Banai v. Secretary, United States Department of Housing & Urban Development Ex Rel. Times

                 United States Court of Appeals,

                        Eleventh Circuit.

                              No. 95-4377.

            Annette BANAI, Janos Banai, Petitioners,

                                   v.

   The SECRETARY, UNITED STATES DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT, on Behalf of Steve Ellis TIMES, Betty Brinson and
United States of America, Respondents.

                          Jan. 7, 1997.

Petition for Review of an Order of the United States Department of
Housing and Urban Development. (HUDALJ 04-93-2060-8).

Before TJOFLAT, Circuit Judge, and RONEY and PHILLIPS*, Senior
Circuit Judges.

     TJOFLAT, Circuit Judge:

     This case comes before us on appeal from a Final Decision and

Order of the Secretary of the Department of Housing and Urban

Development ("HUD"), which affirmed the Initial Decision and Order

of an administrative law judge ("ALJ").      After a hearing, the ALJ

determined that the appellants, Janos and Annette Banai, violated

section 804 of the Fair Housing Act (the "FHA"), 42 U.S.C. §

3604(a) and (c), by refusing to rent their house on account of the

prospective lessees' race.1    The Secretary thereafter issued an in

     *
      Honorable J. Dickson Phillips, Jr., Senior U.S. Circuit
Judge for the Fourth Circuit, sitting by designation.
     1
      Section 804 of the FHA provides, in relevant part, that

          it shall be unlawful—

          (a) To refuse to sell or rent ... a dwelling to any
          person because of race, [or]

          (c) To make ... any statement ... with respect to the
          sale or rental of a dwelling that indicates any
          preference, limitation, or discrimination based on race
personam order directing, inter alia, that the Banais pay $70,000

in compensatory damages to Steve Times and Betty Brinson, the

victims of the Banais' discrimination.                          The Banais concede that

they violated the FHA, but argue that the award of $70,000 is

excessive.           Because       we   find    that      the   award    is    supported   by

substantial evidence on the record, we affirm.

                                                I.

       In August 1992, Times and Brinson, an unmarried black couple,

lost    their    house       in    Princeton,        Florida,      to   damage    caused   by

Hurricane Andrew.            They began searching almost immediately for a

residence       to   rent,        but   the    hurricane        had   created    a   critical

shortage of residential property.                         Times and Brinson lived at

Brinson's place of business for a short time, stayed with friends

for a few days, and then moved into a hotel when they began

receiving money from their insurance company for living expenses.

While staying at the hotel, Brinson fell in the shower and was

seriously injured;            she was hospitalized as a result.                      Brinson's

injuries impaired her mobility and required substantial physical

therapy.

       Shortly after Times and Brinson began looking for a home to

rent,    Annette       and     Janos     Banai,       a    white      couple    residing   in

Lindhurst, New York, decided to place the house they owned in

Hollywood, Florida, on the rental market.                        The Banais had learned

that Hurricane Andrew had left many Miami-area residents without


            ... or an intention to make any such preference,
            limitation or discrimination.

       42 U.S.C. § 3604 (1994).
homes and hoped that they could help victims of the hurricane by

renting their house.   They contacted Manhattan Group Real Estate,

Inc. ("Manhattan"), and arranged for that company to list their

house for rent.    Sylvia Arias, then an employee of Manhattan,

placed an advertisement for the house in a local newspaper.

     While Brinson was still hospitalized, Times responded to this

advertisement, and Arias showed him the Banais' house.    The house

suited Times and Brinson given Brinson's injuries:    its one-story

floor plan would allow Brinson to move around easily, and its

proximity to her physical therapist was convenient.      Times told

Arias that he and Brinson wanted to rent the house.   Arias believed

that Times and Brinson were fully qualified to rent the house.

Thus, she told Times that she foresaw no problems with the rental,

but needed to confirm it with the Banais.   The prospect of an end

to their housing problems was a great relief to Times and Brinson.

     Unfortunately for Times and Brinson, Arias' confirmation call

to Annette Banai was not the mere formality she had expected.

Banai asked Arias about Times and Brinson's race;     when told that

they were black, Banai responded that she could not rent to blacks

because the neighbors would disapprove.     Upon learning of this

conversation, Arias' supervisor at Manhattan called Banai and told

her that Arias should not have responded to Banai's question about

Times and Brinson's race, that a refusal to rent based on race was

unlawful, and that if Banai did not change her mind, Manhattan

would terminate the listing agreement.    Banai responded that she

believed that she could rent to whomever she pleased and would not

change her mind.   Manhattan terminated the agreement, and Arias
told Times the bad news and recommended that he obtain a lawyer.

     Times continued to search for a house or an apartment to rent

while Brinson remained hospitalized, but none suited them. Because

the hotel did not accommodate Brinson's special needs resulting

from her injuries, Times and Brinson were forced to move in with

Times' mother and sister. This arrangement was also unsatisfactory

because the apartment was too small for the four of them and

because it was located far from Brinson's physical therapist. This

environment placed stress on Times and Brinson's relationship and
created tension between the couple and Times' family.    Some time

later, Times and Brinson received enough money from the insurance

company to purchase a mobile home.   This arrangement was also far

from ideal as strong winds would shake the home during storms, and

rats lived beneath it.   Eventually, for reasons not related to the

Banais' discrimination, Times and Brinson ended their relationship.

     Times filed an administrative complaint against the Banais on

behalf of himself and Brinson alleging housing discrimination in

violation of the FHA.2     After investigating the complaint and

     2
      The FHA identifies people who believe that they have
suffered from housing discrimination as "aggrieved persons," 42
U.S.C. § 3602(i), and provides several avenues of redress for
them. See 42 U.S.C. §§ 3610, 3612, 3613, 3614. An aggrieved
person may file an administrative complaint with the Secretary of
HUD, as Times did here. See 42 U.S.C. § 3610(a)(1)(A)(i). In
that case, the aggrieved person becomes the "complainant," and
the alleged discriminator becomes the "respondent." See 42
U.S.C. § 3602(j), (n). The Secretary can also file a complaint
on his own initiative. 42 U.S.C. § 3610(a)(1)(A)(i).

          When a complaint is filed, the Secretary must engage in
     "conciliation" in an effort to resolve the dispute. 42
     U.S.C. § 3610(b)(1). At the same time, the Secretary must
     investigate the complaint to determine whether "reasonable
     cause" exists to believe a violation of the FHA has
     occurred. 42 U.S.C. § 3610(g)(1). If reasonable cause is
not found, the Secretary must dismiss the complaint. 42
U.S.C. § 3610(g)(3). If reasonable cause is found, the
Secretary must issue a charge setting forth the basis of the
alleged violation. 42 U.S.C. § 3610(g)(2). At that point,
the aggrieved person, the Secretary, or the respondent may
elect to have the case heard in district court, in which
case the Attorney General will file suit in district court
on behalf of the aggrieved person. 42 U.S.C. § 3612(a).

     If no election is made, the Secretary must prosecute
his charge in a HUD administrative hearing. 42 U.S.C. §
3612(b). At this hearing, an ALJ receives evidence in
accordance with the Federal Rules of Evidence, 42 U.S.C. §
3612(c), and thereafter makes findings of fact and
conclusions of law. 42 U.S.C. § 3612(g)(3). If the ALJ
concludes that a violation has occurred, he may order the
respondent to pay the claimant his or her actual damages,
may assess a civil penalty, and may provide such other
equitable relief as may be appropriate. 42 U.S.C. §
3612(g)(3). The ALJ's decision is reviewable by the
Secretary within 30 days, after which the decision becomes
final and is appealable directly to the court of appeals for
the circuit in which the FHA violation occurred. 42 U.S.C.
§ 3612(i).

     This administrative remedy is not exclusive, however.
An aggrieved person under the FHA need not file an
administrative complaint with the Secretary. The FHA also
authorizes an aggrieved person to file a civil action in
district court. 42 U.S.C. § 3613(a)(1)(A). Even if an
administrative complaint has been filed, an aggrieved person
may file suit in district court until an ALJ has begun
hearings on the matter. See 42 U.S.C. § 3613(a)(3). The
district court, on a finding that a violation has occurred,
may enter a judgment awarding the plaintiff actual and
punitive damages, and may order such equitable relief as may
be appropriate. 42 U.S.C. § 3613(c).

     The FHA confers jurisdiction on the district court in
two other situations. The first is when a party files an
election to "opt out" of the administrative forum, forcing
the Attorney General to file suit in district court to
"prosecute" the alleged violation. 42 U.S.C. §§ 3612(a) &
3612(o)(3). In that case, the aggrieved party may intervene
in the suit. 42 U.S.C. § 3612(o)(2). Upon finding a
violation, the court can award actual and punitive damages,
which accrue to the benefit of the aggrieved party unless
that party has failed to intervene in the civil action or
has failed to comply with the district court's discovery
requests. 42 U.S.C. §§ 3612(o), 3613.

     In addition, the Secretary may bypass the
finding probable cause to believe a violation had occurred, the

Secretary of HUD issued a charge on behalf of Times and Brinson

against the Banais.    Because none of the parties filed a demand to

have the case heard in district court, the matter was referred to

an ALJ.   See 42 U.S.C. § 3612(b).

      The ALJ held an administrative hearing during which several

witnesses gave testimony and other evidence was submitted.           In

addition to the facts set forth above, the ALJ found that Times and

Brinson were "devastated" and "angry" when they learned that the

Banais had refused to rent to them because they were black.      It was

the   first   overt   discrimination   that   either   had   personally

experienced. Brinson could not believe that "in th[is] day and age

... because of my color I cannot rent this house.      Not because I am

not qualified.   Because I am black."    The ALJ found that the pain

caused by this discrimination continued at least through the time

of the administrative hearing.    Times continued to worry that the

experience would be repeated when he looked for housing in the

future.

      Following the conclusion of this hearing, the ALJ issued an



      administrative forum and bring suit in district court when
      the case involves a "pattern or practice" of discrimination
      or affects a group of people and is of "general public
      importance," 42 U.S.C. § 3614(a), or when the case arises
      out of an agreement entered into as a result of the
      conciliation efforts described above. 42 U.S.C. § 3614(b).
      On a finding of a violation of the FHA in that case, the
      district court may order appropriate equitable relief and
      may assess civil penalties. 42 U.S.C. § 3614(d).

           In each of these cases, the district court can award
      reasonable attorneys' fees and costs to a prevailing party
      other than the United States. 42 U.S.C. §§ 3612(p),
      3613(c)(2), 3614(d)(2).
Initial Decision and Order in which he concluded that the Banais

had violated 42 U.S.C. § 3604(a) and (c).            On the basis of this

conclusion, the Secretary ordered the Banais to pay $35,000 to

Times and $35,000 to Brinson as compensatory damages for their

injuries.3    The Banais concede that they violated the FHA;                they

argue only that the damages awarded here were excessive.

                                    II.

                                    A.

         We have jurisdiction to hear this appeal pursuant 42 U.S.C.

§ 3612(i).     We will reverse an ALJ's factual determinations, and

thus the agency's final decision, only if they are unsupported by

substantial evidence on the record.        Secretary, U.S. Dep't Hous. &

Urban Dev. ex rel. Herron v. Blackwell, 908 F.2d 864, 870 (11th

Cir.1990).

                                    B.

         Victims   of   discrimination    in   violation   of   the   FHA   are

entitled to "actual damages."4            Although the statute provides

little guidance beyond this statement, anger, embarrassment, and


     3
      Section 3612(g)(3) provides that upon finding a violation
of the FHA, the ALJ "shall promptly issue an order for such
relief as may be appropriate, which may include actual damages
suffered by the aggrieved person and injunctive or other
equitable relief." 42 U.S.C. § 3612(g)(3) (1994). In addition
to ordering the Banais to compensate Times and Brinson in money
damages, the ALJ ordered Manhattan and Arias to pay civil
penalties. They have not appealed this decision.
     4
      These "actual damages" are compensation for the victim's
injuries, not punishment for the perpetrator's wrongdoing. The
act provides separate punitive remedies. If the case is tried in
district court, punitive damages are available. If, as here, the
case is tried in an administrative hearing, punitive damages are
unavailable, but the ALJ is authorized to assess a civil penalty.
See supra note 2.
emotional distress are clearly compensable injuries under this

standard.     See Blackwell, 908 F.2d at 872-73.             The ALJ found that

Times and Brinson had suffered such injuries.             The question before

us, therefore, is whether the record supports those findings.

                                      III.

       This is not a case of first impression in this circuit.                In

Blackwell, we reviewed an ALJ's decision finding discrimination in

violation of the FHA and awarding damages for injuries sustained as

a result of the discrimination.          That case involved a claim that

the defendant, Blackwell, refused to sell his house because of the

prospective buyers' race.         Acting through an agent, Blackwell

signed a contract of sale with Terryl and Janella Herron, a black

couple.      When Blackwell learned that the Herrons were black, he

found pretextual grounds to refuse to complete the sale. The house

was later leased to Brett and Audrey Cooper, a white couple.                 The

Coopers also pursued charges against Blackwell.                 They contended

that   the    publicity   generated    by    the   Herons'    claim   of   racial

discrimination caused them considerable distress and anxiety.

       In that case, we held that the ALJ's award of $40,000 to the

Herrons was "rational and fully supported by the record."                  Id. at

872.    These damages served to compensate the Herrons for their

"embarrassment,     humiliation,      and     emotional      distress."       Id.

(internal quotations marks omitted).           In addition, we affirmed the

ALJ's award of $20,000 to the Coopers for their "embarrassment,

humiliation, and emotional distress" and for the "strain on "family

unity' " that resulted from publicity surrounding the episode. Id.

at 873.      We found that these injuries were compensable under the
Act and that the damages award was rationally supported by the

record.    Id.

     In this case, the ALJ's award of damages is for injuries which

closely parallel those in Blackwell.        The ALJ found that Times and

Brinson    had   suffered   embarrassment   and   humiliation,   the   same

injuries suffered by the Herrons and Coopers in Blackwell.              In

addition, a portion of the damages was compensation for the damage

done to Times and Brinson's relationship.           This damage closely

parallels the injury to the Coopers' family unity in Blackwell.

     The Banais contend, however, that the damages in Blackwell are

justified only because of the particular facts of that case.           They

point out that the Herrons' injuries manifested themselves in

physical symptoms and that the Coopers feared for their children's

safety as a result of the public controversy surrounding their

case.     While those factors were considered by the ALJ and this

court in affirming the damages in that case, the absence of those

facts in this case does not dictate a reversal of the ALJ's award.

        We note first that in     Blackwell we affirmed the award of

damages;     nothing in that case suggested a level at which the

damages awarded would have been excessive.          The appellant cannot

cite Blackwell as an indication of a ceiling above which a damages

award would be considered excessive.        In addition, our affirmance

in Blackwell was not conditioned on the presence of physical

symptoms or on the publicity surrounding the case. We listed these

as factors that the ALJ considered in determining the size of the

damages award.      They suggest the seriousness of the injuries in

that case; different facts suggest the seriousness of the injuries
in this case.

      The ALJ based his award on his finding that Times and Brinson

suffered "emotional distress for humiliation, embarrassment, anger,

inconvenience, and lost housing opportunity," as well as damage to

their relationship. The record supports the ALJ's decision even in

the   absence   of   physical    symptoms    or    publicity.     First,    the

hurricane had "devastated [Times and Brinson's] home, ... disrupted

their lives, [and] render[ed] them uncomfortable and insecure."

Given these facts, and the lack of adequate housing alternatives,

the Banais' refusal to rent their house to Times and Brinson was

particularly painful.         In addition, the Banais' house offered

exactly the amenities that Brinson's injuries required:                it was a

one story structure located close to her physical therapist.               When

the Banais turned Times and Brinson away, they were left with the

alternatives of staying in a hotel that could not meet their needs

or moving in with Times' family.          Neither arrangement was adequate

and their injuries were exacerbated as a result.

      Finally, although Times and Brinson's ultimate decision to end

their   relationship    was     not   a   direct   result   of   the    Banais'

discrimination, the ALJ found that the discrimination had injured

the relationship and accordingly based a portion of the award on

that injury.     In short, while Times and Brinson did not suffer

physical manifestations of their injuries and were not subjected to

public scrutiny as a result of the Banais' discrimination, other

equally valid factors support the ALJ's determination.

                                      IV.

      For the foregoing reasons, we find that the damages award in
this case is supported by substantial evidence on the record.

AFFIRMED.

                     .   .    .    .   .