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United States of America v. Garden Homes Management Corp.

104 Fed. Appx. 796, 2004 WL 1598734 (2004)

LANDLORD-TENANT; FAIR HOUSING ACT; DISCRIMINATION—A management company is fined for failing to hire a discrimination testing service as ordered by a court as a remedy under the Fair Housing Act.

The United States filed a civil action against a management company alleging violations of the Fair Housing Act. The parties entered into a consent order that obligated the management company to contract with a compliance testing company to deter future violations. The consent order did not specify a particular testing company. The United States brought a motion for contempt when the management company failed to comply. In its motion, the United States requested the District Court to amend the order by specifying a particular compliance testing company. The District Court issued an order requiring the management company to enter into a contract with the local Fair Housing Council (FHC) by April 1, 2002. The order also stated that the management company would have to pay $1,000 for each day it failed to comply.

The management company said that it had contacted the FHC on April 1, 2002 about a contract and was awaiting an answer. FHC responded on June 27, 2002 with a testing contract. The management company complained that the price for its testing services was “grossly excessive,” and filed a motion to amend the order to permit the selection of an alternative testing company. After almost one year, the District Court denied the motion. It also assessed the $1,000 per day penalty beginning April 3, 2002, and ending on October 27, 2002.

On appeal, the management company argued that the District Court’s assumption that the FHC had sent a contract on April 3, 2002 was unsupported by the record. It claimed that if sanctions were at all appropriate, the sanctions should have begun on June 28, 2002, the day after the management company had actually received a contract.

The Court of Appeals held that the lower court erred in penalizing the management company three months before it received a contract offer from the FHC. The record contained only one item of correspondence, sent in April, in which the management company requested a written contract from FHC. The next correspondence in the record was dated June 27, 2002. Furthermore, that correspondence made no reference to having sent a contract any earlier. The Court stated that although the record did contain a “skeletal, unsigned ‘contract’” dated April 4, 2002, setting forth the cost for testing, there was no indication in the record as to when or if this document was sent by the FHC. Therefore, the Court reversed the lower court’s decision and remanded the matter so that the District Court could properly determine the date from which the management company was subject to penalty.


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