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Reyes v. Waples Mobile Home Park Limited Partnership

United States District Court, E.D. Virginia, Alexandria Division

September 1, 2016

ROSY GIRON DE REYES, et al., Plaintiffs,


          T. S. Ellis, III, Judge.

         Plaintiffs, eight current or former residents of Waples Mobile Home Park ("the Park"), filed a six-count Complaint against the Park's owners and operators'[1] in response to defendants' enforcement of a policy that, in plaintiffs' view, (i) impermissibly discriminates on the basis of race, national origin, alienage, and citizenship, (ii) violates the terms of their lease agreements, and (iii) violates Virginia law regulating mobile home parks. Specifically, the Complaint alleges the following causes of action:

• Count I: Violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq.;
• Count II: Violation of the Virginia Fair Housing Law, Va. Code § 36-96.3 et seq.;
• Count III: Violation of the Manufactured Home Lot Rental Act, Va. Code § 55-248.41 et seq.;
• Count IV: Violation of 42 U.S.C. § 1981;
• Count V: Breach of contract; and
• Count VI: Tortious interference with contract.

         Defendants moved to dismiss Counts I, II, IV, and VI for failure to state a claim pursuant to Rule 12(b)(6), Fed.R.Civ.P. The motion has been fully briefed and argued orally, and the motion is therefore now ripe for disposition.[2]


         Plaintiffs in this action are Jose Dagoberto Reyes, Rosy Giron de Reyes, Felix Alexis Bolanos, Ruth Rivas, Yovana Jaldin Solis, Esteban Ruben Moya Yrapura, Rosa Elena Amaya, and Herbert David Saravia Cruz.[3] These eight individuals are the heads of four households that currently reside or once resided in the Park. All plaintiffs are non-citizen Latinos of Salvadorian or Bolivian national origin.

         The Park is located in Fairfax, Virginia and provides a relatively low-cost option for housing when compared to other options in the surrounding area. This action focuses on a policy ("the Policy") that defendants began enforcing at the Park in 2015. Under the Policy, defendants require as a condition of entering into or renewing a lease at the Park that all adults living or seeking to live in the Park present either (i) an original social security card or (ii) an original passport, U.S. visa, and original arrival/departure Form 1-94 or I-94W. Although defendants once applied the Policy only to leaseholders, in mid-2015 defendants began applying the Policy to all residents over the age of eighteen. As currently enforced, the Policy provides that all tenants of a mobile home lot in the Park must at the time of lease renewal (i) complete a new rental application, (ii) submit the required documentation, and (iii) pass a criminal background and credit check. Tenants who cannot satisfy the Policy's documentation requirement have attempted without success to use alternative means of satisfying the Policy. For instance, some tenants have attempted to provide alternative documents such as an Individual Taxpayer Identification Number, an expired Form 1-94, or old criminal background check reports. Defendants have declined to accept such documents as substitutes.

         If a tenant cannot satisfy the Policy, defendants then issue a letter to the tenant affording the tenant twenty-one days to cure the deficiency; tenants who cannot do so are then given thirty days to vacate the Park. If defendants determine that a person who has not satisfied the Policy is living in the Park, then defendants inform the leaseholder of the lot on which the non-compliant tenant lives that the leaseholder's year-long lease will not be renewed and will instead convert into a month-to-month lease. Once the lease is converted to a month-to-month tenancy, leaseholders with non-compliant tenants are charged $300 per month above their former monthly rental rates.[4]

         Each male plaintiff in this action satisfies the Policy, but each female plaintiff does not. In fact, the Reyes household vacated the Park under the threat of eviction because plaintiff Rosy Giron de Reyes could not satisfy the Policy. The remaining plaintiffs continue to reside at the Park, but they fear eviction or that they will be unable to afford to rent their lots because of the increased monthly charges associated with any tenant's non-compliance with the Policy.

         In response to defendants' enforcement of the Policy, plaintiffs filed this lawsuit on May 23, 2016. Defendants' partial motion to dismiss attacks plaintiffs' Fair Housing Act, Virginia Fair Housing Law, and 42 U.S.C. § 1981 claims, each of which is addressed in turn.


         Count I alleges that defendants' enforcement of the Policy violates the federal Fair Housing Act ("FHA"), which provides that it is unlawful, inter alia,

[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.

42 U.S.C. § 3604(a). Under the FHA, "a landlord's housing practice may be found unlawful...either because it was motivated by a racially discriminatory purpose or because it is shown to have a disproportionate adverse impact on minorities." Betsey v. Turtle Creek Assocs., 736 F.2d 983, 986 (4th Cir. 1984); see also Tex. Dep't of Horn. & Cmty. Affairs v. Inclusive Cmties. Project, Inc., 135 S.Ct. 2507, 2525 (2015) (affirming that "disparate-impact claims are cognizable under the [FHA]"). In other words, FHA plaintiffs may pursue claims for either disparate treatment or disparate impact. See Inclusive Cmties., 135 S.Ct. at 2525. The choice between these two approaches is not inconsequential, as "[t]he burden confronting defendants faced with a prima facie showing of discriminatory impact is different and more difficult than what they face when confronted with a showing of discriminatory intent." Betsey, 736 F.2d at 988. Specifically, whereas a disparate treatment defendant can "overcome a prima facie showing of discriminatory intent by articulating some 'legitimate non-discriminatory reason for the challenged practice, '" a disparate impact defendant "must prove a business necessity sufficiently compelling to justify the challenged practice." Id. Moreover, the threshold for a prima facie case of disparate impact is lower than the threshold for a prima facie case of disparate treatment because in the former the defendant's intent is not part of the plaintiffs case. See Holder v. City of Raleigh, 867 F.2d 823, 826 (4th Cir. 1989).

         Given these differences between disparate treatment and disparate impact claims, plaintiffs unsurprisingly couch their FHA claim primarily in terms of disparate impact. See Comp. ¶¶ 114-15. Where disparate impact theory properly applies, showing that a facially neutral policy causes a statistical disparity adverse to protected minorities is sufficient to make out a prima facie case of discrimination "because of a plaintiffs protected status. See Inclusive Cmties., 135 S.Ct. at 2523; Holder, 867 F.2d at 826. In this regard, to show that defendants' enforcement of the Policy-which targets illegal aliens-made housing unavailable to plaintiffs "because of race...or national origin, "[5] plaintiffs rely on statistics illustrating that illegal aliens are disproportionately Latino. See Comp. ¶¶ 58-63. In other words, defendants' enforcement of the Policy allegedly discriminates "because of race...or national origin" because the Policy aims at illegal aliens, the vast majority of whom are of Latino national origin, and thus disparately impacts Latinos.[6]

         At the same time, a fair reading of the Complaint reflects that defendants' enforcement of the Policy is also alleged to constitute disparate treatment. This is so because (i) Count I can be read to say as much, see Comp. ¶ 113, (ii) the entire basis of plaintiffs' § 1981 claim is that defendants are engaged in intentional discrimination, and (iii) plaintiffs contend that the stated rationale for the Policy is merely a pretext for a discriminatory intent, see P. Opp. at 28. Nevertheless, the parties appear to agree that the thrust of plaintiffs' claim is based on the disparate impact theory, under which plaintiffs bear a lighter burden to state a prima facie case and defendants bear a heavier burden in justifying the Policy.

         Defendants' motion to dismiss Count I focuses chiefly on whether the Complaint states a valid disparate impact claim. Specifically, defendants attack plaintiffs' reliance on a disparate impact theory on three grounds. First, defendants argue that recognition of plaintiffs' disparate impact claim would conflict with the policies of the United States Department of Housing and Urban Development ("HUD") and with certain criminal penalties under federal immigration law. Second, defendants maintain that in the context of this case, where the challenged Policy facially targets illegal aliens, Latinos cannot state a valid FHA disparate impact claim as a matter of law. And finally, defendants contend that even assuming a disparate impact claim is appropriate in this context, the allegations of a disparity alleged here are insufficient to state a plausible claim for relief. These arguments are addressed in turn.


         Defendants first argue that recognizing plaintiffs' FHA claim requires the recognition of "illegal immigrants as a class" protected by the FHA, which would therefore create a conflict among certain federal laws and policies. D. Reply at 17. Specifically, defendants argue that (i) accepting plaintiffs' view about the scope of disparate impact liability under the FHA necessarily leads to the conclusion "that the policies of the HUD also violate the FHA because HUD explicitly excludes undocumented immigrants from participation in many of its programs, " D. Reply at 7, and (ii) protecting illegal aliens under the FHA would be inconsistent with the ...

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