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Theodora Rescue Committee v. Volunteers of America of Washington

United States District Court, W.D. Washington, Seattle

November 6, 2014



ROBERT S. LASNIK, District Judge.

This matter comes before the Court on "Defendant The Volunteers of America of Washington's Motion for Summary Judgment" (Dkt. # 20) and plaintiff's "Cross-Motion for Summary Judgment on Notice & Civil Conspiracy Issues" (Dkt. # 29). Summary judgment is appropriate if, viewing the evidence in the light most favorable to the nonmoving party, "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); L.A. Printex Indus., Inc. v. Aeropostale, Inc. , 676 F.3d 841, 846 (9th Cir. 2012). The moving party "bears the initial responsibility of informing the district court of the basis for its motion." Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). It need not "produce evidence showing the absence of a genuine issue of material fact" but instead may discharge its burden under Rule 56 by "pointing out... that there is an absence of evidence to support the nonmoving party's case." Id . at 325. Once the moving party has satisfied its burden, it is entitled to summary judgment if the non-moving party fails to designate "specific facts showing that there is a genuine issue for trial." Id . at 324. "The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient." Arpin v. Santa Clara Valley Transp. Agency , 261 F.3d 912, 919 (9th Cir. 2001); Intel Corp. v. Hartford Accident & Indem. Co. , 952 F.2d 1551, 1558 (9th Cir. 1991). "An issue is genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party." In re Barboza , 545 F.3d 702, 707 (9th Cir. 2008) (internal citations omitted).

Having reviewed the memoranda, declarations, and exhibits submitted by the parties, [1] having heard the arguments of counsel, and taking the evidence in the light most favorable to plaintiff, the Court finds as follows:


Plaintiff Theodora Rescue Committee is an organization of current residents of "The Theodora, " a 114-unit supportive housing facility located in the Ravenna neighborhood of Seattle. The owner of the building, defendant The Volunteers of America of Washington ("VoA"), is the local branch of a national non-profit that provides a wide variety of services to individuals and communities around the country. The Theodora was opened in the mid-1960s with the help of a low interest mortgage loan through the "Supportive Housing for the Elderly" program of Section 202 of the Housing Act of 1959. As part of the financing arrangement, VoA was obligated to keep rents affordable for low income, elderly residents throughout the term of the loan, which expired on or about August 1, 2014. In 1985, VoA obtained additional federal assistance by entering into a Section 8 Housing Assistance Payments ("HAP") Contract with the U.S. Department of Housing and Urban Development. The Section 8 program was designed to assist HUD-financed projects that were facing "serious financial problems" and provided VoA with a monthly sum to cover a portion of the rent due from tenants who qualified on the basis of income. VoA renewed the Section 8 contract from 1985 to 2013.

It is undisputed that VoA has been losing money operating The Theodora for a number of years and that it has taken more than $1.6 million in advances from the national Volunteers of America organization to make up the shortfall. As the Section 202 loan approached maturity, VoA evaluated options for renovating and revitalizing the property to make it more attractive to potential tenants in the hopes of reversing the operating losses. VoA was unable to secure financing, however, and decided to sell the property.

In September 2013, VoA listed the property with a relator and instructed him to market the property to nonprofits first in the hope of preserving the building as low-income housing. VoA renewed its Section 8 participation for a one year term, and on October 1, 2013, notified The Theodora residents that the Section 8 subsidies would expire on October 31, 2014. Decl. of Robert Gibson (Dkt. # 23), Ex. F at 1. After a month of contacting nonprofits in what plaintiffs describe as a rather haphazard and unmotivated way, VoA offered the property at market price to all comers. VoA entered into a purchase and sale agreement with defendant Goodman Real Estate, Inc., on December 23, 2013. The agreement provided for a purchase price of $7.1 million. It is undisputed that no nonprofit organization has made an offer on the property to date: those that were or are interested are not able to compete with the purchase price negotiated with Goodman Real Estate.

As part of the sales agreement, VoA promised that, "except as otherwise required by the HAP Contract, [it would] not lease, rent or otherwise permit any person or persons to occupy any portion of the Property other than pursuant to Tenant Leases existing as of the date hereof (i.e. to not enter into leases for units as they become vacant during the term of this Agreement)." Decl. of Camille Taylor Ralston (Dkt. # 24), Ex. D at ¶ 8(v). VoA also took upon itself the obligation to provide the notice to tenants required under RCW 59.28.040. Id . That notice, which informed the tenants that the final payment on the Section 202 would be made on 1, 2014, that the Section 8 rental assistance contract would expire on October 31, 2014, and that The Theodora may thereafter "no longer have limits on the rent or requirements to rent to low-income people, " was issued on February 11, 2014. Id., Ex. A at 1.

On March 7, 2014, defendants amended the purchase and sale agreement to postpone closing for one month to December 4, 2014, and to specify that both VoA and the purchaser would apply to the City of Seattle for tenant relocation licenses. Decl. of Camille Taylor Ralston (Dkt. # 24), Ex. D, First Amendment at ¶ 4 and ¶ 7. On March 12, 2014, VoA circulated a flyer to tenants at a residents' meeting providing a timetable for obtaining relocation assistance under the Seattle Tenant Relocation Ordinance. Decl. of Jack L. Jones (Dkt. # 42), Ex. A. In response to requests from tenants, VoA followed up with a more detailed memorandum offering $6, 000 in relocation assistance from VoA and another $3, 188 for eligible residents of Seattle. Decl. of Robert Gibson (Dkt. # 23), Ex. G at 1.

Plaintiff filed this lawsuit on July 2, 2014, the day after VoA made its final payment on the Section 202 loan. Plaintiff asserts violations of the Fair Housing Act (42 U.S.C. § 3604), the Washington Law Against Discrimination (RCW 49.60.222), the Seattle Open Housing Ordinance (SMC 14.08), and the notice requirements of RCW 59.28.040, as well as claims of unjust enrichment and civil conspiracy.



Although plaintiff identifies three separate basis for its unlawful discrimination in housing claims, it discusses the different laws only for the purpose of showing that they all preclude disparate impacts on protected groups and that a single act can constitute unlawful discrimination in housing. See Opposition (Dkt. # 29) at 9 and 12-13. Otherwise, the parties agree that evaluating claims of disparate impact in housing involves the burden-shifting analysis developed in the Title VII context. Plaintiff therefore has the initial burden of establishing that a facially neutral act or practice had "a significantly adverse or disproportionate impact on persons a particular type." Pfaff v. U.S. Dep't of Hous. & Urban Dev. , 88 F.3d 739, 745 (9th Cir. 1996). Discriminatory intent need not be shown in a disparate impact case, but plaintiff must do more than simply raise an inference that a protected group will be adversely impacted: it must actually prove that a discriminatory impact has or will occur. Gamble v. City of Escondido , 104 F.3d 300, 306 (9th Cir. 1996). If plaintiff meets its initial burden, defendants may rebut the inference of discrimination by demonstrating that a "legally sufficient, nondiscriminatory reason, " "a compelling business necessity, " and/or "one or more substantial, legitimate, nondiscriminatory interests" justifies the impact. Ojo v. Farmers Group, Inc. , 600 F.3d 1205 (9th Cir. 2010); Affordable Hous. Dev. Corp. v. City of Fresno , 433 F.3d 1182, 1195 (9th Cir. 2006); 24 C.F.R. § 100.500(c)(2).[2] If plaintiff does not come forward with evidence showing that defendants' justification was a sham or mere pretext, the disparate impact claim fails. Community House, Inc. v. City of Boise , 490 F.3d 1041, 1053 (9th Cir. 2007).

The Court will assume, for purposes of this motion, that a single act can be the basis of a disparate impact claim and that converting The Theodora into market-rate housing will have a significantly adverse and disproportionate impact on disabled persons.[3] VoA has come forth with a lawful, nondiscriminatory, and compelling business justification for its decision to sell the property, however: the current operations are losing money, significant capital expenditures would be necessary to bring operations back into the black, and financing for repairs and renovations was unavailable. The need to avoid continuing losses for itself and its parent organization justifies the sale of the building. Plaintiff does not, in fact, dispute the compelling business need to sell the property. Rather, it challenges the decision to sell the property at ...

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