Knapp v. Eagle Property Management Corp.Knapp v. Eagle Property Management Corp.
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Linda Knapp brought a variety of claims against defendants, alleging that they had discriminatorily refused to rent her an apartment because of her race and her status as a recipient of federal rent assistance under the “section 8” voucher program.
I.
Knapp, an African-American woman with two children, receives rent assistance from the federal government in the form of a section 8 voucher.
Knapp, who lives in Dane County, Wisconsin, sought a section 8 apartment in the spring of 1992, intending to move when her current lease expired on July 1, 1992. In April, Knapp saw an advertisement in Start Renting magazine stating that defendant Sun Valley, managed by defendant Eagle Property Management, both of which are owned by defendant Douglas Smiljanic (hereinafter collectively the “defendants”), had two-bedroom apartments available. Around April 8, 1992, Knapp telephoned Sun Valley and spoke with a rental agent, Sue Erickson, who informed her that Sun Valley had vacant apartments and that the complex accepted section 8 vouchers. Knapp spoke with Erickson a few days later to confirm this information and arranged a time to view an apartment. Her friend, Theresa Hayes, was also on the telephone and heard this conversation.
Knapp went to Sun Valley on April 13, 1992, and met with Erickson,1 who once again stated that defendants accepted section 8 vouchers. Erickson showed Knapp an apartment that she liked, but Knapp did not submit an application because she did not have with her either a one month security deposit or a $150 application fee. Knapp and Hayes, who does not receive section 8 assistance, returned to Sun Valley on June 2, 1992, so Knapp could complete an application; Hayes had been accepted for an apartment at Sun Valley in May, 1992. If Sun Valley also accepted Knapp for tenancy the women planned for Hayes to care for Knapp’s children, thereby enabling Knapp to obtain work and end her dependence on public assistance. When Knapp handed Erickson her completed application and fee, Erickson refused to take either and stated: “We don’t accept section 8.” At trial, Knapp presented memoranda from Smiljanic to Erickson stating that defendants would not sign any contracts other than their own. The program, however, requires owners to sign Housing Assistance Payment contracts with the local housing authority as well as sign an addendum containing certain provisions, unless the owner’s contract already includes them.
Knapp filed a multi-claim suit in state court and defendants removed the case to district court. Knapp alleged that defen
Knapp also alleged that defendants had discriminated against her on account of her race, thereby violating the Fair Housing Act (the “Act”),
Third, Knapp alleged discrimination in housing on the basis of “lawful source of income,” in violation of
Finally, defendants filed a third-party complaint against Economy Preferred Insurance Company (“Economy Preferred”), seeking a declaration that Economy Preferred had a duty to defend and indemnify defendants under their general liability insurance policy. The court granted Economy Preferred’s motion for summary judgment, holding that the policy covered only “occurrences,” which it defined as accidents, while Knapp’s complaint alleged only intentional acts. This appeal and cross-appeal followed.
II.
A.
Enacted in 1987,
No owner who has entered into a contract for housing assistance payments under this section on behalf of any tenant in a multifamily housing project shall refuse—
... to lease any available dwelling unit ... to a holder of a voucher ..., a proximate cause of which is the status of such prospective tenant as a holder of such voucher.
The statute does not expressly grant voucher holders a private cause of action so we must first inquire whether the district court properly concluded that
When determining whether an implied cause of action exists under a statute, we consider four factors: (1) whether the plaintiff is a member of the class for whose benefit the statute was enacted; (2) whether there is any indication of legislative intent to create or deny such a remedy; (3) whether an implied remedy is consistent with the underlying purposes of the statutory scheme; and (4) whether the cause of action is one traditionally relegated to the states so that it would be inappropriate to imply a federal remedy. Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087-88, 45 L.Ed.2d 26 (1975);
A review of the legislative history accompanying the amendment adding subsection (t) to
[Section 1437f(t) ] creates an enforceable right for applicants that would prohibit owners that receive Section 8 subsidies for any other units in the project from refusing to rent a unit to a certificate or voucher holder ... because the applicant has a Section 8 certificate or voucher subsidy.
H.R. No. 122(1), 100th Cong., 1st Sess. 32 (1987), reprinted in 1987 U.S.C.C.A.N. 3317, 3348. The report continues:
The Committee intends, and has always intended, that applicants and tenants who are adversely affected by violations of these statutory provisions should have a cause of action to enforce the statute in federal court ... Because the courts have been somewhat unreceptive to private causes of action, the Committee wishes to clarify its longstanding intention in favor of private enforcement.
Id. at 3369. Although Congress did not expressly grant a cause of action, the language above clearly displays some intention on the part of Congress for courts to recognize private suits.
Turning to the other Cort factors,
B.
We now turn to an issue of first impression in the courts, the “analytically distinct” question of what remedies are available to redress a violation of
We must now determine which available remedies are appropriate to compensate plaintiffs and further the program’s purpose of ensuring the availability of decent, affordable housing for voucher holders. The district court limited recoverable damages in order to ensure that owners would not be deterred from joining or remaining involved in the program. In Franklin, the Supreme Court rejected a similar argument that monetary damages are not available when Congress has disbursed money to the defendant participating in a voluntary program because it could always leave the program instead. The Court stated that this argument, which it had accepted in cases alleging non-intentional action, did not hold where intentional discrimination was at issue. In such a case, the participant could expect the damages to flow from its conduct and could simply avoid taking the action. Franklin, 503 U.S. at 74-75, 112 S.Ct. at 1037-38.
While Franklin might appear dispositive at first glance, we find its holding to be of limited application. The Franklin Court did not hold that all types of monetary damages are recoverable for all intentional conduct; rather, the Court held that such damages are not conclusively ^recoverable. Moreover, Franklin involved a claim under Title IX,
In enacting
The district court held that Knapp could only recover contractual and equitable remedies. This limitation is sensible because an owner’s duty to not discriminate arises from the contract he signs with the local housing authority. Moreover, section 8 is an • economic program and contractual damages encompass foreseeable economic damages. See 3 E. Allen FaRnswoRTH, Farnsworth on CONTRACTS §§ 12.14, 12.17 (1990); see also Harsch v. Eisenberg, 956 F.2d 651 (7th Cir.) (damages for breach of ERISA, a statutory economic program, expressly limited by Congress to contractual damages), cert. denied, — U.S. —, 113 S.Ct. 61, 121 L.Ed.2d 29 (1992).
Equitable remedies such as injunctions are also available to redress the effects of section 8 discrimination. Knapp contends that an injunction is inadequate because she logically has no desire to rent from an owner that discriminated against her.3 While that may be the case for Knapp, we do not assume all voucher holders will feel the same way— indeed, we have stated that reinstatement is the “preferred remedy for invidious employment discrimination. McKnight v. General Motors Corp., 973 F.2d 1366, 1370 (7th Cir.1992), cert. denied, — U.S. —, 113 S.Ct. 1270, 122 L.Ed.2d 665 (1993). Finally, the Dane County Housing Authority has available a range of contractual penalties, such as terminating or reducing housing assistance payments, that it can invoke in order to ensure owner compliance with
Knapp also challenges several of the district court’s evidentiary rulings which we review for abuse of discretion. McGeshick v. Choucair, 9 F.3d 1229, 1236 (7th Cir.1993). We ask “not whether we would have ruled the same way but rather whether any reasonable person would have agreed with the trial court.” Holmes v. Elgin, Joliet & Eastern Railway Co., 18 F.3d 1393, 1397 (7th Cir.1994). Even if the court erred, we will not reverse if that error was harmless. Id.
First, Knapp asserts that the court should not have excluded evidence that all of Sun Valley’s current section 8 tenants are white. Knapp did not, however, present any evidence regarding the race of section 8 voucher holders that had recently applied for and been denied tenancy. Without such comparative figures and in light of the introduction of evidence showing defendants’ non-section 8 minority tenants, Knapp’s evidence was not particularly probative of anything. See, Kier v. Commercial Union Ins. Cos., 808 F.2d 1254, 1258 (7th Cir.), cert. denied, 481 U.S. 1029, 107 S.Ct. 1955, 95 L.Ed.2d 528 (1987); see also Futrell v. J.I. Case, 38 F.3d 342, 348 (7th Cir.1994); Smith v. General Scanning, Inc., 876 F.2d 1315, 1321 (7th Cir.1989); Simpson v. Midland-Ross Corp., 823 F.2d 937, 943 (6th Cir.1987). Thus the court did not abuse its discretion in excluding this evidence.
Knapp next contends that the district court erroneously excluded her expert witnesses, who would have testified that although whites make up 80% of Dane County’s section 8 voucher holders, a much higher percentage of the county’s total African-American population receives the vouchers. Knapp sought to introduce this information to show that the defendants’ refusal to accept any new section 8 tenants disproportionately affected African-Americans, thereby violating the Act. While the Supreme Court has not yet determined whether practices that produce disparate effects violate the Act, Huntington v. NAACP, 488 U.S. 15, 109 S.Ct. 276, 102 L.Ed.2d 180 (1988), this court has previously applied disparate impact analysis to a claim under the Act. Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir.1977), cert. denied, 434 U.S. 1025, 98 S.Ct. 752, 54 L.Ed.2d 772 (1978). In Arlington Heights, however, we “refuse[d] to conclude that every action which produces discriminatory effects is illegal.... Rather, the courts must use their discretion in deciding whether, given the particular circumstances of each case, relief should be granted under the statute.” 558 F.2d at 1290. Since then, this court has recognized that disparate impact analysis is not appropriate in certain contexts. See NAACP v. American Family Mutual Ins. Co., 978 F.2d 287, 290 (7th Cir.1992) (claim alleging failure to insure in certain areas violated the Act not conducive to disparate impact analysis), cert. denied, — U.S. —, 113 S.Ct. 2335, 124 L.Ed.2d 247 (1993); Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1533 (7th Cir.1990) (“Some practices lend themselves to disparate impact method, others do not.”).
Owner participation in the section 8 program is voluntary and non-participating owners routinely reject section 8 voucher holders. We assume that their non-participation constitutes a legitimate reason for their refusal to accept section 8 tenants and that we therefore cannot hold them hable for racial discrimination under the disparate impact theory. Yet, as the district court noted, no principled way exists to distinguish these owners from those who have agreed to accept section 8 tenants and not to discriminate against them bn that basis. The actions of both non-participating and participating owners have the same impact on minorities and to hold only the latter hable for racial discrimination for that conduct would deter them from joining or remaining involved in the program. Furthermore, our reasons for limiting recoverable damages under
Third, the district court refused to instruct the jury on either punitive or future and consequential damages, rulings that Knapp argues were erroneous. We review the court’s determination that the facts of this ease did not justify punitive damages de novo. Jackson v. Bunge Corp., 40 F.3d 239, 246 (7th Cir.1994). Punitive damages, like all other damages, must be an appropriate remedy under
As to other damages, Knapp contends that the district court erred in refusing an instruction on future and consequential damages and in reducing her award when the verdict form did not delineate amounts for specific items of damages. Knapp testified that defendants’ actions forced her to rent an apartment far from Hayes, which resulted in Hayes being unable to babysit Knapp’s children, thereby making Knapp unable to accept a job. Knapp stated that she was very anxious to end her receipt of public assistance and would have accepted any job. Knapp attempted to stipulate to a maximum recovery of lost-wages equal to 40 hours of work per week at $4.00 per hour for the sixteen months between defendants’ actions and the trial. She had not, however, presented any evidence to support such a recovery, including no evidence about what jobs she may have been able to obtain, the hours and pay she could have received, or the amount of time Hayes, who had a full-time job herself, could actually have watched Knapp’s children. In addition, Knapp testified that the apartment she rented was “raggedy,” and did not have security or air conditioning. She introduced, however, only minimal evidence about the condition of a Sun Valley apartment and offered no proof as to the rent differential.
“[I]t is inevitable and proper that on average the threshold for proving damages will be lower in the small case than in the large.” Partington v. Broyhill Furniture Industries, Inc., 999 F.2d 269, 273 (7th Cir.1993). A low hurdle still requires some evidence, however, because “damages, like every other contested element of plaintiff’s case, must be proved in order to be recovered; a plaintiff who wants substantial damages can’t just ask for them.” Ustrak v. Fairman, 781 F.2d 573, 579 (7th Cir.), cert. denied, 479 U.S. 824, 107 S.Ct. 95, 93 L.Ed.2d 47 (1986); see also Taliferro v. Augle, 757 F.2d 157, 162 (7th Cir.1985) (“A plaintiff is not permitted to throw himself on the generosity of the jury. If he wants damages, he must prove them.”). Knapp failed to meet this burden regarding her alleged lost-wages and difference in apartment values. Moreover, she could not recover the other damages, lost childcare and the cost of future health insurance, to which she feels entitled.. The district court noted that Knapp had not expended any money on childcare — she took care of her own children, something not compensable except as it may have required her to forgo a job, in which case lost-wages, which Knapp did not prove, would be the appropriate measure of dam
D.
Knapp also contends that the district court erred in awarding summary judgment for defendants on her claim under the Wisconsin Open Housing Act.
includ[ing] but ... not limited to lawful compensation or lawful remuneration in exchange for goods or services provided, profit from financial investments, any negotiable draft, coupon, or voucher representing monetary value such as food stamps, social security, public assistance or unemployment compensation benefits.
Wis.Admin.Code § IND 89.01(8).
The district court held that section 8 vouchers are more analogous to subsidies than income. The court relied on a dictionary definition of income, however, and Wisconsin has enlarged the meaning of that term in
Knapp receives a section 8 voucher, but that assistance does not clearly equate to the other forms of aid specified in the statute. Of the categories listed in IND § 89.01(8), the voucher is most analogous to food stamps. Unlike food stamps, however, section 8 vouchers do not have a monetary value independent of the voucher holder and the apartment sought. See
We can envision three results from reading the statute to encompass section 8 vouchers. First, all owners could be held liable for rejections on the basis of the vouchers. It seems questionable, however, to allow a state to make a voluntary federal program mandatory. But see Attorney General v. Brown, 400 Mass. 826, 511 N.E.2d 1103, 1106 (1987) (state law banning housing discrimination on the basis of housing subsidies, including rental assistance, making the acceptance of section 8 vouchers essentially mandatory, not preempted by
III.
A.
Defendants’ cross-appeal contends that no reasonable jury could have found that defendants discriminated against Knapp because of her status as a section 8 voucher holder. The district court denied defendants’ motion for judgment as a matter of law,
Defendants base their argument on Knapp’s testimony: She stated that she spoke with a friend the day Erickson refused to accept her application but mentioned nothing about her section 8 assistance. In addition, Knapp testified that she told her therapist that defendants turned down her application because of her race, once again failing to mention her section 8 status as a reason for their conduct. Thus, defendants contend, Knapp herself believed that she had been discriminated against because of her race, and the jury could not conclude to the contrary. Knapp also testified, however, that Erickson had refused to accept her application, and Hayes testified that Erickson had stated that defendants did not accept section 8.7 Memoranda from Smiljanic to Erickson indicated that defendants would not sign any contracts other than their own, making it impossible to accept any more section 8 tenants, yet defendants had failed to take any steps toward ending their participation in the program. Additionally, defendants admitted that since Knapp had attempted to apply until the time of trial, they had accepted applications from section 8 voucher holders but had rejected all of them. The entirety of the evidence, when read in Knapp’s favor, sufficiently supports the jury’s verdict that defendants did not accept Knapp’s application because of her status as a section 8 voucher holder.
B.
Defendants also appeal the court’s grant of summary judgment for Economy Preferred, their general liability insurer. Economy contends that defendants’ conduct was not an occurrence covered under the policy and that Knapp did not allege any injury covered by the policy. Thus, Economy had a duty neither to defend nor to indemnify defendants. The interpretation of an insurance contract is a question of law that we review de novo. Lund v. American Motorists Ins. Co., 797 F.2d 544, 546 (7th Cir.1986).
To determine whether Economy had to defend this action we must look to the four corners of Knapp’s complaint and decide whether it “ ‘allege[s] facts which, if proven, would give rise to liability covered under the terms and conditions of the policy.’ ” Scottish Guarantee Ins. Co., Ltd. v. Dwyer, 19 F.3d 307, 309 (7th Cir.1994) (quoting Sola Basic Indus., Inc. v. U.S. Fidelity & Guar.
Wisconsin courts construe insurance policies as they do ordinary contracts. Kremers-Urban Co. v. American Employers Insurance Co., 119 Wis.2d 722, 351 N.W.2d 156, 163 (1984). “The objective in interpreting and construing a contract is to ascertain and carry out the true intention of the parties.” Id. Specifically, insurance contracts are construed to mean “what a reasonable person in the position of the insured would have understood the words to mean.” Id. Ambiguities must be construed in favor of the insured. Sola Basic, 90 Wis.2d 641, 280 N.W.2d at 214. ‘Words or phrases are ambiguous if they are fairly susceptible to more than one construction.” Kremers-Urban, 119 Wis.2d 722, 351 N.W.2d at 163. Where a policy is not ambiguous, we simply apply the plain meaning of its terms. Id.
The policy at issue covers “bodily injury” and “property damage” caused by an “occurrence,” which the policy defines as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” An exclusion clause states that the policy does not cover bodily injury or property damage “expected or intended from the standpoint of the insured.” The district court held that the policy covered only accidents, not intentional acts resulting in unintended or unexpected damage as defendants contended, while Knapp’s complaint alleged only intentional conduct. We need not review this decision because we conclude that Knapp did not allege any covered damages.
The policy at issue covers only “property damage” and “bodily injury,” which it defines as “bodily injury, sickness or disease.” Economy Preferred contends that only physical ailments fall within the term bodily injury, while depression and other emotional damages are “personal injuries.” The Wisconsin eases cited by Economy Preferred, however, either do not include the same definition of bodily injury because they exclude sickness and disease, Richie v. American Family Mutual Ins. Co., 140 Wis.2d 51, 409 N.W.2d 146, 147-48 (Ct.App.Wis.), review denied, 140 Wis.2d 873, 416 N.W.2d 66 (1987), cover personal injury, Eau Claire County v. Employers Ins. of Wausau, 146 Wis.2d 101, 430 N.W.2d 579, 583 (Ct.App.Wis.1988), or were decided on other grounds. Therefore, we conclude that Wisconsin courts have not expressly held that emotional distress damages are only covered by policies including the term “personal injury.”
Defendants assert that Lavanant v. General Accident Ins. Co. of America, 79 N.Y.2d 623, 584 N.Y.S.2d 744, 595 N.E.2d 819 (1992), is the most analogous case and that we should adopt its reasoning. Faced with the same definition of bodily injury as at issue here, the Lavanant court held that the policy covered depression. The court stated that the terms sickness and disease enlarged the term bodily injury and “to the average reader máy include mental as well as physical sickness and disease.” Id. 584 N.Y.S.2d at 747, 595 N.E.2d at 822. The court declined to “rewrite the contract to add ‘bodily sickness’ and ‘bodily disease,’ [because the insurer] could itself have specified such limitations in drafting its policy, but it did not do so.” Id.
Contrary to Lavanant, we believe that the most natural reading of “bodily injury, sickness, or disease” indicates that “bodily” modifies all three terms, see E-Z Loader Boat Trailers, Inc. v. Travelers Indemnity Co., 106 Wash.2d 901, 908; 726 P.2d 439, 443 (1986) (en banc), thereby covering only injuries with some physical component. The term is therefore not ambiguous. This meaning accords with that given to the same definition of bodily injury by the majority of courts. See, e.g., SL Industries, Inc. v. American Motorists Ins. Co., 128 N.J. 188, 607 A.2d 1266, 1274 (1992) (collecting cases); Voorhees v. Preferred Mutual Ins. Co., 128 N.J. 165, 607 A.2d 1255, 1260-61 (1992) (collecting cases); Mellow v. Medical Malpractice Joint Underwriting Assoc., 567 A.2d 367, 368 (R.I.1989). We need not decide today
For the foregoing reasons, we affirm the decision of the district court.
AFFIRMED.
Notes
. Knapp testified that Erickson met with her that day; defendants presented evidence that Knapp actually met with another rental agent, Connie Adomato.
. The relevant section states, in part:
No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance ...
. Knapp also asserts that an injunction would be inadequate because she has signed a lease for another apartment. We assume that a court could order a participating owner to rent to a voucher holder at a future date.
. On appeal, Knapp does not challenge the exclusion of this evidence as it relates to her race-based claims under
. Knapp did not know that she would have to prove both her damages and that they were foreseeable to defendants. If she had introduced sufficient evidence of her damages we would not presume that defendants could not, as a matter of law, have foreseen them and would have remanded for a new trial on damages. Knapp‘s failure to meet her initial burden of proof prevents us from doing so.
. The Wisconsin Act allows a plaintiff to recover “injunctive relief, for damages, including punitive damages, and in the case of a prevailing plaintiff, for court costs and reasonable attorney fees.”
. Defendants also contend that Hayes only believed they had discriminated on the basis of race because she said, “You guys treat all black peo-pie like that” after Erickson refused to accept Knapp‘s application and made a similar comment when withdrawing her own application. We note that Hayes may have omitted any reference to section 8 assistance simply because she did not receive it. Her comments do not require us to hold that no reasonable jury could have inferred section 8 discrimination.