Fair Housing Act: Hotel Owner Has Standing to Sue for Mentally Ill
The owner of a San Pedro hotel who intends to sell out to a nonprofit group has standing to file a Fair Housing Act lawsuit against the City of Los Angeles for allegedly interfering with the sale, the Ninth U.S. Circuit Court of Appeals has ruled. In addition, the Ninth Circuit ruled that City Councilman Rudy Svornich - while immune from liability for his legislative actions - is not immune from a lawsuit alleging he retaliated against the hotel owners by allegedly initiating code enforcement inspections.
The case began in 1994, when the Fentis family, owner of the California Hotel in San Pedro, agreed to sell to a nonprofit developer known as A Community Of Friends, or ACOF, which planned to convert the hotel to housing for mentally disabled people. The sale was contingent on ACOF obtaining federal financing and tax credit allocations. The $1.3 million federal loan had to be approved by the City of Los Angeles.
In 1995, several local groups, including the San Pedro Chamber of Commerce, publicly expressed their opposition to the project. Later that year, the L.A. City Council Housing and Community Redevelopment Committee voted not to recommend that the federal funds be applied to the California Hotel project. Svornich, the city council member who represents San Pedro, was chair of the redevelopment committee.
Subsequently, John Fentis was quoted in a local newspaper claiming that the city had acted illegally and his family would sue. Several weeks later, members of L.A.'s "Slumlord Task Force" inspected the California Hotel and found code violations requiring $40,000 in repairs.
Subsequently, the Fentises filed suit, alleging a violation of their civil rights under 42 U.S.C. 1983, as well as state and federal fair housing laws. They asked that the city and Svornich be enjoined from interfering with the funding of a home for the mentally ill. After the complaint was filed, the city re-inspected the California Hotel. Inspectors concluded that the Fentises had not made substantial progress on previously cited problems and also found new violations as well. The city charged the Fentises with criminal slum offenses.
Following all this activity, the redevelopment committee recommended approval of the California Hotel loan and the City Council concurred. ACOF received tax-credit authorization and the sale of the property was completed. However, the Fentises elected to move forward with their claims.
U.S. District Court Judge Harry Hupp dismissed most of the claims, saying, among other things, that the Fentises had no standing to complain about the city's interference. Hupp also ruled that Svornich as an individual was immune from action he took in a legislative capacity. However, Hupp allowed the Fentises to amend their complaint in order to properly state a retaliation claim against the city and against Svornich.
Once the claim was amended, however, Svornich moved for - and received - summary judgment on the retaliation claim. Hupp also dismissed the retaliation claim against the city itself and, after a lengthy delay, granted summary judgment to the city on all other claims.
But a three-judge panel of the Ninth Circuit overturned some of Judge Hupp's rulings. Most significantly, the panel concluded that the Fentises do have standing to file a lawsuit under the federal Fair Housing Act. Judge Hupp had concluded that the relationship between the Fentises and the people who would actually be victimized - the mentally disabled persons who would move into the hotel after it was sold and renovated - was too tenuous. "To establish standing under the Act, all the Fentises need to show is that the City interfered with the housing rights of the mentally ill and that, as a result, the Fentises suffered an actual injury."
The city had argued that it could not be held liable for a discretionary action - i.e., choosing not to approve the loan to ACOF. But the Ninth Circuit disagreed. "The allegation here is not that the City violated the Act by failing to approve the ACOF loan, but that it improperly interfered with the loan ACOF needed to purchase the Fentis' property."
The Ninth Circuit upheld Judge Hupp's conclusion that Svornich is immune from liability based on his legislative actions but overturned Hupp's ruling that he is also immune from the retaliation claim. "[W]e believe that there are genuine issues of material fact which preclude summary judgment," the court wrote. "The timing of the investigations, the short amount of time given to the Fentises to make repairs, the participation of the Building and Safety Commissioner, the criminal prosecution, and the evidence suggesting that a city official may have been demoted for interceding on behalf of the Fentises cannot, on the current state of the record, be accepted as routine or condemned as evidence of invidious purpose." The court remanded the retaliation claim against both the city and against Svornich personally to the trial court for a trial on its merits.
The court affirmed Hupp's dismissal of the Civil Rights Act claims, saying the Fentises alleged no claim against themselves and - at least so far as the Civil Rights Act is concerned - have no standing to sue on behalf of the mentally disabled.
San Pedro Hotel Co. v. City of Los Angeles, No. 97-55053, 98 Daily Journal D.A.R. 11480 (issued November 6, 1998).
For San Pedro Hotel Co.: William J. Davis, Davis & Co., (949) 222-9034.
For City of Los Angeles: Jesse J. Gonzalez, Deputy City Attorney, (213) 485-1059.