Massachusetts Supremes Say Fair Housing Discrimination Claim Can Be Brought Against Landlord Who Decided Against Renewing Section 8 Housing Assistance Payments Contract w/ HUD, But Nix Recent Legal Action Anyway Saying Tenants' Failure To Satisfy Rigorous Pleading Requirements Sinks Suit

Massachusetts Lawyers Weekly reports:

• The Supreme Judicial Court has upheld the dismissal of a claim of disparate impact brought by current and prospective tenants of an apartment building following its owner’s decision not to renew a project-based Section 8 housing assistance payments contract with the United States Department of Housing and Urban Development.(1)(2)

For more, see Disparate impact suit over Section 8 non-renewal dismissed (requires paid subscription).

For the court ruling, see Burbank Apartments Tenant Assoc. v. Kargman, No. SJC-11872 (Mass. April 13, 2016).

For background information on this case, see Supreme Judicial Court to Hear Important Housing Case (go here for an amicus brief filed in support of the tenants).

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(1) The court describes the gist of the lawsuit in the following excerpt:

• This case arises out of a decision made by the defendants, the principals and owners of Burbank Apartments (Burbank), not to renew Burbank's project-based Section 8 housing assistance payments contract (HAP) with the United States Department of Housing and Urban Development (HUD) when its forty-year mortgage subsidy contract expired on March 31, 2011.
  
  In lieu of those project-based subsidies, the defendants opted instead to accept from its tenants Section 8 enhanced vouchers, enabling tenants living in units subsidized on a project basis to remain as tenants under an alternative Federal housing program.[4] See 42 U.S.C. § 1437f (2012).
  
  The plaintiffs, comprised of current and potential Burbank tenants, complained that Burbank's decision violated § 3604 of the Federal Fair Housing Act (FHA or Title VIII), 42 U.S.C. §§ 3601 et seq. (2012), and the Massachusetts antidiscrimination law, G. L. c. 151B, § 4, both by virtue of intentional discrimination as well as disparate impact on members of otherwise protected classes of citizens. In particular, the plaintiffs alleged that the defendants' decision not to renew their HAP would have a disproportionately negative effect on people of color, the disabled and elderly, female-headed households, recipients of public and rental assistance, and families with children (collectively, members of protected classes).

(2) From the court's ruling:

• The plaintiffs' housing discrimination claims, based on the theory of disparate impact, raise an issue of first impression in Massachusetts concerning the relationship among Section 8, the FHA, and the Massachusetts antidiscrimination statute (together the fair housing statutes).
  
  Specifically, can a private building owner's decision not to renew participation in the project-based Section 8 subsidy program in favor of tenant-based Section 8 subsidies be the basis of a disparate impact claim when such decision was otherwise permitted by both Federal and State statutes, as well as by contract? And, if so, what are the pleading requirements for making out such a claim?
  
  In his comprehensive memorandum of decision and order, the motion judge determined that a disparate impact claim under these circumstances is not legally cognizable, and never reached the second question.
  
  Subsequently, the United States Supreme Court released its decision in Texas Dep't of Hous. & Community Affairs v. The Inclusive Communities Project, Inc., 135 S. Ct. 2507, 2525 (2015) (Inclusive Communities), holding that claims, such as this one, based on the theory of disparate impact are generally cognizable under the FHA. We granted the plaintiffs' application for direct appellate review to consider their allegations in the context of the FHA, as well as the potential for similar claims under Massachusetts antidiscrimination law, and to examine the impact of the Inclusive Communities decision.
  
  We affirm the decision of the motion judge granting the motion to dismiss, although on somewhat different grounds. We conclude that even where the property owner has acted in accord with statute, regulation, and contract, a disparate impact claim under the fair housing statutes can be brought, subject to rigorous pleading requirements. The plaintiffs in the present case, however, have not satisfied those requirements.