STEWART v. McDONALD

FIRST DIVISION
DOYLE, C. J.,
PHIPPS, P. J, and BOGGS, J.

NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules

November 13, 2015

In the Court of Appeals of Georgia
A15A0862. STEWART v. MCDONALD. DO-041

DOYLE, Chief Judge.

This case arises from claims for violations of the Georgia Fair Housing Act

(“the Act”),1 breach of professional duty under the Brokerage Relationships in Real

Estate Transactions Act,2 and intentional infliction of emotional distress,3 filed by

Brandon Stewart against the real estate agent who represented the seller from whom

1
OCGA § 8-3-200 et seq.
2
OCGA § 10-6A-5 (a) (4).
3
Although Stewart’s claims for breach of professional duty and intentional
infliction of emotional distress were voluntarily dismissed, the trial court addressed
them its order granting summary judgment to McDonald. Regardless, because Stewart
enumerates error only as to the grant of summary judgment regarding the violations
of the Act, we do not address the portion of the trial court’s order dealing with those
other claims.
he purchased a home. After the appellee filed a motion for summary judgment on the

claim arising under the Act, the trial court granted the motion. For the reasons that

follow, we affirm.

Summary judgment is proper when there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law.
On appeal from the grant or denial of a motion for summary judgment,
we review the evidence de novo, and all reasonable conclusions and
inferences drawn from the evidence are construed in the light most
favorable to the nonmovant.4

On March 13, 2013, Stewart, an African-American male, entered into a real

estate contract to purchase property for $370,000 ($20,000 over the asking price, but

with the seller paying $8,000 in closing costs) from Brad Goldman and his wife;

Stewart’s was the highest of three offers on the table as of March 10, 2013. Prior to

the contract being signed, neither Goldman nor his real estate agent, Collette

McDonald, had met Stewart. On March 17, 2013, however, Stewart was driving past

the property and met Goldman, and thereafter, Goldman spoke about the meeting to

McDonald; he averred that he could not recall whether or not he told McDonald that

4
(Citations and punctuation omitted.) Bailey v. Stonecrest Condo. Assn., 304
Ga. App. 484 (696 SE2d 462) (2010).

2
Stewart was African-American. McDonald deposed that Goldman did not mention

Stewart’s race.

Prior to closing but after the March 17 meeting, Stewart gathered homeowner’s

insurance quotes, and he discovered the property was not insurable without the

addition of a four-foot high fence around the property swimming pool. On March 25,

Stewart’s agent, Patricia Berholtz, contacted McDonald about the issue, and the

following exchange occurred:

Berholtz: We are having a problem getting insurance on the house due
to the pool fence not being 4 feet . . .

McDonald: I’m on it. I’ll get back to you asap.

Berholtz: Thank you[.] Nothing is easy[.]

McDonald: Seriously! I’m wondering if we can just transfer the current
home owners policy. Not that it would answer all the issues but it would
help.

Berholtz: Who is it with[?] If it is the GA law now that the fence has to
be 4 ft out of the ground[], I don’t think that would work.

3
 McDonald: I got an idea. . . . let’s put barbed wire on the top of the
fence and pretend we are in South Africa [laugh out loud]. We’ll have
to figure this one out for sure.

Berholtz did not disclose the last email to Stewart immediately because she believed

it to be a racial slur against Stewart, and she was shocked and highly offended.

Eventually, Goldman agreed to remove the old fence and replace it with a code

compliant fence. And shortly thereafter, Stewart’s inspector completed his inspection

and discovered water leaking into the foundation and mold in the house. Despite the

fact that this normally is a repair that a seller will complete, McDonald responded on

behalf of Goldman that he would not assist with repairs or complete them himself,

however, he would pay $3,200 toward repairs. McDonald threatened that Goldman

would cancel the contract and move on to another buyer in the event that this

agreement was not acceptable to Stewart.

Another issue arose when the appraisal of the home established a market value

of $5,000 less than the contract price. Berholtz sent to Goldman via McDonald an

amended sales contract with the reduced sales price of $365,000 in order to comply

with the appraisal, but McDonald returned to Stewart a different amended contract,

which included (in addition to the reduced sales price) a reduction in the amount of

4
closing costs paid by Goldman; McDonald threatened that the sale would be

terminated if Stewart disagreed with the reduction.

Because of the change in seller-paid closing costs, Stewart wanted to reduce

the overall closing costs due by $3,000 by using his mortgage lender’s preferred

closing attorney. In response to the request to use a specific closing attorney instead

of the closing attorney normally used by McDonald, she refused, stating, “Deal

breaker. We are done here unless [Stewart] gets off this. We are using [our preferred

closing attorney].” Berholtz complained to McDonald’s supervising broker, asking

for assistance getting the closing completed. McDonald was reprimanded by the

broker, and the closing proceeded using the mortgage lender’s preferred closing

attorney as Stewart had requested. Berholtz averred that she had never experienced

having the issue of a specific closing attorney be a “deal killer” as McDonald had

threatened it would be.

After this, McDonald requested that the closing be split so that she and

Goldman did not have to be there simultaneously with Stewart and Berholtz. Stewart,

however, arrived while McDonald and Goldman were still at the closing, but instead

of staying in the same room with him, McDonald took Goldman to a separate room.

McDonald later re-entered the closing room, demanding checks for Goldman and

5
herself, but due to McDonald’s own request for a wire transfer of the funds, the

closing attorney had not prepared checks; the transfers were delayed because

McDonald had failed to provide instructions prior to the closing. After closing but

prior to completion of the transfer, McDonald refused to provide keys to Stewart.

Finally, Berholtz requested transmission of the termite letter from Goldman, who had

so agreed in the sales contract but had never provided it, and McDonald instructed

Goldman that he was not obligated to do so because the closing had extinguished all

unfulfilled contingencies in the sales contract.

Shortly before the closing, Stewart’s agent told him about the South Africa

comment from McDonald’s March 25 email, which caused him upset, shock, hurt,

sadness, and anger. Stewart reasoned that because McDonald lived in the same

neighborhood as the Goldman property, her statement and actions regarding the post-

contract issues and closing were a targeted attempt to prevent the sale based on his

race. Stewart’s agent agreed that she seemed to be going out of her way to prevent the

sale, and he noted that her confrontational behavior and threats to terminate arose

immediately after Stewart’s meeting with Goldman at which point she could have

learned his race.

6
 As a result of McDonald’s comment and behavior, Stewart claimed to have

suffered lost wages due to lack of focus and concentration at work, difficulty

sleeping, and worry about not being welcome in the neighborhood in which both

McDonald and Goldman continue to reside.

Stewart filed suit against McDonald, and the trial court granted summary

judgment to McDonald, finding that (1) Stewart failed to show that McDonald’s

conduct was racially motivated, and (2) Stewart had not suffered a distinct, palpable

injury.5 Under each of the three subsections of the Act under which Stewart has

asserted injury, the trial court held that he had failed to show McDonald’s conduct

was discriminatory because (1) there was no evidence McDonald knew Stewart’s

race; (2) the message related to the fence was not a racist statement or evidence of

5
We note that the trial court’s order did not contain a recitation of the burden-
shifting framework generally used when allegations of circumstantial evidence of
discrimination arise. See, e.g., Bailey, 304 Ga. App. at 488 (1) (“Claims based on
circumstantial evidence are subject to a burden-shifting analysis that was first
developed by the United States Supreme Court for employment discrimination cases
in McDonnell Douglas Corp. v. Green[, 411 U. S. 792 (93 SCt 1817, 36 LE2d 668)
(1973)].”). Nevertheless, we presume that the trial court understood and applied the
correct law unless the plaintiff shows otherwise. See Infinite Energy, Inc. v. Ga.
Public Svc. Commission, 257 Ga. App. 757, 759 (1) (572 SE2d 91) (2002) (“‘The trial
judge is presumed to know the law and presumed to faithfully and lawfully perform
the duties devolving upon it by law. This [C]ourt will not presume the trial court
committed error where that fact does not affirmatively appear.’”).

7
racial animus; (3) McDonald’s actions threatening to kill the deal were reasonable

negotiations; (4) McDonald’s refusal to give Stewart the keys at closing “was . . .

prudent”; and (5) the failure of Goldman to provide the termite letter could not “be

tied to any discriminatory conduct by McDonald.”

1. Stewart argues that the trial court erred by finding that he failed to show that

McDonald’s conduct and statement was discriminatory.

“The [Act], which is nearly identical to the Federal Fair Housing Act (“FHA”),

allows aggrieved persons to seek actual and punitive damages for violations of the

Act.”6 “Given that the . . . Act and the FHA are nearly identical, we consider federal

cases construing the FHA persuasive precedent applicable to the instant dispute.”7

Under the Act,

. . . it shall be unlawful . . . [t]o discriminate against any person in the
terms, conditions, or privileges of sale . . . of a dwelling, or in the
provision of services or facilities in connection therewith, because of
race . . . ; [or t]o make, print, or publish or cause to be made, printed, or
published any notice, [or] statement . . . with respect to the sale . . . of a
dwelling, that indicates any preference, limitation, or discrimination

6
(Footnotes and punctuation omitted.) Bailey, 304 Ga. App. at 487 (1). See
OCGA § 8-3-217.
7
Bailey, 304 Ga. App. at 487, n.3.

8
 based on race . . . or an intention to make any such preference,
limitation, or discrimination.8

Additionally, “[i]t shall be unlawful for any person or other entity whose business

includes engaging in residential real estate related transactions to discriminate against

any person in making available such a transaction or in the terms or conditions of

such a transaction because of race . . . .”9 And “[i]t shall be unlawful to coerce,

intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or

on account of such person’s having exercised or enjoyed . . . any right granted or

protected by this article.”10

We apply Title VII discrimination analysis in examining Fair
Housing Act discrimination claims. A plaintiff can establish a FHA
discrimination claim under a theory of disparate treatment or disparate
impact. To bring a disparate treatment claim, the plaintiff must first
establish a prima facie case. Adapted to this situation, the prima facie
case elements are: (1) plaintiff’s rights are protected under the FHA; and
(2) as a result of the defendant’s discriminatory conduct, plaintiff has
suffered a distinct and palpable injury. Establishing the prima facie case
affords the plaintiff a presumption of discrimination. This test does not

8
OCGA § 8-3-202 (a) (2), (a) (3).
9
OCGA § 8-3-204 (b).
10
OCGA § 8-3-222.

9
 permit the court to consider rebuttal evidence at the prima facie case
stage. After the plaintiff has established the prima facie case, the burden
then must shift to the defendant to articulate some legitimate,
nondiscriminatory reason for the action. To accomplish this, the
defendant is only required to set forth a legally sufficient explanation.
Assuming the defendant can successfully rebut the presumption of
discrimination, the burden shifts back to the plaintiff to raise a genuine
factual question as to whether the proffered reason is pretextual. A
plaintiff may succeed in persuading the court that she has been a victim
of intentional discrimination, either directly by persuading the court that
a discriminatory reason more likely motivated the defendant or
indirectly by showing that the defendant’s proffered explanation is
unworthy of credence. The trier of fact may consider the same evidence
that the plaintiff introduced to establish a prima facie case in
determining whether the defendant’s explanation is merely pretext. Once
a prima facie case is established summary judgment for the defendant
will ordinarily not be appropriate on any ground relating to the merits
because the crux of a discrimination claim is the elusive factual question
of intentional discrimination.11

(a) The alleged discriminatory statement.

The Act

11
(Citations and punctuation omitted.) Harris v. Itzhaki, 183 F.3d 1043, 1051
(II) (A) (9th Cir. 1999).

10
 prohibits oral or written statements with respect to [the sale] of a
dwelling that indicate a ‘preference, limitation, or discrimination’ based
on certain protected statuses . . . . Thus, to establish [McDonald’s]
liability [Stewart had to show that] (1) [McDonald] made a statement;
(2) the statement was made with respect to the sale or rental of a
dwelling; and (3) the statement indicated a preference, limitation, or
discrimination on the basis of [race]. To determine whether a statement
meets the third prong, courts use an “ordinary listener” standard. If an
ordinary listener would believe that the statement suggests a preference,
limitation, or discrimination based on a protected status, the statement
is deemed discriminatory. Evidence of the speaker’s motivation for
making the discriminatory statement is unnecessary to establish a
violation.12

“[D]irect [verbal] evidence is composed of only the most blatant remarks,

whose intent could be nothing other than to discriminate on the basis of some

impermissible factor.”13 Thus, the alleged discriminatory statement in this case is not

an overtly discriminatory statement. McDonald deposed that her statement about

barbed wire fencing was an off-hand comment based on her viewing news footage

12
(Citations and punctuation omitted.) Corey v. HUD, 719 F.3d 322, 326 (II)
(A) (2013). See also OCGA §§ 8-3-222, OCGA § 8-3-204 (b).
13
See Bailey, 304 Ga. App. at 488 (1) (a). See also Coldwell Banker Real
Estate Corp. v. DeGraft-Hanson, 266 Ga. App. 23 (596 SE2d 408) (2004)
(addressing evidence of overtly racist comments regarding a home sale including
“those people” and “[w]e don’t need their kind here”).

11
regarding Oscar Pistorius, a South African facing murder charges at the time. In her

mind, she was trying to get the issue handled so her sellers would not lose the deal;

but it was a “silly” reply to Berholtz’s earlier communication, which had also been

“silly.” While McDonald’s statement is altogether nonsensical in response to the issue

of fence height, we simply cannot say that an ordinary listener would understand this

statement as one that indicated McDonald had a preference or distaste for buyers of

a certain race.14 To the extent that Stewart contends that Berholtz’s averrment that she

found the statement prejudicial and hurtful provides evidence that an “ordinary

hearer” would view the statement as racist (thereby defeating a grant of summary

judgment), he provides no citation to authority showing that the trial court’s inquiry

into “ordinary hearer” is anything other than what a hypothetical “ordinary hearer”

would understand with regard to the statement.15 Accordingly, we hold that the trial

court did not err by denying Stewart’s claim pursuant to OCGA §§ 8-3-202 (a) (3) to

14
Compare with id.
15
See, e.g., Ragin v. Harry Macklowe Real Estate Co., 6 F.3d 898, 905-906 (B)
(2nd Cir. 1993).

12
the extent that he argues that the statement was an overt statement in violation of the

Act.16

(b) Instances of alleged discriminatory conduct.

We now address Stewart’s claims that the statement and other conduct,

including (1) McDonald’s threats to terminate the deal based on the issues of (a) mold

and foundation remediation, the sales price reduction and closing costs reduction, and

the closing attorney; (b) the split closing; and (2) the failure to provide the keys and

the termite letter, are circumstantial evidence of violations of the Act pursuant to

OCGA §§ 8-3-202 (a) (2) & (a) (3), OCGA § 8-3-204 (b), and OCGA § 8-3-222.17

We hold that the trial court did not err by finding that Stewart failed to rebut

McDonald’s legitimate, nondiscriminatory reasons for these occurrences.18

First, although McDonald’s statements threatening to cancel the deal occurred

after Goldman’s discovery of Stewart’s race (at which point the information could

have been conveyed to McDonald), McDonald testified that the statements were made

in an effort to negotiate a good deal for her clients by limiting the amount they paid

16
See also OCGA § 8-3-204 (b) (applying the Act to real estate agents).
17
See also id.
18
See Bailey, 304 Ga. App. at 490-492 (1) (b).

13
in repairs and closing costs. Stewart argues that this reason was merely pretext

because, as McDonald conceded, the fence repair,19 mold and foundation remediation,

and the low appraisal, were issues that would have arisen with any purchaser,

regardless of race. Stewart has not shown, however, that McDonald would not have

made the same threats to terminate the sale to a buyer of a different race.20

With regard to the closing attorney issue, the split closing, the termite letter,

and the refusal to provide the keys at the end of the closing (but prior to a complete

transfer of funds), McDonald deposed that Goldman, not she, was the impetus for the

refusals to use Stewart’s attorney, for the decision to have a split closing, and for

refusing to provide the termite letter and keys because he was upset with the amount

of repairs to the house and changes to the contract that were being made after signing

the sales agreement.

19
McDonald noted, however, that the type of fence installed (wood versus
chain-link) was an upgrade rather than a remediation; nevertheless, she previously
had explained that if the deal fell through it would have been much more likely that
a new buyer would have been attracted by a wood rather than chainlink fence.
20
See, e.g., Grant v. The Phoenix on Peachtree Condominium Assoc., 331 Ga.
App. 306, 308-309 (2) (a) & (2) (b) (771 SE2d 15) (2015) (affirming summary
judgment because there was no showing that white owners were treated differently
with regard to the rule enforced against a black owner to support claims under OCGA
§§ 8-3-202 (a) (2), 8-3-222).

14
 While we question whether a seller would care about the identity of the closing

attorney or would know to request a split closing independent of McDonald, and

McDonald conceded in her deposition that she counseled Goldman that he was not

required to provide the termite letter after closing, even if we attribute each of these

actions to McDonald and take into account the statement about barbed wire fencing,

we cannot say that the trial court erred by finding that Stewart failed “to provide

evidence that the reasons asserted by [McDonald] were mere pretext.”21 Accordingly,

the trial court did not err by granting the motion for summary judgment.

2. Stewart argues that the trial court erred by finding that he had not presented

sufficient evidence to show he had suffered a distinct, palpable injury. But based on

our conclusion in Division 1 of this opinion, we need not address this enumeration.

Judgment affirmed. Phipps, P. J., and Boggs, J., concur.

21
See Bailey, 304 Ga. App. at 491-492 (1) (b) (“pretext is established by a
direct showing that a discriminatory reason more likely motivated the defendant or
by an indirect showing that the defendant’s explanation is not credible”) (punctuation
omitted), quoting Blockum v. Fieldale Farms Corp., 275 Ga. 798, 802 (4) (573 SE2d
36) (2002).

15