Avenue 6E Investments, LLC v. City of Yuma
2016 U.S. App. LEXIS 5601
| 9th Cir. | 2016Background
- Avenue 6E Investments and Saguaro Desert Land (the Developers, Hall family entities) sought to rezone 42 acres in southeastern Yuma from R-1-8 (8,000 sq. ft. lots) to R-1-6 (6,000 sq. ft. lots) to allow moderately priced/higher-density housing after the market collapse made R-1-8 infeasible.
- City planning staff and the Planning & Zoning Commission unanimously recommended approval, but the City Council denied the rezoning after public opposition that used stereotypical, racially charged language about "Hall neighborhoods" and crime, and after one council member referenced demographic/ownership concerns.
- The rezoning denial was the only one of 76 applications denied by the Council during the prior three years; Developers allege the Council capitulated to anti-Hispanic animus despite its own experts’ recommendations and the City’s General Plan goals to reduce segregation.
- Developers sued under the Fair Housing Act (FHA) for disparate treatment and disparate impact and under 42 U.S.C. § 1983 (Equal Protection). The district court dismissed the disparate-treatment claims and denied leave to amend; it later granted summary judgment to the City on Developers’ disparate-impact claim based solely on the existence of similarly priced housing elsewhere in Southeast Yuma.
- The Ninth Circuit (Reinhardt, J.) reversed the dismissal of disparate-treatment claims (FHA and Equal Protection), finding the complaint plausibly alleged discriminatory intent given the public comments, the Council’s departure from staff/commission recommendations, and the singling-out of Developers’ application. It also reversed the grant of summary judgment on disparate impact (rejecting the rule that availability of similar housing elsewhere necessarily defeats a disparate-impact claim) and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint plausibly alleged disparate treatment (intentional discrimination) under the FHA and Equal Protection | Developers: Council denied rezoning to appease constituents motivated by anti-Hispanic animus; public comments used racially coded stereotypes; Council departed from its own experts and routine practice | City: Opposition concerned nonracial issues (crime, parking, lot size); denial consistent with pre-existing R-1-8 expectations and legitimate local concerns | Held: Reversed dismissal — allegations (coded racial comments, experts’ recommendations ignored, unusual single denial) are sufficient to plausibly plead discriminatory intent under Arlington Heights |
| Whether availability of similarly-priced/similarly-modelled housing elsewhere in the city forecloses a disparate-impact claim under the FHA | Developers: Denial of rezoning at this site would disproportionately affect Hispanics; comparable housing far away or in different neighborhood conditions is not dispositive | City/District Court: Because similarly-priced housing existed elsewhere in Southeast Yuma, no disparate impact could be shown | Held: Reversed grant of summary judgment — availability of housing elsewhere (in a broad quadrant) does not automatically negate disparate-impact claims; proximity and neighborhood characteristics matter; remand for further factbound analysis |
| Whether the Developers’ perpetuation-of-segregation disparate-impact theory was supported | Developers: Denial would perpetuate segregation by preventing affordable opportunities in a predominantly White area | Developers’ evidence insufficient to show a significant integrative effect | Held: Court agreed with district court — Developers failed to plead sufficient facts to support a perpetuation-of-segregation disparate-impact claim |
| Whether the district court abused its denial of leave to amend the complaint | Developers: Second Amended Complaint added facts (e.g., only rezoning denied of 76) showing plausibility | City: Amendment would be futile | Held: Reversed — denial of leave to amend was improper because second amended complaint plausibly alleged disparate treatment |
Key Cases Cited
- Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977) (governs assessment of discriminatory intent in zoning cases)
- Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) (FHA encompasses disparate-impact claims to address unconscious or systemic discrimination)
- Pacific Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142 (9th Cir. 2013) (FHA prohibits discriminatory zoning practices; framework for FHA claims in zoning contexts)
- McGinest v. GTE Service Corp., 360 F.3d 1103 (9th Cir. 2004) (use of coded language can be circumstantial evidence of discriminatory intent)
- Hallmark Developers, Inc. v. Fulton County, 466 F.3d 1276 (11th Cir. 2006) (contrasting rule that availability of similar housing elsewhere negates disparate impact — Ninth Circuit rejects that broad rule here)
- Mt. Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly, 658 F.3d 375 (3d Cir. 2011) (describes prima facie disparate-impact showing and burden-shifting to justify municipal actions)