Split 7th Circuit allows racial housing-discrimination claims to proceed against individuals but not Kokomo HOA

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A Black couple subjected to racist harassment from their neighbors may proceed to jury with their racial housing discrimination claims, a split 7th Circuit Court of Appeals has ruled. A dissenting judge, however, argued that a nexus between discriminatory treatment and an adverse housing action was lacking in their claims.

When Tonca and Terence Watters, a Black couple, built their home in Kokomo’s Preserve at Bridgewater, they were immediately met by confrontations from their homeowners association president and neighbors, Ed and Kate Mamaril. At the time the Watters built their home, Kate was the HOA president. Her husband, Ed, took over the position in 2015.

Conflict with the Mamarils started as soon as the Watters began construction on their home. In one incident, Ed told the Watters they were not welcome, referred to them with profanity, asked why “you people” moved here, and told them he had them investigated and suggested they live “somewhere else.”

Other run-ins occurred between the two families, including when the Watters attempted to keep the Mamarils’ free-roaming cats off of their property in compliance with their HOA and city ordinances. When the HOA refused to enforce the rules, the Watters called the local humane society to catch the cats and return them.

In response, Kate approached Tonka and used profanity and racial slurs against her. In another incident, the Maramils also used racial slurs against the Watters’ grandchildren at a local restaurant.

The Watters also had a series of conflicts with their HOA, including being denied access to copies of the restrictive covenants and rejecting their request to install a privacy fence, which was against the HOA rules. The Watters wanted the fence to accommodate Terence’s post-traumatic stress disorder, which stemmed from his military service.

The Watters eventually sued the HOA and the Maramils, alleging two claims of race discrimination: one under the Fair Housing Act and another under 42 U.S.C. § 1982, as well as a third claim against only the HOA for failure to accommodate Terence’s PTSD.

The Indiana Southern District Court granted summary judgment to the defendants on all claims, but the 7th Circuit vacated that decision in part.

On the  racial discrimination claim, the majority noted the defendants did not dispute that Kate’s “repeated, flagrant use of racial epithets” established discriminatory intent.

It noted that despite the defendants’ assertion that Ed’s “you people” comment only referred to the Watters as a specific family and not their race, Ed had never met the Watters before they moved into the neighborhood.

“Rather, the record reflects that Ed saw the first Black couple who chose to live in the Preserve and told them that ‘you people’ should live somewhere else,” 7th Circuit Judge Candace Jackson-Akiwumi wrote, joined by Circuit Judge Frank Easterbrook. “Moreover, based on his wife’s blatant racist comments, a reasonable factfinder can infer in the light most favorable to the Watters — as we must do at the summary judgment stage — that Ed’s ‘you people’ comment carried the stain of racial animus.”

7th Circuit Judge Amy St. Eve dissented from the majority on that point, writing separately that while the Watters were “subjected to degrading and offensive comments” on account of their race, a nexus between discriminatory treatment and an adverse housing action was lacking in their claims.

“Viewed holistically, the majority can point to only two instances (over a year apart) where Kathryn used racial epithets, and Edward’s single use of the phrase ‘you people,’” St. Eve wrote. “Without any link to an adverse housing action, the Watters’ claims fail. Therefore, in my opinion, the district court properly awarded summary judgment in favor of the Mamarils.”

In a footnote, the majority rejected St. Eve’s suggestion that the court could not infer Ed’s use of the phrase “you people” referred to the Watters’ race because there was no surrounding context that suggested his comment referenced the their race.

“Putting aside the fact that Kate’s repeated use of the N-word provides such additional context, the dissent ignores the fact that the phrase ‘you people’ is well recognized racial code in our society,” the majority wrote.

Turning to the Watters’ housing-rights concerns, the 7th Circuit ruled that a reasonable factfinder could conclude the Mamarils’ pattern of harassment interfered with the Watters’ post-acquisition enjoyment of their property, “even if the Mamarils could not or did not actually force the Watters to leave.”

The appellate court rejected the Maramils’ assertion that the incidents involving their insults and epithets “are simply personal in nature and have no relationship to the Watters’ housing.”

“The problem with this argument is that it ignores the forest for the trees,”Jackson-Akiwumi wrote. “While it is true that isolated incidents of racial slurs may not be enough on their own, this case involves the same defendant making two separate uses of one of the most horrendous slurs in our language, and her husband adding his own racially hostile innuendo.

“… A reasonable factfinder can infer that being treated with racial disdain and hostility by the head of the HOA and his wife, who herself held the same position only recently, can directly affect how safe a family feels in their own home,”she continued. “More importantly, as discussed above, a reasonable factfinder can infer that the Mamarils’ repeated harassment undermined the Watters’ ability to enjoy the basic living conditions one expects when they purchase a home.”

A key omission was found in the Watters’ evidence, however, in that the Mamarils were sued only in their individual capacities when they made their discriminatory statements and not in their roles with the HOA.

“As such, the Watters cannot provide any evidence of the HOA’s discriminatory intent or interference in their FHA rights,” Jackson-Akiwumi wrote.

The 7th Circuit also denied the Watters’ claim that the HOA violated the FHA by failing to accommodate for Terence’s PTSD, finding that he failed to include any reference to it in his accommodation request.

“The Watters have presented sufficient evidence to try their claims against the Mamarils under the FHA and § 1982 before a jury,” the court concluded.  “They do not, however, provide any evidence directly linking the Mamarils’ actions to the HOA as a whole, nor do they provide any evidence to support their failure to accommodate claim.

“We, therefore, affirm the district court judgment as to the HOA and almost all of the individual defendants, but vacate the judgment as to the Mamarils on the FHA and § 1982 claims, and remand for further proceedings consistent with this opinion.”

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