn. Gen.Stat. § 46a–64c(a)(2) ; (2) publication of a statement or notice with respect to the rental of a dwelling that indicates a "preference, limitation or discrimination based on lawful source of income," id. § 46a–64c(a)(3) ; (3) making a residential real-estate-related transaction unavailable based on lawful source of income, id. § 46a–64c(a)(7) ; (4) discrimination in the terms or conditions of a residential real-estate-related transaction based on lawful source of income, id.; and (5) coercion, intimidation, threatening, or interference with the landlords' "exercise or enjoyment of" their right to rent to individuals without consideration for their lawful source of income, id. § 46a–64c(a)(9) ; (see 2d Am. Comp. ¶¶ 103–07).
Plaintiffs also assert claims for discrimination on the basis of race and national origin under both federal and state law (Counts Two and Three) contending that because African–American and Latino households are 12 times more likely to participate in the Section 8 program than white non-Hispanics, "the defendant's use of discriminatory insurance underwriting criteria actually or predictably results in a significantly disproportionate impact on the basis of race and national origin" and any non-discriminatory business purpose could be achieved by "less discriminatory underwriting criteria." (2d Am. Compl. ¶¶ 18–19, 112, 117, 121, 126.)
The CFHA protects tenants from various forms of discrimination based on their "lawful source of income" and is "designed to provide that low income families ‘may not be rejected or denied a full and equal opportunity for ... public accommodation based solely on the presence of [their lawful source of] income.’ " Comm'n on Human Rights & Opportunities v. Sullivan Assocs., 250 Conn. 763, 777, 739 A.2d 238 (1999) (quoting 32 H.R. Proc., Pt. 25, 1989 Sess., p. 8776) (alterations in original). Lawful source of income includes "income derived from ... housing assistance," Conn. Gen.Stat. 46a–63(3), such as Section 8 vouchers, see Sullivan Assocs., 250 Conn. at 775, 739 A.2d 238 .
The statute provides in relevant part:
Defendant contends that "Plaintiffs lack a private right of action to pursue these claims, because they are outside the protected class expressly granted such a right, and their claimed injuries are not linked to discrimination against the protected class." (Def.'s Mem. Supp. [Doc. # 34] at 4.) Defendant's argument thus appears to be twofold: (1) only protected class members under the CFHA may bring claims to redress violations of the Act and (2) a CFHA plaintiff's claimed injuries must be linked to an act of discrimination against protected class members.
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