ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES:
JACQUELYN THOMPSON MARK E. SPITZER
Indiana Civil Rights Commission BROWNE SPITZER HERRIMAN
Indianapolis, Indiana STEPHENSON HOLDEREAD &
MUSSER
Marion, Indiana
IN THE
SUPREME COURT OF INDIANA
STATE OF INDIANA, )
CIVIL RIGHTS COMMISSION, )
)
Appellant-Plaintiff, ) Supreme Court Cause
Number
) 27S02-0004-CV-270
v. )
)
COUNTY LINE PARK, INC., ) Court of Appeals Cause Number
PAUL D. FOX and CAROLYN FOX, ) 27A02-9901-CV-29
)
Appellees-Defendants. )
APPEAL FROM THE GRANT SUPERIOR COURT NO. 3
The Honorable Natalie Conn, Judge
Cause No. 27D03-9803-CP-91
ON PETITION TO TRANSFER
November 29, 2000
RUCKER, Justice
Under the Indiana Fair Housing Act, it is unlawful to discriminate
based on familial status. The Act defines familial status in part as a
parent or custodian who is domiciled with “an individual” under the age of
eighteen. We conclude that the Act also protects families living with more
than one individual under the age of eighteen.
Factual and Procedural History
In December 1996, James and Martha Cain purchased a three-bedroom
mobile home located in a mobile home park owned and operated by County Line
Park, Inc. (“County Line”). The Cains submitted a written application to
County Line to rent a lot in the park. The application indicated that in
addition to the Cains their four children, ages sixteen, nine, six, and
two, would also live in the home. Paul Fox, president of County Line,
responded to the Cains that he was denying their application because of
County Line’s long-standing policy of not renting mobile home lots to
families with more than two children.
In February 1997, James Cain filed an administrative complaint with
the Indiana Civil Rights Commission (“Commission”) and the U.S. Department
of Housing and Urban Development (“HUD”). Initially the complaint named
County Line and Paul Fox as defendants and alleged discrimination in
housing based on familial status and the disability of one of the Cains’
children. The complaint was later amended to include Martha Cain as an
additional plaintiff and Carolyn Fox, secretary of County Line, as an
additional defendant. The Commission conducted an investigation and in
January 1998 issued a notice that concluded there was reasonable cause to
believe discrimination based on familial status had occurred in violation
of the Indiana Fair Housing Act (“Act”), Ind. Code §§ 22-9.5-1-1 et
seq., and the federal Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601-3631.
The notice did not find reasonable cause with respect to the disability of
one of the Cains’ children. County Line and the Foxes (collectively
referred to as “Landowners”) then elected to have the merits of the
complaint tried in a civil action rather than by an administrative law
judge.[1]
In March 1998, the Commission filed a complaint in Grant Superior
Court on its own behalf and on behalf of James and Martha Cain alleging
that Landowners had violated the Act by refusing to rent the mobile home
lot to the Cains based upon its two children per mobile home occupancy
limit. In response, Landowners filed a motion to dismiss the complaint
under Indiana Trial Rule 12(B)(6) contending that although the Act
prohibits discrimination against families in general, it does not provide
protection to “large families” such as the Cains. Landowners also
contended that under the Act, the Foxes, as corporate officers and
shareholders of County Line, could not be sued in their individual
capacities. Landowners sought attorney’s fees pursuant to the “prevailing
party” provision of the Act. The trial court granted the motion to dismiss
and awarded attorney’s fees to Landowners of $350. The Commission
appealed. The Court of Appeals affirmed the judgment and remanded the case
to the trial court for a determination of appellate attorney’s fees. Civil
Rights Comm’n v. County Line Park, Inc., 718 N.E.2d 768 (Ind. Ct. App.
1999). Having previously granted transfer, we now reverse the judgment of
the trial court.
Discussion
I.
The Act makes it unlawful to “refuse to sell or to rent after the
making of a bona fide offer, refuse to negotiate for the sale or rental of,
or otherwise make unavailable or deny a dwelling to any person because of
race, color, religion, sex, familial status, handicap, or national origin.”
Ind. Code § 22-9.5-5-1(a) (emphasis added). A discriminatory act based
upon familial status is committed if the person who is the subject of the
discrimination is:
(1) pregnant;
(2) domiciled with an individual younger than eighteen (18) years of
age in regard to whom the person:
(A) is the parent or legal custodian; or
(B) has the written permission of the parent or legal custodian
for domicile with that person; or
(3) in the process of obtaining legal custody of an individual
younger than 18 years of age.
Ind. Code § 22-9.5-1-2 (emphasis added).
The Act borrows heavily from the FHA, with many parallel provisions
and similar language. In fact, the first section of the Act declares that
its purpose is “to provide rights and remedies substantially equivalent to
those granted under federal law.” Ind. Code § 22-9.5-1-1. In relevant
part, the FHA provides: “‘Familial status’ means one or more individuals
(who have not attained the age of 18 years) being domiciled with (1) a
parent or another person having legal custody . . . .” 42 U.S.C. § 3602(k)
(emphasis added). Seizing on the “an individual” language of the Act in
contrast to the “one or more individuals” language in the FHA and relying
on principles of statutory construction, the Court of Appeals reasoned that
the Act should be read more narrowly than its federal counterpart. County
Line, 718 N.E.2d at 772. We disagree with our colleagues on the Court of
Appeals.
The goal of statutory construction is to determine, give effect to,
and implement the intent of the legislature. Collier v. Collier, 702
N.E.2d 351, 354 (Ind. 1998). The statute is examined as a whole, and it is
often necessary to avoid excessive reliance on a strict literal meaning or
the selective reading of individual words. Id. The legislature is
presumed to have intended the language used in the statute to be applied
logically and not to bring about an unjust or absurd result. Riley v.
State, 711 N.E.2d 489, 495 (Ind. 1999). Applying these principles to the
Act, we must conclude that limiting protection to families living with only
“an individual” under the age of eighteen would produce a result we do not
believe the legislature could have intended. For example, Landowners argue
that numerical occupancy restrictions are permissible based on factors such
as the number and size of sleeping areas or bedrooms and the overall size
of the dwelling unit. We have no problem with this general proposition.
Indeed the Act specifically provides that it “does not affect a reasonable
local or state restriction on the maximum number of occupants permitted to
occupy a dwelling . . . .” Ind. Code § 22-9.5-3-6(a). However, to read the
Act as Landowners insist would mean that it protects from discrimination
families comprised of four adults and one child but not families comprised
of two adults and three children. And this is so even though the numbers
are the same.
Further, in construing Indiana civil rights law we look to federal
case law for guidance. Indiana Civil Rights Comm’n v. Alder, 714 N.E.2d
632, 636 (Ind. 1999). Federal courts as well as HUD have held that
occupancy limitations based on the number of children as opposed to
reasonable spatial considerations violate the FHA. See HUD v. Kelly, 3
F.3d 951, 952 (6th Cir. 1993) (holding that apartment owners’ one child per
bedroom policy violated the familial status provisions of the FHA); HUD v.
Sams, Fair Hous.-Fair Lend. (P-H) ¶ 25,069 (HUD A.L.J. March 11, 1993),
aff’d without opinion, 76 F.3d 375 (4th Cir. 1996) (holding that
landlord’s refusal to rent a house to a family because it had “too many
children” constituted familial status discrimination in violation of the
FHA). We view the federal approach as appropriate here. Thus, despite the
difference in wording, the Act should not be interpreted more narrowly than
the FHA. Accordingly, under the Act families living with one or more
individuals under the age of eighteen are entitled to protection from
familial status discrimination.
II.
We turn then to the question of whether the trial court properly
granted Landowners’ motion to dismiss the Commission’s complaint. In
reviewing a 12(B)(6) motion to dismiss, we look at the complaint in the
light most favorable to the plaintiff, with every inference drawn in its
favor, to determine if there is any set of allegations under which the
plaintiff could be granted relief. Indiana Civil Rights Comm’n v.
Indianapolis Newspapers, Inc., 716 N.E.2d 943, 945 (Ind. 1999); Ratliff v.
Cohn, 693 N.E.2d 530, 534 (Ind. 1998); Cram v. Howell, 680 N.E.2d 1096,
1096 (Ind. 1997). A dismissal under Trial Rule 12(B)(6) is improper unless
it appears to a certainty that the plaintiff would not be entitled to
relief under any set of facts. Thomson Consumer Elecs., Inc. v. Wabash
Valley Refuse Removal, Inc., 682 N.E.2d 792, 793 (Ind. 1997). Dismissals
under Trial Rule 12(B)(6) are “rarely appropriate.” Obremski v. Henderson,
497 N.E.2d 909, 910 (Ind. 1986).
There are two theories by which a plaintiff may establish a prima
facie case of housing discrimination: disparate treatment and disparate
impact. Snyder v. Barry Realty, Inc., 953 F. Supp. 217, 219 (N.D. Ill.
1995). The two follow distinct evidentiary paths. To establish a prima
facie case of disparate treatment, a plaintiff must prove, by either direct
or circumstantial evidence, that the defendant intentionally discriminated
against the plaintiff based on familial status. Kormoczy v. HUD, 53 F.3d
821, 824 (7th Cir. 1995). If the plaintiff succeeds, then the defendant
must prove that it would have made the same decision absent any reliance on
familial status. Id. By contrast, to establish a prima facie case of
disparate impact, a plaintiff must prove that the defendant’s actions had a
discriminatory effect. United States v. Badgett, 976 F.2d 1176, 1178 (8th
Cir. 1992). If the plaintiff succeeds, then the burden shifts to the
defendant to articulate a legitimate, non-discriminatory reason for its
action. Id. If the defendant satisfies this burden, then the plaintiff
has the opportunity to prove that the legitimate reasons asserted by the
defendant are in fact mere pretext. Id. In order to survive a challenge
under Trial Rule 12(B)(6) for disparate treatment, a plaintiff need only
allege intentional discrimination. See Kormoczy, 53 F.3d at 824.
Likewise, in order to survive a challenge under Trial Rule 12(B)(6) for
disparate impact, a plaintiff need only allege discriminatory effect. See
Snyder, 953 F.Supp. at 219.
In the case before us, the Commission alleged in its complaint that
the Cains submitted a written application to County Line to rent a mobile
home lot; the mobile home would accommodate two adults and four children
under the age of eighteen; County Line had a two children per mobile home
occupancy limit regardless of the number of bedrooms or square footage in
the mobile home; and County Line relied on this policy to deny the Cains’
application to rent the mobile home lot. R. at 6-11. It is clear that at
the very least the allegations in the Commission’s complaint support a
claim for disparate treatment, namely: that County Line intentionally
discriminated against the Cains based on familial status.
The Commission also sued Paul and Carolyn Fox in their individual
capacities as shareholders and corporate officers of County Line.
Landowners contend the trial court properly granted its 12(B)(6) motion to
dismiss as to the Foxes because “it is hornbook corporate law that officers
and shareholders are generally not personally liable for the acts or
contractual obligations of the corporation.” Brief of Appellees at 13. It
is true that an officer of a corporation is generally not personally liable
for the torts of the corporation or other officers or agents merely because
of her office. Hanson v. St. Luke’s United Methodist Church, 682 N.E.2d
1314, 1320 (Ind. Ct. App. 1997), aff’d in part, vacated in part on other
grounds by 704 N.E.2d 1020 (Ind. 1998). However, an officer is personally
liable for the torts in which she has participated or which she has
authorized or directed. Palace Bar, Inc. v. Fearnot, 376 N.E.2d 159, 169
(Ind. Ct. App. 1978), vacated on other grounds by 381 N.E.2d 858 (Ind.
1978); Gable v. Curtis, 673 N.E.2d 805, 809 (Ind. Ct. App. 1996) (“It is
well-settled that a corporate officer cannot escape liability for fraud by
claiming that he acted on behalf of the corporation when that corporate
officer personally participated in the fraud.”); Ind. Code § 23-1-26-3(b)
[the Business Corporations Act] (“Unless otherwise provided in the articles
of incorporation, a shareholder of a corporation is not personally liable
for the acts or debts of the corporation except that the shareholder may
become personally liable by reason of the shareholder’s own acts or
conduct.”); cf. Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1236
n.7 (Ind. 1994) (holding that corporate officer can be personally liable
for inducing the corporation to breach its contract if he is acting outside
the scope of his official duties or for personal gain). These principles
apply also to cases involving alleged housing discrimination. See, e.g.,
City of Chicago v. Matchmaker Real Estate Sales Ctr., Inc., 982 F.2d 1086,
1098 (7th Cir. 1992) (holding that sole owner/chief executive officer of
corporation was personally liable for violating the FHA because he
supervised the day-to-day operations of the corporation and its agents);
Moss v. Ole S. Real Estate, Inc., 933 F.2d 1300, 1312 (5th Cir. 1991)
(holding that the magistrate erred in granting a directed verdict in favor
of the officers of the corporation because if the jury found that the
officers directly participated in or authorized the discrimination in the
sale of the home, they could be held personally liable); Clark v. Universal
Builders, Inc., 501 F.2d 324, 340 (7th Cir. 1974) (permitting complaint
under the Civil Rights Act not only against the officers of the closely
held corporation, but also against the shareholders because they “were on
constructive notice of the [discriminatory housing] action and indeed were
active participants in it since its inception.”).
The question here is whether the allegations in the Commission’s
complaint, naming Paul and Carolyn Fox in their individual capacities as
officers and shareholders of County Line, are sufficient to withstand a
12(B)(6) motion to dismiss. We conclude that they are sufficient. To
support its request to hold the Foxes personally liable, the Commission
alleged the following: Paul Fox and Carolyn Fox, husband and wife, are
“President and Secretary, respectively, of County Line Park, Inc., through
which they own and operate [County Line],” and that Paul Fox wrote the
Cains stating that he was denying their application to rent the mobile home
lot because “it has been policy of County Line Park for 25 years not to
accept applications w/more [sic] than 2 children . . . .” R. at 6-7. It
is clear that the Commission has stated facts sufficient to allege that
Paul Fox directly participated in an act of housing discrimination.
Although the Commission did not specifically refer to Carolyn Fox by name
in the body of the complaint, she was joined as a defendant in this action,
and the complaint does allege: “[t]he actions of the defendants in denying
[the Cains] their right to fair housing and equal housing opportunity were
intentional and in wanton and reckless disregard of the Indiana Fair
Housing Act” and “[the two children per mobile home occupancy limit]
constitute[s] [a] pattern or practice by the defendants of resistance to
the full enjoyment of rights secured by the [Act].” R. at 11, 12 (emphasis
added). With regard to any defendant, whether the Commission can carry its
burden of proof at trial remains to be seen. However, at this stage of the
proceedings, looking at the complaint in the light most favorable to the
Commission with every inference drawn in its favor, we must conclude that
the allegations in the Commission’s complaint entitle it to relief against
all defendants for discrimination in housing based on familial status as
defined by the Act.
Conclusion
The judgment of the trial court is reversed and this cause is
remanded for further proceedings.
SHEPARD, C.J, and SULLIVAN and BOEHM, JJ., concur.
DICKSON, J., concurs except as to the reversal of the order dismissing the
action as to defendant Carolyn Fox, which he would affirm.
-----------------------
[1] Indiana Code § 22-9.5-6-12(a) provides, “A complainant, a
respondent, or an aggrieved person on whose behalf the complaint was filed
may elect to have the claims asserted in a finding of reasonable cause
decided in a civil action . . . .”