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UNITED STATES v. CITY OF HAYWARD

November 2, 1992

UNITED STATES OF AMERICA, Plaintiff,
v.
CITY OF HAYWARD, CALIFORNIA, Defendant.



The opinion of the court was delivered by: FERN M. SMITH

 INTRODUCTION

 The United States brought suit against the City of Hayward ("Hayward") for a violation of the Fair Housing Act ("FHA"), 42 U.S.C. § 3617, arising from Hayward's enforcement of its rent control statute. Both parties have brought motions for summary judgment. For the reasons set forth below, the United States' motion for summary judgment is GRANTED and Hayward's motion for summary judgment is DENIED.

 BACKGROUND

 S.G. Borello & Sons Corporation ("Borello") owns and operates Eden Roc Mobile Home Park in Hayward, California. Prior to 1989, Eden Roc was operated as an "adult-only" park, and residents were required to be at least eighteen years old.

 In 1988, Congress enacted the Fair Housing Amendments Act to prohibit discrimination against families with minor children. This amendment included an exemption for housing for older persons. On June 28, 1989, Borello entered into its first lease with a family with minor children. Hayward contends that Borello knew this single lease would not affect the park's eligibility for a senior exemption under the FHA and that Borello intended to claim the exemption. Hayward alleges Borello confirmed its intention in writing to an existing tenant and orally to new tenants.

 On October 24, 1989, Hayward passed an ordinance prohibiting discrimination against families with children as well as a "vacancy decontrol ordinance" which would free the park from rent restrictions on new residents. On January 1, 1990, Borello issued new Park Rules and Regulations stating its intention to open the park to families with children. Hayward asserts Borello opened the park to families with children hoping that it would cause its predominantly senior residents to leave, thereby allowing it to bring in new tenants at increased rental rates.

 On January 16, 1990, 167 seniors filed a petition with Hayward's Rent Control Office claiming that opening the park to families with children amounted to a reduction of services, entitling them to a reduction in rent pursuant to the rent control ordinance. Hayward accepted the seniors' petition for filing and assigned an arbitrator to hear and decide the petition. The arbitrator concluded the petitioners were not precluded in their claims by the FHA, found there was a reduction in services and awarded rent reductions.

 On August 28, 1990, Borello filed a verified Petition for Writ of Mandamus against Hayward in Alameda County Superior Court seeking review of the arbitrator's decision. Hayward defended the action. On April 25, 1991, Borello's petition for a writ was denied; it did not appeal.

 On July 24, 1990, Borello filed a housing discrimination complaint with the United States Department of Housing and Urban Development ("HUD") against Hayward. Following its investigation, HUD determined the complaint involved the legality of a state or local zoning or land use ordinance, and referred the matter to the Attorney General. The United States then filed this action against Hayward, alleging a violation of 42 U.S.C. § 3617 for coercing and interfering with Borello on account of its efforts to add families with children to enjoy their protected rights under the FHA.

 DISCUSSION

 Summary judgment should be granted when there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In order to resolve the parties' cross-motions for summary judgment, it is necessary to address the following issues: (1) whether Hayward interfered with Borello's attempt to aid families with children, and (2) whether any absolute defenses raised by Hayward apply.

 A. Hayward interfered with Borello's attempt to open the park to families with children.

 Federal law preempts local ordinances if Congress has expressly stated its intent to supersede state law, or Congress has legislated so comprehensively in an area that federal law occupies the entire field, or the ordinance actually conflicts with federal law. Wisconsin Public Intervenor v. Mortier, 115 L. Ed. 2d 532, 111 S. Ct. 2476, 2482 (1991). A conflict occurs when the ordinance frustrates federal purposes and objectives. Id. The United states alleges that Hayward applied its rent control ordinance in a manner that conflicted with the FHA by penalizing Borello for opening the park to families with children.

 Hayward contends its actions did not violate the FHA since it merely accepted the seniors' petition for filing and referred the matter to an independent third party arbitrator. Hayward's contention is without merit. First, Hayward's authority to accept the petition and refer the matter to binding arbitration was derived from its rent control ordinance and its police power. *fn1" Second, since the parties did not voluntarily consent to arbitration, the arbitrator's authority was derived solely from a delegation of administrative power by Hayward. As a result, the arbitrator was acting as Hayward's agent, and Hayward is liable for any acts committed by the arbitrator that violate the FHA. As the Ninth Circuit has recognized, "with the exception of § 1983, the general rule ...


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