Ave. 6E Invs., Ltd. Liab. Co. v. City of Yuma - 818 F.3d 493 (9th Cir. 2016)

Rule:

The Fair Housing Act, 42 U.S.C.S. § 3601 et seq., prohibits intentional discrimination - that is, disparate treatment. A private developer or governmental body cannot refuse to sell or rent housing to someone because of that person's race, religion, gender, or other protected characteristic, nor can a government zone land or refuse to zone land out of concern that minorities would enter a neighborhood. If a governmental actor engages in this discrimination, such conduct also violates the Equal Protection Clause. U.S. Const. amend. XIV.

Facts:

Plaintiffs, two real estate developers, brought the present case against the City of Yuma, contending that the City's refusal to rezone land to permit higher-density development violated, among other things, the Equal Protection Clause of the United States Constitution and the federal Fair Housing Act (FHA). In particular, the plaintiffs maintained that the City’s refusal stemmed from intentional discrimination against Hispanics and created a disparate impact because the denial disproportionately deprived Hispanic residents of housing opportunities and perpetuated segregation. The district court dismissed the plaintiffs’ Equal Protection and FHA disparate-treatment claims under Rule 12(b)(6) for failure to state a claim and denied the plaintiffs’ motion for leave to file a Second Amended Complaint. It then granted summary judgment in favor of the City on the plaintiffs’ disparate-impact claim, rejecting both theories on which the plaintiffs relied. 

Issue:

Did the district court err in dismissing plaintiffs’ Equal Protection and FHA disparate-treatment claims for failure to state a claim? 

Answer:

Yes.

Conclusion:

The court held that it was error to dismiss the plaintiffs’ claim, alleging that the city’s refusal to rezone land to permit higher-density development violated the Equal Protection Clause of U.S. Const. amend. XIV and the federal Fair Housing Act, 42 U.S.C.S. § 3601 et seq., as the plaintiff alleged a plausible claim of disparate treatment based on the city's animus and intentional discrimination towards Hispanic homebuyers, who were a protected class, that was inferred from "code words" used by neighborhood opposition and the city's departure from its normal procedures in denying the plaintiffs’ application. The court further held that summary judgment for the city on the plaintiffs’ disparate-impact claim was error because the availability elsewhere of other similarly-priced and similarly-modeled housing did not necessarily preclude a disparate impact finding.