Outdoor Playgrounds Now Permitted to Open in Regions Under Stay Home Order

By Jacquelyn E. Quinn, Esq.

We can add this as another example of just how quickly things can change in the age of COVID-19.

Earlier this morning, December 9, the State updated its Regional Stay Home Order to allow outdoor playgrounds to remain open to facilitate physically distanced personal health and wellness through outdoor exercise.

The California Department of Public Health guidelines for open outdoor playgrounds can be found here.

As always, we seek to bring our clients the most accurate and up-to-date information on all relevant topics. Please visit the State of California’s COVID-19 website for more information on the State’s quickly evolving orders.

 

Keywords: COVID-19, Coronavirus

SB800 and Governing Documents Checklist

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Notice to Members and Informational Meeting

  • Notice to members required at least 30 days before filing a civil action against developer
  • Notice must include:
    • Time and place that a meeting will take place to discuss problems impacting association
    • Potential impacts to community, including potential financial impacts to association and its members. This can include impact of claims on sales; attorney fees, expert and other costs; raising funds through assessments and reserves
    • The options, including civil actions, that are available to address the problems
  • If the association has reason to believe an applicable statute of limitations will expire, it may give notice of this meeting within 30 days after filing of a civil action
  • Some governing documents may suggest a membership vote is required prior to initiating any legal action against a declarant entity. Generally, these provisions are void and unenforceable if drafted by the declarant. Such provisions may be enforceable if adopted by the non-declarant members of the association.

Information Typically Required for Meetings Through Governing Documents

  • Impact of claims on sale
  • Attorney fees, expert and other costs
  • Raising funds through assessments and reserves
  • Potential parties
  • Description of process to pursue claims

Documents to Have Prepared and Ready when Sending Notice to Builder

  • Meeting Minutes
  • Maintenance Manual reports
  • Maintenance Records
  • Budgets, reserve studies for 10 years
  • Communications with members?

Community Association Transition to Owner Control Checklist Construction

  • Manufacturer warranties (HVAC, elevators, windows, lift gates, pool equipment, exterior cladding, key fobs, security)
  • Manufacturer recommended maintenance schedules and instructions
  • Building plans and permits; notices of completion or occupancy
  • Location of key components (water, gas, irrigation valves and shut off) and information concerning all fire safety and other emergency systems
  • Owner and Association Maintenance Manual
  • List of contractors and contact information
  • Inventory of Association real and personal property

Legal Documents

  • Everything recorded (CC&Rs, easements, maps), Bylaws, CC&Rs, Rules
  • Architectural requests, approvals, denials; meeting minutes
  • Insurance policies
  • Release of mechanics liens; lawsuit documents
  • Records from Department of Real Estate (or “BRE”)
  • Assessment and Construction Bonds
  • Leases
  • Senior Housing Compliance documents

General Timeline to Bring Claims

(Each case varies with the applicable facts)

For an association, the time to bring claims can begin to run from a number of different dates, including, the date of substantial completion of the building or building component (as defined by code) or the date the declarant relinquishes control over the decision to initiate a claim (this can have various meanings, including the date a homeowner becomes a director, the date homeowners become the majority on the Board of Directors, or some governing documents define a specific date based on the association’s annual meeting). Below is a list of some of the statutory deadlines for the major components. Consult with legal counsel to determine which statutory deadlines may apply to your claims.

1 year          Irrigation systems, drainage, manufactured products, noise (from occupancy of adjacent unit)

2 years        Dryer ducts, landscaping systems, untreated wood posts

4 years        Exterior pathways, driveways, hardscape, sidewalks, patios, (certain) plumbing and sewer system issues, (certain) electrical systems, untreated steel fences

5 years        Paint, stain

10 years      Other components including decks, balconies, tiles, stucco, framing, foundations, (other) plumbing and sewer lines, roofs, soils, structural, windows

Notice to Members of Settlement

If a settlement agreement is entered into between the Association and the builder, notice must be sent to the members of the association as soon as reasonably practicable. This notice to the members must include a general description of the defects that the association reasonably believes will be prepared, a good faith estimate of when the repairs will be completed, and the status of any defects that were identified in the association’s preliminary defect list that are not included among the anticipated repairs. This notice may be amended periodically to keep members apprised of the status as repairs are made, or more information is obtained.

Southern California on Regional Stay Home Order Effective December 6, 2020

By Jacquelyn E. Quinn, Esq.

Late on Friday, December 4, the Southern California region, which includes San Diego, Riverside, San Bernardino, Los Angeles, Orange Imperial, Inyo, Mono, San Luis Obispo, Santa Barbara, and Ventura, triggered a Regional Stay Home Order because it dropped below 15% ICU capacity. Kern County, which is included in the San Joaquin Valley region, also triggered a Regional Stay Home Order.

Regions under a Regional Stay Home Order have 24 hours to comply. Meaning, the Southern California and San Joaquin Valley regions will have until 11:59 p.m. Sunday, December 6 to comply.

In any region that triggers a Regional Stay Home Order because it drops below 15% ICU capacity, the following must close and/or cease operations:

  • Indoor and outdoor playgrounds and tot lots
  • Indoor recreational facilities
  • Hair salons and barbershops
  • Personal care services, including nail salons and massage services
  • Restaurants closed for all dine-in. Take-out, pick-up, and delivery only
  • All private gatherings of any size

The following sectors may continue with additional modifications and 100% masking and physical distancing:

  • Outdoor recreational facilities: Allow outdoor operation only without any food, drink or alcohol sales. Outdoor pools, hot tubs, tennis, pickleball, and other outdoor recreational facilities may remain open with 100% masking (when not in the water) and physical distancing and following all other existing operational and cleaning/disinfecting guidance.
  • Retail, including libraries: Allow indoor operation at 20% capacity with entrance metering and no eating or drinking in the stores. Additionally, special hours should be instituted for seniors and others with chronic conditions or compromised immune systems.
  • Hotels and lodging, including short term rentals: Allow to open for critical infrastructure support only. No hotel or lodging entity in California shall accept or honor out of state reservations for non-essential travel, unless the reservation is for at least the minimum time period required for quarantine and the persons identified in the reservation will quarantine in the hotel or lodging entity until after that time period has expired.

The Regional Stay Home Order will be in effect for at least 3 weeks after the trigger and will continue until ICU availability projections for the region are greater than or equal to 15%.

Californians are instructed to stay at home as much as possible to limit the mixing with other households that can lead to COVID-19 spread. It allows access to (and travel for) critical services only and allows outdoor activities to preserve Californians’ physical and mental health.

To read more about the Regional Stay Home Order and the status of other regions please click here.

 

Keywords: COVID-19, Coronavirus

Immediate Action Required for California Employers: Cal/OSHA Adopts Emergency COVID-19 Safety Standards for California Employers

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By Mandy D. Hexom, Esq.

As of November 20, 2020, Cal/OSHA adopted temporary standards or regulations (effective immediately for 180 days unless further extended) that apply to most employees and workplaces in California related to COVID-19.

Who is covered by these new emergency regulations?

All employees in all places of employment including but not limited to association employees with the following exceptions:

  • Places of employment that only have one employee who does not have contact with other persons;
  • Employees that are solely working from home; and
  • Employees covered by Cal/OSHA’s Aerosol Transmissible Diseases standard (which does not apply to association employees and primarily applies to health care workers).

Under the new regulations, association employers, unless one of the exceptions above applies, must have a written COVID-19 Prevention Plan that addresses the following:

  • System for communicating information to employees about COVID-19 prevention procedures, testing, symptoms and illnesses, including a system for employees to report exposures without fear of retaliation.
  • Identification and evaluation of hazards – screening employees for symptoms, identifying workplace conditions and practices that could result in potential exposure.
  • Investigating and responding to cases in the workplace – responding immediately to potential exposures by following steps to determine who may have been exposed, providing notice within one business day about potential exposures, and offering testing to workers who may have been exposed.
  • Correcting COVID-19 hazards – including correcting unsafe conditions and work practices as well as providing effective training and instruction.
  • Physical distancing – implementing procedures to ensure workers stay at least six feet apart from other people if possible.
  • Face coverings – providing face coverings and ensuring they are worn.
  • Adopting site-specific strategies such as changes to the workplace and work schedules and providing personal protective equipment to reduce exposure to the virus.
  • Recording requirements for positive COVID-19 cases and making the COVID-19 Prevention Plan accessible to employees and employee representatives.
  • Removal of COVID-19 exposed workers and COVID-19 positive workers from the workplace with measures to protect pay and benefits.
  • Criteria for employees to return to work after recovering from COVID-19.
  • Requirements for testing and notifying public health departments of workplace outbreaks (three or more cases in a workplace in a 14-day period) and major outbreaks (20 or more cases within a 30-day period).
  • Specific requirements for infection prevention in employer-provided housing and transportation to and from work.

Cal/OSHA has posted FAQs and a one-page fact sheet on the regulations, as well as a model COVID-19 prevention program. Employers are invited to participate in training webinars held by Cal/OSHA’s Consultation Services branch.

If you have questions or need assistance with workplace health and safety programs, you can also call Cal/OSHA’s Consultation Services Branch at 800-963-9424 or contact our office for further assistance.

 

Keywords: COVID-19, Coronavirus

Epsten, APC Hosts Virtual Blood Drive

Donate Blood. Save Lives.

Epsten, APC Virtual Blood Drive

November 9th – December 20th

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Epsten, APC is hosting a “virtual” blood drive November 9th – December 20th. Although The San Diego Blood Bank is currently unable to host blood drives at this time, we want to continue to save lives and give back to our community at this critical time.

If possible, please consider donating blood at one of the San Diego Blood Bank donor centers and mention your Group Code EAPC when you donate. Let’s save lives together!

Please visit www.sandiegobloodbank.org/GiveLife or call (619) 400-8251 to schedule an appointment and find a location near you.

PLUS…
All blood donated through December 31st will be tested for COVID-19 antibodies. Please note, this is NOT a diagnostic test and it will not detect active COVID-19 infections or recent exposure; however, may tell you if you had a past infection with the virus that causes COVID-19.

Please note:

  1. Appointments only. No walk-ins, but same day appointments available.
  2. For up-to-date information related to blood donation and COVID-19, including safety measures and exposure deferrals, please visit the San Diego Blood Bank website at sandiegobloodbank.org/COVID19.
  3. There is an opportunity to donate convalescent plasma if you have recovered from COVID-19. Your antibodies may help someone in critical condition. Visit sandiegobloodbank.org/donateplasma.

Thank you in advance for supporting your community and our community on behalf of all of us at Epsten, APC!

Coley v. Eskaton

51 Cal.App.5th 943 (2020)

RONALD F. COLEY, Plaintiff and Appellant,
v.
ESKATON et al., Defendants and Appellants.

No. C084328.
Court of Appeals of California, Third District.
June 11, 2020.

Summary by Dea C. Franck, Esq.:

Association directors may be found personally liable for damages stemming from their breach of their fiduciary duty by imposing improper assessments (and disclosing confidential information) if the director approved a transaction wherein that director (an employee of developer) had a material financial interest unless the affected directors can prove the transaction was entered into in good faith and was inherently fair to the association and its members.

*** End Summary ***

Appeal from the Super. Ct. No. 34-2014-00171851-CU-MC-GDS.

Diepenbrock Elkin Gleason, David A. Diepenbrock; Brady & Vinding, Michael E. Vinding and Michael V. Brady for Plaintiff and Appellant.

Horvitz & Levy, Jon B. Eisenberg, Peder K. Batalden; Hefner Stark & Mariois, Kenneth R. Stone, Michael R. Williams; Law Office of Jon B. Eisenberg and Jon B. Eisenberg for Defendants and Appellants.

947*947 [CERTIFIED FOR PARTIAL PUBLICATION[*]]

OPINION

RAYE, P. J.—

Eskaton, Eskaton Village-Grass Valley (Eskaton Village), and Eskaton Properties Inc. (collectively, the Eskaton entities) are related corporations that develop and support common interest developments for older adults in Northern California. Ronald F. Coley owns a home in one of their developments, Eskaton Village Grass Valley (the Village). He brought this suit against the Village’s homeowners association, two of the directors on the association’s board, and the directors’ employers (the Eskaton entities), alleging these directors ran the association for the benefit of the Eskaton entities rather than the association and its members.

The trial court agreed with Coley in part, finding these directors breached their fiduciary duty to the homeowners association and its members in several respects. In particular, the court found one director improperly shared with the Eskaton entities the association’s privileged communications with its counsel, and both directors, in violation of the association’s governing documents, approved certain assessments that benefited the Eskaton entities and harmed many of the association’s members. Based on this conduct, the court found the directors’ employers, the Eskaton entities, were liable for any 948*948 damages Coley suffered as a result, though it declined to find the directors liable in their personal capacities. It awarded Coley damages of $2,328.51 and attorney fees of $654,242.53.

Both parties appealed. The Eskaton entities and the two director defendants (collectively, the defendants) contend the court should have afforded the directors more deference under the business judgment rule—a rule under which courts tend to defer to the decisions of corporate directors. They also claim the court misread the association’s governing documents, miscalculated appropriate damages, and misapplied vicarious liability principles in finding the Eskaton entities liable for their employees’ conduct even though their employees were not liable themselves. Finally, they assert the court awarded an excessive amount of attorney fees. Coley, in his cross-appeal, raises several additional issues. He contends the court should have found the two directors personally liable for their conduct, and alleges the court wrongly rejected several of his claims against the defendants.

We agree in part with both of the parties. We find, as the defendants contend, that the court miscalculated the damages on certain claims and should, after reducing the damages award on remand, reconsider the awarded attorney fees in light of this reduction. We also agree, as Coley asserts, that the court should have found the two directors personally liable for their actions. In all other respects, we affirm the judgment.

BACKGROUND

I. The Village and the Association

The Eskaton entities, among other things, develop and support common interest developments for older adults in Northern California. One of those developments is the Village. The Village consists of 130 homes known as the “Patio” homes and 137 rented residences housed in a building known as the “Lodge.” It also consists of several common areas accessible to both Patio and Lodge residents, including walking paths and a maintenance building. Eskaton Village, an Eskaton subsidiary, owns the Lodge and its 137 residences, and various individual homeowners, including Coley, own the 130 Patio homes. Eskaton Properties, another Eskaton subsidiary, is responsible for the Village’s day-to-day management.

Eskaton Village and the Patio homeowners are members of the Eskaton Village, Grass Valley Homeowners Association (the Association), a nonprofit mutual benefit corporation. A five-member board of directors runs the Association subject to the requirements of the Association’s governing document, 949*949 the “Declaration of Covenants, Conditions and Restrictions for Eskaton Village-Grass Valley Homeowners Association” (or the CC&Rs).

II. The Association’s Governance Structure

Since the Association’s inception, Eskaton Village has controlled three out of the five seats on the Association’s board. Under the CC&Rs, the owners of the 267 housing units (the 137 Lodge residences and 130 Patio homes) are entitled to one vote per housing unit owned. Because Eskaton Village owns a majority of these units (137 of 267), it holds a perpetual voting majority.

Exercising its majority voting power, Eskaton Village has consistently elected three employees of the Eskaton entities to sit on the Association’s board. And, at least in recent years, it has appointed directors who are financially incentivized to run the Association for the benefit of Eskaton Village. Two of those employees are defendants here, Todd Murch and Elizabeth L. Donovan. Murch is the chief executive officer and president of all the Eskaton entities. Donovan is the chief operating officer of all the Eskaton entities. Both are paid by Eskaton Properties and receive bonuses and incentive compensation in part based on Eskaton Properties’ performance. Eskaton Properties’ performance, in turn, is based in part on Eskaton Village’s performance. The higher Eskaton Village’s operating losses, for example, the lower Eskaton Properties’ profits given the latter’s subsidizing of Eskaton Village in years of operating losses—which, in fiscal year 2015 alone, amounted in a subsidy of hundreds of thousands of dollars. Given Murch’s and Donovan’s pay structure, the lower this subsidy (i.e., the better Eskaton Village performs) the higher their potential compensation.

III. The Association’s Assessments for Security Services

Under the CC&Rs, the Association is authorized to levy various assessments against Eskaton Village and the Patio owners. Using this authority, the Association has assessed both for, among other things, “Security/Emergency Response” services since its creation in the early 2000s.

For its initial 10 years, the Association allocated the cost of providing these security and emergency response services equally between Eskaton Village and the Patio owners, with each covering 50 percent of the total cost. But in late 2012, the Association’s board, in a three-to-two vote, approved a new budget that increased the Patio owners’ relative responsibility for the cost of these services. Under the new budget, the Patio owners would cover 83.3 percent of the total costs of security services and Eskaton Village would cover the remaining 16.7 percent. The Eskaton-affiliated directors, including Murch and Donovan, all voted in favor of the new budget. The two other directors, including Coley, voted against.

950*950 IV. Coley’s Suit and the Trial Court’s Judgment

In November of 2014, Coley and another Patio homeowner, Karen B. Lorini, filed a class action against the Eskaton entities, Murch, Donovan, and, as a nominal defendant, the Association.[1] In their complaint, the two named plaintiffs alleged that Murch and Donovan, acting pursuant to the direction of the Eskaton entities, were managing the Association for the benefit of the Eskaton entities and to the detriment of the Patio owners. In particular, the plaintiffs contended that Murch and Donovan unlawfully voted to require the Patio homeowners to cover 83 percent of the cost associated with security services, allowed Eskaton Village to use the Association’s maintenance building rent free, and engaged in various other acts of misconduct to benefit the Eskaton entities. In doing so, the plaintiffs asserted, the defendants breached their fiduciary obligations to the Association and its members and committed elder abuse against Patio owners like Coley who were aged 65 or older.

Coley and Lorini later amended their complaint to add additional causes of action in light of the defendants’ postcomplaint conduct. The first addition concerned the Association’s assessment for legal fees. To cover the cost of litigation in this case, the Association initially relied on assessments imposed on both the Patio and Lodge owners. But beginning in late 2015, it began imposing certain fees on the Patio owners alone. Coley and Lorini contended the director defendants violated the Association’s CC&Rs in approving this change. The second addition concerned Murch’s disclosure of certain records. The Association’s attorneys advised the Association on certain matters relating to this litigation. At some point, Murch shared this information with his personal counsel and the Eskaton entities’ counsel. Based on this conduct, Coley and Lorini alleged Murch breached his fiduciary duty to the Association by disclosing the Association’s privileged communications.

Before trial, Coley and Lorini moved to certify their action as a class action on behalf of themselves and similarly situated Patio homeowners. But after Coley’s individual claims were severed from the proposed class to expedite the resolution of his claims, the parties agreed to stay the hearing on the motion for class certification until after the resolution of Coley’s claims.

The trial on Coley’s claims began in December of 2015, and in early 2017, the trial court issued its judgment. Before addressing Coley’s specific claims, the court first noted a “principle issue in this case guiding the Court’s determination of Plaintiff’s claims against Defendants is whether a conflict of 951*951 interest was created when Eskaton retained control of the [Association] Board of Directors by filling three positions with its own employees.” The court concluded it was. Although Murch and Donovan, as directors of the Association, were charged with serving the best interest of the Association and all its members, the court found both were financially incentivized to operate the Association for the benefit of one member in particular—Eskaton Village. The court explained that both directors were paid in part based on Eskaton Properties’ performance, and that Eskaton Properties’ performance in turn was based in part on Eskaton Village’s performance. Thus, the court reasoned, “the conclusion is inescapable that the financial success of [Eskaton Village] plays a role in determining [the directors’] compensation and advancement, even if is not the only factor.” The court found this pay structure left the directors in an “irreconcilable conflict of interest.”

Turning to Coley’s specific claims, the trial court agreed in part with six of his 12 causes of action, several of which overlapped. It found Murch and Donovan breached their fiduciary duties and violated the Association’s CC&Rs when they voted to raise the Patio owners’ share of the security and emergency response costs from 50 percent to 83.3 percent. It found they further breached their fiduciary duties and violated the Association’s CC&Rs when they voted to charge certain legal expenses to the Patio owners alone. And it found Murch also breached his fiduciary duty when he disclosed the Association’s privileged communications with its counsel to further his own “interest rather than the interest of the [Association].” Because of this conduct, the court found all the defendants—including the corporate defendants—were liable to pay damages to Coley that resulted from the various breaches of fiduciary duty. The court calculated these damages to be $2,328.51.

The court, however, clarified in a prejudgment order that only the corporate defendants were in fact liable to pay this amount. Following the court’s proposed statement of decision, Coley asked the court to clarify that Murch and Donovan were liable in their personal capacities. But the court declined to find the two directors liable, reasoning that Coley had failed to show they acted in self-interest, benefited from their breach of fiduciary duty, or mismanaged the Association. The court went on to note, however, that Eskaton Properties and Eskaton Village were “vicariously liable” for damages caused by the directors within the scope of their employment.[2]

Following the court’s judgment, Coley moved to obtain attorney fees under Civil Code section 5975, which allows the prevailing party in any action to enforce the CC&Rs of a common interest development to obtain attorney fees 952*952 and costs. Coley contended the court should find all his attorneys’ time compensable, apply a positive multiplier to enhance the fee award, and award total fees in the amount of $1,140,445.03. The defendants, in opposition, contended the court should instead apply a negative multiplier and award fees only for the time spent on claims that allowed attorney fees. The court struck a middle path. Because it believed the considerations in favor of either a positive or negative multiplier canceled out, it rejected the parties’ competing demands for a multiplier and instead declined to apply any multiplier. And because it found “the factual issues between fee-eligible and non-fee eligible claims were inextricably intertwined,” it also rejected the defendants’ request that Coley be awarded fees only for the time spent on fee-recoverable claims. The court awarded Coley attorney fees in the amount of $648,058.25 plus accrued interest of $6,184.28, for a total of $654,242.53.

Both parties timely appealed the court’s judgment.

DISCUSSION

I. The Defendants’ Appeal

A. The Corporate Defendants’ Liability[*]

……………………………………………………………………..

B. Application of the Business Judgment Rule

The defendants’ next claim the court misapplied the business judgment rule. The business judgment rule is a policy of deference to a corporate board’s decisionmaking. (Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 257 [87 Cal.Rptr.2d 237, 980 P.2d 940] (Lamden).) But the trial court here found the rule inapplicable because the Eskaton entities’ employees who sat on the Association’s board had an “irreconcilable conflict of interest” that “preclude[d] the business judgment rule as a defense to liability in this case.” According to the defendants, rather than finding this conflict precluded the business judgment rule altogether, the court instead should have afforded the defendants an opportunity to reclaim the benefit of the rule by showing they acted in good faith after reasonably investigating material facts. We view the law differently.

1. Background law

California recognizes two types of business judgment rules: one based on statute and another on the common law. (Lamden, supra, 21 Cal.4th at 953*953 p. 259 & fn. 6.) Corporations Code section 7231 supplies the relevant statutory rule for nonprofit mutual benefit corporations like the Association. Under that statute, a director is not liable for “failure to discharge the person’s obligations as a director” if the director acted “in good faith, in a manner such director believes to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.” (Corp. Code, § 7231, subds. (a), (c).) The common law business judgment rule is similar but broader in scope. It is similar in that it immunizes directors for their corporate decisions that are made in “good faith … to further the purposes of the [corporation], are consistent with the [corporation’s] governing documents, and comply with public policy.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 374 [33 Cal.Rptr.2d 63, 878 P.2d 1275]; see Lamden, supra, 21 Cal.4th at p. 257.) And it is broader in that it also “`insulates from court intervention those management decisions'” that meet the rule’s requirements. (Lamden, supra, 21 Cal.4th at p. 257.)

A director, however, cannot obtain the benefit of the business judgment rule when acting under a material conflict of interest. (Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411, 430 [8 Cal.Rptr.3d 31] (Everest Investors); Gaillard v. Natomas Co. (1989) 208 Cal.App.3d 1250, 1263 [256 Cal.Rptr. 702].) Deference under the business judgment rule is premised on the notion that corporate directors are best able to judge whether a particular transaction will further the company’s best interests. (Gaillard, supra, 208 Cal.App.3d at p. 1263.) But that premise is undermined when directors approve corporate transactions in which they have a material personal interest unrelated to the business’s own interest. And it is particularly undermined when a majority of these directors approve transactions while having a material conflict of interest. Under those circumstances, the directors carrying this conflict of interest are precluded from seeking the benefit of the business judgment rule. (See Everest Investors, supra, 114 Cal.App.4th at p. 430; Gaillard, supra, 208 Cal.App.3d at p. 1263.)

But although the business judgment rule is inapplicable under these circumstances, that is not to say that corporate decisions affected by these types of conflicts are improper as a matter of law. As with the business judgment rule generally, statutory and common law requirements are again relevant in this context. Corporations Code section 7233 supplies the relevant statutory rule. It provides, among other things, that an interested director who casts a deciding vote on a transaction must show the “transaction was just and reasonable as to the corporation at the time it was authorized, approved or ratified.” (Corp. Code, § 7233, subd. (a)(3).) Section 7233, however, only applies to transactions “between a corporation and one or more of its directors, or between a corporation and any domestic or foreign corporation, firm or association in which one or more of its directors has a material 954*954 financial interest.” (Corp. Code, § 7233, subd. (a).) The common law rule, as before, is similar but broader in scope. It is similar in that it requires interested directors to “prove that the arrangement was fair and reasonable”—a rigorous standard that requires them “`not only to prove the good faith of the transaction but also to show its inherent fairness from the viewpoint of the corporation and those interested therein.'” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 31-32 [216 Cal.Rptr. 130, 702 P.2d 212] (Tenzer).) And it is broader in that, unlike Corporations Code section 7233, it is not concerned only with transactions between a corporation and either its directors or a business in which its directors have a material financial interest. (See Corp. Code, § 7233, subd. (a).) Rather, recognizing the potential for self-dealing may also exist outside this particular context, courts have found directors must also satisfy the common law requirements when they approve other transactions in which they have a material financial interest distinct from the corporation’s own interest. (See Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 127-128 [214 Cal.Rptr. 177] (Heckmann) [directors who approved corporate action intended to stave off a company takeover and protect their board positions were required to show “the transaction was entered in good faith” and was “inherent[ly] fair[] from the viewpoint of the corporation and those interested therein”]; see also Remillard Brick Co. v. Remillard-Dandini (1952) 109 Cal.App.2d 405, 416-421 [241 P.2d 66] [common law requirements of “good faith” and “inherent fairness” exist independent of statutory “`just and reasonable'” requirements].)

2. The trial court’s application of the business judgment rule

Turning to the trial court’s decision here, we find the court appropriately summarized the relevant principles governing the business judgment rule. It correctly explained that directors acting under a conflict of interest cannot obtain the benefit of the business judgment rule. (See Everest Investors, supra, 114 Cal.App.4th at p. 430.) And it rightly added that although “a conflict does not necessarily establish actionable impropriety,” it shifts the burden to the director to show the transaction was “`fair and reasonable.'”[3] (See Tenzer, supra, 39 Cal.3d at pp. 31-32.)

955*955 The defendants make no effort to satisfy this “just and reasonable” standard, but instead assert the trial court should have shifted the burden to the Eskaton directors to show they approved the disputed transactions in “good faith” after a “reasonable inquiry.”

In support of this alternative standard, the defendants rely on Katz v. Chevron Corp. (1994) 22 Cal.App.4th 1352 [27 Cal.Rptr.2d 681] and Lee v. Interinsurance Exchange (1996) 50 Cal.App.4th 694 [57 Cal.Rptr.2d 798]. Katz concerned a corporate board’s defensive actions in response to an attempted corporate takeover—actions that were reviewed under Delaware law. (Katz, supra, 22 Cal.App.4th at pp. 1367-1368.) Applying Delaware law, the Katz court found that because the board directors might have acted to protect their own interests in adopting these defensive measures, the board was not entitled to deference under the business judgment rule unless it first passed the “enhanced” scrutiny test—that is, unless the board showed (1) it had reasonable grounds for believing that “`a danger to corporate policy and effectiveness existed because of another person’s stock ownership'”—which could be established by “`”showing good faith and reasonable investigation”‘” —and (2) its action was “`reasonable in relation to the threat posed.'” (Id. at p. 1367.) The Lee court, in turn, relied on Katz in discussing California’s general background rules on conflicts of interest—even though the Katz decision concerned Delaware, not California, law. (Lee, supra, 50 Cal.App.4th at p. 715.) Never mentioning its principles derived from Delaware law, the Lee court suggested that a director is not entitled to the benefit of the business judgment rule in the event of a conflict of interest, unless the director first shows “good faith and reasonable investigation.” (Ibid.) But that suggestion was ultimately irrelevant to the case, as the appellants there did not even allege facts establishing a conflict of interest. (Id. at pp. 701, 715.)

The defendants, in sum, rely on one case that summarized Delaware law, and another case that, in dictum, summarized a case that summarized Delaware law. Belatedly recognizing this heavy reliance on Delaware law after oral argument, the defendants submitted a postargument letter asserting that California courts “may properly rely on corporate law developed in the State of Delaware given that it is identical to California corporate law for all practical purposes.” (Oakland Raiders v. National Football League (2001) 93 Cal.App.4th 572, 586, fn. 5 [113 Cal.Rptr.2d 255].) But even if that were true, it would not favor the defendants’ argument.

To begin, even under Delaware law, the defendants’ position would fail. Under Delaware law, courts apply “`[e]nhanced'” scrutiny—the type of scrutiny the defendants’ request here—in a narrow set of cases; specifically, “`whenever the record reflects that a board of directors took defensive measures in response to a perceived threat to corporate policy and effectiveness which touches on issues of control.'” (Gantler v. Stephens (Del. 2009) 956*956 965 A.2d 695, 705.) But they apply “even more exacting scrutiny” when there is evidence of “actual self-interest” that “affects a majority of the directors approving a transaction.” (Paramount Communications Inc. v. QVC Network Inc. (Del. 1994) 637 A.2d 34, 42, fn. 9.) And it is the latter scenario, not the former, that describes the facts of our case. Under those circumstances, the directors must prove the “entire fairness” of the transaction—a test requiring directors to “demonstrate both their utmost good faith and the most scrupulous inherent fairness of transactions in which they possess a financial, business or other personal interest which does not devolve upon the corporation or all stockholders generally.” (Mills Acquisition Co. v. Macmillan, Inc. (Del. 1989) 559 A.2d 1261, 1280; see Weinberger v. UOP, Inc. (Del. 1983) 457 A.2d 701, 710 [“When directors of a Delaware corporation are on both sides of a transaction, they are required to demonstrate their utmost good faith and the most scrupulous inherent fairness of the bargain”].)

California law, more importantly, demands the very same of majority directors who approve transactions while operating under a material conflict of interest. Directors faced with such divided loyalties must show the approved transaction was “fair and reasonable”—meaning they must not only “`prove the good faith of the transaction but also … show its inherent fairness from the viewpoint of the corporation and those interested therein. [Citation.]'” (Tenzer, supra, 39 Cal.3d at pp. 31-32; see Heckmann, supra, 168 Cal.App.3d at pp. 127-128.) And again, we find the trial court fairly captured this requirement in concluding the Eskaton-affiliated directors, because of their conflict of interest, had the burden to show their approved assessments were “just and reasonable.” The defendants here, however, never made this showing.[4]

Finally, as an alternative argument, the defendants argue that the Eskaton-affiliated directors had no improper conflict of interest at all, relying on Lexin v. Superior Court (2010) 47 Cal.4th 1050 [103 Cal.Rptr.3d 767, 222 P.3d 214] (Lexin). But Lexin offers them no support. The court in Lexin considered whether six city officials who voted on a matter that affected their government pension benefits violated Government Code section 1090—a 957*957 statute barring public officials from being personally financially interested in the contracts they form in their official capacities. (Lexin, supra, 47 Cal.4th at p. 1062.) It ultimately concluded most did not as a matter of law in light of a statutory exception to Government Code section 1090 that applies when the official’s financial interest is the same as the official’s constituency. (Lexin, supra, 47 Cal.4th at pp. 1063, 1094.) As the court explained, although the charged officials were financially interested in the matter, their interest was shared by “thousands of their fellow retirement system members.” (Id. at p. 1063.)

But the defendants here can point to no similar statutory exception to absolve them of their conflict. Nor would it matter if they could. The city officials in Lexin voted on a matter that affected them and their constituents in similar ways. For that reason, the court found, “the financial interest in question is not personal to an employee or official because it is shared with like members of the public agency’s constituency.” (Lexin, supra, 47 Cal.4th at p. 1095.) But the same cannot be said of the Eskaton-controlled directors. Their financial interest was personal and distinct from that enjoyed by the Association members generally. As the trial court explained, the directors’ incomes were tied in part to the financial performance of Eskaton Village—incentivizing the directors to shift costs from Eskaton Village to the Patio owners. And that is what they ultimately did, to the benefit of the Eskaton entities and the detriment of the Patio owners.

C.-F.[*]

……………………………………………………………………..

II. Coley’s Cross-appeal

A. Murch’s and Donovan’s Liability

Coley, in his cross-appeal, first contends the trial court should have found Murch and Donovan liable in their personal capacities. The trial court declined to do so because it concluded “the evidence failed to establish (1) conduct by the majority directors was motivated by specific self-interest; (2) the individual directors benefited from their breach of fiduciary duty or (3) that the actions of the directors amounted to mismanagement of the HOA.” According to Coley, the court erred in requiring this showing; it was enough, he maintains, that he showed (1) the directors had a fiduciary obligation to him and other Patio owners, (2) they breached this duty by approving transactions—while acting under a material conflict of interest—that were 958*958 unfair to Coley and other Patio owners, and (3) Coley suffered damages as a result of this breach. We agree.

The trial court correctly set out the three elements of the cause of action at issue: existence of a fiduciary relationship, breach of fiduciary duty, and damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820 [124 Cal.Rptr.3d 256, 250 P.3d 1115] (Oasis West Realty).) And as it further explained, the directors of a nonprofit mutual benefit corporation, like the Association here, are fiduciaries who must act for the benefit of the corporation and its members. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 513 [229 Cal.Rptr. 456, 723 P.2d 573] (Frances T.) [“Directors of nonprofit corporations … are fiduciaries who are required to exercise their powers in accordance with the duties imposed by the Corporations Code”]; Cohen v. S & S Construction Co. (1983) 151 Cal.App.3d 941, 945 [201 Cal.Rptr. 173] [“This fiduciary duty extends to individual homeowners, not just the homeowner’s association”].)

The court also correctly applied these principles to the facts. It found the directors Murch and Donovan owed a fiduciary duty to the Association and its members—satisfying the first element for breach of fiduciary duty. It then concluded they breached their fiduciary duties by voting, inconsistent with the CC&Rs, to (1) raise the Patio owners’ share of the security services from 50 percent to 83.3 percent, and (2) require the Patio owners alone, and not also the Lodge owners, to cover certain legal fees—satisfying the second element. It found Murch further breached his fiduciary responsibility by disclosing the Association’s privileged communications with its counsel. Finally, the court found Coley suffered damages as a result of the directors’ breaches of their fiduciary duties—satisfying the third and final element for breach of fiduciary duty.

Each of these findings were supported by substantial evidence. First, as all parties accept, Murch and Donovan owed a fiduciary duty to Coley and other Patio owners. (See Frances T., supra, 42 Cal.3d at p. 514; Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 108-110 [81 Cal.Rptr. 592, 460 P.2d 464].) Second, substantial evidence supports the court’s finding that Murch and Donovan breached this duty. As fiduciaries, Murch and Donovan were bound not to approve a transaction in which they had a material financial interest unless that transaction was “fair and reasonable”—meaning the transaction was entered in “`good faith'” and was “`inherent[ly] fair[] from the viewpoint of the corporation and those interested therein.'” (See Tenzer, supra, 39 Cal.3d at pp. 31-32; see also id. at p. 32 [discussing “the standards of fairness and good faith required of a fiduciary” in cases involving potential self-dealing]; Jones, supra, 1 Cal.3d at pp. 110, 112 [majority shareholders owe a fiduciary duty of “good faith and inherent fairness to the minority in 959*959 any transaction where control of the corporation is material”; this “comprehensive rule of `inherent fairness'” also applies to directors who engage in transactions that conflict with their duty to shareholders]; see Heckmann, supra, 168 Cal.App.3d at pp. 127-128.)

But they failed to meet this standard. Even if the directors required the Patio owners to pay a greater share of the security-services fees and legal fees in good faith—which is debatable (see fn. 4, ante)—it could not be said that their doing so in violation of the CC&Rs was fair from the viewpoint of the Patio owners. Nor do we find Murch’s disclosure of the Association’s privileged communications was fair from the Patio owners’ perspective. Finally, substantial evidence supports the court’s finding that Coley and similarly situated Patio owners suffered damages as a result of these breaches—though, as discussed ante in the unpublished portion, some of the awarded damages must be adjusted downward.

Although the trial court found the directors breached their fiduciary duties, it declined to find them personally liable, reasoning in a prejudgment order that something more is required before the directors may be found personally liable for their misconduct. In the court’s view, Coley needed to show, in addition to the directors’ breach of their fiduciary duties, that they acted in self-interest, benefited from their breach of fiduciary duty, and mismanaged the Association.

This was error. Once Coley established the existence of a fiduciary relationship, breach of fiduciary duty, and damages, he was entitled to damages absent some applicable affirmative defense. (See Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395-397 [178 Cal.Rptr.3d 604] [“`Where a breach of fiduciary duty occurs, a variety of equitable [and legal] remedies are available'”]; see also Oasis West Realty, supra, 51 Cal.4th at p. 820 [“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages”]; Frances T., supra, 42 Cal.3d at pp. 503-504 [corporate directors and officers may be liable for corporate wrongs when they “`authorize[], direct[], or in some meaningful sense actively participate[] in the wrongful conduct'”].) As we have explained, although the common law business judgment rule may generally provide a director with immunity for decisions made in good faith, such immunity does not apply when, as here, the director is acting under a material conflict of interest.

In demanding more from Coley before awarding damages, the court asked for too much. The court first faulted Coley for failing to show the “conduct by the majority directors was motivated by specific self-interest.” But even if the directors were not “motivated by specific self-interest,” and even if they 960*960 acted in good faith, that would not be reason enough to avoid liability. Again, considering the directors’ material conflict of interest in the transactions they approved, they were required “`not only to prove the good faith of the transaction but also to show its inherent fairness from the viewpoint of the corporation and those interested therein.’ [Citation.]” (Tenzer, supra, 39 Cal.3d at p. 32.) And for reasons already discussed, the directors could not show their challenged actions were fair to Coley and other Patio owners.

The court next took issue with Coley’s failure to show “the individual directors benefitted from their breach of fiduciary duty.” But a director may still be liable for damages resulting from his or her breach of fiduciary duties, even if the director did not personally benefit from that breach. (See St. James Armenian Church of Los Angeles v. Kurkjian (1975) 47 Cal.App.3d 547, 553 [121 Cal.Rptr. 214] [“where a fiduciary, in breach of his duty of disclosure, causes secret profits to flow to a third party, the fiduciary may be held liable for those profits even though he did not personally receive any part of them”].) To find otherwise would absolve directors of liability when they abuse their positions to benefit, for example, friends and family. It would also inappropriately immunize directors who abuse their positions to benefit themselves but fail to succeed for reasons outside their control.

Finally, the court faulted Coley for failing to show “that the actions of the directors amounted to mismanagement of the [Association].” But the directors’ failure to comply with the Association’s CC&Rs was mismanagement—at least to the extent of this failure. It may not have been pervasive mismanagement. It may not have been egregious mismanagement. But an unlawful failure to abide by an association’s governing documents is mismanagement to some degree nonetheless.

We find, in sum, the trial court should have found both Murch and Donovan personally liable for any damages resulting from their breaches of their fiduciary duties. We remand to allow the court to determine the amount of these damages consistent with the unpublished potion of our opinion. We also remand to allow the court to determine the directors’ liability, if any, for Coley’s attorney fees.

B., C.[*]

……………………………………………………………………..

DISPOSITION

The judgment is reversed in part and affirmed in part. We direct the trial court to enter a modified judgment finding Murch and Donovan liable in their 961*961 personal capacities for their respective breaches of their fiduciary duties. We also remand to allow the court to recalculate the damages award consistent with the unpublished portion of our opinion; to consider whether the awarded attorney fees should be reduced in light of the reduced damages; and to determine Murch’s and Donovan’s liability for damages and their liability, if any, for Coley’s attorney fees. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

Mauro, J., and Renner, J., concurred.

[*] Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified for publication with the exception of parts IA., IC., ID., IE., IF., IIB., and IIC. of the Discussion.

[1] Coley and Lorini also originally named Mark T. Cullen and Trevor Hammond as additional defendants, but neither were listed in the plaintiffs’ final amended complaint.

[2] As the defendants note, the court’s reference to Eskaton Properties and Eskaton Village alone, and not also Eskaton, was an apparent oversight.

[*] See footnote, ante, page 943.

[3] The trial court derived the “just and reasonable” standard from Corporations Code section 7233. On the facts here, however, we believe it better to find these principles derive from the common law rather than section 7233. As discussed in part I.B.1. ante, section 7233 only applies to transactions between a corporation and its directors or a business in which its directors have a material financial interest. (Corp. Code, § 7233, subd. (a).) And the disputed transactions here do not fit within one of these categories. But even so, we still agree with the court’s finding that the director had the burden to show the transaction was just (or fair) and reasonable. (See Tenzer, supra, 39 Cal.3d at pp. 31-32 [discussing the common law “fair and reasonable” requirements].)

[4] Although the defendants never contend the directors’ actions were inherently fair, they at least assert the directors acted in good faith. But even there, we question whether their showing could be found sufficient. To demonstrate good faith, the defendants rely principally on two points. First, they contend the Department of Real Estate’s approval of the creation of the Association (including its management structure) “demonstrates the requisite element of good faith.” But that the department initially approved the creation of the Association does not show the Association’s directors later governed the Association in good faith. Second, the defendants contend the trial court itself found their appointed directors “did nothing worse than make honest mistakes.” But the court only found that Coley failed to show these directors were “motivated by specific self-interest.” It never made an affirmative finding that the directors in fact acted in good faith.

[*] See footnote, ante, page 943.

[*] See footnote, ante, page 943.

 

Hill v. River Run Homeowners Ass’n

BRIAN HILL, ANNE HILL, and INTERMOUNTAIN FAIR HOUSING COUNCIL, INC., Plaintiffs,
v.
RIVER RUN HOMEOWNERS ASSOCIATION, INC., Defendant.

Case No. 1:18-cv-00281-CWD.
United States District Court, D. Idaho.
February 7, 2020.

Summary by Dea C. Franck, Esq.:

An association’s rules giving adults preferential use of certain common area amenities violated the Fair Housing Act being facially discriminatory based on familial status.  Additionally, a reasonable jury could infer that the association’s denial of an owner’s architectural application to enclose their backyard with a fence for the safety of their young children while approving other owners’ backyard fencing enclosures for other purposes was likely violated the Fair Housing Act.

**END SUMMARY**

Brian Hill, Plaintiff, represented by Brian A. Ertz, Christopher Brancart, Brancart & Brancart, pro hac vice, Liza Cristol-Deman, Brancart & Brancart & Eileen R. Johnson, Ertz Johnson LLP.

Anne Hill, Plaintiff, represented by Brian A. Ertz, Christopher Brancart, Brancart & Brancart, pro hac vice, Liza Cristol-Deman, Brancart & Brancart, Michael Thomas Witry, Office of the Attorney General Department of Insurance & Eileen R. Johnson, Ertz Johnson LLP.

Intermountain Fair Housing Council, Plaintiff, represented by Brian A. Ertz, Christopher Brancart, Brancart & Brancart, pro hac vice, Michael Thomas Witry, Office of the Attorney General Department of Insurance, Monica R. Fabbi, Intermountain Fair Housing Council & Eileen R. Johnson, Ertz Johnson LLP.

River Run Homeowners Association, Inc., Defendant, represented by Terrence Scott Jones, Quane Jones McColl, PLLC.

MEMORANDUM DECISION AND ORDER RE: DKT. 39, 42, 50, and 53

CANDY W. DALE, Magistrate Judge.

INTRODUCTION

Plaintiffs Brian and Anne Hill, and the Intermountain Fair Housing Council,[1] allege that Defendant River Run Homeowner’s Association, Inc., violated the Fair Housing Act’s prohibition against discrimination on the basis of familial status. The Hills claim River Run’s common area signs and other printed material setting forth the rules for use of the neighborhood pool, tennis courts, and clubhouse, as well as River Run’s denial of the Hills’ application for permission to build a fence, violated 42 U.S.C. §§ 3604(a), (b), (c), and 42 U.S.C. § 3617 of the Fair Housing Act.

Pending before the Court are the parties’ motions for summary judgment, and River Run’s related motions to strike the affidavit of Brian Hill submitted in support of the Hills’ motion, and Brian Hill’s declaration submitted in opposition to River Run’s motion. The Hills’ motion seeks partial summary judgment limited to the issue of liability with regard to the claims asserted under Sections 3604(b) and (c) concerning the River Run signs and printed materials. River Run’s motion seeks summary judgment as to all causes of action asserted under the FHA by the Hills and IFHC.

The Court conducted oral argument on the motions on December 10, 2019. After careful consideration of the parties’ arguments, the legal authorities cited, and a thorough review of the record, the Court will deny Defendant’s motion for summary judgment; grant Plaintiffs’ motion for partial summary judgment; and deny Defendant’s two motions to strike.

STANDARD OF REVIEW

1. Summary Judgment Standard

Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). This Court’s role at summary judgment is not “to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Zetwick v. Cty. of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (citation omitted). When parties submit cross-motions for summary judgment, “[e]ach motion must be considered on its own merits.” Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001).

2. Applicable Fair Housing Act Provisions

42 U.S.C. § 3604(a) provides that it is unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of . . . familial status. . . .”

42 U.S.C. § 3604(b) prohibits discrimination “against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of . . . familial status. . . .”

42 U.S.C. § 3604(c) provides that it is unlawful to “make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on . . . familial status, . . . or an intention to make any such preference, limitation, or discrimination.”

42 U.S.C. § 3617 provides that it “shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title.”

Regulations adopted by the United States Department of Housing and Urban Development (HUD) state that it is “unlawful, because of . . . familial status, . . . to impose different terms, conditions or privileges relating to the sale or rental of a dwelling or to deny or limit services or facilities in connection with the sale or rental of a dwelling.” 24 C.F.R. § 100.65(a). Prohibited actions include, but are not limited to, “[l]imiting the use of privileges, services or facilities associated with a dwelling because of . . . familial status, . . . of an owner, tenant or a person associated with him or her.” 24 C.F.R. § 100.65(b)(4).

“Familial status” is defined as “one or more individuals (who have not attained the age of 18 years) being domiciled with. . . a parent or another person having legal custody of such individual or individuals.” 42 U.S.C. § 3602(k)(1). Familial status discrimination thus entails “discrimination against families with children.” Fair Housing Congress v. Weber, 993 F.Supp. 1286, 1290 (C.D. Cal. 1997).

FACTS

In support of their motion for partial summary judgment, the Hills submitted a statement of undisputed facts which River Run did not contest with a separate statement of disputed facts. (Dkt. 42-2.)[2] An independent review of the record establishes the facts as set forth in Docket 42-2 in support of the Hills’ motion for summary judgment, and the Court therefore finds the facts undisputed.

In support of its motion, River Run submitted a statement of undisputed facts with numbered paragraphs 1 through 59. (Dkt. 39-2.) The Hills disputed certain statements confined to paragraphs 6, 10, 11, 21, 22, 23, 24, 26, 27, 34, 36, 37, 39, 40-41, 44, 48, 50, and 58 of River Run’s statement of facts. (Dkt. 46-1.) An independent review of the record establishes that the facts related to the Hills’ application to construct a fence are genuinely disputed.

River Run does not dispute that the Hills’ residence constitutes a “covered dwelling” as defined under the Fair Housing Act, or that the Hills meet the definition of familial status in 42 U.S.C. § 3602(k).

The facts material to the Court’s determination, and which the Court finds not subject to reasonable dispute, follow.

Intermountain Fair Housing Council (“IFHC”) is an Idaho nonprofit corporation operating in the state Idaho. IFHC’s stated mission is to advance equal access to housing for all persons and assist with housing complaints. River Run is now, and has been, an Idaho nonprofit corporation since 1980. The officers of River Run Homeowner’s Association, Inc. in late 2014 and early 2015 included Lloyd Cox, President; Dave Holm, Vice President; Norm Beckert, Treasurer; and Linda Strauss, Secretary. (Dkt. 40-6 at 2.) Tom Roush served as the Architectural Chair, and Danielle Drake was the Association Manager. Id.

The River Run subdivision (the “Subdivision”) includes 333 dwellings located within various phases of the Subdivision. The Subdivision is a planned community situated along the Boise River containing multiple creeks and water areas that adjoin the river. Amended CC&Rs were recorded on April 17, 1995. (Dkt. 39-2 at ¶ 3.)

Brian and Anne Hill purchased a residence (the Property) on White Pine Lane, located within the Subdivision, in April of 2013. (Dkt. 39-2 at ¶ 6.) At the time they purchased the Property, the Hills received a copy of the CC&Rs, the 2013 River Run Handbook, and the Architectural Committee Rules and Regulations governing the Subdivision. (Dkt. 39-2 at ¶ 15.) The Hills and their three children, ages 5, 3, and 1, resided on the Property from August of 2014 through March of 2015. (Dkt. 42-2 at ¶ 7.) The Property is a single-family residence located within Phase 2, the White Pine phase, of the Subdivision. The backyard of the Hills’ property abuts a small creek with a riparian area and a common area walking path which leads to the community pool.

The 2013 River Run Handbook included the following provisions related to the use of the Subdivision’s Recreation Center, which includes the clubhouse, pool, and tennis courts:

RECREATION CENTER

The Recreation Center includes the clubhouse, swimming pool, spa, deck, patio area, and tennis courts. Members are residents of River Run with the exception of The Island and Heron Cove (which have their own Phase recreation facilities).

An “Adult” is defined as an individual nineteen (19) years of age or older.

* * *

* The pool, pool deck and spa are closed Iron the weekend after Labor Day until the weekend before Memorial Day. Quiet swimming is required from 9 to 10 p.m.

CLUBHOUSE

During the summer season when the pool is open, the Recreation Center Manager will unlock the Clubhouse for ADULT USE ONLY. This service will be provided only during the time that the Recreation Center Manager is on the premises. The Clubhouse will remain locked at all other times, except when it has been reserved and checked out to a member.

* * *

Reservations may be made through the Association Manager during office hours stating the nature of the function and the number of guests expected. Members will be asked to complete a “Clubhouse Rental Agreement’ form. The maximum number of guests in the Clubhouse is twenty-five (25). The reservation does not extend to the patio area. swimming pool, spa or tennis courts. A limit of six guests (6) per household at the pool also applies to guests at private parties using the Clubhouse,

SWIMMING POOL and SPA

No member or guest under the age of 14 may use the pool or spa unless accompanied by an adult (19 or older) member or adult guardian authorized by an adult member.

Guests are limited to six (6) per `household. Residents 14 through 18 years of age are limited to one guest per person notwithstanding the household limit, Guests must be accompaniec by a member.

* * * *

The Recreation Manager is on duty at times as determined by the Board of Directors. The Recreation Manager has the authority to enforce compliance with regulations and to require members and guests violating rules to leave the premises. The Board will support the good judgment of our Recreation Manager in arriving at the best solution to any problem which may arise.

Decl. of Ertz Ex. 4. (Dkt. 42-3 at 36-37.)

In August of 2014 and for the remainder of the Hills’ residency in the Subdivision, signs were posted on the tennis court gate and on the recreation center clubhouse wall, near the pool. (Dkt. 42-2 ¶ 31, 34.) The sign on the tennis court gate was visible to any resident or guest near the tennis court entrance. Id. ¶ 32. The tennis court gate sign stated: “Adults have court privileges over children after 3:00 p.m. weekdays and any time on weekends or holidays.” Id. ¶ 33. The sign on the recreation center clubhouse wall read: “Quiet Swimming Only in Pool & Jacuzzi.” Id. ¶ 34. The pool sign was visible to residents and guests outside of the pool area, and was visible from the backyard of the Hills’ property. Id. ¶¶ 35-36.

Brian Hill noticed the sign posted on the fence outside the tennis courts giving preference to adults after 3:00 p.m. He noticed also the pool sign admonishing “quiet swimming only.” Mr. Hill took photographs of the tennis court and pool signs on January 22, 2015. Aff. of Hill ¶¶ 8-9, Exs. A, B. (Dkt. 42-4 at 3.) Mr. Hill claims the signs were visible to him and his family, guests, and other residents, and seeing the signs “made us feel like our family would have to be especially careful using the common areas and facilities of the homeowners’ association. It felt like we would have to tip toe around with our children since the needs of adults have preference. Seeing these rules contributed to my feeling that my kids and our family were unwelcome in the community.” Aff. of Hill ¶ 13. Neither Brian nor Anne Hill recall an instance, however, when they could not use the pool with their children, and they do not recall using the tennis courts, or an instance when their children may have used the tennis courts. (See Dkt. 50-1 at 9.)

River Run adopted, posted, and had the power to rescind or alter the rules governing the use of the Recreation Center.

After moving into the Property, Brian Hill applied on October 19, 2014, to construct a fence to enclose their back yard. (Dkt. 40-4 at 2.) The River Run Architectural Committee Rules, effective January 2014 applicable to fencing, stated that the design of the Subdivision was intended to “minimize the need for fencing, especially perimeter fencing.” However, the rules allowed perimeter fencing “under special circumstances and only according to approved plans and specifications approved by the Architectural Committee.” The stated goal of the fencing rules was to “achieve the appearance of a grouping of homes that have been placed in a park-like setting. To achieve this effect, it is necessary that the lawn area of one neighbor run into the lawn area of another without property boundaries being defined by fencing or landscaping.”

The rules allowed four types of fences:

(1) the privacy fence/screen, (2) the enclosing fence which, under very special circumstances, may be allowed for the safety of children, and (3) the sound abatement fence which shall be approved for the homes immediately abutting Park Center Blvd, specifically lots 13-17 of Block 3, and lots 5,6,7,8 of Block 1, Phase 1A; and 4) only for houses where the back yard is along Loggers Creek, short wire fences may be installed if approved by the Architectural Committee. Fences must be constructed and installed in accordance with para 3.12.2.

Architectural Rules § 3.12 Fencing. (Dkt. 49-2 at 41.)[3]

With regard to enclosing fences, the Architectural Rules specified that the fence “must be of open construction with at least 6 inches between solid elements which themselves may not be more than 4 inches wide (a ratio of 1/3 solid to 2/3 open construction must always be maintained). This fence may not exceed four feet in height, may not enclose more than forty percent (40%) of the rear yard area and may not be situated on a property line, except in limited areas.” (Dkt. 49-2 at 41-42.)

The Rules required submission of an application form, two neighbor notification forms, a description of the height, location, color and design of the fence, a site plan, a sample of the proposed building materials, a paint or stain chip, and any other information requested. (Dkt. 40-3 at 12.) The Rules required also that enclosing fences be screened on the neighbor’s side of the fence with groupings of landscaping materials placed on the applicant’s property. (Dkt. 40-3 at 13.) And last, the Rules indicated that the homeowner could expect a determination by the committee within twenty calendar days after submission of the application. (Dkt. 40-3 at 7.)

The Hills’ application was submitted on the proper form, and contained a letter describing the proposed project; a photograph depicting the proposed height, color, design, and building materials; and a drawing depicting the location of the proposed fence. (Dkt. 49-5.) Brian Hill explained the purpose of the fence was for the safety of his young children, due to the waterway that bordered the rear yard of the Property. (Dkt. 49-1 at 37.) The minutes of the River Run HOA meeting conducted on October 20, 2014,[4] reflect that Tom Roush, Architectural Committee Chair, presented the Hills’ fence application. (Dkt. 40-6 at 3.) Another topic on the agenda was the consideration of amendments to Section 3.12 of the Architectural Rules governing fencing, during which River Run discussed the “type, color and plantings around the Enclosing Fences.” (Dkt. 40-6 at 4.)

Emails prior to the October 20 meeting indicated that the proposed fence rule changes under consideration would “specifically prohibit wrought iron as a fencing material. The same effect and containment can be achieved with wood.” (Dkt. 49-1.) Another email to the members of the River Run Architectural Committee from Tom Roush indicated that Brian Hill’s proposal “complies with River Run Rules and Regs, except for some landscaping aspects. However by our Rules, the AC may decide whether to allow it, based on circumstances.” (Dkt. 49-1 at 3.)

Emails circulated among the Architectural Committee members and River Run board members after the October 20 meeting indicate that River Run considered rejecting the Hills’ application for noncompliance with planting regulations. (Dkt. 49-1 at 4, 5.) Tom Roush proposed, however, that the Architectural Committee treat the proposal the same as others, because the Committee has “NEVER required a homeowner to submit an acceptable project proposal before we review and vote on it. I see no reason to single him out by returning his `incomplete’ project proposal and making him change it in a way he and his neighbors don’t want.” (Dkt. 49-1 at 4.)

On October 23, 2014, Linda Strauss emailed members of the Architectural Committee indicating that the problem with the current fencing rules was the provision for the “enclosed Fence. . . .I would hate to see small fences popping up everywhere. . . . Enclosed Fences do not go along with the `park like setting’ that the homeowners of River Run bought into when they purchased their homes here. . . .Changing the rules and reg to comply to one family (or even more) does not do that. I understand the [] demographics of the neighborhood are changing, but what about those homeowners that bought into the idea of a `parklike setting’ a long time ago.” (Dkt. 49-1 at 13-14.)

Another email, drafted by Tom Roush on October 23, 2014, indicated there was “no Board intention or direction to change the rules about enclosing fences until Dave [Holm] decided he wanted to do it. . . .A decision [on the Hill Application] should NOT be based on rules adopted as a result of his project proposal.” (Dkt. 49-1 at 16.) On October 24, 2014, Linda Strauss wrote again to restate that, “as the demographics change, if this clause [regarding enclosing fences] is left in the rules and regs, I believe we will see many more requests for such fences, which will have a real impact on our `park-like setting’ and I believe will impact property values.” (Dkt. 49-1 at 22.)

An email dated October 28, 2014, authored by David Holm and addressed to Lloyd Cox, Danielle Drake, Norm Beckert, and Linda Strauss, indicated that he had “been trying to come up with a way to appeal a yes vote on Hill and the only way I can come up with is to personally appeal it based on the requirement that landscaping materials shall be part of the project . . . It is not a strong position . . . but unless the Executive Board would, as a group, appeal based on the timing of the application conflicting with a re-write . . . that might make a stronger case.” (Dkt. 49-1 at 29.) David Holm later wrote that it would be “much cleaner if Hill would see the handwriting on the wall and withdraw his proposal until the new language is adopted,” to eliminate enclosing fences. (Dkt. 49-1 at 30.)

On October 29, Tom Roush wrote to the members of the Architectural Committee that there were “fences ALL OVER the place on White Pine Lane,” complaining that the Architectural Committee had treated the Hills’ fence application “entirely differently than other homeowners’ applications.” (Dkt. 49-1 at 32.) Roush also noted that the Architectural Committee had approved “other such fences over the years; there are at least three [enclosing fences] in place now . . . to an outside observer there would seem to be fences of all kinds on White Pine Lane,” and that, all of a sudden, a rule that has been in place “for, what, twenty years? . . . without any objections or heartburn? And all of a sudden, now that Brian [Hill] has submitted his application, we eliminate that kind of fence?” (Dkt. 49-1 at 32-33; see also Dkt. 49-1 at 37, acknowledging original intent of the modifications to the fencing rules proposed in October 2014 was not to eliminate an option for an enclosing fence, but “as a result of” the Hills’ application, the Board was considering eliminating the option for the enclosing fence entirely.”).

The Architectural Committee met on November 6, 2014, in the Hills’ back yard to vote on the fence application. (Dkt. 49-2 at 1.) The application was denied with a vote of 6 to 1. (Dkt. 49-2 at 1.) The Committee did not give the Hills “specific direction” with regard to what it might approve. (Dkt. 49-2 at 2, 9.) Tom Roush thereafter resigned as the Chair of the Architectural Committee. (Dkt. 49-2 at 21.) Roush expressed his opinion that the re-write of the rules eliminated the “long-standing fence rules (since 1988 . . . ) so that neither Brian [Hill] nor anyone else with children would ever be able to build a fence for their children’s safety. This is despite the fact that such fences had been permitted over the years for other residents. . . .” (email, Feb. 11, 2015, Dkt. 49-2 at 21.)

On November 17, 2014, the Hills resubmitted their fence application with the original submissions; a color swatch; a second letter and two letters from the adjacent neighbors, both of whom supported the application, with one expressly requesting that the fence remain open and without landscaping; and proposed the following changes: the installation of bushes along the waterway near the pool (the back of the fence); and reduction of the depth of the fence by five feet. (Dkt. 49-6.)

On November 17, 2014, River Run adopted new Fence Rules and Regulations, eliminating the enclosing fence as an option but leaving in the Privacy Screen option. (Dkt. 49-2 at 8; 49-3 at 32.) The Architectural Committee discussion, as recorded in the minutes, indicated that the “fencing requirements have not kept up with the change in our demographics.” (Dkt. 49-3 at 36.)

David Holm on November 19 proposed that the Executive Board reject the Hills second application, because the Architectural Committee had “no interest in discussing a modification to allow a play area. . . .” (Dkt. 49-2 at 3.) The Executive Board elected to treat the Hills’ second application as an “Appeal to proceed with the original plan with minor modifications,” and it notified Brian Hill that the appeal would be brought before the River Run Homeowner’s Association Board for further discussion and a vote. (49-2 at 3-4.) On November 25, 2014, Lloyd Cox informed Brian Hill that his second application would be considered an appeal under the prior fencing rules, or he could “submit a new application under the new rules that reflects the revised Privacy Screen definition and allowed characteristics.” (Dkt. 49-2 at 8.) Brian Hill objected to the characterization of his second application as an appeal, and requested a vote on the second application by the Architectural Committee under the prior enclosing fence guidelines. (Dkt. 49-2 at 9; see also Dkt. 49-2 at 10, “We [the Committee] told him we would review his request under the old rules, but that is about to change . . . Maybe if he would get real and submit something that the AC could/would approve we could move on.”).

The Hills’ attorney on December 19, 2014, notified River Run it was in violation of its CC&Rs by failing to vote on the second application within twenty days; therefore, the second application was deemed approved, and the Hills would be proceeding with construction of the fence. (Dkt. 40-13.)

On January 6, 2015, Lloyd Cox wrote to Brian Hill notifying him there was “no willingness to consider an alternate enclosing fence,” and inviting him to appeal the AC denial of his original application at the January 19, 2015 Board meeting. (Dkt. 49-19 at 1.) Mr. Cox stated also that, “Speaking for the Executive Committee and knowing the attitude of the Board Members, I can assure you RRHOA will litigate the matter should you choose to construct the fence. . . .” (Dkt. 49-19 at 2.)

River Run’s Board of Directors met on January 19, 2015, to consider Brian Hill’s appeal of his fence application. (Dkt. 49-4 at 1.) Brian Hill did not attend the meeting. Id. River Run did not vote on the appeal. Rather, a motion was made and seconded to “engage Givens Pursley to review our documentation. . . .” (Dkt. 49-4 at 3.)

River Run produced a photograph during discovery depicting a wrought iron enclosing fence similar to that proposed by the Hills. (Dkt. 49-7.)[5] An application to construct a fence along Loggers Creek to prevent geese from coming into the yard resulted in a re-write of the rules, which were approved January of 2014, to allow wire fences for all residents along Loggers Creek. (Dkt. 49-2 at 19, 22; 49-2 at 33; 49-3 at 24.) Mike M. submitted a proposal to the Architectural Committee on or about August of 2014, to enclose his back yard by connecting a rear fence to the two existing side fences, which proposal was approved on August 18, 2014. (Dkt. 49-3 at 2.) Brian Hill’s affidavit submitted in opposition to River Run’s motion included fifty-two photographs of fences in the White Pine phase and other phases in the Subdivision. (Dkt. 48-2.) Lloyd Cox recalled one other instance where the AC Committee approved an enclosing fence for a special needs child prior to the adoption of the new rules eliminating enclosing fences. (Dkt. 49-20 at 11.)

After the change to the Architectural Committee Rules in November of 2014 to eliminate enclosing fences, the Architectural Committee, on June 15, 2015, indicated that a fence application submitted by Marv and Frances W. seeking to build a fence at the back of their property connecting two existing side fences would be “approved,” even though the rules “regarding fences does [sic] not allow for this type of fence.” (Dkt. 49-2 at 27.) In or about September of 2017, the Architectural Committee allowed an enclosing fence for 1981 Springbrook Lane projecting into a rear yard for the safety of a “special needs” individual, who was 22 years old and came home on the weekends. (Dkt. 49-20 at 11; 49-9 at 10.) The purpose of the fence was to “ensure his safety.” (Dkt. 49-9 at 10.)

In November of 2014, the Hills engaged IFHC to assist them. Aff. of Olsen ¶6. (Dkt. 42-5 at 2.) On May 27, 2015, the Hills, on behalf of themselves and their three minor children, filed an administrative complaint with HUD alleging River Run violated 42 U.S.C. §§ 3604(a), (b), and (c). IFHC acted as the Hills’ representative before HUD, and for the duration of the HUD investigation of the Hills’ administrative complaint. IFHC worked also to remedy familial status discrimination occurring at the Subdivision. Id.

The HUD complaint filed on May 27, 2015, alleged that River Run issued discriminatory statements and had adopted discriminatory terms and conditions based upon familial status. (Dkt. 51-4 at 1.) The HUD complaint included an allegation that “River Run also has overly restrictive rules on children. At the tennis courts, it is posted that adults have preference over children after 3:00 p.m. on weekdays, and at all times on weekends and holidays.” (Dkt. 51-4 at 4.) The complaint alleged also that the Hills were not allowed to construct a fence due to discrimination based on familial status.

The HUD complaint was amended on July 15, 2015. (Dkt. 51-5.) The amended HUD complaint alleged that River Run had “overly restrictive rules on children. On or about August 5, 2014, Complainants noticed at the tennis courts, it is posted that adults have preference over children after 3:00 p.m. on weekdays and at all times on weekends and holidays. A posting at the pool says, `Quiet swimming only in pool and Jacuzzi.'” (Dkt. 51-5 at 2.) The allegations included also the Hills’ assertion that River Run denied their application to construct a fence based upon their belief that they were subject to discrimination based upon familial status. (Dkt. 51-5 at 2.)

River Run removed and replaced the tennis court and pool signs in February of 2015. In March of 2015, River Run voted to revise the 2013 River Run Handbook and Pool Rules. Aff. of Jones ¶ 2, Ex. A. (Dkt. 51-1.) The River Run Handbook was amended and published in or about July of 2015, eliminating the restrictions placed upon children’s use of the Recreation Center. Aff. of Jones ¶ 3 Ex. B. (Dkt. 51-1.)

The Hills timely filed this lawsuit.

ANALYSIS

1. The Hills’ Motion for Partial Summary Judgment and River Run’s Related Motion to Strike

A. River Run’s Motion to Strike — Docket 50

In support of their motion for partial summary judgment, the Hills submitted the Affidavit of Brian Hill. (Dkt. 42-4.) The affidavit describes the tennis court, pool, and clubhouse signs, and attaches two photographs of the tennis court and pool signs that Brian Hill took on January 22, 2015. He explains the rules contributed to his feeling that his children and his family were unwelcome in the community. River Run requests the Court enter an order striking the affidavit entirely, and deny Plaintiffs’ motion for partial summary judgment as a discovery sanction, on the grounds that: (1) the Hills failed to disclose the photographs during discovery; and, (2) Brian Hill’s prior deposition testimony contradicts his affidavit.

River Run claims Plaintiffs’ motion for partial summary judgment should be denied pursuant to Fed. R. Civ. P. 37(c)(1) as a discovery sanction, because the Hills failed to disclose or produce the two photographs during discovery. River Run relies also upon Fed. R. Civ. P. 56(c)(2), which allows objections to material cited to support or dispute a fact if it cannot be presented in a form that would be admissible in evidence. The Court finds River Run’s arguments lack merit. First, River Run does not dispute the language or existence of the tennis court and pool signs, as depicted in the photographs. Both the initial and amended HUD complaint contained allegations regarding the signs. The Complaint filed in this matter quoted the signs’ language. And, River Run admitted removing the signs in February of 2015. The Court finds the failure to disclose the photographs harmless pursuant to Fed. R. Civ. P. 37(c)(1).

Next, River Run argues summary judgment should be denied as a sanction because the Hills’ deposition testimony regarding emotional distress damages contradicts Mr. Hill’s affidavit, and the Hills did not disclose information supporting their claim for emotional distress damages during discovery. River Run argues it is prejudiced, because it was not aware of the Hills’ claim for emotional distress damages and therefore did not inquire about the same during discovery. The Court finds River Run misunderstands the Hills’ claim and misrepresents the evidence in the record regarding the Hills’ claims for emotional distress.

The Complaint alleges the rules and signs published by River Run are facially discriminatory. When a claim involves facial discrimination under the Fair Housing Act, injury is presumed once a violation is established. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 827 (9th Cir. 2001) (“Where a defendant has violated a civil rights statute, we will presume that the plaintiff has suffered irreparable injury from the fact of the defendant’s violation.”). Even if some showing was required, it is not onerous. Such injury may include humiliation, embarrassment, and emotional distress. Green v. Rancho Santa Margarita Mortgage Co., 28 Cal.App.4th 686, 699, 33 Cal.Rptr.2d 706 (1994). It could also include “inconvenience” and “loss of enjoyment of life.” U.S. v. Burke, 504 U.S. 229, 241 (1992).

River Run relies upon deposition testimony wherein Brian Hill and Anne Hill were asked about their pool and tennis court use. River Run asserts the Hills did not suffer damages, because they testified that they were not prevented from using the pool with their children, and they did not recall using the tennis courts, while they resided in the Subdivision. However, that testimony does not preclude damages for the injury presumed under Silver Sage Partners when facial discrimination is claimed, as it is here.

The record also reflects that River Run had prior knowledge of the nature of the Hills’ emotional distress damages. The HUD report of investigation reflects the Hills referenced feeling uncomfortable and unwanted in the neighborhood, especially when at the pool with their children. (Dkt. 57-1 at 14.) Brian Hill asserts the same in his affidavit. (Dkt. 42-2 at 4 ¶ 13.) The Complaint in this matter sets forth a claim for emotional distress damages, and the Hills’ initial disclosures indicate they are seeking emotional distress damages. (Dkt. 50-3 at 3.) Thus, Brian Hill’s affidavit is not the first time River Run was on notice of the Hill’s claim for emotional distress damages related to the signs at the pool and tennis courts.

Despite prior knowledge of the Hills’ claim for emotional distress, the record reflects River Run did not ask either Brian Hill or Anne Hill during their depositions about their emotional distress upon viewing the signs at the pool or tennis courts, or upon reading the Recreation Center rules in the 2013 River Run Handbook. Instead, the questions posed during the Hills’ depositions focused solely upon whether the Hills and their children were ever denied access to the tennis court, pool, and clubhouse. However, as explained above, proof of denial of access is not required in connection with a claim of facial discrimination.

The Court will deny the Motion to Strike.

B. The Hills’ Motion for Partial Summary Judgment — Docket 42

The Hills move for partial summary judgment with respect to liability on their FHA claims asserted under 42 U.S.C. § 3604(b) and (c) related to the signs and printed materials governing the use of the Recreation Center.[6] The Hills assert the tennis court signs and clubhouse rules targeting children and families with children were facially discriminatory.[7]

River Run argues The Hills have not set forth sufficient admissible evidence to support their motion for summary judgment. River Run contends: (1) The Hills lack standing;[8] (2) the rules were not discriminatory and were implemented for a legitimate business purpose; (3) Section 3604(c) does not apply because the publication of the rules did not relate to the rental or sale of a dwelling; and (4) even if the rules were discriminatory, such does not equate to a finding of liability under the FHA or entitle the Hills to recover damages.

(1) Standing Under the Fair Housing Act

(a) Brian and Anne Hill

Contrary to River Run’s argument, the Hills have standing. The United States Supreme Court has long held that claims brought under the FHA are to be judged under a very liberal standing requirement. The sole requirement for standing under the FHA is the “Article III minima of injury in fact.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 372 (1982). To meet this requirement, a plaintiff need only allege “that as a result of the defendant’s [discriminatory conduct] he has suffered a distinct and palpable injury.” Id.

Under the FHA, any person harmed by discrimination, whether or not the target of the discrimination, can sue to recover for his or her own injury. Harris v. Itzhaki, 183 F.3d 1043, 1050 (9th Cir. 1999) (citing Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 212 (1972)). “This is true, for example, even where no housing has actually been denied to persons protected under the Act.” San Pedro Hotel, Inc. v. City of Los Angeles, 159 F.3d 470, 475-76 (9th Cir. 1998) (upholding standing of hotel owners in suit alleging that the City interfered with the housing rights of the mentally ill); Smith v. Stechel, 510 F.2d 1162, 1164 (9th Cir. 1975) (real estate agent fired for renting apartments to minorities allowed to sue under the Act)).

River Run argues that the Hills allege a “stigmatic injury,” and must therefore show discriminatory treatment together with substantial emotional injury. River Run argues the Hills have not met their burden upon summary judgment to establish an actionable injury sufficient to confer standing, because the Hills and their children were never denied access to the Recreation Center, and suffered mere discomfort. River Run, however, conflates the Hills’ claims. As discussed above, injury is presumed once a violation is established. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 827 (9th Cir. 2001) (“Where a defendant has violated a civil rights statute, we will presume that the plaintiff has suffered irreparable injury from the fact of the defendant’s violation.”). Even if some showing is required, it is not onerous. Such injury may include humiliation, embarrassment, and emotional distress. Iniestra v. Cliff Warren Investments, Inc., 886 F. Supp. 2d 1161, 1167 (C.D. Cal. 2012). It could also include “inconvenience” and “loss of enjoyment of life.” U.S. v. Burke, 504 U.S. 229, 241 (1992). Here, the Hills have produced evidence establishing emotional distress injury sufficient to meet their prima facie burden. Mr. Hill set forth in his declaration that he and his family experienced emotional distress upon viewing the signs and printed materials. Therefore, the Hills have adequately met their burden to establish they are “aggrieved persons” entitled to maintain an action under the FHA. Whether the Hills’ injury is ultimately an appropriate basis for anything more than a nominal damages award by the jury is not an issue currently before the Court. See, e.g., Blomgren v. Ogle, 850 F.Supp. 1427, 1440-41 (E.D. Wash. 1993) (granting partial summary judgment on section 3604(c) claim, but noting damages must be proven at trial).

(b) The IFHC

River Run also argues IFHC suffered no damages, because the tennis court sign was removed, and the Recreation Center rules changed, prior to IFHC becoming actively involved in the case. However, the record reflects that IFHC assisted the Hills beginning in or about November of 2014, and investigated, educated, pursued outreach regarding familial status discrimination, filed the complaint with HUD in May of 2015 on behalf of the Hills, provided legal resources and assistance to the Hills, and worked to remedy familial status discrimination occurring at River Run. (Aff. of Olsen, Dkt. 42-5 at 3.) The May 2015 HUD complaint, expressly mentioned the overly restrictive rules, and quoted the tennis court sign as an example. The July 2015 amended HUD complaint included also a quote of the rule requiring quiet swimming.

Diverted staff time of an organizational plaintiff such as the IFHC has been recognized as a compensable injury. Pac. Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142, 1166 (9th Cir. 2013) (citing Walker v. City of Lakewood, 272 F.3d 1114, 1124-25 (9th Cir. 2001); Convoy Co. v. Sperry Rand Corp., 672 F.2d 781, 785-86 (9th Cir. 1982); and cf. Fair Housing of Marin v. Combs, 285 F.3d 899, 903-04 (9th Cir. 2002) (holding that an organizational plaintiff suffered injury sufficient to confer Article III standing where it diverted staff resources to combating FHA violations)). River Run did not remove the tennis court (and pool) sign until February of 2015, after IFHC had begun assisting the Hills. And it was not until March of 2015 that River Run voted to revise its 2013 River Run Handbook and Pool Rules. The final published handbook eliminating the restrictions placed upon children’s use of the Recreation Center was not printed and published until July of 2015. Based upon the evidence in the record, the Court finds IFHC has adequately substantiated its allegations that it suffered an actual and palpable injury to confer standing to bring this action.

(2) The Hills’ Section 3604(b) Claim

The Hills argue that the tennis court sign, adult only clubhouse rule, and pool guest rule are facially discriminatory and were not implemented for a legitimate business purpose.

Section 3604(b) of the FHA prohibits discrimination “against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of . . . familial status. . . .” A plaintiff may bring a Section 3604(b) claim by alleging disparate treatment or disparate impact. Budnick v. Town of Carefree, 518 F.3d 1109, 1114 (9th Cir. 2008). The Hills claim disparate treatment. A plaintiff may establish a prima facie violation of section 3604(b) by establishing the existence of “facially discriminatory rules which treat children, and thus, families with children, differently and less favorably than adults-only households.” U.S. v. Plaza Mobile Estates, 273 F.Supp.2d 1084, 1091 (C.D. Cal. 2003). Section 3604(b) reaches post-acquisition discrimination, because the inclusion of the word “privileges” in the statute implicates continuing rights, “such as the privilege of quiet enjoyment of the dwelling.” The Comm. Concerning Cmty. Improvement v. City of Modesto, 583 F.3d 690, 713 (9th Cir. 2009).[9]

The three-part test set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), is used to evaluate claims of discrimination brought under Section 3604(b) of the FHA. U.S. v. Badgett, 976 F.2d 1176, 1178 (8th Cir. 1992). The plaintiff must first prove a prima facie case of discrimination by a preponderance of the evidence. If the plaintiff sufficiently establishes a prima facie case, the burden shifts to the defendant to articulate some legitimate non-discriminatory reason for its action.

“Once a prima facie case is established, defendants must articulate a legitimate, non-discriminatory justification for the challenged policy.” Fair Hous. Council of Orange Cty., Inc. v. Ayres, 855 F. Supp. 315, 318 (C.D. Cal. 1994) (citing Badgett, 976 F.2d at 1178); see also Pfaff v. U.S. Dep’t of Hous. & Urban Dev., 88 F.3d 739 (9th Cir. 1996); Pack v. Fort Washington II, 689 F. Supp. 2d 1237, 1243 (E.D. Cal. 2009). “To accomplish this, the defendant is only required to set forth a legally sufficient explanation.” Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th Cir. 1999) (citing Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 255 (1981)).

If the defendant satisfies this burden, the plaintiff must prove by a preponderance of the evidence that the legitimate reasons asserted by the defendant are pretextual. Intermountain Fair Hous. Council v. Orchards at Fairview Condo. Ass’n, Inc., No. 1:09-CV-522-CWD, 2011 WL 162401, at *9 (D. Idaho Jan. 18, 2011) (citing Pollitt v. Bramel, 669 F.Supp. 172, 175 (S.D. Ohio 1987)).

a) Tennis Court Sign

The tennis court sign stated: “Adults have court privileges over children after 3:00 p.m. weekdays and any time on weekends or holidays.” The uncontroverted facts establish that the sign was visible to any resident or guest, including the Hills, and adorned the gate to the tennis courts at all times the Hills resided at the Property. The rule on its face describes a preference given to adults. At the hearing, River Run conceded the rule stated a clear preference for adults and could not articulate, or point to evidence in the record of, a legitimate, non-discriminatory reason for implementation of the rule.[10]

b) Clubhouse Rule

The River Run Handbook provided that the clubhouse was reserved for “ADULT USE ONLY” during the summer months, while the pool was open. The clubhouse’s use was for “private parties,” which included parties such as birthday parties, and meetings or gatherings. The rule on its face constitutes an outright prohibition on children’s use of common area facilities. See Fair Housing Congress v. Weber, 993 F.Supp. 1286, 1292-1293 (C.D. Cal. 1997) (“outright prohibitions on children’s use of facilities like a billiards room and shuffleboard facility were not justified, and that rules requiring adult supervision of all children (up to age 18) at all times were not justified.”). Consistent with the authorities discussed in Orchards at Fairview Condo. Ass’n, Inc., 2011 WL 162401 at *10, the Court finds rule is facially discriminatory because it is expressly premised upon familial status, and imposes different terms upon, and limits services to, families with children.

River Run argues that the clubhouse has no amenities, but is simply a small room used for meetings, implying it was not attractive for use by children. (Dkt. 51-6 at 2.) And, River Run indicated that, “out of concerns for damage and vandalism,” River Run required an adult to reserve the room. Id. Ms. Drake, the Association Manager, also stated that no one ever actually excluded children from the clubhouse, and the rule was simply meant to require adult supervision.

Similar arguments used to justify “adults only” rules, or “adult supervision” rules, have been found by other courts to be illegitimate justifications for such rules. For instance, in Plaza Mobile Estates, the court granted partial summary judgment for the plaintiffs because a rule prohibiting children walking around the mobile home park without adult supervision was an overbroad attempt to ensure the safety of children. United States v. Plaza Mobile Estates, 273 F.Supp.2d 1084, 1091 (C.D. Cal. 2003). In Fair Housing Congress, the court granted partial summary judgment for plaintiff because an apartment rule which stated that, “[c]hildren will not be allowed to play or run around inside the building area at any time because of disturbance to other tenants or damage to building property” was overbroad. Fair Housing Congress v. Weber, 993 F.Supp. 1286, 1289 (C.D. Cal. 1997); see also Pack v. Fort Washington II, 689 F. Supp. 2d 1237, 1244 (E.D. Cal. 2009) (granting partial summary judgment for plaintiff because rule requiring children “10 and under to be supervised by an adult” violated § 3604(b)); Llanos v. Estate of Coehlo, 24 F.Supp.2d 1052, 1061-1062 (E.D. Cal. 1998) (defendant’s rule restricting children under 18 from using adult pools was “overly broad, `paternalistic’ and unduly restrictive”); Landesman v. Keys Condo. Owners Ass’n, 2004 WL 2370638, at *4 (N.D. Cal. 2004) (“The desire for peace and quiet—while a worthy goal—is not a valid justification for denying access to common facilities on the basis of familial status”); Iniestra v. Cliff Warren Investments, Inc., 886 F. Supp. 2d 1161, 1168 (C.D. Cal. 2012) (finding safety and noise justifications uncompelling justifications for rule prohibiting use of pool by children without an adult).

Here, the rule on its face does not purport to allow use of the clubhouse by children, even with an adult. The rule expressly states the clubhouse is for adult use only. Thus, River Run’s ad hoc justification, that it was meant to require a reservation by an adult, is belied by the express language of the rule itself. And, to state that a meeting room is simply “not attractive” for children’s use is a nonstarter to justify a ban on its use by children. Children could presumably use the table to eat lunch, play cards, play board games, take a break from the sun, read a book, or any number of other activities while using the pool. The Court therefore finds River Run’s justification for the adults only clubhouse rule to be meritless.

c) Pool Guest Rule

The handbook expressly stated that, while adults were permitted to have up to six guests per household, “residents 14 through 18 years of age” were limited to one guest per person “notwithstanding the household limit.” The rule unambiguously targets children of a certain age group and treats families with children differently than other households. It is therefore facially discriminatory under the authorities discussed above.

River Run argues its pool guest rule applicable to children ages fourteen to eighteen was meant to address concerns of overcrowding, “vandalism, drug use, sexual assault, etc.” (Dkt. 51 at 17.) For instance, Ms. Drake stated in her affidavit that the purpose of the rule was to set a limit on the number of guests unsupervised teens could have at the pool, “out of concern that this area would be taken over by one or two young residents and their non-resident friends___and thus be unavailable for other members.” (Dkt. 51-6 at 2.) She stated also that the limit on unaccompanied non-resident teens served “to address concerns of damage and vandalism that may be caused by large groups of unsupervised teens.” Id.[11]

The Court finds, however, that River Run’s concerns are not tied to the proffered reasons. Adults can also overcrowd and vandalize the pool and surrounding area, yet adults were allowed up to six guests. River Run offers no justification why teenagers with six guests are more problematic than adults with six guests, who would also “take over” the pool to the exclusion of other residents by bringing more guests. Prohibiting certain children from bringing more than one guest to the pool while allowing adults to do so cannot be justified. See United States v. Plaza Mobile Estates, 273 F. Supp. 2d 1084, 1092 (C.D. Cal. 2003) (finding prohibition against all children from playing in common areas while allowing individuals eighteen and older to do so cannot be justified). And, the rule is not age-neutral.[12]

“The statute does not distinguish among any of the protected characteristics, in the sense of indicating that some are more worthy of protection than others. Thus, there is no exception to the scope of protection, such that discriminatory treatment based on familial status would be acceptable under the FHA if there is a showing that adult residents of a housing complex do not like sharing a swimming pool with children.” Landesman v. Keys Condo. Owners Ass’n, No. C 04-2685 PJH, 2004 WL 2370638, at *4 (N.D. Cal. Oct. 19, 2004), aff’d, 125 F. App’x 146 (9th Cir. 2005). The rule was expressly directed at children, specifically teenagers, and the Court finds River Run’s proffered purpose is not legitimate.

The Court therefore finds that River Run has not raised a genuine issue of material fact as to a legitimate, non-discriminatory reason for its tennis court, clubhouse, and pool guest rules. The Court therefore needs not address pretext.

(3) The Hills’ Claim Under 3604(c)

River Run argues the Hills cannot maintain a claim under Section 3604(c), because the Recreation Center rules and tennis court sign do not relate to the sale or rental of a dwelling. River Run asserts actionable publications are limited to those provided to the Hills prior to their purchase of the Property. River Run argues the Hills have not presented sufficient evidence to establish that the rules and signage related to the sale or rental of a dwelling, because the rules were provided to the Hills after they purchased the Property. See Morris v. W. Hayden Est. First Addition Homeowners Ass’n, Inc., No. 2:17-CV-00018-BLW, 2017 WL 3666286, at *3 (D. Idaho Aug. 24, 2017) (denying motion to dismiss and finding letter sent by HOA prior to plaintiffs’ purchase of home related to the sale or rental of a dwelling).

Section 3604(c) does not require discriminatory intent and is not analyzed under a burden-shifting paradigm. Rather, the inquiry under this section of the FHA is whether the statement at issue suggests a preference to an “ordinary reader or listener.” Fair Housing Congress v. Weber, 993 F.Supp. 1286, 1290 (C.D. Cal. 1997); Llanos v. Estate of Coehlo, 24 F.Supp.2d 1052, 1057 (E.D. Cal. 1998) (noting that the Ninth Circuit has not addressed the issue but adopting the “sound” reasoning of other circuits). Proof of discriminatory intent is not required. Llanos, 24 F.Supp.2d at 1056. Discriminatory preference, rather than an outright ban, is the basis for a Section 3604(c) violation. Weber, 993 F.Supp. at 1291; Pack v. Fort Washington II, 689 F. Supp. 2d 1237, 1245 (E.D. Cal. 2009). The Court finds the tennis court sign and Recreation Center rules meet this test.

HUD regulations make clear that Section 3604(c)’s prohibitions apply to “[w]ritten notices and statements includ[ing] any application, flyers, brochures, deeds, signs, banners, posters, billboards or any documents used with respect to the sale or rental of a dwelling.” 24 C.F.R. § 100.75(b). The prohibition applies “to all written or oral statements by a person engaged in the sale or rental of a dwelling.” 24 C.F.R. § 100.75(b). Discriminatory notices and statements “include, but are not limited to . . . [e]xpressing to agents, brokers, employees, prospective sellers or renters or any other persons a preference for or limitation on any purchaser or renter because of . . . familial status. . . .” 24 C.F.R. § 100.75(c)(2).[13]

While the majority of Section 3604(c) case law “involve[s] allegations of `steering’ protected individuals away from certain housing opportunities and/or obviously discriminatory statements made to prospective renters,” see Pack v. Fort Washington II, 689 F.Supp.2d 1237, 1245 (E.D. Cal. 2009), several courts have entertained Section 3604(c) claims based upon rules or restrictions published by entities such as homeowners’ associations. See Lath v. Oak Brook Condo. Owners’ Ass’n, No. 16-CV-463-LM, 2017 WL 1051001, at *8 (D.N.H. Mar. 20, 2017) (finding service dog policy actionable); Fair Housing Ctr. of the Greater Palm Beaches, Inc. v. Sonoma Bay Cmty. Homeowners Ass’n, Inc., 136 F. Supp. 3d 1364, 1368 (S.D. Fla. 2015) (condominium rules alleged to discriminate against children); Llanos v. Estate of Cohelo, 24 F. Supp. 2d 1052, 1060 (E.D. Cal. 1998) (apartment complex rules that discriminated against children).

The Hills have presented sufficient factual allegations in the record to survive summary judgment. River Run admitted that every homeowner is given a copy of the River Run Handbook, the CC&R’s and the Architectural Committee Rules and Regulations when they purchase their home in the Subdivision. (Dkt. 40-2 ¶¶3-6; Dkt. 39-2 at ¶ 15.) Ms. Drake, the Association Manager, stated in her affidavit that each homeowner received a copy of the River Run CC&Rs from their realtor. (Dkt. 40-2 at ¶ 6.) Ms. Drake stated also that she was “directly involved in giving every new homeowner a welcome packet that included the River Run Handbook and the [Architectural Committee Rules and Regulations] when they purchase[d] their home.” Id. Last, Brian Hill stated that the tennis court sign was clearly visible to any resident or guest. (Dkt. 42-4 at 2.) A reasonable juror could, therefore, infer based upon this evidence that prospective buyers and their real estate agents were provided with the written materials and would see the signs prior to the sale of a house within the subdivision.

The Court finds the Hills have met their burden upon summary judgment establishing a violation of Section 3604(c).

(4) The Hills Have Established Liability

River Run argues the Hills cannot establish liability, because a finding that certain rules are discriminatory does not equate to a finding of liability under the FHA, nor does it entitle the Hills to recover damages. River Run asserts that, for the Hills to be entitled to damages, they must show the rules were enforced against them and other families with children. That is not, however, the law in the Ninth Circuit, as discussed above. See also Pac. Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142, 1172 (9th Cir. 2013) (citing 24 C.F.R. § 180.670(b)(3)(i) (HUD regulations recognizing availability of damages for “humiliation and embarrassment” in FHA cases); Krueger v. Cuomo, 115 F.3d 487, 492 (7th Cir. 1997) (tenant’s testimony sufficient to establish FHA liability for emotional distress where her landlord’s discriminatory actions made her “feel `real dirty,’ `like a bad person,’ and `scared’ her”)); Blomgren v. Ogle, 850 F.Supp. 1427, 1440 (E.D. Wash. 1993) (rule per se discriminatory without proof that defendant had knowledge of the rule, . . . “[d]amages, however, may be imposed only where there is credible proof of harm proximately caused by the violation.”). The Court finds the Hills have set forth sufficient factual allegations to survive summary judgment and to support a claim for emotional distress damages. The Hills still bear the burden of proving damages at the time of trial.

2. River Run’s Motion for Summary Judgment and its Related Motion to Strike

A. Motion to Strike — Docket 53

River Run moves to strike the Declaration of Brian Hill (Dkt. 48) submitted with the Hills’ response in opposition to the motion for summary judgment, pursuant to the sham affidavit rule. “The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony.” Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991). The reasoning behind such a rule is, “if a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of facts.” Id. However, the rule “does not automatically dispose of every case in which a contradictory affidavit is introduced to explain portions of earlier deposition testimony . . . rather the district court must make a factual determination that the contradiction was actually a “sham.” Id. at 266-67. Additionally, the inconsistency between a party’s deposition testimony and later affidavit must be clear and unambiguous to justify striking the affidavit. Minor inconsistencies that result from an honest discrepancy or mistake afford no basis for excluding an affidavit. See Messick v. Horizon Indus., 62 F.3d 1227, 1231 (9th Cir. 1995).

Brian Hill was asked during his deposition to recall whether there are fences that encompass the back yards of any property on White Pine Lane. He testified he did not know, and was not aware of any. (Dkt. 39-4 at 10.) Later, in his declaration, Mr. Hill stated he observed fences in every phase of the Subdivision, and that fences were present in the vicinity of his former home. (Dkt. 48 at 2.)[14] Mr. Hill also took photographs of fences present in the subdivision.[15] Furthermore, the existence of fences throughout the Subdivision is consistent with the evidence in the record. For instance, Tom Roush, the Architectural Chair, indicated at the time the Architectural Committee was considering the Hills’ fence application that there are “fences ALL OVER the place on White Pine Lane.” (Dkt. 49-1 at 32.) Roush stated that there are “at least three [such perimeter fences] in place now, including two high-visibility ones right on River Run Drive,” and a “fourth one that existed for many years on a high-visibility lot on Pebblecreek.” (Id.)[16] Put simply, the existence of fencing throughout the Subdivision, and on White Pine Lane, both prior to and during the time the Hills lived there cannot reasonably be disputed, and Brian Hill’s declaration is not a “sham.”

In addition, River Run seeks to strike statements in the Declaration regarding Mr. Hill’s conversations with various architectural committee members during the time the Hills’ fence application was pending, and which he could not specifically recall during his deposition. The Court need not rely upon the statements Brian Hill made in his declaration; rather, the Court will rely upon the affidavits of Chynna Simmons and Dannielle Drake River Run submitted; and the Declaration of Brian Ertz Plaintiffs submitted, and to which River Run did not object. (Dkt. 39-3, 40, and 49.)

The Motion to Strike (Dkt. 53) will be denied.

B. Motion for Summary Judgment — Docket 39

River Run moves for summary judgment on the grounds that it did not discriminate against the Hills, or otherwise violate the FHA, with regard to the Hills’ application to construct an enclosing fence in their back yard. River Run asserts the following arguments: (1) Section 3604(a), (b), and (c) do not apply, because River Run is an HOA and was not engaged in the sale or rental of housing when it denied the Hills’ fence application; (2) the Hills have failed to establish a prima facie case of discrimination; (3) even if the Hills establish a prima facie case, River Run had a legitimate, non-discriminatory reason for rejecting the Hills’ fence application; (4) there is no evidence that River Run’s fence rules disproportionately impact families with children;[17] and (5) there is no evidence River Run retaliated against the Hills within the meaning of Section 3617.

(1) Post-Acquisition Discrimination

Sections 3604(a), (b), and (c) apply to post-acquisition discrimination. River Run’s argument that the FHA was not designed to prohibit conduct that merely interferes with a homeowner’s later use and enjoyment of a dwelling contradicts binding Ninth Circuit authority. The Comm. Concerning Cmty. Improvement v. City of Modesto, 583 F.3d 690, 713 (9th Cir. 2009); Morris v. West Hayden Estates First Addition Homeowners Association, Inc., No. 2:17-cv-00018-BLW, 2017 WL 3666286 *2 n.2 (D. Idaho Aug. 24, 2017) (noting the court in City of Modesto held that the FHA reaches post-acquisition discrimination). At the hearing, River Run conceded there is a basis for post-acquisition claims under section 3604. Accordingly, the Court will address this argument only briefly.

The Hills’ claim is that River Run denied the Hills’ fence application, and imposed different terms and conditions of approval for the same, because of their familial status. The claim concerns the provision of services or facilities in connection with a dwelling, and is squarely addressed in Section 3604(b). City of Modesto, 583 F.3d at 713 (explaining the statute’s inclusion of the phrase, “the provision of services or facilities in connection therewith,” is broad enough to encompass the “many `services or facilities’ provided to the dwelling associated with the occupancy of the dwelling.” Id.

The Hills claim that River Run engaged in conduct that effectively made their property unavailable to their family within the meaning of Section 3604(a). 24 C.F.R. § 100.60(b) provides that Section 3604(a) prohibits “[s]ubjecting a person to harassment because of . . . familial status . . . that causes the person to vacate a dwelling or abandon efforts to secure the dwelling.” Although “[Section] 3604(a) does not reach every event that might conceivably affect the availability of housing,” the statute “is designed to ensure that no one is denied the right to live where they choose for discriminatory reasons.” Jersey Heights Neighborhood Ass’n v. Glendening, 174 F.3d 180, 192 (4th Cir. 1999).

In line with the reasoning in City of Modesto, the regulations applicable to Section 3604(a) clearly contemplate after-acquired conduct that results in constructive eviction— a resident cannot “vacate a dwelling” unless it is first occupied. Here, the Hills assert that River Run deviated from the procedures previously employed for considering applications to construct enclosing fences, and later changed the architectural rules to eliminate the option for enclosing fences in the Subdivision. A reasonable juror could infer River Run’s actions evinced a preference for homeowners without young children,[18] which effectively made the Hills’ property unavailable to them, causing them to move.

Section 3604(c) applies also to the Hills’ claim concerning the fence application.[19] Brian Hill testified in his deposition that he reviewed the Architectural Rules, including the requirements for enclosing fences, prior to purchasing the Property. The Architectural Rules contain an express statement directed at children, indicating their safety is not a “special circumstance” warranting an enclosing fence, but allowing for the construction of enclosing fences in “very special circumstances” for children’s safety. A reasonable juror could infer that the rules concerning backyard fences limited the use and enjoyment of property by children. See Fair Housing Congress v. Weber, 993 F.Supp. 1286 (C.D. Cal. 1997) (permitting a claim to move forward under Section 3604(c) based upon similar rules and regulations because the rules expressed a limitation on the use of the apartment complex by children tenants, and an ordinary reader could not interpret otherwise).

(2) Prima Facie Case of Discrimination — Disparate Treatment

The Hills contend the circumstances surrounding the rejection of their fence application demonstrate discrimination based on familial status. To prove discrimination under a disparate treatment theory, “the prima facie case elements are: (a) plaintiff is a member of a protected class;[20] (b) plaintiff [submitted a fencing application] and was qualified to receive [a fence]; (c) the [fencing application] was denied despite plaintiff being qualified; and (d) defendant approved a [fencing application] for a similarly situated party during a period relatively near the time plaintiff was denied. . . .” Gamble v. City of Escondido, 104 F.3d 300, 305 (9th Cir. 1997). See also Reynolds v. Quarter Circle Ranch, Inc., 280 F. Supp. 2d 1235 (D. Colo. 2003) (applying McDonnell Douglas burden shifting framework to plaintiffs’ FHA claims arising from attempt to gain architectural committee approval of plans to build a house).

In lieu of satisfying the elements of a prima facie case, a plaintiff may also “simply produce direct or circumstantial evidence demonstrating that a discriminatory reason more likely than not motivated” the challenged decision. Budnick v. Town of Carefree, 518 F.3d 1109, 1114 (9th Cir. 2008) (quoting McGinest v. GTE Serv. Corp., 360 F.3d 1103, 1122-23 (9th Cir. 2004) (“[I]t is not particularly significant whether [a plaintiff] relies on the McDonnell Douglas presumption or, whether he relies on direct or circumstantial evidence of discriminatory intent to meet his [initial] burden”)); see also Metoyer v. Chassman, 504 F.3d 919, 931 (9th Cir. 2007) (stating that a plaintiff suing under 42 U.S.C. § 1981, like a plaintiff bringing a suit for disparate treatment, may proceed under the McDonnell Douglas framework or by producing direct or circumstantial evidence showing that a discriminatory reason “more likely than not” motivated the employer). Under either method, however, the plaintiff must counter the defendant’s explanation with some evidence suggesting that the challenged action “was due in part or whole to discriminatory intent.” Budnick, 518 F.3d at 1114 (quoting McGinest, 360 F.3d at 1123).

River Run argues the Hills cannot prove the second and third elements of their prima facie case, because the Hills did not submit a complete application; River Run did not issue a decision on the application appeal; and, there is no evidence of similarly situated applications being approved. In response, the Hills argue there are disputed issues of fact with respect to the motive for denying the Hills’ fence application. Alternatively, the Hills argue the fence application was adequate and other similarly situated applicants were treated more favorably.

The Court finds the Hills point to numerous pieces of evidence that raise a triable issue of fact whether River Run’s reasons for denying the Hills’ fence application were more likely than not motivated by a discriminatory intent. For instance, the Architectural Committee Rules were amended to allow fences, in contravention of the stated purpose to maintain a “park like setting,” for several other purposes, such as sound abatement; geese control; and privacy. Shortly after the Hills submitted their fence application for the stated purpose of ensuring their children could play safely in their backyard, the Architectural Committee decided to eliminate all enclosing fences. Numerous emails exchanged after the Hills submitted their fence application referred to the “changing demographics” of the subdivision, and “protecting the property values of the homeowners.” When read in context, the statements appear to infer that more families with children were moving to River Run, and that fences to ensure children’s safe play should not be allowed. (See, e.g., Dkt. 49-1 at 13-21.)

Additionally, even under a traditional McDonnell Douglas analysis, the Court finds material facts regarding motivation for the denial, and whether the reasons were pretextual, are disputed. The Hills’ first fence application was denied, ostensibly because it was missing the “required” landscaping element. However, Tom Roush indicated in an email directed to the Architectural Committee members that the committee has “never required a homeowner to submit an acceptable project proposal before we review and vote on it.” (Dkt. 49-1 at 4; 49-2 at 21-22.). David Holm testified in his deposition that, during his time on the Architectural Committee, residents submitted applications that were missing required elements. (Dkt. 39-11 at 8.) Docket 49-9 contains incomplete applications from other River Run homeowners that the Architectural Committee considered. Tom Roush noted that the Architectural Committee had, in the past, ignored the landscaping requirements for privacy screens and enclosing fences. (Dkt. 49-1 at 20.) And, there is evidence the Architectural Committee knew the Hills’ neighbors specifically requested there be no landscaping. (Dkt. 49-6 at 5; see also 49-6 at 6.)

Accordingly, the Court finds there is evidence in the record from which a juror could reasonably infer that the denial of the Hills’ application, based upon the lack of the landscaping element, was pretext for familial status discrimination.

Next, River Run argues it never issued a decision on the Hills’ appeal of the fence application, and therefore never denied it, asserting the Hills did not complete the application process and therefore cannot maintain a case for discrimination. The facts here are disputed. The Hills’ first application was denied with a vote of 6:1. The Hills next submitted what they considered to be a new application, and asked that it be treated as such. Instead, the Architectural Committee indicated it was treating the Hills’ second application as an appeal, which would be presented to and considered by the Executive Board. Yet, the Architectural Committee Rules contain no appeal procedure. No vote appears in the Executive Board’s January 20, 2015 meeting minutes or at any time after the application’s submission. If indeed there was never a vote, then an inference could be made, as argued by the Hills, that the second application (or appeal) was approved. Thereafter, upon notice that the Hills would be proceeding with construction, Mr. Cox threatened Brian Hill on January 6, 2015, with litigation.

The Court finds there is a dispute as to what action, if any, was taken by the Architectural Committee or the River Run Executive Board at its January 2015 meeting. The Court finds also that a reasonable juror could infer that River Run did not follow its own CC&Rs and rules, and unilaterally changed them to the detriment of the Hills.

Last, there is sufficient evidence before the Court upon which a reasonable juror could infer that similarly situated applications considered near the time of the Hills’ application were treated more favorably. See Gamble, 104 F.3d at 305 (requiring evidence that a permit was granted to a similarly situated party relatively near the time of the applicant’s denial). First, there is ample evidence in the record that fences existed throughout the subdivision. This evidence includes a photograph of a wrought iron enclosing fence projecting into the rear yard, similar to the fence proposed by Brian Hill. (Dkt. 48-2 at 22.)[21]

Next, there is evidence River Run approved non-conforming fences near the time the Hills submitted their application. For instance, the Architectural Committee approved an application from Mike K. for a fence to inhibit geese, dated August 20, 2013, despite the fact the fence did not meet River Run’s rules at the time. (Dkt. 49-2 at 19.) The architectural rules were later changed to expressly allow this type of fence. Mike M. submitted a fence application on July 14, 2014, that did not meet the Architectural Rules, yet his application was approved. Id.[22] And Tom Roush recalled that enclosing fences “had been permitted over the years.” (Dkt. 49-2 at 21.)

The Court finds that, viewing the facts in the light most favorable to the Hills, a reasonable juror could conclude River Run had approved non-conforming fence applications, and allowed enclosing fences, at or near the time of Mr. Hill’s application on October 19, 2014. The Hills have presented sufficient facts demonstrating similarly situated persons without children were treated more favorably when they requested to build fences. See Reynolds v. Quarter Circle Ranch, Inc., 280 F. Supp. 2d 1235, 1243 (D. Colo. 2003)(“[T]he requirement of producing evidence of a similarly situated party does not mean the plaintiff must produce an identical match: `When comparing the relative treatment of similarly situated minority and non-minority employees, the comparison need not be based on identical violations of identical work rules; the violations need only be of `comparable seriousness.'”).

(3) Non-Discriminatory Reason

River Run argues it had multiple legitimate and non-discriminatory reasons for seeking to limit the type of fence the Hills sought to place on their property. However, there are genuine disputes as to the material facts regarding River Run’s alleged non-discriminatory reasons for rejecting the Hills’ fence application. Several documents suggest that members of the Architectural Committee and Executive Board considered the “changing demographics” of the subdivision; changed the architectural rules applicable to fences to eliminate enclosing fences in response to the Hills’ application; and did not discuss alternatives to the Hills’ proposed fence. Rather, River Run voted to eliminate the type of fence that a reasonable juror could conclude would most effectively provide for children’s safety and enjoyment.

(4) Retaliation

To establish a prima facie case under Section 3617, “a plaintiff must show that (1) he engaged in a protected activity; (2) the defendant subjected him to an adverse action; and (3) a causal link exists between the protected activity and the adverse action.” Walker v. City of Lakewood, 272 F.3d 1114, 1128 (9th Cir. 2001).

River Run construes protected activity too narrowly, arguing that conduct predating the July 16, 2015 HUD complaint[23] is irrelevant to the Hills’ retaliation claim and therefore not actionable. However, the retaliation claim is based upon the Hills’ desire to enjoy their home free from familial status discrimination, and there is evidence the Hills exercised their right to do so prior to the filing of their HUD complaint.

The Hills’ first fence application expressly stated that they sought to construct an enclosing fence “for the safety of children.” (Dkt. 49-5 at 2.) After the first application was denied, the second submittal mentions the safety of the Hills’ children as a reason for the fence application, and explains that a patio fence “works great for adults, but doesn’t really work as well for kids. I suppose that is why there is separate fence category specifically for children, the enclosing fence . . . [allowing] room for kids to move around and play.” (Dkt. 49-6 at 1.) The letter authored by neighbors Bill and Pat Kolb states that they “welcome the Hills and their beautiful young children, they are such a delight and wonderful addition to our aging community.” (Dkt. 49-6 at 5.) The letter authored by the Hills’ other neighbors, the Penningtons, states that when “discrimination becomes part of the narrative, it is time to re-address 20 year old bi-laws. This is not a 55 and older designated neighborhood. . . .We hope you consider the needs of the younger families, that are moving to Idaho and welcome them with open arms.” (Dkt. 49-6 at 6.) River Run was therefore put on notice that the Hills were contesting the initial denial of their application based on familial status, and exercising their right to have their application considered free from familial status discrimination.

A reasonable juror may also infer adverse action. After the denial of the Hills’ first application and the submission of the revised application, the Hills’ attorney on December 19, 2014, notified River Run it was in violation of its CC&Rs by failing to vote on the second application within twenty days, and therefore the second application was deemed approved and the Hills would be proceeding with construction of the fence. (Dkt. 40-13.) On January 6, 2015, Lloyd Cox wrote to Brian Hill, stating that the Executive Board exhibited “no willingness to consider an alternate enclosing fence.” (Dkt. 49-19 at 1.) Mr. Cox threatened litigation, stating: “Speaking for the Executive Committee and knowing the attitude of the Board members, I can assure you RRHOA will litigate the matter should you choose to construct the fence as stated by your attorney.” (Dkt. 49-19 at 2.)

Thereafter, evidence in the record indicates Brian Hill engaged in a discussion with members of the Executive Committee sometime after January 6, 2015, and that it was clear to him “the Executive Committee will not compromise on any type of enclosing fence for any child under any circumstance, even though the enclosing fence has been an allowed category of fence for years and years.” (Dkt. 40-12 at 10.)

The above evidence may be construed by a reasonable juror as evidence of protected activity, and evidence that River Run threatened, intimidated, and interfered with the Hills’ enjoyment of their right to be free from familial status discrimination. At the very least, there are disputed issues of fact as to why River Run acted in the manner it did, in light of the existence of similar fences throughout the neighborhood. Thus, there is evidence in the record sufficient to preclude summary judgment with respect to the three elements required to prove the retaliation claim under Section 3617.

And last, there is evidence upon which a reasonable juror could find a causal link between the Hills’ protected activity and the adverse action.[24] The Hills claim they could not enjoy their home because their young children could not play safely in their yard, which backed up to a creek.[25] They felt uncomfortable going to the pool and viewing the signs around the common areas. And the Hills saw all sorts of other fences, including fences to keep out geese, but they were not allowed to construct a fence enclosing their back yard for their children’s safety and enjoyment according to established Architectural Rules. As a result, they moved.

CONCLUSION

The Court concludes there are no disputed issues of material fact precluding partial summary judgment on Plaintiffs’ motion. The Hills and IFHC have established liability under 42 U.S.C. §§ 3604(b) and (c) for River Run’s discriminatory tennis court sign, pool guest rule, and adult only clubhouse rule. That leaves the issue of damages for trial on these claims. Conversely, the Court finds there are genuine issues of material fact concerning Plaintiffs’ claims under 42 U.S.C. §§ 3604(a), (b), and (c), as well as under 42 U.S.C. § 3617, related to the Hills’ application to construct a fence in their backyard for the safety and enjoyment of their children. Defendant’s motion for summary judgment will therefore be denied.

The Court will contact the parties to discuss a trial setting.

ORDER

1) Defendant’s Motion for Summary Judgment (Dkt. 39) is DENIED.

2) Plaintiffs’ Motion for Partial Summary Judgment (Dkt. 42) is GRANTED.

3) Defendant’s Motion to Strike (Dkt. 50) is DENIED.

4) Defendant’s Motion to Strike (Dkt. 53) is DENIED.

[1] Plaintiffs will be referred to collectively as the Hills, unless otherwise indicated.

[2] Although River Run’s memorandum filed in opposition to the Hill’s motion for partial summary judgment indicated it “dispute[d] the Plaintiffs’ statement of facts as set forth herein and as addressed” in its motion to strike the declaration of Brian Hill, River Run did not file a statement of disputed facts, or otherwise dispute the Hills’ recitation of the relevant facts for purposes of the Hills’ motion. As discussed below, the motion to strike the declaration of Brian Hill will be denied. The Court has, however, considered the arguments and disputed facts raised by River Run in its motion to strike the declaration of Brian Hill.

[3] There is no dispute that the Architectural Rules allowed enclosing fences at the time Brian and Anne Hill purchased the property in April of 2013. The provision allowing short wire fences along Logger’s Creek was added in January of 2014.

[4] The minutes indicate that the River Run HOA held a regular meeting, and a quorum was present. Mr. Hill was present also.

[5] The location, timing of construction, or any other details regarding the construction of this fence are not clear from the record.

[6] The Recreation Center encompasses the tennis courts, pool, and clubhouse.

[7] Although Brian Hill’s affidavit includes also allegations related to the “quiet swimming only” sign at the pool, Plaintiffs’ motion for partial summary judgment addresses only the tennis court sign and not the pool sign. River Run admitted it removed and changed the language of both the tennis court and pool signs in February of 2015.

[8] In Section III (2) of its motion for summary judgment, River Run argues also that Plaintiffs lack standing.

[9] In its briefing, River Run argued that Section 3604 did not reach post-acquisition conduct. However, at the hearing, River Run conceded that binding authority, including City of Modesto, holds that section 3604 reaches post-acquisition conduct.

[10] River Run argued that the rule was somehow saved because it stated a preference, rather than an outright ban, on the use of the tennis courts by children during certain times. However, when pressed at the hearing to distinguish the tennis court rule preferring adults after 3:00 p.m. from a rule that stated a preference for “whites only after 3:00 p.m.,” River Run could not articulate a distinction. The Court finds none. Further, River Run conceded that, on the record before the Court, there was no evidence of a legitimate purpose for the rule.

[11] River Run, in footnote 5 of its brief, argues that the sign requiring “quiet swimming” was not discriminatory because it applied to everyone. The Court declines to address the sign for purposes of the Plaintiffs’ motion for partial summary judgment, because the issue was not raised in the motion.

[12] For instance, certain age-neutral rules limiting the number of guests have been justified. See Landesman v. Keys Condo. Owners Ass’n, No. C 04-2685 PJH, 2004 WL 2370638, at *4 n.4 (N.D. Cal. Oct. 19, 2004), aff’d, 125 F. App’x 146 (9th Cir. 2005) (“This is not to say that The Keys Association cannot impose other reasonable, age-neutral restrictions on the use of one or more of the pools.”).

[13] The Court questions the applicability of the reasoning in Morris v. W. Hayden Est. First Addition Homeowners Ass’n, Inc., No. 2:17-CV-00018-BLW, which purports to limit actionable publications to those provided to the buyers prior to the point of sale. The regulations include publications expressing to “sellers . . . or any other persons a preference. . . .” The 2013 Handbook and pool sign could be construed as a discriminatory statement expressing to sellers or other persons a preference because of familial status. However, whether Morris is distinguishable was not presented to the Court.

[14] Although Mr. Hill did not state when he observed the fences, there are sufficient facts in the record for a reasonable juror to infer that fences existed throughout the Subdivision during the time the Hills lived at the Property.

[15] Mr. Hill does not indicate when he took the photographs. However, from the record, it appears Plaintiffs’ counsel provided River Run with “photographs of fences and fence-like structures in River Run,” having identified the fence photographs in Plaintiffs’ initial disclosures. (Dkt. 50-3 at 3.) It therefore seems disingenuous for River Run to object to the introduction of these photographs via Brian Hill’s declaration in these proceedings.

[16] Emails containing the above quotations attributed to Tom Roush were submitted attached to the Declaration of Brian Ertz in opposition to River Run’s motion for summary judgment.

[17] River Run argues also that there is no evidence River Run’s rules or restrictions disparately impact families with children. (Dkt. 39-1 at 21.) Plaintiffs do not advance a disparate impact theory, and did not address the argument in their response brief. Accordingly, the Court has not considered this argument.

[18] It is difficult to conceive of any other reason for a fence enclosing the patio and yard area, other than to allow for play space, and for the protection and safety of children and pets. While the Architectural Rules expressly provided (and still provide) for “privacy fence/screen[s],”such fences are limited to enclosing only patios and decks, or screening utilities and trash containers. Thus, it would provide a limited enclosed space of a hard surface area (concrete or wood/composite decking), and may not allow children and pets to enjoy the entire yard area.

[19] The Court discussed above that Section 3604(c) applies to the Hill’s claim related to the Recreation Center rules published in the Handbook and the tennis court sign.

[20] It is undisputed that the Hills are members of a protected class.

[21] It is not clear from the record when this particular wrought iron fence was constructed or why. However, construing the evidence in the record in favor of the Hills, the fact it existed at all, and was similar to the design proposed by Mr. Hill, may be construed by a reasonable juror as constituting favorable treatment to other similarly situated applications.

[22] Marv and Francis applied to construct a fence to enclose their entire yard on or about June 15, 2015, after the re-write to the rules eliminated that option. (Dkt. 49-2 at 27.) Their application was allowed to proceed, and Danielle Drake indicated that the Board of Directors “will look favorably on approving it given the other fences on nearby units.” Id. The Architectural Committee approved an enclosing fence at 1981 S. Springbrook Lane in September of 2017, for the purpose of providing for the safety of a special needs adult and two small dogs. (Dkt. 49-10 at 4.)

[23] The Hills filed their HUD Complaint on May 27, 2015, and amended it on July 16, 2015.

[24] River Run did not address IFHC’s claimed damages other than in the context of its argument regarding standing in Section III (C). And, Plaintiffs did not move for summary judgment on damages.

[25] Brian Hill stated also in his declaration that the community pool backed up to the backyard of the Property, and his children could fit through the pickets of the pool fence. (Dkt. 48 at 2.)

 

Sanzaro v. Ardiente Homeowners Ass’n, LLC

364 F.Supp.3d 1158 (2019)

Deborah SANZARO and Michael Sanzaro, Plaintiffs,
v.
ARDIENTE HOMEOWNERS ASSOCIATION, LLC et al., Defendants.

Case No. 2:11-cv-01143-RFB-CWH.
United States District Court, D. Nevada.
Signed March 5, 2019.

Summary by Dea C. Franck, Esq.:

An association’s refusal to grant an owner a reasonable accommodation which would allow her to bring her service dog with her into the common area clubhouse violated the Fair Housing Act.  The court imposed compensatory and punitive damages totaling $635,000 against the association, the association’s developer, individual board members, the association’s management company, the association’s former manager, and the association’s manager.  The court also awarded plaintiff her attorneys’ fees and costs.

*** End Summary ***

1163*1163 Deborah Sanzaro, Las Vegas, NV, pro se.

Michael Sanzaro, Las Vegas, NV, pro se.

Joseph P. Garin, Kaleb D. Anderson, Lipson Neilson P.C., Las Vegas, NV, Jason C. Gless, Wood, Smith, Henning & Berman, Riverside, CA, for Defendant.

AMENDED ORDER

Findings of Fact and Conclusions of Law After Court Trial

RICHARD F. BOULWARE, II, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION

Plaintiffs in this case are Deborah Sanzaro (“Mrs. Sanzaro”) and Michael Sanzaro (“Mr. Sanzaro”) (collectively, “Plaintiffs” or “the Sanzaros”). Plaintiffs are homeowners and members of the Ardiente Homeowners Association (“HOA”). This case involves three incidents between 2009 and 2011, during which Mrs. Sanzaro, alone or accompanied by Mr. Sanzaro, attempted to enter the Ardiente HOA clubhouse (“the Ardiente clubhouse”) with Mrs. Sanzaro’s alleged service animal, a Chihuahua named Angel. On each of these three occasions, Mrs. Sanzaro was denied access to the clubhouse while accompanied by Angel. The Court held a bench trial in this case on April 9, 2018, April 10, 2018, April 16, 2018, April 17, 2018, April 18, 2018, April 20, 2018, and May 11, 2018. The Court rules in favor of Plaintiffs based on the following findings of fact and conclusions of law.

II. PROCEDURAL HISTORY

Plaintiffs’ operative Amended Complaint was filed on July 22, 2013. (ECF No. 78). Plaintiffs brought 102 causes of action for “discrimination against the disabled, breach of contract and other torts,” including claims under the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12182, and the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601-19, and NRS § 651.075. On November 29, 2017 the Court entered an order on various motions, including a motion for summary judgment filed by Plaintiffs, which the Court denied. (ECF No. 381). The remaining causes of action were Claims 1, 2, 6, 7, 11, and 12 which relate to 1164*1164 the three incidents that took place on March 11, 2009 (“Incident 1”), July 26, 2010 (“Incident 2”), and January 29, 2011 (“Incident 3”). Based on these causes of action and the prior rulings of the Court, the issues remaining for trial were: (1) whether the HOA clubhouse was a place of public accommodation under the ADA and NRS § 651.075, and (2) whether Plaintiffs requested, and were ultimately refused, a reasonable accommodation under the FHA.[1]

III. JURISDICTION AND VENUE

This Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 for claims arising under the ADA and the FHA. The Court has supplemental jurisdiction over state law claims under 28 U.S.C. § 1367. Venue is proper because the underlying actions and corresponding damages occurred within Clark County, Nevada.

IV. FINDINGS OF FACT

Federal Rule of Civil Procedure 52(a)(1) requires the Court to “find the facts specially and state its conclusions of law separately” in a bench trial. Fed. R. Civ. P. 52(a)(1). Factual findings must be sufficient to indicate the basis for the Court’s ultimate conclusion. Unt v. Aerospace Corp., 765 F.2d 1440, 1444-45 (9th Cir. 1985) (citing Kelley v. Everglades Drainage Dist., 319 U.S. 415, 422, 63 S.Ct. 1141, 87 L.Ed. 1485 (1943)). The findings must be “explicit enough to give the appellate court a clear understanding of the basis of the trial court’s decision, and to enable it to determine the ground on which the trial court reached its decision.” United States v. Alpine Land & Reservoir Co., 697 F.2d 851, 856 (9th Cir. 1983), cert. denied, 464 U.S. 863, 104 S.Ct. 193, 78 L.Ed.2d 170 (1983) (citations and quotation marks omitted). Accordingly, the Court makes the following findings of fact on this matter.

1. The Ardiente HOA

a. Ardiente is a restricted-access residential HOA neighborhood located in North Las Vegas, Nevada. The community is gated and requires a remote transponder or access code for entry. Members of the public cannot enter the Ardiente community without prior permission from the property management unless they have assistance or consent from a current homeowner for a particular visit.

b. In addition to private residences, the community contains common-use facilities such as the Ardiente clubhouse. The Ardiente clubhouse has several amenities including a gym, a pool and sauna, and rooms to rent for private events. The Ardiente clubhouse also has restricted access, monitored by Ardiente and property management staff. Members of the public cannot enter the Ardiente clubhouse without prior permission from staff. The office for Ardiente is located within the clubhouse.

c. At all times relevant to this litigation, the Declarant—either Defendant Corona Ardiente (“Corona”) or non-party Shea Homes—hosted programs called “Stay and Play” and “Taste of the Good Life,” in which members of the public who were not residents of the Ardiente community could stay overnight in an Ardiente model home and access community facilities, including the clubhouse. 1165*1165 The purpose of these programs was to induce these guests to purchase an Ardiente home. Members of the public were not permitted to access the Ardiente community and facilities unless they indicated potential interest in purchasing a home within the community and were part of the aforementioned marketing programs.

d. In October 2010, Shea Homes hosted a Grand Opening of the Ardiente community, which was advertised to the public in the local newspaper. As part of the Grand Opening, activities such as yoga, dog training, and line dancing occurred inside of the clubhouse. The purpose of the event was to induce members of the public to purchase an Ardiente home.

2. The Parties

a. Since August 2007, Plaintiffs have been owners of a single family home within the Ardiente community located at 3609 Inverness Grove, North Las Vegas, Nevada. The value of Plaintiffs’ home at the time of purchase was $ 212,800.00.

b. Plaintiffs lived in their Ardiente home from October 2008 to January 2018. Plaintiffs used the Ardiente clubhouse facilities without incident two to three times per day on average between November 2008 and March 2009. While Plaintiffs still own the home, they moved out of the home and away from the Ardiente community due to ongoing and persistent harassment and threats, which they continue to experience in connection with the events described herein.

c. Defendant Ardiente Homeowners Association (“Ardiente” or “the HOA”) is the entity that maintains and operates the community. Ardiente is governed by a Board of Directors (“the Board”) pursuant to its governing documents, including Bylaws, Rules & Regulations, and a Declaration of Covenants, Conditions, Restrictions (“CC & Rs”) (collectively, “Ardiente’s governing documents”). Plaintiffs received a copy of these governing documents when they purchased their home

d. Pursuant to Ardiente’s governing documents, at the time Plaintiffs purchased their home and until 2010, the majority of the Board positions were filled by the Declarant, with remaining seats filled by homeowners.

e. Defendant Corona was the Declarant prior to non-party Shea Homes. Under the terms of the CC & Rs and Bylaws, the Declarant developed the community and sold lots to homeowners. The Declarant also had authority to appoint and oversee voting members to the Board.

f. Neither Ardiente nor Corona provided any training to their Board representatives or relevant employees about the requirements or prohibitions of the ADA, FHA, or NRS § 651.075, such as what, if any, documentation is required to establish that an animal is a service or assistance animal.

g. Neither Ardiente nor Corona provided any training to their Board representatives about how to engage with homeowners seeking to bring service or assistance animals into the clubhouse.

h. Defendant RMI Management, LLC (“RMI”) was the property management company hired by the community developer. RMI managed Ardiente between 2009 and 2011. During the Incidents at issue in 1166*1166 this case, RMI property management staff were employed at Ardiente facilities, including at the Ardiente clubhouse. RMI employed property managers, called Community Managers, at all relevant times during the events that gave rise to this litigation.

i. RMI did not provide any training to its Community Managers about the requirements or prohibitions of the ADA, FHA, or NRS § 651.075, such as what, if any, documentation is required to establish that an animal is a service or assistance animal.

j. RMI did not provide any training to its Community Managers about how to engage with homeowners seeking to bring service or assistance animals into the clubhouse.

k. Defendant Scott Harris (“Harris”) is a former member of the Ardiente Board and former appointee of Corona. Harris was a voting Board member during the first Incident involving the Sanzaros. Harris participated in and ratified decisions regarding the Sanzaros, including to prohibit them from accessing the clubhouse.

l. Defendant Ryan Smith (“Smith”) was a member of the Ardiente Board between February 2010 and January 2013. Smith took over the position from Harris. Smith was appointed to the Board by Corona, and was an employee of non-party successor Declarant Shea Homes. Smith was a voting Board member during the second and third Incidents involving the Sanzaros. Smith participated in and ratified decisions regarding the Sanzaros, including to prohibit them from accessing the clubhouse.

m. Defendant Kevin Wallace (“Wallace”) is the Chief Executive Officer of RMI. Wallace was not a member of the Board and had no authority to vote on Board decisions. Wallace never attended any Board meetings, and did not communicate directly with the Sanzaros.

n. Defendant Laury Phelps was the Community Manager of the Ardiente community, and a former employee of RMI, between 2007 and 2010. She was the Community Manager during the first two Incidents involving the Sanzaros. During her tenure, Phelps sent out communications regarding animals in the Ardiente clubhouse to Ardiente homeowners, including the Sanzaros, on behalf of the Board. She also actively prevented the Sanzaros from entering the Ardiente clubhouse with Angel at the direction of the Board. However, she was not a voting member of the Board.

3. Mrs. Sanzaro’s Disability and Use of an Assistance Animal

a. Mrs. Sanzaro became disabled on March 12, 2004. Her disability is permanent, impedes her ability to walk without assistance, and generates significant and ongoing incidents of pain.

b. As a result of her disability, Mrs. Sanzaro uses a walker.

c. Mrs. Sanzaro needed, and continues to need, the assistance of a service dog in or around October 2008 until the present, and began using the services of Angel, a Chihuahua, at that time.

d. Between November 2008 and February 2009, Angel was trained to assist Mrs. Sanzaro with her disability. Initially, Angel assisted Mrs. Sanzaro in coping with acute pain arising from Mrs. Sanzaro’s disability. Angel was subsequently trained 1167*1167 to retrieve Mrs. Sanzaro’s walker and car keys in the event that those items were out of Mrs. Sanzaro’s reach.

4. 2009 Incident and Interactions between Plaintiffs and Defendants

a. Incident 1 occurred at the clubhouse on March 11, 2009. That day, Mrs. Sanzaro entered the clubhouse with Angel and her walker. Defendant Phelps, then Community Manager of the HOA, was working at the clubhouse that day. Prior to this incident, Phelps had seen Mrs. Sanzaro use her walker and was aware that Mrs. Sanzaro suffered from a physical impairment that significantly impaired her ability to walk. Phelps asked Mrs. Sanzaro why the dog was in the clubhouse. Sanzaro then explained that the dog assisted her with her disability as a service animal. Phelps asked Mrs. Sanzaro if she had with her any documentation for the dog, and Mrs. Sanzaro responded that she did not. Phelps then asked Mrs. Sanzaro to leave. When Mrs. Sanzaro refused to leave, Phelps called the HOA’s attorney and also called security. After security was called, Mrs. Sanzaro left the clubhouse with Angel.

b. On March 13, 2009, Phelps sent an email on behalf of the HOA Board with subject line “RE: Animals in the clubhouse,” stating in part: “Persons with service animals should notify the clubhouse staff about their service animal when they come into the clubhouse, or let the clubhouse staff know, if asked, that the animal is a service animal. If a homeowner refuses to say whether the animal is a service animal or not, the animal will have to stay outside of the clubhouse. If you do have certification papers, it would be helpful to provide them for inclusion in your file.”

c. The same day, Mrs. Sanzaro entered the clubhouse with Angel, without incident.

d. Additionally on March 13, 2009, counsel for the HOA sent Plaintiffs a letter describing Incident 1 as a violation of the HOA’s governing documents, and also informing Plaintiffs that a hearing before the HOA Board regarding the incident before the HOA Board would be set for March 30, 2009. The letter stated in part: “[T]his letter is a formal request that, at the hearing, you provide the [HOA] with additional documentation from Mrs. Sanzaro’s doctors to substantiate the existence of a handicap/disability and the necessity for the presence of the dog in the clubhouse in order to accommodate that handicap/disability.”

e. On March 16, 2009, Phelps sent another email to Ardiente homeowners on behalf of the Board, stating in part: “The clubhouse staff wants everyone to know that if someone enters the clubhouse with a legitimate service animal, and properly advises the staff of such, that person will be granted all privileges and assistance by the staff to accommodate their disability…. If you have a service animal, and require them to be in the clubhouse, please advise the staff so that we can properly accommodate you and your service animal.”

f. On March 29, 2009, non-party James Marsh (“Marsh”), then President of the HOA and homeowner representative on the HOA Board, sent a letter to Ardiente homeowners regarding Plaintiffs’ hearing set the following day. In the letter, Marsh 1168*1168 stated that, although he was “not at liberty to discuss the nature and extent of the alleged violations” against the Sanzaros, he nonetheless “[could] ensure [homeowners] that Mr. Sanzaro’s recitation of the facts is inaccurate, self-serving and intentionally misleading.” He further informed homeowners that Mrs. Sanzaro did not introduce her dog as a service animal to staff and never presented documentation that the dog was a service animal during Incident 1. He concluded the letter by writing “I, and the Board, sincerely apologize to all of you that have had to endure Mr. and Mrs. Sanzaro’s emails to assist him in furthering his personal vendetta against you, the HOA.” Marsh sent the letter on behalf of the Board and at the direction of counsel for the HOA.

g. On March 30, 2009, a hearing was held before the HOA regarding Incident 1. The meeting was conducted in “open” format such that other Ardiente homeowners were permitted to attend. Plaintiffs were not present.

h. Beginning in March 2009 and at least through 2010, the Sanzaros received hate letters and emails as well as verbal harassment from other homeowners in the Ardiente community regarding the Sanzaros’ dispute with the Board over Angel’s documentation. At no point did representatives of Ardiente or Corona, Board member Harris, or Phelps take any action to discourage homeowners from harassing the Sanzaros despite being aware of the harassment and threats.

i. After the March 30, 2009 hearing, an Ardiente homeowner anonymously sent the Sanzaros a letter that read in part: “We hear you are going to file a lawsuit against the HOA and us. Jim [Marsh] was right when he told a large group of us at Sage Park a couple years ago that you are going to cost each of us a lot of money…. Leave this community. We don’t want you here…. You and [Mrs. Sanzaro] have lost every action against the HOA…. Don’t sue us. Just get the hell out of here! If you sue us I hope your little dog gets loose and someone catches it and drops it deep in the desert….”

ii. On approximately June 21, 2009, the Sanzaros found a letter tucked inside of their door handle which read in part: “Our group has combined our efforts to rid our community of undesirables such as you two. The board meeting a few days ago was only a small example of our combined power. In a meeting attended by many homeowners our group devised a plan to disrupt the two of you from speaking at the board meeting. As you know it worked very well. You two looked like idiots trying to talk. Our group followed our plan and heckled and yelled obscenities at you until you were force [sic] to stop talking and sit down. Jim [Marsh] said he would not stop us from heckling you…. At first you two were a fun part of this community, but when you turned on Jim Marsh and Laury Phelps your fight against them and [Ardiente] became our fight against you two. A very good proverb works well here. An enemy of our friend is our enemy. Do our community a big favor, GET THE HELL OUT OF OUR COMMUNITY!” The letter was signed by 1169*1169 “Ardiente Residents for Solidarity.”

iii. At some point in Summer 2009, an anonymous homeowner spray painted a threatening message on the Sanzaros’ garage door, telling them to get out of the neighborhood. The message also included a death threat against Angel and the Sanzaros. Phelps and the Board were informed about this spray painted message.

iv. On approximately June 22, 2009, the Sanzaros received by mail another letter which read in part: “We can tell by the message painted on your garage that [anonymous homeowner A Concerned Ardiente Resident] ACAR wants you more than gone…. Dogs are not allowed in the clubhouse unless it is a service animal. Laury [Phelps] and Jim [Marsh] have told us several times that your dog is not a service animal…. Why won’t you give Laury the documents that she wants and end your fight? We all know why. We know you cannot prove that Debbie [Sanzaro] is disabled and that her little dog is a service animal…. Stop bad mouthing Laury. You two are LIARS! You two are GARBAGE in the eyes of this community. Get the hell out of our community. We hate you for what you are doing to Laury.” The letter was signed by “The Ardiente Residents for Solidarity.”

v. On approximately August 18, 2009, the Sanzaros received by mail another letter from an anonymous individual, signed “A Concerned Ardiente Resident.” The letter stated in part: “YOU LOST THE FIGHT AND MUST NOW PAY $ 19,000. GREAT NEWS! LAURY PHELPS SAID THE ARBITRATOR RULED THAT YOUR DOG IS NOT A SERVICE ANIMAL. THIS IS THE SAME THING SHE HAS ALWAYS SAID. LAURY ALSO SAID THAT THE ARBITRATOR RULES THAT ALL OF THE BOARDS [sic] ACTIONS HAVE BEEN LEGAL. THE BOARD HAS NEVER DONE ANYTHING WRONG…. UNFORTUNATELY WE WERE TOLD THAT OUR ASSOCIATION MUST PAY THE ALMOST $ 19,000 IN LEGAL FEES UNTIL THEY GET PAY[M]ENT FROM YOU. YOUR LAWSUIT HAS COST OUR COMMUNITY A LOT OF MONEY. OUR MEMBERS FOR SOLIDARITY HAVE TRIED AND FAILED TO FORCE YOU TO LEAVE OUR COMMUNITY BY MAKING YOU TWO SOCIAL OUTCASTS. LAURY PHELPS SAID WE CAN FORCE YOU TO LEAVE BY FORECLOSING ON YOUR HOUSE FOR THE $ 19,000 YOU OWE US. WHY DON’T YOU PAY US NOW AND LEAVE. SAVE US THE TIME AND MONEY TO FORECLOSE ON YOU. AS A MEMBER OF THE ARDIENTE RESIDENTS FOR SOLIDARITY WE DO NOT WANT YOU LIVING IN OUR COMMUNITY.”

vi. Plaintiffs filed a police report regarding the anonymous letters and the graffiti on their garage, and although an investigation was commenced, Plaintiffs never discovered the identity of the individuals that took these actions.

1170*1170 i. On April 9, 2009, counsel for the HOA sent Plaintiffs a letter with the results of the March 30, 2009 hearing. According to the letter, the Board found that Mrs. Sanzaro’s entry into the clubhouse with Angel and subsequent failure to provide documentation about the dog’s abilities as a service animal, was a violation of the HOA Rules & Regulations.[2] The Board found a second violation, as Mrs. Sanzaro brought Angel into the clubhouse on March 13, 2009. Plaintiffs were assessed a $ 100 fine for the March 11, 2009 incident and a $ 100 fine for Mrs. Sanzaro’s entry into the clubhouse with Angel on March 13, 2009. Plaintiffs were also advised that they were required to pay the attorneys’ fees and costs incurred by the HOA for enforcing its governing documents, in the amount of $ 752. The letter stated that the $ 200 fine would be waived if there was no subsequent violation during the next six months, but that fines would be imposed for any further violation.

5. 2009 NRED Arbitration

a. Plaintiffs filed a complaint with the Nevada Real Estate Division (“NRED”) against (1) Corona; (2) Ardiente; (3) non-party Linda Kemper (“Kemper”), a member of the HOA Board at the time; (4) Marsh, as Board President; (5) Phelps, as Community Manager and an employee of RMI; and (6) RMI. The claim was submitted to a non-binding arbitrator.

b. On July 27, 2009, a non-binding arbitration was held before the NRED. Plaintiffs were in attendance, as well as a representative of Corona, a representative of Ardiente, Kemper, Marsh, Phelps, and a representative of RMI, as well as their counsel.

c. During the arbitration, Mrs. Sanzaro testified that Angel provided assistance by helping Mrs. Sanzaro manage acute pain attacks arising from her disability.

d. The same day, at the request of the arbitrator, Plaintiffs sent a fax to the arbitrator with the following documents: (1) a doctor’s statement requesting that Angel be registered as a service dog; (2) a notice of entitlement to disability benefits from the Social Security Administration; (3) a doctor’s statement regarding Mrs. Sanzaro’s disability; and (4) a statement from Mrs. Sanzaro explaining how Angel has been trained to assist her with her disabilities. Copies of the documents were also sent to counsel for the parties that attended the arbitration.

e. Representatives from Ardiente, Corona, and RMI, as well as Phelps, heard Mrs. Sanzaro explain how Angel assists her and received the information from the documents Plaintiffs submitted for the arbitration.

f. As a result of the faxed documentation being provided to Phelps and representatives of Ardiente, Corona, and RMI, Defendant Harris, as a member of the Board and representative of Corona during the time of the arbitration, became aware, at least as of this correspondence and testimony, of Mrs. Sanzaro’s disability which resulted in a physical impairment that significantly impaired her ability to walk and Angel’s assistance 1171*1171 to her as a service animal. This information was undisputed.

g. On August 6, 2009, NRED Arbitrator Ara Shirinian entered a non-binding arbitration award in favor of Ardiente. The arbitrator found in part that “Mrs. Sanzaro’s self-serving letter and a signed post-card to a private for-profit company without explanation of why the dog is needed by Mrs. Sanzaro [was] unpersuasive.” The arbitrator awarded fines related to the violations of the Ardiente governing documents as well as attorneys’ fees incurred in the course of the arbitration.

h. The arbitration was upheld by the Eighth Judicial District Court of Clark County, Nevada as well as by the Nevada Supreme Court.

6. July 2010 Incident and Interactions between Plaintiffs and Defendants

a. Incident 2 occurred at the clubhouse on July 26, 2010. On that date, the Sanzaros attempted to enter the clubhouse to purchase a gate transponder, accompanied by Angel. During this incident, the Sanzaros were told that they could not come into the clubhouse unless they provided more documentation about Mrs. Sanzaro’s disability and Angel’s services, despite the documentation the Sanzaros provided to Ardiente, Corona, RMI, and Phelps in July 2009 as part of the NRED arbitration.

b. Following Incident 2, Mr. Sanzaro sent a letter to Corona; Shea Homes, and Harris, as representatives of the Declarant; and Kemper, Smith, and non-party Sal Sirna (“Sirna”) as members of the Board. In the letter, Mr. Sanzaro stated that he was lodging a formal written complaint against Phelps for disability discrimination. He also accused the Board of failing to properly supervise Phelps in her role as Community Manager.

c. Mr. Sanzaro sent a similar letter directly to Phelps on August 1, 2010. In the letter, Mr. Sanzaro requested a response to his allegations.

d. On August 1, 2010, Phelps sent a response letter to Mr. Sanzaro, on behalf of the Ardiente Board. She stated in part: “[U]ntil you provide proof that the dog in question is a registered service dog, I will have to respectfully disagree with your opinion. Unless you have recently provided documentation that we are not aware of, the dog is not a registered service dog and, therefore, I did not violate any of your rights.”

e. On August 8, 2010, Mr. Sanzaro sent separate letters to Corona, Smith, and Harris, detailing his allegation of disability discrimination by Phelps, noting her disability and describing Mrs. Sanzaro’s need to access the Ardiente clubhouse. Mr. Sanzaro wrote that Mrs. Sanzaro required use of, amongst other things, the gym, sauna, pool, Jacuzzi, and library, but was being denied access to the clubhouse.

f. As a result of the letters from Mr. Sanzaro, at least by August 8, 2010, Smith was aware of Mrs. Sanzaro’s disability which resulted in a physical impairment that significantly impaired her ability to walk.

g. Between September 2010 and December 2010, Plaintiffs sent letters to Corona and to individual Board members, including Smith, requesting mitigation and use of the Ardiente clubhouse.

1172*1172 h. On January 20, 2011, counsel for Ardiente sent Plaintiffs a letter rejecting their requests to use the clubhouse. The letter stated in part: “[Y]ou still need to provide the Board with records and/or documents that demonstrate that Mrs. Sanzaro has such an impairment which affects one or more of her major life activities, and that the impairment is related to the need for her having the dog in question residing with her and accompanying her into the Common Areas [of the Ardiente community]…. [Ardiente’s] request that you provide the proper documentation evidencing a certificate of training as a service dog for the chihuahua is well founded in Federal law…. You still have failed to furnish the proper documentation that the Association has been requesting since March 2009. Until such time that you furnish such documentation you will not be allowed to bring the Chihuahua into the [Ardiente] clubhouse as it is a violation of the [Ardiente] Rules and Regulations.” The Ardiente Board was copied on this letter, which included Smith.

i. On January 22, 2011, Mr. Sanzaro sent a letter to Corona, Shea Homes, and Harris, as representatives of the Declarant, and non-party Margo Hughen (“Hughen”), Smith, and Sirna as members of the Board, responding to the January 20, 2011 letter. Mr. Sanzaro disputed that documentation or certification of Angel’s abilities was required by law, and stated that he and his wife, along with Angel, would appear at the clubhouse on January 29, 2011 at 4:00pm for the purpose of regaining access to the clubhouse. He requested that Board Members, representatives of Corona, and counsel for Ardiente be present on that date.

7. The January 2011 Incident

a. Incident 3 took place on January 29, 2011, when the Sanzaros appeared with Angel at the Ardiente clubhouse. Non-party Ron Winkel (“Winkel”) was the Community Manager at the time, and had replaced Phelps at some point in 2010. Winkel refused the Sanzaros’ entry into the clubhouse, and told them that the Board would not allow them to come into the Ardiente clubhouse with the dog until they provided documents that Angel was a service animal. Feeling intimidated by Winkel’s presence, the Sanzaros left the clubhouse with Angel.

8. Other Actions Taken Against the Sanzaros

a. Following the assessments of fines and attorneys’ fees and costs in conjunction with the incidents described above, Ardiente initiated foreclosure proceedings against the Sanzaros.

i. On August 28, 2009, a Lien for Delinquent Assessments in the amount of $ 2,590.80 was recorded against Plaintiffs.

ii. A Notice of Default and Election to Sell was recorded against Plaintiffs’ home on October 13, 2009. Pursuant to the Notice, Plaintiffs owed $ 3,608.80 in assessments to the HOA.

b. As a result of the foreclosure proceedings being initiated, the Sanzaros were forced to file for Chapter 11 bankruptcy in August 2010.

c. Plaintiffs’ debt was not discharged until October 28, 2013. Up to that date, they received notifications that their Ardiente home was in foreclosure. 1173*1173 Prior to the discharge, Plaintiffs made payments to non-party Red Rock Financial Services, the debt collector for Ardiente, in the amount of $ 4,011.40.

V. CONCLUSIONS OF LAW

A. Plaintiffs’ Claims Under the ADA

i. Legal Standard

Title III of the ADA prohibits discrimination in public accommodations, stating that “[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” 42 U.S.C. § 12182(a) (2009); Kohler v. Bed Bath & Beyond of California, LLC, 780 F.3d 1260, 1263 (9th Cir. 2015) (quoting Molski v. M.J. Cable, Inc., 481 F.3d 724, 730 (9th Cir. 2007)). To prevail on a Title III discrimination claim, the plaintiff must show that (1) she is disabled within the meaning of the ADA; (2) the defendant is a private entity that owns, leases, or operates a place of public accommodation; and (3) the plaintiff was denied public accommodations by the defendant because of her disability. Molski, 481 F.3d at 730.

In the context of ADA discrimination claims pertaining to service animals in particular, discrimination is defined in part as “a failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities….” 42 U.S.C. § 12182(b)(2)(A)(ii) (2009). The Department of Justice issued ADA regulations which state in part: “[g]enerally, a public accommodation shall modify policies, practices, or procedures to permit the use of a service animal by an individual with a disability.” 28 C.F.R. § 36.302(c)(1) (2009). “By this regulation the Department of Justice intended that `the broadest feasible access be provided to service animals in all places of public accommodation[.]'” Lentini v. Cal. Ctr. for the Arts, Escondido, 370 F.3d 837, 843 (9th Cir. 2004) (citation omitted). However, failure to make such modifications does not automatically constitute discrimination where the entity “`can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages, or accommodations….'” Id. at 844 (alteration in original) (quoting 42 U.S.C. § 12182(b)(2)(A)(ii)). The Supreme Court has articulated different inquiries to make this determination: “whether the requested modification is `reasonable,’ whether it is `necessary’ for the disabled individual, and whether it would `fundamentally alter the nature of the [goods, services, etc.].” Id. (quoting PGA Tour, Inc. v. Martin, 532 U.S. 661, 683 n.38, 121 S.Ct. 1879, 149 L.Ed.2d 904 (2001)).

ii. Discussion

1. Mrs. Sanzaro is Disabled Under the ADA

All Defendants concede that Mrs. Sanzaro is a disabled individual and has had a disability at all relevant times during the events described above. Therefore, in consideration of the facts presented at trial, the Court finds that Mrs. Sanzaro is disabled as a matter of law. The Court also finds that she provided sufficient documentation about her disability to all Defendants. HOA Defendant Ardiente and business entity Defendants Corona and RMI were aware of Mrs. Sanzaro’s disability at least as of July 27, 2009, the date of the NRED arbitration.

1174*1174 2. The Ardiente Clubhouse is Not a Place of Public Accommodation

42 U.S.C. § 12181(7) provides a list of private entities that are considered public accommodations for the purposes of the ADA, if those entities engage in operations that affect commerce. The majority of the listed examples — including movie theaters and other places of entertainment, convention centers and other places of public gathering, and elementary schools and other places of education — are not analogous to the community facilities within an HOA. However, the statute includes as a place of accommodation “an inn, hotel, motel, or other place of lodging, except for an establishment located within a building that contains not more than five rooms for rent or hire and that is actually occupied by the proprietor of such establishment as the residents of such proprietor ….” 42 U.S.C. § 12181(7)(A) (2009). Despite this broad list of examples, the ADA does not apply to “private clubs or establishments exempted from coverage under Title II of the Civil Rights Act of 1964 (42 U.S.C. 2000-a(e)) ….” 42 U.S.C. § 12187 (2009). The Court must therefore determine whether the Ardiente clubhouse can be considered a place of lodging, such that it qualifies as a public accommodation under the ADA, or whether the clubhouse is a private establishment exempted from the ADA.

The Court finds that the Ardiente clubhouse does not qualify as a place of public accommodation. The Court finds that the entire Ardiente community including the Ardiente clubhouse was a private establishment. Although members of the public were invited to stay overnight in an Ardiente model home and were permitted to use the clubhouse during their stay, the Court finds that the general public did not have unrestricted, general or even limited access to the clubhouse. See Jankey v. Twentieth Century Fox Film Corp., 212 F.3d 1159, 1161 (9th Cir. 2000) (“[Plaintiff’s] argument is premised on the assumption that if a facility falls within a § 12181 category, the [ADA] applies regardless of whether it is open to the public. This argument, for which we have found no support, ignores the plain language of § 12187 which … [like Title II] exempts from coverage any `private club or other establishment not in fact open to the public.‘”) (alteration in original) (citation omitted); see also Clegg v. Cult Awareness Network, 18 F.3d 752, 755 n.3 (9th Cir. 1994) (“Congress … has drawn a distinction between [an] organization—a private club—and the facilities the organization operates. Only when the facilities are open to the public at large does Title II govern.”).

As a general matter, the Ardiente clubhouse and the overall community were not open to the general public. Members of the community could only access entry by use of a transponder to open the gates. Non-resident access to the community including the clubhouse required either obtaining permission for limited access from the community office, being escorted by a member of the community or being provided access by a member of the community. For those members of the public that participated in the “Stay and Play” and “Taste of the Good Life” programs, there was a condition imposed on their stay — namely, those guests had to explicitly indicate an interest in writing in purchasing a home within the Ardiente community prior to staying in the model home and obtaining access to the Ardiente clubhouse. The homes used for this program and the Ardiente clubhouse access provided with the programs were not open to the public as they would be for a hotel. This access was never advertised to the general public as an accommodation where individuals could simply pay money to stay, as they would with a hotel. Any member of the public 1175*1175 interested in using these facilities had to explicitly indicate their interest in exploring the possibility of purchasing a home in the community. As interested guests could not access the clubhouse without first meeting this condition, the Ardiente clubhouse cannot be considered a place of lodging open to the public generally.

As the Ardiente clubhouse does not qualify as a place of public accommodation, Plaintiffs cannot establish a claim for disability discrimination under the ADA.

B. Plaintiffs’ Claims Under the FHA

i. Legal Standard

In the Ninth Circuit, a plaintiff can bring discrimination claims under the FHA and assert either a theory of disparate treatment or disparate impact. Gamble v. City of Escondido, 104 F.3d 300, 304-05 (9th Cir. 1997) (citations omitted). Additionally, a plaintiff may bring suit under the section 3604(f)(3)(B) of the Fair Housing Act Amendments (“FHAA”) for failure to make reasonable accommodations in handicapped housing. Id. at 305 (citation omitted). To advance a disparate treatment discrimination claim, Plaintiffs must first show: (1) Mrs. Sanzaro is a member of a protected class; (2) Mrs. Sanzaro applied for and was qualified for use of the clubhouse with Angel; (3) Mrs. Sanzaro was denied use of the clubhouse with Angel; and (4) Defendants allowed similarly situated parties to use the clubhouse. See Sanghvi v. City of Claremont, 328 F.3d 532, 536 (9th Cir. 2003) (citing Gamble, 104 F.3d at 305). Once Plaintiffs have established the prima facie case, the burden shifts to Defendants to “to articulate a legitimate, nondiscriminatory reason for its action.” Gamble, 104 F.3d at 305. Finally, Plaintiffs must show by a preponderance of evidence that Defendants’ proffered reason is pretextual. Id.

Regarding reasonable accommodation claims under the FHA, unlawful discrimination includes a housing provider’s “refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford [a handicapped] person equal opportunity to use and enjoy a dwelling.” 42 U.S.C. § 3604(f)(3)(B) (2009). A plaintiff must prove five elements to prevail on an FHA reasonable accommodation claim under § 3604(f)(3)(B): “(1) that the plaintiff or his associate is handicapped within the meaning of 42 U.S.C. § 3602(h); (2) that the defendant knew or should reasonably be expected to know of the handicap; (3) that accommodation of the handicap may be necessary to afford the handicapped person an equal opportunity to use and enjoy the dwelling; (4) that the accommodation is reasonable; and (5) that defendant refused to make the requested accommodation.” Dubois v. Ass’n of Apartment Owners of 2987 Kalakaua, 453 F.3d 1175, 1179 (9th Cir. 2006) (citations omitted), cert. denied, 549 U.S. 1216, 127 S.Ct. 1267, 167 L.Ed.2d 92 (2007). “The reasonable accommodation inquiry is highly fact-specific, requiring case-by-case determination.” Id. (quoting United States v. Cal. Mobile Home Park Mgmt. Co., 107 F.3d 1374, 1380 (9th Cir. 1997)).

Although the FHA does not explicitly allow plaintiffs to assert a theory of vicarious liability for individual and business entity agents or employees acting on behalf of principals or employers, the Supreme Court has held that “it is well established that the [Fair Housing] Act provides for vicarious liability.” Meyer v. Holley, 537 U.S. 280, 285, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003). This is because “when Congress creates a tort action, it legislates against a legal background of ordinary tort-related vicarious liability rules and consequently intends its legislation to incorporate those rules.” Id. (citations omitted). Therefore, in determining 1176*1176 whether an employer or principal can be held liable for the acts of an agent or employee, the Court must apply traditional vicarious liability rules which permit a finding of liability where the employee or agent acted within the scope of employment or agency. Id. (citations omitted). However, absent special circumstances, an officer or owner of a business entity may not be held vicariously liable, as it is the business entity that is the principal or employer. Id. at 286, 123 S.Ct. 824 (citations omitted).

ii. Discussion[3]

1. Ardiente, Corona, and RMI qualify as Housing Providers under the FHA

The Court first finds that the FHA applies to the HOA Defendant and the business entity Defendants in this case. Although Defendants do not contest the applicability of the FHA, the Court briefly addresses its scope. In agency guidance regarding reasonable accommodations under the FHA, the Department of Housing and Urban Development (“HUD”) and the Department of Justice (“DOJ”) recognized that the statute applies broadly and covers “individuals, corporations, associations and others involved in the provision of housing and residential lending, including property owners, housing managers, homeowners and condominium associations, lenders, real estate agents, and brokerage services.” Joint Statement of the Dep’t of Housing and Urban Dev. and the Dep’t of Justice, Reasonable Accommodations Under the Fair Housing Act (May 17, 2004) (“HUD and DOJ Joint Statement”), at 3, https://www.hud.gov/sites/documents/DOC_7771.PDF.[4] As the HOA, Ardiente is a provider of private residential housing and is required to follow the FHA in the sale of housing and in the provision of reasonable modifications and accommodations for use and enjoyment of those properties. As Declarant and developer of the community, Corona was also bound by the FHA and can be held liable for violations of its provisions. As the former property management company, RMI is also may be held liable for engaging in activity prohibited by the FHA.

As discussed below, these entities are vicariously liable for the acts of their agents and employees.

2. Mrs. Sanzaro is Handicapped Under the FHA

As discussed above in the context of ADA disability discrimination, the parties no longer dispute that Mrs. Sanzaro qualifies as handicapped under the FHA.[5] Based upon the evidence presented at trial, 1177*1177 the Court concludes as a matter of law that Mrs. Sanzaro has been, at all relevant times, a handicapped individual as defined by the FHA.

3. Defendants Were Reasonably Expected to Know of Mrs. Sanzaro’s Handicap

The Court finds that all Defendants knew and could reasonably have been expected to know of Mrs. Sanzaro’s handicap. They knew that her handicap requires the use of a walker, and Defendants do not dispute that her impairment was a visible one. Ardiente, through the Board members involved in the Incidents as well as correspondence from the Sanzaros, knew that Mrs. Sanzaro had a permanent handicap. Corona, as Declarant, had members on the Board during the three Incidents, and also knew of Mrs. Sanzaro’s handicap. RMI, as employer of the Community Manager, knew of Mrs. Sanzaro’s handicap through its representation at the NRED arbitration and being named as a party in the Sanzaros’ agency actions. Phelps was present at the NRED arbitration, and testified at trial that she knew that Mrs. Sanzaro had a handicap which significantly impaired her mobility. The Court therefore finds that by the July 27, 2009 arbitration these Defendants knew Ms. Sanzaro was disabled and that Angel assisted her with her disability when she had acute pain attacks. The Court also finds that they did not have any information that disputed this.

Smith and Harris, serving on the Board at the behest of the Declarant, knew of Mrs. Sanzaro’s handicap due to their service on the Board and involvement in the decisions to exclude her and Mr. Sanzaro from the clubhouse with Angel. These Defendants thus knew that Mrs. Sanzaro had a qualifying impairment. However, Defendant Wallace did not attend the NRED arbitration and did not directly communicate with the Sanzaros. The Court does not find that he knew or could reasonably be expected to have known of Mrs. Sanzaro’s handicap.

4. An Accommodation was Necessary for Mrs. Sanzaro to Use and Enjoy the Clubhouse

The Court finds that Mrs. Sanzaro was unable to use and enjoy the clubhouse without an accommodation related to her disability. The Court further finds that access to the clubhouse was necessary for the Sanzaros’ enjoyment of their home or dwelling. First, the clubhouse provided various programming and a community meeting place for enjoyment by all homeowners in the community. Homeowners understood its programming, facilities, and meeting spaces to be an integral part of being a homeowner in the community. The Sanzaros purchased their home within the Ardiente community with the expectation that they would be able to use and enjoy the home with the shared amenities in the clubhouse. Indeed, the promotional materials published in the local newspaper advertising the Ardiente community specifically referred to the clubhouse amenities, for the purpose of enticing potential buyers. A buyer of a Shea Homes property not only purchases a home but also purchases access to community facilities that are only available to members of that community. Indeed, that is why clubhouse access and use was an explicit part of the marketing programs, such as “Stay and Play.” Second, the clubhouse was necessary for the enjoyment of the Sanzaros’ home because it contained the office for the community. The office supported homeowners enjoyment of and access to their actual homes by providing, for example, the gate transponder devices that homeowners needed to enter the community itself. Thus, without access to the clubhouse, there could be no access to the community itself by a homeowner. When members of the community 1178*1178 had issues within Ardiente the office in the clubhouse was the initial contact point for resolving issues under the jurisdiction or control of the HOA. The Court finds factually that Mrs. Sanzaro required regular and continuous access to the clubhouse to have full enjoyment of and access to her actual home.

The Court also separately finds that the Ardiente clubhouse qualifies as a dwelling under the FHA. A “dwelling” is defined as: “any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, or portion thereof.” 42 U.S.C. § 3602(b) (2009). Departmental regulations include public spaces and common use areas in the definition of “dwelling.” 24 C.F.R. § 100.204 (2009). The FHA applies to property owners, housing managers, and homeowners and condominium associations. HUD and DOJ Joint Statement, at 3. The Court’s finding that the FHA applies to the Ardiente clubhouse thus naturally follows as a reasonable interpretation of HUD guidance.

For these reasons stated, Mrs. Sanzaro required an accommodation to realize her expectation to use and enjoy the Ardiente clubhouse.

5. Permitting Angel to Accompany Mrs. Sanzaro in the Clubhouse was a Reasonable Accommodation

The Court finds that Angel qualifies as a service animal under the FHA, and Angel’s entry into the clubhouse was a reasonable accommodation for Mrs. Sanzaro. In response to public comment, HUD provided guidance regarding the definition of “service animal.” Pursuant to the 2008 Final Rule on public housing regulations, a housing provider may verify that a disability exists, and inquire as to the need for accommodation such as a service animal, if neither the disability nor the need is “readily apparent.” Preamble to Final Rule, Pet Ownership for the Elderly and Persons With Disabilities, 73 Fed. Reg. 63,833, 63,835 (Oct. 27, 2008).[6] HUD further clarified that, so long as a person with a disability demonstrates a nexus between the disability and the service the animal provides, specialized training is not required, as “[s]ome animals perform tasks that require training, and others provide assistance that does not require training.” Id.

The Court finds that Angel assisted Mrs. Sanzaro with her acute pain attacks and with retrieving her walker. Except for Wallace, all Defendants knew that Angel provided this assistance to Mrs. Sanzaro, because she testified as such during the NRED arbitration and she provided documentation. The Court finds that these Defendants understood and knew that Angel provided these services. These Defendants also knew that Angel did not pose a risk or threat of harm to anyone in the clubhouse or in the community.

In this case, there is a clear nexus between Mrs. Sanzaro’s disability and the services that Angel provides. Mrs. Sanzaro’s disability involved difficulty walking and acute and debilitating pain attacks. Angel was trained and offered assistance with both of these aspects of her disability. Angel assisted Mr. Sanzaro with the alleviation of pain during an acute attack. Angel assisted Mrs. Sanzaro with having constant and easy access to her walker since she is unable to walk without her walker.

1179*1179 Moreover, Defendants have not identified why the accommodation would have been unreasonable. Angel was not disruptive, threatening or harmful to other residents in the community or in the clubhouse. She was so inconspicuous due to her small size and quiet disposition that individuals in the clubhouse entry often did not even notice her. The accommodation to allow Angel to accompany Mrs. Sanzaro into the clubhouse was clearly reasonable based upon the evidence introduced at trial.

6. Defendants Refused to Make the Requested Accommodation

There is no dispute that, on each of the three Incidents discussed above, Defendants Harris, Smith, and Phelps directly refused to accommodate the Sanzaros’ request to bring Angel into the clubhouse. The other Defendants were aware of the Sanzaros’ request for an accommodation and either approved of or ratified the denial of request for an accommodation. Ardiente as HOA directly refused the accommodation. Corona and RMI in addition to being directly contacted were vicariously liable for the acts of their agents or employees whom they oversaw and directed.

In addition to refusing the Sanzaros’ entry with Angel, the Court finds factually that these Defendants repeatedly asked Plaintiffs for more documentation regarding Angel’s services even when they knew the assistance she provided and had sufficient documentation of Angel’s assistance as a service animal. Defendants all insisted on this documentation, in violation of the FHA. These Defendants, as well as Ardiente, Corona, and RMI as principals, are liable for failure to provide a reasonable accommodation to the Sanzaros.

The Court further notes that at no point were the Sanzaros required to submit a written request for accommodation even though they did make such a written request. See HUD and DOJ Joint Statement, at 10 (“An applicant or resident is not entitled to receive a reasonable accommodation unless she requests one. However, the Fair Housing Act does not require that a request be made in a particular manner or at a particular time…. [T]he requester must make the request in a manner that a reasonable person would understand to be a request for an exception, change, or adjustment to a rule, policy, practice, or service because of a disability… [and] a reasonable accommodation request can be made orally or in writing ….”). All Defendants knew from the Sanzaros’ actions and communications, including correspondence, that they were seeking an accommodation to allow Mrs. Sanzaro to bring Angel into the clubhouse with her. Each time the Sanzaros entered or attempted to enter the clubhouse with Angel, it was clear that they were seeking an exception to the policy of animals being prohibited in the clubhouse. This request was reinforced by the Sanzaros’ communications and submission of documentation related to Angel. The Sanzaros also explicitly made a request for Angel to be allowed into the clubhouse. These Defendants’ refusal to allow the Sanzaros to enter the clubhouse with Angel therefore constitutes a failure to reasonably accommodate their request.

The Court therefore finds in favor of Plaintiffs against all of Defendants, except Defendant Wallace, on their FHA reasonable accommodation claim.

C. Plaintiffs’ Claims Under NRS § 651.075

i. Legal Standard

Under Nevada law, “public accommodation” has a similar definition as set forth in the ADA. NRS § 651.050 (2009). Nevada law provides that it “is unlawful for a place of public accommodation to: (a) Refuse admittance 1180*1180 or service to a person with a disability because the person is accompanied by a service animal” and “(f) Require proof that an animal is a service animal or service animal in training.” NRS § 651.075(1) (2009); See, e.g., Clark Cty. Sch. Dist. v. Buchanan, 112 Nev. 1146, 924 P.2d 716, 719 (1996) (applying NRS § 651.075(1) to a plaintiff training a service dog). However, “[a] place of public accommodation may: (a) Ask a person accompanied by an animal: (1) If the animal is a service animal or service animal in training; and (2) What tasks the animal is trained to perform or is being trained to perform.” NRS § 651.075(2) (2009). At the time of Incident 1, a service animal was defined under Nevada law as “an animal that has been trained to assist or accommodate a person with a disability.” NRS § 426.097 (2009).

ii. Discussion

Plaintiffs’ claim under NRS § 651.075 fails for the same reasons noted above regarding their ADA claim. The Ardiente community and clubhouse were part of a private establishment and cannot be considered public accommodations.

D. Damages

Based on its reasoning set forth above, the Court finds that damages are only available to Plaintiffs for violations of the FHA.

Under the FHA, a plaintiff may seek actual and punitive damages, as well as injunctive relief, if the court finds evidence of a discriminatory housing practice. 42 U.S.C. § 3613(c)(1). In an action under the FHA, if a plaintiff establishes actual damages, the Court is required to award compensatory damages. U.S. v. City of Hayward, 36 F.3d 832, 839 (9th Cir. 1994) (citations omitted). “Although compensatory damages need not be determined with certainty, they may not be based upon `mere speculation or guess.'” Silver Sage Partners, LTD v. City of Desert Hot Springs, 251 F.3d 814, 824 (9th Cir. 2001) (quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S.Ct. 248, 75 L.Ed. 544 (1931)). While a court may award lump sum damages, a damages award must be sufficiently detailed. See Simeonoff v. Hiner, 249 F.3d 883, 891-92 (9th Cir. 2001) (finding that lump sum awards of $ 6500 for past lost wages and $ 130,000 for future lost wages did not specify how the amounts were calculated but that “the district court’s findings of fact are adequately detailed to permit meaningful appellate review of any substantive challenge”). The Ninth Circuit will not reverse an award for damages “unless it is clearly unsupported by evidence, or it shocks the conscience.” Id. at 893 (citation and quotation marks omitted).

To obtain punitive damages under the FHA, a plaintiff must show that defendants acted with reckless indifference. Fair Hous. Council of San Diego, Joann Reed v. Penasquitos Casablanca Owner’s Ass’n, 381 Fed.Appx. 674, 676-77 (9th Cir. 2010) (citing Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002)). Reckless indifference is found where a defendant, at minimum, “discriminate[s] in the face of a perceived risk that its actions will violate federal law” but does not require that defendant “engage in conduct with some independent, egregious quality” to be subject to punitive damages. Id. (quoting Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535, 537, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999)).

i. Compensatory Damages

The Court finds that Plaintiffs have established actual damages resulting from the failure of a reasonable accommodation being provided. The Court finds that Plaintiffs have established non-economic 1181*1181 damages under the requisite legal standard. Plaintiffs incurred non-economic damages including pain and suffering, humiliation, and emotional distress due to being driven out of their Ardiente home, facing death threats and harassment from community members, being undermined publicly and privately by the Ardiente Board and Phelps, having to file bankruptcy, and being unable to use and enjoy the Ardiente clubhouse facilities with Angel for several years. The Court therefore imposes compensatory damages for these non-economic damages in the amount of $ 350,000 against Defendants Harris, Smith, Phelps, Ardiente, Corona, and RMI. These damages are joint and several. The Court’s award is based upon the findings in this case, and the Court emphasizes the salient findings as to each defendant below.

The Court awards compensatory damages against Harris as an agent of Ardiente and Corona during the time of the first Incident. The Court finds that Harris is liable for requiring the Sanzaros to provide documentation that the FHA did not require. Harris approved Phelps’s communications on behalf of the Board that prevented the Sanzaros from using the Ardiente clubhouse with Angel without providing the requested documentation. Harris is additionally liable for ratifying the assessment of fines against the Sanzaros for bringing Angel into the Ardiente clubhouse in March 2009. Further, Harris directed Phelps to exclude the Sanzaros from the Ardiente clubhouse with Angel between March 2009 and February 2010.

The Court similarly awards compensatory damages against Smith as an agent of Ardiente and Corona during the time of Incidents 2 and 3. The Court finds that Smith participated in the decisions to continue to exclude the Sanzaros and Angel from the Ardiente clubhouse and unlawfully require certification of Angel’s training between 2010 and 2013.

The Court imposes compensatory damages against Phelps as Community Manager and an agent of RMI. During Incident 1, Phelps initially excluded Mrs. Sanzaro from the Ardiente clubhouse and called HOA security because Angel was present in the facility despite Mrs. Sanzaro using Angel as an assistance animal at that time. Following the first Incident, Phelps sent multiple emails to other Ardiente homeowners with misleading information about the legal requirements for service animals, cultivating the atmosphere of open hostility toward the Sanzaros. Phelps attended the NRED arbitration and heard Mrs. Sanzaro testify about Angel’s assistance tasks, and nonetheless continued to prevent the Sanzaros from obtaining a reasonable accommodation to use the clubhouse. Phelps’s requests for documentation and certification were improper and her conduct was motivated by personal animus against the Sanzaros.

The Court imposes compensatory damages against Ardiente. The Court finds that Ardiente, through its Board of Directors, directed the exclusion of the Sanzaros and Angel from the clubhouse during all three Incidents. The Board, on behalf of Ardiente, also imposed fines upon the Sanzaros and required them to provide certification and other documentation related to Angel’s training, despite the Sanzaros providing sufficient information in July 2009 to allow the Board to evaluate the nexus between Mrs. Sanzaro’s disability and her need for Angel. The Board also took no action to address or mitigate the hostility and threats expressed by other members of the Ardiente community toward the Sanzaros, and in fact fomented this hostility. Additionally, Ardiente failed to train its Board members on the requirements of discrimination law.

1182*1182 The Court awards compensatory damages against Corona as a principal of Harris and Smith and for ratifying their actions. The Court finds that, pursuant to Ardiente’s governing documents, Corona, as Declarant, had the authority to appoint and did appoint and oversee voting members to the Ardiente Board during the Incidents at issue in this case. Corona exercised this authority and maintained majority representation on the Board until sometime in 2010. It retained representation during 2011, even though it no longer had majority control of the Board. Therefore, during all three Incidents, Corona had at least one voting member on the Ardiente Board. Corona is liable for actions described above, including the exclusion of the Sanzaros and Angel from the clubhouse and the failure to address at Board meetings or in correspondence with homeowners the threats against the Sanzaros. Corona also failed to train its Board representatives on the requirements of discrimination law.

The Court awards compensatory damages against RMI as a principal and employer of Phelps and for ratifying and directing her actions. The Court finds that RMI failed to properly train Phelps on the requirements of federal and state discrimination law. RMI received complaints from the Sanzaros in 2009 following the first Incident, and nevertheless failed to inform Phelps that the law did not require the Sanzaros to provide further documentation of Angel’s training. Neither federal nor state law operative in 2009 required any particular certification for a service animal. Furthermore, RMI sent a representative to the 2009 NRED arbitration, where Mrs. Sanzaro testified about how Angel assisted her. RMI received documentation from the Sanzaros about how Angel assisted Mrs. Sanzaro immediately after the NRED arbitration — that documentation was sufficient to establish that Mrs. Sanzaro was disabled and required assistance from Angel which included bringing Angel into the Ardiente clubhouse.

The Court declines to impose liability or damages against Wallace, CEO of RMI. The Court finds that vicarious liability cannot be imposed against Defendant Wallace, pursuant to Meyer v. Holley. Plaintiffs have produced no evidence that Wallace directly participated in the denial of the reasonable accommodation or ratified its denial. As Wallace cannot be held liable merely for being an owner or officer of RMI, the Court does not award any damages against this Defendant.

ii. Punitive Damages

The Court finds that certain Defendants acted with reckless indifference as to the rights of disabled individuals seeking reasonable accommodations. The Court therefore awards punitive damages to the Plaintiffs in the amount of $ 285,000 and finds that this amount appropriately “punish[es] unlawful conduct and deter[s] its repetition.” Philip Morris USA v. Williams, 549 U.S. 346, 352, 127 S.Ct. 1057, 166 L.Ed.2d 940 (2007) (citations and quotation marks omitted). The Court finds that the conduct of Defendants Ardiente, Harris, Smith, and Phelps in the violation of the Plaintiffs’ rights under the FHA warrants the imposition of punitive damages. This conduct includes, but is not limited to, (1) continuing to, in a harassing and malicious manner, request documentation about Mrs. Sanzaro’s need for Angel’s assistance even after sufficient documentation was provided to them regarding Mrs. Sanzaro’s disability and the ways in which Angel assisted her; (2) actively and wantonly preventing the Sanzaros from using the clubhouse once that documentation was provided; (3) sending or directing to be sent communications on behalf of the Board that portrayed the Sanzaros as litigious and untruthful and knowing that 1183*1183 such communications about the Sanzaros would contribute to a hostile, threatening and intimidating living environment; and (4) failing to discourage Ardiente residents from harassing and threatening the Sanzaros at open meetings and through anonymous letters. The Court further finds that these Defendants acted with personal animus toward the Sanzaros, which fueled the antagonism among the community.

Defendants Corona and RMI are vicariously liable for these reckless acts. At all times, these Defendants were aware of, oversaw and ratified the actions of their agents.

The Court, based upon the above findings, awards punitive damages as follows:

a. Defendant Ardiente: $ 150,000

b. Defendant Phelps: $ 25,000

c. Defendant Corona: $ 15,000

d. Defendant RMI: $ 75,000

e. Defendant Harris: $ 10,000

f. Defendant Smith: $ 10,000

iii. Injunctive Relief

In their Complaint, Plaintiffs make the following requests for injunctive relief: (1) Plaintiffs request that the Court enjoin Defendants from committing any further discriminatory acts; (2) Plaintiffs ask the Court to order Ardiente to incorporate policies and procedures for the disabled into their governing documents; and (3) Plaintiffs seek to enjoin Defendants from enforcing any future amendments to governing documents that have not been legally implemented by a majority vote of the HOA’s members, recorded with the Clark County Recorder, and mailed to all members of the HOA. The Court does not find it appropriate to order injunctive relief at this time. Plaintiffs have essentially asked this Court to order that Defendants follow the law. This is not a proper basis for injunctive relief in this case.

E. Attorneys’ fees and costs

The Court is authorized to award attorneys’ fees and costs to the prevailing party in an FHA action. 42 U.S.C. § 3613(c)(2). The Court awards Plaintiffs attorneys’ fees and costs to the extent available in an amount to be decided following the entry of Judgment.

VI. JUDGMENT

The Court finds in favor of Plaintiffs. The Court will award to Plaintiffs: $ 350,000 in compensatory damages, and $ 285,000 in punitive damages, pursuant to 42 U.S.C. § 3613(c)(1). The Court also awards attorneys’ fees to the extent available and costs of litigation to Plaintiffs, pursuant to 42 U.S.C. § 3613(c)(2). Plaintiffs are ordered to submit a Motion for Attorneys’ Fees and Costs and attached list of litigation costs to the Court within thirty days of entry of this order.

The Clerk of Court is instructed to enter judgment accordingly and to close this case.

VII. Outstanding Motion for Reconsideration

The Court now considers Plaintiffs’ pending Motion for Reconsideration [ECF No. 432] of the Court’s Order [ECF No. 403] taxing costs. The Court has reviewed the Court’s Order and finds that the Order taxing costs is appropriate and shall not be reconsidered. To the extent that Plaintiffs have raised concerns about service, the Court is not convinced that there was not service. In any event, Plaintiffs have now viewed the itemization of costs and have not raised substantive or persuasive arguments as to the actual costs themselves. Moreover, the Court has now entered judgment as to all parties so there is no further issue of the Order being premature. 1184*1184 The Order taxing costs shall remain in effect for the full amount.

IT IS SO ORDERED.

[1] All statutes cited herein refer to the operative versions in 2009, at the time of the first alleged incident of discrimination.

[2] The specific Rule & Regulation Plaintiffs were alleged to have violated was Article V, Section A.2, which provided: “Except for handicap assistance, animals are prohibited in the clubhouse.”

[3] To the extent that any factual statements in this “Discussion” section are not explicitly noted in the “Factual Findings” section, see supra, the Court incorporates them by reference into that section and makes such additional factual statements as factual findings based upon the record and in support of the order here.

[4] The Court finds it appropriate to rely upon this agency guidance where the FHA itself is unclear as to its scope. See National Cable & Telecomm. Ass’n v. Brand X Internet Serv., 545 U.S. 967, 980, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) (“If a statute is ambiguous, and if the implementing agency’s construction is reasonable, Chevron requires a federal court to accept the agency’s construction of the statute ….”) (quoting Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843-44 & n.11, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).

[5] The terms “disabled” and “handicapped” can be used interchangeably, as the Supreme Court has recognized that “the ADA’s definition of disability is drawn almost verbatim from the definition of “handicapped individual” included in the Rehabilitation Act of 1973… and the definition of “handicap” contained in the Fair Housing Amendments Act of 1988 …. Bragdon v. Abbott, 524 U.S. 624, 631, 118 S.Ct. 2196, 141 L.Ed.2d 540 (1998) (citations omitted).

[6] HUD also noted that there was no specific definition of the term “service animal,” and used the term interchangeably with “assistance animal” in accordance with reasonable accommodation law.

 

Civil Code §4741. Impermissible Rental Restrictions and Prohibitions

California Civil Code  >   Part 5. Common Interest Developments (Davis-Stirling Common Interest Development Act)  >  Chapter 5. Property Use and Maintenance  > Article 1. Protected Uses  >  Civil Code §4741 Impermissible Rental Restrictions and Prohibitions

*New statutes and amendments effective January 1, 2021 are shown in bold, underline italics. [ ] indicates an amendment of deleted text only.

(a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits, has the effect of prohibiting, or unreasonably restricts the rental or leasing of any of the separate interests, accessory dwelling units, or junior accessory dwelling units in that common interest development to a renter, lessee, or tenant.
(b) A common interest development shall not adopt or enforce a provision in a governing document or amendment to a governing document that restricts the rental or lease of separate interests within a common interest to less than 25 percent of the separate interests. Nothing in this subdivision prohibits a common interest development from adopting or enforcing a provision authorizing a higher percentage of separate interests to be rented or leased.
(c) This section does not prohibit a common interest development from adopting and enforcing a provision in a governing document that prohibits transient or short-term rental of a separate property interest for a period of 30 days or less.
(d) For purposes of this section, an accessory dwelling unit or junior accessory dwelling unit shall not be construed as a separate interest.
(e) For purposes of this section, a separate interest shall not be counted as occupied by a renter if the separate interest, or the accessory dwelling unit or junior accessory dwelling unit of the separate interest, is occupied by the owner.
(f) A common interest development shall comply with the prohibition on rental restrictions specified in this section on and after January 1, 2021, regardless of whether the common interest development has revised their governing documents to comply with this section. However, a common interest development shall amend their governing documents to conform to the requirements of this section no later than December 31, 2021.
(g) A common interest development that willfully violates this section shall be liable to the applicant or other party for actual damages, and shall pay a civil penalty to the applicant or other party in an amount not to exceed one thousand dollars ($1,000).
(h) In accordance with Section 4740, this section does not change the right of an owner of a separate interest who acquired title to their separate interest before the effective date of this section to rent or lease their property. [2020]

Civil Code §2924n. Purchasers’ Obligations to Tenants

California Civil Code  >  Civil Code §2924m. Purchasers at Trustee’s Sale

*New statutes and amendments effective January 1, 2021 are shown in bold, underline italics. [ ] indicates an amendment of deleted text only.

Nothing in this article shall relieve a person deemed the legal owner of real property when the trustee’s deed is recorded from complying with applicable law regarding the eviction or displacement of tenants, including, but not limited to, notice requirements, requirements for the provision of temporary or permanent relocation assistance, the right to return, and just cause eviction requirements. [2020]