Burbank Apartments Tenant Association v. Kargman
48 N.E.3d 394
Mass.2016Background
- Burbank Apartments (173 units) received § 221(d)(3) low‑interest mortgage assistance and, since 1982, had 67 project‑based Section 8 units under a HAP that expired March 31, 2011.
- Owners opted not to renew the project‑based HAP, accepted statutory tenant‑based enhanced vouchers for eligible residents, and complied with federal/state notice and statutory procedures.
- Plaintiffs (several current and prospective tenants and community organizations) alleged the nonrenewal had a disparate impact on protected classes (people of color, disabled, elderly, female‑headed households, recipients of public assistance, families with children) and also raised subsidy‑discrimination claims under G. L. c. 151B.
- The Housing Court denied injunctive relief and later granted defendants’ Rule 12(b)(6) motion to dismiss both counts; plaintiffs appealed directly to the SJC.
- The SJC, in light of the U.S. Supreme Court’s Inclusive Communities decision, held disparate‑impact claims are cognizable under the FHA and Mass. law but affirmed dismissal because plaintiffs failed to meet the rigorous pleading/causation requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a property owner’s lawful nonrenewal of a project‑based Section 8 HAP can give rise to a disparate‑impact claim under the FHA and G. L. c. 151B | Kargman’s nonrenewal disproportionately and foreseeably harms protected classes and perpetuates segregation | Nonrenewal complied with federal/state law and contract; that compliance should bar disparate‑impact liability as a matter of law | Court: Disparate‑impact claims are cognizable even when defendant acted lawfully; no per se immunity for compliance with subsidy rules |
| Pleading standard for disparate‑impact claims | Plaintiffs need only allege statistical disparities and plausible injury | Defendants urge heightened causation requirement and dismissal for speculative allegations | Court: Adopted Inclusive Communities framework — plaintiffs must allege facts showing the challenged practice caused or predictably will cause a discriminatory effect (robust causation); dismissal affirmed for failure to meet that standard |
| Subsidy discrimination under G. L. c. 151B §§4(5),(10) (discrimination against recipients of public assistance) | Nonrenewal converted project‑based subsidies into less protective enhanced vouchers, disadvantaging subsidy recipients | Owners lawfully transitioned to tenant‑based enhanced vouchers and accepted them; no refusal to rent or denial of subsidy to tenants | Court: Plaintiffs failed to plead plausible subsidy discrimination; conversion to enhanced vouchers and continued acceptance of vouchers insufficient to state a §4(5)/(10) claim |
| Whether statutes (federal/state Section 8 law and G. L. c. 40T) preempt or immunize owner from fair housing claims | Plaintiffs: State law/court can police discriminatory effects despite federal program structure | Defendants: Federal statutory scheme and voluntary nature of program preclude state liability or constitute an immunity | Court: No preemption or categorical immunity; federal/state subsidy statutes and fair‑housing laws are harmonious and owners remain subject to disparate‑impact scrutiny |
Key Cases Cited
- Texas Dep't of Hous. & Cmty. Affairs v. Inclusive Communities Project, 135 S. Ct. 2507 (U.S. 2015) (FHA permits disparate‑impact claims; requires rigorous causation at pleading stage)
- Griggs v. Duke Power Co., 401 U.S. 424 (U.S. 1971) (foundation for disparate‑impact theory in employment discrimination)
- Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (U.S. 1972) (FHA implements broad national policy against housing discrimination)
- Franconia Associates v. United States, 536 U.S. 129 (U.S. 2002) (background on mortgage prepayment and owner incentives under federal housing programs)
- Figgs v. Boston Hous. Auth., 469 Mass. 354 (Mass. 2014) (context on Section 8 and related state law issues)
- DiLiddo v. Oxford St. Realty, Inc., 450 Mass. 66 (Mass. 2007) (state precedent on §4(10) subsidy discrimination and limitations of reading exceptions into statute)
- Graoch Assocs. No. 33, L.P. v. Louisville/Jefferson Cnty. Metro Human Relations Comm'n, 508 F.3d 366 (6th Cir. 2007) (rejects categorical bar on disparate‑impact challenges to withdrawal from Section 8)
- Hennessey v. Berger, 403 Mass. 648 (Mass. 1988) (voluntary participation in government programs does not automatically preclude state regulation)