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Bell v. Tower Management Services, L.P.

A-3165-08T3 (N.J. Super. App. Div. 2010) (Unpublished)

LANDLORD-TENANT; DISCRIMINATION —Where a landlord refuses to include the amount of a rental subsidiary a disabled tenant receives from the state as part of that tenant’s qualifying income, the tenant will be given an opportunity to argue the novel disability discrimination theory that the landlord is, in essence, discriminating against the tenant because of the tenant’s disability.

A disabled woman, who claimed she was physically incapable of working, qualified for a State rental subsidy known as “S-RAP.” This subsidy is intended to allow disabled tenants to live in market rate housing. The woman alleged that the subsidy would enable her to afford the rent for an apartment in a specific building. The operator of the building maintained a policy of refusing to rent to any applicant who did not have annual income of at least $28,000.

The woman filed suit. Her amended complaint alleged discrimination on the basis of her disability and source of income, in violation of the New Jersey Law Against Discrimination (LAD). The complaint asked the operator to waive the income limit as a reasonable accommodation to her disability, as her subsidy enabled her to satisfy the purpose of the operator’s income policy – to ensure tenants had sufficient income to pay their rent. The woman alleged that the operator’s refusal to waive the policy as a reasonable accommodation violated the LAD.

The woman also alleged a violation of the LAD based on the operator’s refusal to rent to her because of the source of her lawful rent payment (the subsidy). The complaint asserted the operator’s income policy had a discriminatory impact on persons who paid their rent using government subsidies, and that the policy was not justified by any business necessity because the policy had no relation to the ability of an S-RAP recipient to afford rent for the operator’s housing. The lower court, before the operator filed its answer, dismissed the woman’s amended complaint for failure to state a claim for which relief could be granted. The woman appealed.

The Appellate Division reversed, and remanded the matter to permit discovery. According to the Court, when reviewing a complaint, a court must determine whether the complaint can possibly be read as stating one or more causes of action. It also held that it is desirable to allow parties to litigation to create a record before the court decided novel legal issues.

The Court held the complaint clearly stated a cause of action for disparate impact discrimination based on a policy that was allegedly not justified by business necessity, but which allegedly has the impact of excluding almost all applicants who intended to pay rent through an S-RAP subsidy. It also held that the complaint alleged the operator’s refusal to waive the income limitation served to deny the woman a reasonable accommodation of her disability, and the operator could waive the income limit without undue economic hardship because of the application of the subsidy.

The Court offered no view as to the merits of the complaint, but given New Jersey’s strong public policy to eradicate discrimination, concluded that the woman should be entitled to develop her novel disability discrimination theory through discovery.

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