NEW JERSEY COALITION OF ROOMING AND BOARDING HOUSE OWNERS; Louis Cook; John E. Brown; Leonard Levy; Carol Wise; Brenda Copeland; Michael Byrne; Beverly Deming; Eugene Hodas, Appellants, v. MAYOR AND COUNCIL OF THE CITY OF ASBURY PARK; The City of Asbury Park, a Municipal Corporation of the State of New Jersey; Mayor and Council of the Township of Neptune; The Township of Neptune, a Municipal Corporation of the State of New Jersey; Mayor and Council of Keansburg; Borough of Keansburg, a Municipal Corporation of the State of New Jersey, Mayor and Council of the City of Asbury Park; The City of Asbury Park, Defendants/Third-Party Plaintiffs, v. STATE OF NEW JERSEY, Third-Party Defendant.
No. 97-5483.
United States Court of Appeals, Third Circuit.
Argued May 4, 1998. Decided July 30, 1998.
Glenn C. Motyczka (Argued), James J. Higgins, Boyar, Higgins & Suozzo, P.A. Morristown, NJ, Donald L. Beekman, Ocean Grove, NJ, for Appellees, Mayor and Council of the Township of Neptune, and Township of Neptune.
Peter Verniero, Attorney General of New Jersey, Joseph L. Yannotti, Assistant Attorney General, Cheryl R. Clarke (Argued), Deputy Attorney General, Office of Attorney General of New Jersey, Trenton, NJ, for Appellee, State of New Jersey.
Before: BECKER, Chief Circuit Judge, SCIRICA and COWEN, Circuit Judges.
OPINION OF THE COURT
EDWARD R. BECKER, Chief Circuit Judge.
The New Jersey Coalition of Rooming and Boarding House Owners (the “Coalition“), which represents owners of rooming and boarding houses (“R & B houses“) in the Neptune, New Jersey area, together with a number of individuals who are residents of those R & B houses, sued in the district
The FHAA declares that it is unlawful “to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap of—(A) that person; . . . or (C) any person associated with that person.”
Plaintiffs challenged a number of provisions in the Act and Ordinances. The district court granted relief on several of the plaintiffs’ claims and invalidated portions of
To fully review this case, we must also address a number of dispositive rulings on various aspects of plaintiffs’ claims that would be controlling on remand. In particular, we examine the district court‘s decisions not to award plaintiffs compensatory damages, punitive damages, or counsel fees, and we highlight several statutory and constitutional claims that may require further consideration by the district court. In the end, we will reverse the district court‘s determination that it need not award compensatory damages once actual damages have been shown; we will affirm on the punitive damages issue because the district court‘s factual finding that Neptune did not act outrageously or with reckless disregard for plaintiffs’ federal rights is not clearly erroneous; and we will vacate and remand on the counsel fees issue for de novo consideration because of confusion surrounding certain procedural issues.
I.
The Act and Ordinances complained of here are the progeny of the Rooming and Boarding House Act of 1979,
In December 1993, New Jersey enacted the Licensing Law, which gave the governing body of each municipality in New Jersey the option of assuming from the State the licensing responsibility for R & B houses. See
In early 1994, the Neptune Town Council, acting under the authority vested in it by the Licensing Law, adopted two Ordinances, Nos. 1658 and 1661, and assumed local control over R & B licensing in Neptune. Ordinance No. 1661 established a “Site Licensing Board” consisting of three persons and adopted virtually all of the essential elements of the Licensing Law. Ordinance No. 1658 required, among other things, that each R & B house owner secure a Certificate of Inspection prior to leasing, renting, or otherwise allowing the occupancy of any unit, room, or rental dwelling space within its facility.
II.
The district court found that a number of provisions of the Act and Ordinances violated the FHAA. The invalidated provisions had required: (1) R & B house owners to get Certificates of Inspection each time a new tenant occupied a room in their house; (2) public hearings before the Site Licensing Board would issue operating licenses to R & B house owners; (3) R & B house owners to secure bonding to cover relocation costs in the event that their R & B house was forced to close; and (4) applicants for site licensing to obtain zoning approvals for premises that had already been shown to have been properly zoned. See New Jersey Coalition of Rooming and Boarding House Owners v. Mayor and Council of the City of Asbury Park, Civ. No. 94-5134, at *34 (D.N.J. Jul. 8, 1997) (“District Court Opinion“). The district court found that these provisions were freighted with discriminatory intent, were unduly burdensome to plaintiffs, and that the Township had failed to make reasonable accommodations to allow handicapped persons to live in the residences and communities of their choice. See id. at 26-29. As we have observed, defendants have not appealed those aspects of the district court‘s order that invalidated portions of the Act and Ordinances.
With respect to the balance of their claims, however, the district court ruled against plaintiffs. Most notably, on the ground that plaintiffs lacked standing, the court did not reach their claims challenging the distance and density provisions of the Act. The district court also made several other rulings that are perforce before us now. The court found that it had discretion to award compensatory damages but decided that this was an inappropriate case in which to exercise that discretion because the R & B owners (the only plaintiffs for whom the district court found any standing) were not members of the protected group of handicapped individuals. The district court also rejected plaintiffs’ claims for punitive damages in view of its determination that defendants did not act with the requisite outrageousness and reckless disregard of plaintiffs’ federal rights. Finally, the court failed to mention (and thus effectively denied) plaintiffs’ request for counsel fees and costs as a prevailing party under the FHAA.
III.
As noted above, the district court refused to consider plaintiffs’ challenges to the distance and density provisions of the Licensing Law on the grounds that plaintiffs lacked standing to assert them. The distance provision states that no license shall be issued for any R & B house when any part of the boundary line of any other R & B house is within 1,000 feet (in the case of a municipality with a population greater than 100,000, the standard may be increased to 2,000 feet). See
The ground upon which the district court found that plaintiffs lacked standing was that the Act and the Ordinances contained a “grandfather” clause that exempted all existing R & B homes from application of the distance and density provisions. See
First, plaintiffs maintain that there has been a decline in the R & B housing stock in Neptune due to the distance and density provisions of the Act, and that it will therefore be difficult for disabled individuals to find lodging in the future. There is evidence in the record to this effect. For example, Ms. Andress testified that the Ordinances reduced the number of R & B houses in the community. See District Court Opinion, at *12. In addition, other evidence indicates that current R & B owners, despite the grandfather clauses, may have been detrimentally affected by the distance and density provisions. Notably, Mr. Mumford testified that his business volume and the financial rewards he could obtain decreased because of the Act, see id. at 11, and Ms. Andress opined that, although her R & B house was fully rented, the Act and Ordinances hurt her because the value of her property declined and consequently she could no longer sell her property and retire as planned. See id. at 13. Similarly, the Act and Ordinances preclude current owners from expanding their facilities into adjacent lots because only existing R & B houses are grandfathered. Finally, plaintiffs adduced evidence that they are harmed not only by the Act and Ordinances themselves, but also by the hostile manner in which defendants administered them. See id. at 12-13.
Although further factual development is necessary, the evidence and theories just described might be sufficient to establish standing by the R & B owners and/or the resident plaintiffs to challenge the distance and density provisions of the Act. However, because these possible bases for standing may well be factually challenged and, at all events, have been inadequately fleshed out in the record and lack sufficient findings to facilitate our review, we will vacate the judgment of the district court and remand for further proceedings at which the plaintiffs will have the opportunity to attempt to establish standing in the first instance. If they succeed, the district court will then reach the merits.
IV.
A. Compensatory Damages
Although it granted relief on certain claims, the district court declined to award compensatory damages, which are said by plaintiffs to flow from emotional harm resulting from: (1) the distress to owners and residents caused by not knowing whether they would be forced to close or move, and (2) the distress to the residents caused by not being able to live in the housing units which they desired, and/or fearing they would have to leave a place that could accommodate their needs and in which they felt safe. Specifically, plaintiffs point to several findings of fact and conclusions by the district court that they claim demonstrate the
Apparently, the district court believed that the FHAA conferred upon it the discretion to decide whether to award compensatory damages. See District Court Opinion, at *31 (“The plaintiff owners claim that they were harmed due to the distress caused by not knowing whether they would be forced to close. I find that such damages are not appropriate in this case. . . . Damages for emotional distress in discrimination cases are generally granted to the members of the protected group. . . . This rationale simply does not apply in this case. . .“). This conclusion is understandable given the wording of the compensatory damage provision in the FHAA: “In a civil action under subsection (a) of this section, if the court finds that a discriminatory housing practice has occurred or is about to occur, the court may award to the plaintiff actual and punitive damages,”
While at first glance this language (“may award“) appears discretionary, we decline to accept the district court‘s reading, and instead endorse the Ninth Circuit‘s thoughtful opinion in United States v. Hayward, 36 F.3d 832 (9th Cir. 1994), which concluded that the compensatory damages provisions of the FHAA are mandatory.3 See Hayward, 36 F.3d at 839-40. In Hayward, the Ninth Circuit relied on the Supreme Court‘s reasoning in Curtis v. Loether, 415 U.S. 189, 94 S. Ct. 1005, 39 L. Ed. 2d 260 (1974), which found no discretion with respect to actual damages under a predecessor damages provision of the Fair Housing Act of 1968,
As the Ninth Circuit points out, when Congress amended the FHA in 1988 and replaced the damage provision at issue in Curtis with § 3613, it did not substantially change any language therein, nor did it indicate any displeasure with the Curtis decision. The former § 3612(c) provided: “The court . . . may award to the plaintiff actual damages and not more that $1,000 punitive damages. . . .” The new § 3613(c) provides: “[T]he court may award to the plaintiff actual and punitive damages. . . .” The wording in the amended damage provision is virtually identical to old language except that Congress eliminated the $1,000 cap on punitive damages. The legislative history of the new enforcement provisions in the FHAA confirms this reading:
Section [3613(c)] provides for the types of relief a court may grant. This section is intended to continue the types of relief that are provided under current law, but
removes the $1,000 limitation on the award of punitive damages. The Committee believes that the limit on punitive damages served as a major impediment to imposing an effective deterrent on violators and a disincentive for private persons to bring suits under existing law.
H.R.Rep. No. 711, 100th Cong., 2d Sess., 39-40 (1988), reprinted in, 1988 U.S.C.C.A.N. 2173, 2200-01 (footnotes omitted). On the basis of this language and the unanimous mandate of the Supreme Court, we agree with the Ninth Circuit that “Congress did not intend the courts to have discretion to award actual compensatory damages if a party has actual damages,” for if it did, “it would have changed the language of the new damages provisions when it enacted the 1988 Amendments.” Hayward, 36 F.3d at 839. Thus, “if a party proves actual damages, a district court‘s award of compensatory damages is mandatory, not discretionary.” Id.
Defendants advance several alternative arguments in the event that we were to conclude, as we have, that the award of damages under § 3613(c)(1) is mandatory. First, they contend, and the district court held, that damages for emotional distress should only be available to the deinstitutionalized, and not to the R & B owners, because the owners are not members of a protected group under the FHAA. We find nothing in the statute, however, that distinguishes between handicapped plaintiffs and those who are not. The statute directs that the court “may award to the plaintiff actual and punitive damages.”4
We find support for this conclusion in United States v. Scott, 809 F.Supp. 1404, 1406-07 (D.Kan.1992), where the court permitted the seller of a home intended to be used as a group home for physically and mentally handicapped adults to sue as an “aggrieved person” under the FHAA and to recover actual compensatory damages for emotional distress based upon specific instances of “cool treatment and social shunning” by the defendants. Therefore, should plaintiffs ultimately prevail on remand over defendants’ alternative positions discussed next (as well as on the distance and density provisions if they can establish standing), the district court will be required to calculate damages.
Defendants also make several fact-based arguments why compensatory damages are not warranted here. For example, defendants claim that there is not enough evidence of emotional distress related to actions taken by Neptune officials (as opposed to the Ocean Grove Homeowners Association) to justify compensation. Defendants also urge that, because plaintiffs ultimately received their licenses and zoning approvals, they could not possibly have suffered emotional distress due to defendants’ discriminatory practices which only threatened their livelihoods. Finally, defendants contend that, because the Department of Community Affairs could have closed down the R & B houses for legitimate violations prior to the passage of the Act and Ordinances, any argument by plaintiffs that they suffered emotional distress based upon the threat of closure by the Site Licensing Board after passage of the Act and Ordinances is unavailing. These arguments may in fact prevail, and plaintiffs’ damage claims may prove ephemeral. However, given the district court‘s erroneous conclusion that it had discretion under
B. Punitive Damages
The district court also declined to award punitive damages. In so doing, the court concluded that defendants were not motivated by “evil motive or intent” and did not act with the requisite outrageousness and
C. Counsel Fees
The district court failed to address plaintiffs’ motion for counsel fees and costs to which, as the prevailing party, they were entitled under
That being said, we cannot direct an award of counsel fees because the procedural history surrounding this aspect of the case is murky. Plaintiffs included a request for counsel fees and costs in the prayer for relief of their complaint. On July 8, 1997, the district court entered a judgment in favor of plaintiffs on several issues, against them on others, that simply did not mention plaintiffs’ request for attorneys fees and taxed costs. On July 22, 1997, plaintiffs filed a timely Notice of Appeal appealing from “the final judgment entered in this action on the 8th day of July, 1997.” App. at iii. On July 29, 1997, twenty-one days after the judgment was entered, plaintiffs filed a timely “Motion for Relief From Judgment or Order, Pursuant to [Fed. R. Civ.] Rule 60, and Motion to Tax Costs, Including Attorney Fees, Pursuant to [N.J. Civ.] Local Rule 54.1.” In paragraphs 10 through 12 of his certification accompanying these motions, plaintiffs’ counsel stated (underscoring in original):
I called the Clerk to discuss the taxing of costs under these circumstances. I inquired as to the manner of filing the motion to reform the judgment and obtain attorney fees in light of the 3 day return in [N.J. Civ.] Rule 54.1. Obviously the Clerk would not be entitled to reform a judgment or to assess attorney fees.
I was instructed to submit a Bill of Taxed Costs on the presumption that if the judgment was silent, it was intended that costs should be awarded to the prevailing party, and make the motion for the remainder of the relief to the Court.
I have proceeded in this fashion, therefore, filing this motion pursuant to [Fed. R. Civ.] Rule 60 and Rule 54.1 of the local rules, for costs, including attorney fees, which I believe to be appropriate pursuant to
42 U.S.C. § 3613(c)(2) , to be read in conjunction with42 U.S.C. § 1988 .
The district court denied these motions on October 6, 1997.
It appears to us that plaintiffs filed a viable (and timely) petition for counsel fees pursuant to N.J. Civ. R. 54.1 within 30 days of the judgment.7 However, when the matter came before Judge Brown, to whom the case was assigned following the death of Judge Fisher, the only issue that was apparently presented to him was the question whether Judge Fisher had intentionally or inadvertently left counsel fees and costs out of the judgment. Judge Brown concluded that the omission was deliberate, and he consequently denied plaintiffs relief under Rule 60. In his judgment, delivered from the bench, Judge Brown concluded:
It seems to me that a Rule 60 motion clearly does not lie here. There is no evidence whatsoever of any clerical mistake, rather the order and the findings and conclusions are clear, except to the very limited extent set forth therein; the plaintiff‘s request for relief was denied and judgment was entered for the defense.
From these statements, it appears that Judge Brown only considered the Rule 60 motion, and not the Local Rule 54.1 motion, which was timely filed and properly before the court. Moreover, it is possible that plaintiffs will prevail on additional claims in light of our discussion with regard to their standing to challenge the distance and density provisions, and hence the district court may have to consider counsel fees and costs on those issues in the future.
Given the foregoing circumstances, we think that the best approach is to send back this entire matter for reconsideration of the Local Rule 54.1 motion. This disposition will not prejudice defendants because plaintiffs’ fee request was included in their complaint and was preserved in their Notice of Appeal filed on July 22, 1997.
Assuming plaintiffs can establish standing upon remand, the district court will have to consider several troubling aspects of the Act and Ordinances, most notably the distance and density provisions contained in
Insofar as the plaintiffs continue to challenge the remainder of the provisions of
As the district court concluded, none of these provisions is unduly burdensome on plaintiffs, and they do not violate the FHAA. Their essential impact is to shift the oversight and enforcement of R & B houses from the state to local level. Similar provisions for licensing, inspections, revocation, et cetera, existed under the state-administered regime, and we will not invalidate provisions of a statute whose only effect is to authorize local communities to assume an enforcement role at their election—even if there was discriminatory animus behind the legislation—without some evidence that the provisions were unduly burdensome. In addition, the provisions are rationally related to the government‘s legitimate purpose of protecting the mentally ill and aged who live in R & B houses, and thus they do not violate either the United States or the New Jersey constitutions.
Finally, we note that
For the foregoing reasons we will affirm in part, reverse in part, and remand for further proceedings consistent with this opinion. Parties to bear their own costs.