Woods v. Foster

Majority - Nordberg, District Judge

Yes, a residential facility for homeless families qualifies as a "dwelling" under the FHA. The court reasoned that the FHA's definition, "any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families," should be given a "generous construction" to effectuate its broad purpose. Applying the "ordinary meaning" of residence as a "temporary or permanent dwelling place... to which one intends to return as distinguished from the place of temporary sojourn or transient visit" (from United States v. Hughes Memorial Home), the court found that homeless individuals inhabit the shelter as their residence because they have nowhere else to go. The temporary nature of their stay, even a purported 120-day limit, does not make it a mere transient visit like a motel, as residents are "in need of a place to live" and the shelter serves as their primary abode. Yes, the FHA's prohibitions against discrimination apply to the alleged conduct. The court held that 42 U.S.C. § 3604(a)'s prohibition against "to otherwise make unavailable or deny a dwelling" for improper reasons is to be interpreted broadly, as "as broad as Congress could have made it," extending beyond traditional sales or rentals. It cited N.A.A.C.P. v. American Family Mutual Insurance Co. (7th Cir. 1992), which applied this clause to insurance redlining, and emphasized that the FHA's purpose is to provide fair housing for all victims of discrimination, not just those who pay for their own housing. Additionally, the court found that the Ministries "rented" the Shelter under FHA § 3602(e) because it received $125,000 from HUD via the DHS Contract as "consideration" for providing homeless individuals the right to occupy the premises, and the FHA's definition of "to rent" does not require that consideration be paid directly by the occupant. Yes, residents of a homeless shelter can be considered direct third-party beneficiaries of a contract between the shelter and a city agency. The court cited Holbrook v. Pitt (7th Cir. 1981), which held that needy families receiving housing assistance payments under federal law were the primary beneficiaries of contracts between landlords and HUD, rejecting the argument that the government program was the sole direct beneficiary. Given the DHS Contract's purpose to provide various benefits directly to otherwise homeless persons, the Plaintiffs plausibly alleged they were direct beneficiaries, allowing the claim to survive a motion to dismiss even without the contract document itself. Yes, providers of a homeless shelter owe a duty of care to their residents. The court held that a general duty of care includes refraining from participating in the sexual abuse of persons placed in their care, given that "Every person has a general duty to use due care... not to injure others." The relationship between the Defendants, as care providers, and the Plaintiffs, as vulnerable residents, is "of sufficient closeness and obligation" to impose a duty to treat residents reasonably and provide services without active harm. The foreseeability and likelihood of injury from coercive sexual activities are high, and the burden of guarding against such activity is minimal. Furthermore, the court held that an employer owes a duty to third parties to exercise reasonable care in the retention and supervision of its employees, particularly those known or who should be known to be a danger to others. Plaintiffs' allegations that House's and Foster's sexual activities were known among other residents and discussed were sufficient to claim the corporate defendants knew or should have known they were potentially dangerous. Yes, the corporate defendants can be held liable for the intentional discriminatory acts of their executive director and chairman of the board. Citing Hunter v. Allis-Chalmers Corp. (7th Cir. 1986) and Saxton v. American Telephone and Telegraph Co. (7th Cir. 1993), the court explained that the "deliberate act" of a person at the "decision-making level in the corporate hierarchy" is considered the corporation's deliberate act, making the knowledge of their supervisors irrelevant. Since Foster and House were alleged to be decision-makers for the Ministries, and House for the Church, their actions are directly imputable to the corporate defendants.