Corey v. U.S. Dept. of Housing and Urban Development, No. 12-2239

Decided:  July 5, 2013

The Fourth Circuit affirmed the judgment of the Secretary of the U.S. Department of Housing and Urban Development (“HUD”) and rejected Corey’s challenges to the Secretary’s order, which found him in violation the Fair Housing Act (“FHA”) by discriminating on the basis of disability.

Corey, a landlord, violated the FHA when he made written and oral statements with respect to the rental of a dwelling indicating a preference based on disability.  When Ms. Walker informed Corey that her brother and potential co-habitant, Mr. Walker had “severe autism,” Corey insisted Ms. Walker obtain a bond to protect the property and issued three other written preconditions for rental:  1) a note from the disabled’s doctor indicating he did not pose a liability threat, 2) a rental insurance policy with $1M in liability coverage, and 3) assumption of responsibility for any damage Mr. Walker might cause to the property.  Even though Ms. Walker never submitted the required rental application, HUD filed a charge of discrimination against Corey, which was heard by an Administrative Law Judge (“ALJ”).  The ALJ originally found that Corey’s rental requirements were reasonable requests for additional information and not in violation of the FHA.  However, the Secretary reversed the ALJ’s decision on each charged violation and remanded the case for a hearing on damages.  After the damages award, both parties petitioned for Secretarial Review of the ALJ’s remand decision.  In a Final Agency Order (“the Order”), the Secretary denied Corey’s petition as untimely, granted in part the Department’s petition, and imposed a steeper damages award and a civil penalty.

The Fourth Circuit took up Corey’s challenge to the Final Agency Order and HUD’s Cross-Application for Enforcement of the Order.  Pursuant to the Administrative Procedures Act, federal courts may overturn agency decisions if they are arbitrary and capricious and unsupported by substantial evidence.  The Fourth Circuit first applied the “ordinary listener” standard to Corey’s oral and written statements and found direct evidence that Corey violated the FHA by making statements that an ordinary listener would deem reflected a “preference or limitation” against the Walkers based on Mr. Walker’s disability.  Furthermore, the Fourth Circuit found by direct evidence that Corey violated the FHA by imposing more burdensome application procedures and generally discouraging the potential tenants’ application because of a disability.  Finally, the Fourth Circuit determined that the “direct threat” exception to the FHA does not apply because Corey provided no objective evidence that Mr. Walker posed a direct threat to persons or property, as is required to trigger the exception.

Full opinion

– E. Leary McKenzie

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