ILNews

Justices split on rental restriction case

Michael W. Hoskins
January 1, 2008
Keywords
Back to TopCommentsE-mailPrintBookmark and Share
In a ruling that could be the first of its kind in the nation, a divided Indiana Supreme Court Thursday afternoon reversed a lower court's ruling that a Kokomo subdivision's covenant restricting rentals violated the federal Fair Housing Act because of potential racial implications.

The state's highest court has been quiet on the issue since hearing arguments in October 2006, but it simultaneously decided to grant transfer and issue an opinion in the case of Villas West II of Willowridge v. Edna McGlothin, No. 34S02-0805-CV-266. The case involved a covenant that the Indiana Court of Appeals described as being "subterfuge for excluding minorities from renting homes" and a case of first impression that could affect how neighborhoods across the state implement no-rent provisions.

More than two years ago, the lower appellate court had upheld the trial judge's determination about the rental restriction. But a majority of the justices disagreed that the owner challenging the restriction, Edna McGlothin, proved any racial disparate impact.

The bottom line: the subdivision's no-lease covenant can stay in place.

"This record does not support a claim under a disparate impact theory," Chief Justice Randall T. Shepard wrote, joined by Justices Brent Dickson and Theodore Boehm. Justices Robert D. Rucker and Frank Sullivan dissented, voting to affirm the trial court.

The suit arose when the homeowners association sued McGlothin in 2002 for renting her residence in violation of a covenant barring rentals in the community to anyone other than family members. Algy and Edna McGlothin had bought the home in 1996. The developer controlled the association until turning it over to a board of homeowners in May 2000, but through their daughter the McGlothins had started leasing the home in 1998. That person rented until 2002, when the homeowner-controlled association notified the owner that they had violated the covenant. McGlothin had moved into a nursing home after her husband's death and needed the rental income to qualify for Medicaid and finance her care. The association sued her - as well as her estate after she died - and argued that the rental ban was needed to protect property values within the community and was consistent with the association's obligation to do so.

McGlothin countersued, arguing that the covenant violated the Fair Housing Act because it had a disparate impact on blacks. Howard Superior Judge Stephen Jessup ruled against the association, and the Court of Appeals upheld that decision in January 2006, holding that the covenant violates the federal Fair Housing Act. The association appealed.

But in their ruling, justices noted the trial court ruling was "clearly erroneous" because it found no "legitimate non-discriminatory reason" for the covenant despite undisputed evidence and expert testimony in the record showing that owners maintain property better than renters.

The court reflected on multiple jurisdictions' handling of how to determine whether any disparate impact had been proven, delving into federal caselaw in five of the 15 pages of the opinion. The majority noted that there is wide agreement in the federal Circuit courts that the FHA allows disparate impact claims but that there's no consensus about the proper framework for analyzing such a claim, and the U.S. Supreme Court hasn't addressed that issue.

A main federal precedent questioned, and ultimately rejected by the majority, was Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977), which is known as "Arlington Heights II." The majority notes that it isn't bound by federal precedent and that it finds Arlington Heights II "doctrinally unsound" in how it outlines a procedure for establishing the burden each party must meet. Ultimately, it settled on its own framework.

"In sum, to establish a right to disparate impact recovery under the FHA, a plaintiff must establish a prima facie case by demonstrating that a policy or practice actually or predictably has a significantly adverse or disproportionate impact on a protected class," Chief Justice Shepard wrote. "To rebut this showing, the defendant must demonstrate that its policy or practice has a manifest relationship to a legitimate, nondiscriminatory interest. The plaintiff may then overcome the defendant's showing by demonstrating that a less discriminatory alternative would serve the defendant's legitimate interest equally well."

Applying that framework to the Villas West II case, justices determined that McGlothin's evidence left "something to be desired" in proving that the no-lease covenant would predictably and disproportionately affected blacks, but it proceeded on the basis that the prima facie case was established. Next, it looked at the HOA's demonstration that it had a legitimate, non-discriminatory reason for the rule by considering expert testimony that renters don't maintain homes as well as owners do and, therefore, excluding renters helps maintain property values. Lastly, the justices looked at McGlothin's rebuttal claim that other covenants helped maintain the community and property values.

Chief Justice Shepard wrote that other property-maintenance covenants - rules to maintain windows and fixtures, maintain lawns, clear trash, signs, and non-working vehicles - can be a less discriminatory alternative to no-lease covenants, and that owners typically do take more pride in their properties. He relied on expert testimony and evidence that was undisputed at trial and noted these other covenants are not an equally effective way to address the problem of divided interests in rental property.

In the dissent, Justices Rucker and Sullivan pushed to not abandon the 30-year-old precedent from the 7th Circuit Court of Appeals that much of the case's analysis of disparate impact relied upon.

"The majority works overtime and spends much ink to argue that Arlington Heights II is flawed and should not be followed," Justice Rucker wrote. "Other than to make it exceedingly more difficult for legitimate victims of housing discrimination to press their claims, I see no reason to abandon this precedent."

Now, the Kokomo case goes back to Judge Jessup to decide whether any intentional discrimination occurred and if any relief is needed.

"We find ourselves unable to discern whether relief is appropriate on McGlothin's intentional discrimination claim," the court wrote. "The need for fair adjudication suggests the desirability of remanding for further evidence and findings."
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. @BryanJBrown, You are totally correct. I have no words, you nailed it.....

  2. You have not overstated the reality of the present situation. The government inquisitor in my case, who demanded that I, on the record, to choose between obedience to God's law or man's law, remains on the BLE, even an officer of the BLE, and was recently renewed in her contract for another four years. She has a long history in advancing LGBQT rights. http://www.realjock.com/article/1071 THINK WITH ME: What if a currently serving BLE officer or analogous court official (ie discplinary officer) asked an atheist to affirm the Existence, or demanded a transsexual to undergo a mental evaluation to probe his/her alleged mindcrime? That would end a career. The double standard is glaring, see the troubling question used to ban me for life from the Ind bar right here: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners (see page 8 of 21) Again, what if I had been a homosexual rights activist before law school rather than a prolife activist? A gay rights activist after law school admitted to the SCOTUS and Kansas since 1996, without discipline? A homosexual rights activist who had argued before half the federal appellate courts in the country? I am pretty certain that had I been that LGBQT activist, and not a pro-life activist, my passing of the Indiana bar exam would have rendered me an Indiana attorney .... rather than forever banished. So yes, there is a glaring double standard. And some are even beyond the reach of constitutional and statutory protections. I was.

  3. Historically speaking pagans devalue children and worship animals. How close are we? Consider the ruling above plus today's tidbit from the politically correct high Court: http://indianacourts.us/times/2016/12/are-you-asking-the-right-questions-intimate-partner-violence-and-pet-abuse/

  4. The father is a convicted of spousal abuse. 2 restaining orders been put on him, never made any difference the whole time she was there. The time he choked the mother she dropped the baby the police were called. That was the only time he was taken away. The mother was suppose to have been notified when he was released no call was ever made. He made his way back, kicked the door open and terrified the mother. She ran down the hallway and locked herself and the baby in the bathroom called 911. The police came and said there was nothing they could do (the policeman was a old friend from highschool, good ole boy thing).They told her he could burn the place down as long as she wasn't in it.The mother got another resataining order, the judge told her if you were my daughter I would tell you to leave. So she did. He told her "If you ever leave me I will make your life hell, you don't know who your f!@#$%^ with". The fathers other 2 grown children from his 1st exwife havent spoke 1 word to him in almost 15yrs not 1 word.This is what will be a forsure nightmare for this little girl who is in the hands of pillar of the community. Totally corrupt system. Where I come from I would be in jail not only for that but non payment of child support. Unbelievably pitiful...

  5. dsm 5 indicates that a lot of kids with gender dysphoria grow out of it. so is it really a good idea to encourage gender reassignment? Perhaps that should wait for the age of majority. I don't question the compassionate motives of many of the trans-advocates, but I do question their wisdom. Likewise, they should not question the compassion of those whose potty policies differ. too often, any opposition to the official GLBT agenda is instantly denounced as "homophobia" etc.

ADVERTISEMENT