Seals v. Itex Group LLC
1:22-cv-00383
| E.D. Tex. | Aug 30, 2023Background
- Plaintiffs J.W. Seals, Jr., Vergie Seals, and Marie L. Pace sued Itex Group LLC asserting federal claims (Fair Housing Act and Title VI) and pendant state-law claims arising from allegedly defective apartment conditions (pest infestations, mold, sewage leaks, and structural defects).
- Defendant filed a second Motion to Dismiss. Plaintiffs filed a Second Amended Complaint without leave, which the magistrate judge recommended striking as futile.
- Magistrate Judge Christine L. Stetson issued a Report & Recommendation: grant dismissal of FHA claims for failure to state a claim; find Title VI and state-law claims moot or subject to strike for lack of standing/futility; decline to exercise supplemental jurisdiction over state claims.
- Plaintiffs timely filed objections raising Title VI standing, FHA pleading sufficiency, a request for leave to amend, and an argument to retain supplemental jurisdiction over state claims.
- The district court conducted a de novo review, overruled the objections, adopted the R&R, dismissed the FHA claims, struck the unauthorized Second Amended Complaint (rendering the Title VI challenge moot), and declined supplemental jurisdiction; final judgment to follow.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Title VI standing | Plaintiffs contend they identified federal funding to Itex and thus have standing | Itex argues plaintiffs pleaded only conclusory funding allegations and failed to show discriminatory use of funds | District court: no standing; Second Amended Complaint futile and struck; Title VI dismissal rendered moot |
| FHA—availability of dwelling | Plaintiffs argue severe habitability defects make the unit "unavailable" under FHA | Itex argues uninhabitability does not equate to "unavailable" under FHA statutory language and caselaw | District court: allegations insufficient; uninhabitability ≠ "unavailable"; FHA claim dismissed for failure to state a claim |
| Leave to amend | Plaintiffs seek leave to cure pleading defects on Title VI and FHA claims | Itex opposes; claims are legally deficient and amendment would be futile | District court: deny leave to amend as futile; consistent prior failures to plead plausibly |
| Supplemental jurisdiction over state claims | Plaintiffs urge the court to retain state claims for fairness and efficiency | Itex defers to dismissal of federal claims; court should decline supplemental jurisdiction | District court: declines to exercise supplemental jurisdiction; state claims dismissed without prejudice |
Key Cases Cited
- Nettles v. Wainwright, 677 F.2d 404 (5th Cir. 1982) (general or conclusory objections need not be considered)
- Great Lakes Dredge & Dock Co. LLC v. Louisiana, 624 F.3d 201 (5th Cir. 2010) (conclusory allegations fail to survive a Rule 12(b)(6) challenge)
- Cox v. City of Dallas, 430 F.3d 734 (5th Cir.) (uninhabitability does not render a dwelling "unavailable" under the FHA)
- Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (1972) (standing in FHA administrative proceedings; not addressing uninhabitability)
- Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015) (disparate-impact framework under the FHA; not a ruling that uninhabitability equals unavailability)
- Nat’l Ass’n of Gov’t Emps. v. City Pub. Serv. Bd. of San Antonio, 40 F.3d 698 (5th Cir. 1994) (Title VI requires that defendant receive federal funds for standing)
- Forman v. Davis, 371 U.S. 178 (1962) (leave to amend normally granted unless amendment would be futile)
- Thomas v. Chevron U.S.A., Inc., 832 F.3d 586 (5th Cir. 2016) (affirming denial of leave to amend where amendment would be futile)
- Enochs v. Lampasas Cnty., 641 F.3d 155 (5th Cir. 2011) (general rule to dismiss pendent state-law claims when federal anchors are dismissed)