Henlopen Landing Homeowners Association v. Vester ( 2015 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: July 20, 2015
Date Decided: September 14, 2015
Michael R. Smith, Esquire Neilson C. Himelein, Esquire
The Smith Firm, LLC Community Legal Aid Society, Inc.
8866 Riverside Drive 100 W. 10th Street, Suite 801
P.O. Box 1587 Wilmington, Delaware 19801
Seaford, Delaware 19973
William E. Manning, Esquire Kathaleen St. J. McCormick, Esquire
Richard A. Forsten, Esquire Elisabeth S. Bradley, Esquire
Allison J. McCowan, Esquire Matthew C. Bloom, Esquire
Saul Ewing LLP Young Conaway Stargatt & Taylor, LLP
222 Delaware Avenue, Suite 1200 Rodney Square
Wilmington, Delaware 19801 1000 North King Street
Wilmington, Delaware 19801
Re: Henlopen Landing Homeowners Ass’n v. Vester,
Civil Action No. 7229-MA
Dear Counsel:
This Letter Opinion involves exceptions to the Final Report of Master
Ayvazian granting the Respondents’ Motion to Amend, issued February 25, 2015.
The matter was partially resolved by me from the bench on June 5, 2015; the
following represents my decision on the remainder of the issues presented on
exception.1
1
This Letter Opinion supplements, and does not supersede or replace, my bench rulings of June
5, 2015.
In November 2011, JaKara Vester filed a housing discrimination complaint
with the Delaware Division of Human Relations (the ―DDHS Action‖) alleging
discrimination based on race, disability, and familial status in connection with the
Henlopen Landing Homeowners Association’s (―HOA‖) refusal to approve certain
requested accommodations.2 Ms. Vester also alleged in the DDHS Action that the
HOA engaged in conduct that intimidated or coerced her, or interfered with her
rights under the Federal and State Fair Housing Acts (together, the ―Fair Housing
Acts‖). In a February 2012 petition in this Court, the HOA requested relief
pursuant to 10 Del. C. § 348 to enforce deed restrictions against Ms. Vester and her
husband, Russell H. Vester (the ―348 Action‖), relating to, among other things, an
allegedly improper extension of their driveway.3 The Vesters removed the 348
Action to the federal district court, and alleged via counterclaim, among other
claims, that the 348 Action itself was an attempt to coerce, intimidate, and threaten
the Vesters, and interfere with their exercise of rights granted or protected by the
Fair Housing Acts as alleged in the DDHS Action. These particular counterclaim
2
Ms. Vester sought approval for, as relevant here, (1) installation of a six-foot high fence, citing
one of her children’s disability as the reason, which height was approved, (2) widening the
existing driveway, and (3) extending the location of the fence closer to the front of the lot than
was otherwise permitted. There is a dispute as to whether Ms. Vester noted her son’s disability
as the reason for the request to extend the fence toward the front of the lot, or whether she
indicated that it was related to the family’s dog. The driveway extension and fence extension
were denied, and when the Vesters expanded their driveway nonetheless, the HOA suspended
the family’s pool privileges due to alleged violations of the restrictions.
3
The petition also alleged violations for plantings in the area between a neighborhood road and
sidewalk, as well as improper placement of garbage receptacles.
2
allegations (the ―Retaliation Counterclaims) are at issue in this Letter Opinion.
In May 2013, the district court remanded the 348 Action to this Court.
Master Ayvazian appointed a mediator, pursuant to the mandatory mediation
provisions in Section 348. The mediation was unsuccessful, and the parties
proceeded to litigate before the Master. On February 27, 2014, the Vesters filed a
Motion for Joinder and a Motion to Amend Their Answer, Defenses and
Counterclaims to add additional parties (the ―Motion to Amend‖).4 The Motion to
Amend sought to add Preston Dyer, the president of the HOA’s board of directors,
and Premier Property and Pool Management, LLC (―PPPM‖), the HOA’s
management company, to the Vesters’ counterclaims.
Following briefing and argument, the Master issued a draft report,
recommending granting the Motion to Amend and adding Dyer as a party
defendant to Counts II, III, V, and VI of the counterclaims, and adding PPPM as an
additional party defendant to Counts I and IV of the counterclaims. The Petitioner
took exceptions, and following briefing and argument, the Master issued her Final
Report, which again recommended granting the Motion to Amend. The Petitioner
has taken exceptions to the Final Report.
Dyer and PPPM requested the opportunity to submit briefing on the
4
The parties submitted a stipulated scheduling order, which the Master entered on December 3,
2013, allowing for joinder of other parties and amendments to the pleadings to be made by
February 28, 2014.
3
Petitioner’s exceptions, which I allowed. I heard oral argument on the exceptions
on June 5, 2015, partially resolving the matter from the bench with respect to Dyer,
and denying PPPM’s exception to the Master’s report. I requested additional
briefing on the language in 42 U.S.C. § 3613(a)(1)(A) and 6 Del. C. § 4613 to aid
in my determination as to whether an amendment adding Dyer as a party to the
Retaliation Counterclaims would be futile in light of the statutory limitations
period under the Fair Housing Acts. In light of the record and the supplemental
briefing, I conclude that such an amendment would be futile.
A. Standard of Review
The findings of fact and law in Masters’ Reports are reviewed by this Court
de novo.5
B. The Amendment Adding Dyer to the Retaliation Counterclaims Would be
Futile
Rule 15(a) provides that leave to amend should be ―freely given when
justice so requires.‖6 ―Amendments to the pleadings typically are permitted unless
(1) the amendment would result in undue prejudice or undue delay, (2) the
amendment would be futile, or (3) the party seeking leave to amend is acting in
bad faith or in an effort to delay the proceedings.‖7
5
DiGiacobbe v. Sestak, 743 A.2d 180, 184 (Del. 1999).
6
Ct. Ch. R. 15(a).
7
Saitis v. Malatesta, 2013 WL 2015546, at *1 (Del. Ch. May 13, 2013).
4
Dyer opposes the amendment to add him to the Retaliation Counterclaims on
the ground that it would be futile as time-barred under the two-year limitations
period in the Federal and State Fair Housing Authority Acts. He points out that the
last discriminatory act alleged in the proposed Retaliation Counterclaims occurred
on February 7, 2012, when the 348 Action was filed, or, at the latest, on February
14, when the Vesters’ counsel received a copy of the complaint in that action,
which receipt counsel confirmed the following day. The Vesters were formally
served with the complaint on February 27, 2012 and the Motion to Amend was
filed on February 27, 2014.
Both the Federal and State Fair Housing Acts impose a two-year limitation
period by statute: in the Federal Act running from the later of the ―occurrence or
termination‖ of the wrong; in the State Act after the later of the occurrence,
termination or actual or reasonable discovery thereof.8 I found from the bench that
receipt of the complaint by the Vesters’ attorney represented the date from which
the Vesters should have discovered the allegedly retaliatory 348 Action.9 Thus,
8
42 U.S.C. § 3613(a)(1)(A) (emphasis added); 6 Del. C. § 4613(a)(1)a.
9
The Vesters argued that, under the State Fair Housing Act, the statute begins to run from the
date the discriminatory practice has been discovered or should have been discovered, which, in
this instance, they suggested to be the date the 348 Action petition was served on them—
February 27, 2012, exactly two years prior to the Motion to Amend. However, the record
reflects that their counsel was served prior to that date, on February 14, 2012, which he
acknowledged on February 15. I ruled from the bench that the date he was made aware of the
348 Action was the latest possible date it could be said that the discriminatory act was discovered
or should have been discovered by the Vesters, thus leaving only the question of whether the
discriminatory practice is ongoing in light of the fact that the 348 Action is still pending.
5
assuming the Vesters’ retaliation cause of action accrued with the occurrence of, or
their discovery of the occurrence of, that complaint, the allegations regarding the
348 Action they attempt to plead against Dyer in the Retaliation Counterclaims are
time-barred. The Vesters, however, point out that the limitations period runs from
the latter of the ―occurrence or termination‖ of the wrong, and argue that, in light
of the continued pendency of the 348 Action, the wrong represented by the filing
of that action has not yet ―terminated.‖ In other words, according to the Vesters,
the limitation period has not yet begun to run. This Letter Opinion addresses that
issue: whether the continued maintenance of the Section 348 Action is an
―unterminated‖ violation of the State and Federal Fair Housing Acts, such that the
two-year limitations period has not yet expired.
Under 42 U.S.C. § 3613(a)(1)(A), private enforcement claims under the Fair
Housing Act must be filed ―not later than two years after the occurrence or
termination of an alleged discriminatory housing practice . . . whichever occurs
last.‖10 Delaware’s fair housing law similarly provides that, as relevant here, a
civil action must be commenced ―not later than 2 years after the occurrence or the
termination of an alleged discriminatory housing practice.‖11
10
42 U.S.C. § 3613(a)(1)(A).
11
6 Del. C. § 4613(a)(1)a reads, in pertinent part:
An aggrieved person may commence a civil action . . . not later than 2 years after
the occurrence or the termination of an alleged discriminatory housing practice,
[or] not later than 2 years after such practice has been discovered or reasonably
6
The Vesters assert that the amendment would not be futile because the filing
of the § 348 Action was a discriminatory practice, and, since the action remains
pending, that discriminatory practice has not yet ―terminated.‖ Under this theory,
the statute of limitations would not begin to run until a final disposition of this
case.
The parties agree that the ―or termination‖ limitation trigger was added to
the Federal Fair Housing Act (and presumably, to the State Act) in response to the
United States Supreme Court’s decision in Havens Realty Corp. v. Coleman,12
which allowed otherwise untimely claims to proceed under the ―continuing
violations doctrine.‖ Havens focused on a ―continuing pattern, practice, and policy
of unlawful racial steering,‖ which was based ―not solely on isolated incidents . . . ,
but [involved] a continuing violation manifested in a number of incidents.‖13
Under Havens, for purposes of the statute of limitations, a continuing violation
―should be treated differently from one discrete act of discrimination. Statutes of
limitations . . . are intended to keep stale claims out of courts. Where the
challenged violation is a continuing one, the staleness concern disappears.‖14
should have been discovered by the aggrieved person . . . whichever occurs
last . . . .
As described above, with the respect to the Retaliation Counterclaims the ―alleged
discriminatory action‖—the filing of the 348 action—was or should have been discovered more
than two years prior to the Vesters’ Motion to Amend.
12
455 U.S. 363 (1982).
13
Id. at 381.
14
Id. at 380.
7
The filing of a lawsuit—at least as alleged here—does not fit within that
rationale; it is not a pattern of multiple incidents that, like racial steering, continues
over time. The Vesters concede that ―the alleged discriminatory behavior . . .
[was] the commencement of this action . . . .‖15 The commencement of the 348
Action, if it was retaliatory, was a discrete act that was completed upon filing, and
discovered upon service to the Vesters’ counsel. This is demonstrated by the fact
that the original ―Answer, Defenses and Counterclaims‖—filed by the Vesters in
2013—alleged that this action was ―motivated by discriminatory animus‖ and was
actionable under the Fair Housing Acts.16 Thus, I do not find that the existence of
the 348 Action represents a continuing violation.
The Vesters point to a number of design and construction cases where courts
have apparently applied the continuing violations doctrine in different ways, some
concluding that completion of one building is a single occurrence with others
concluding that there is a continuing violation while multiple buildings are
constructed. The Vesters note that ―all [of these cases] appear to apply the
termination of the discriminatory behavior, e.g. date construction completed, date
last certificate of occupancy was issued and date last non-compliant building was
15
Respondents’ Supplemental Reply Letter, July 20, 2015, at 4 (emphasis added); see
Respondents’ Amended Answer, Defenses and Counterclaims, at 17 (alleging that Dyer’s
―actions . . . in commencing this action‖ violated that Fair Housing Acts).
16
―Answer, Defenses and Counterclaims,‖ at 5, 15–16. As Dyer and PPPM point out, the
Vesters raised the Retaliation Counterclaims as early as their March 14, 2012 Notice of Removal
to the United States District Court.
8
constructed, as the trigger for the statute of limitations.‖17 Here, they contend,
―[w]hether the retaliation is a single act of discriminatory behavior or a continuing
violation, the termination of the discriminatory behavior, the lawsuit against
Respondents, is what triggers the statute of limitations.‖18 That conclusion is not
warranted from the rationale of the construction cases, which involve the design
and construction of buildings non-compliant with a provision in the Fair Housing
Acts requiring that access for disabled individuals be provided. In each case,19 the
court focuses on the occurrence of the design and construction; whether that
occurrence happens upon the completion of construction of one building or, under
a continuing violation theory, the termination of a multi-building project, the
occurrence takes place, and the limitation period accrues, when construction is
completed and the project ready for occupancy, not, by analogy to the Vesters’
argument here, when the discriminatory feature is remedied. Moreover, the
Vesters’ position is inconsistent with the notion of a continuing practice. It is not
clear to me how ―a single act of discriminatory behavior‖ could have a
―termination‖ separate from the ―single act‖; either an act of discrimination is a
discrete act, initiated and completed (an ―occurrence‖), or it is a pattern of
17
Respondents’ Supplemental Reply Letter, July 20, 2015, at 4 (citing Garcia v. Brockway, 526
F.3d 456 (9th Cir. 2008) (on rehearing en banc); Equal Rights Ctr. v. AvalonBay Communities,
Inc.¸ 2009 WL 1153397 (S.D. Md. Mar. 23, 2009); Kuchmas v. Towson Univ., 2007 WL
2694186 (D. Md. Sept. 10, 2007); Moseke v. Miller and Smith, Inc., 202 F.Supp.2d 492 (E.D. V.
2002)).
18
Id. (emphasis added).
19
See n. 17 and the cases cited therein.
9
discriminatory behavior (a ―continuing violation‖), the ―termination‖ of which
would start the clock on the statutory period. The Vesters’ construction would
read the ―occurrence‖ accrual trigger out of the statutory language. I note also that
application of the Vesters’ construction of the statute would mean that a cause of
action arising from the alleged filing of a lawsuit for a discriminatory purpose
would potentially be viable for many years: the two-year statutory period tacked on
to a multi-year litigation of the underlying action. Such a result invites the very
problems and injustices—involving proof and defense of stale tort claims based
upon frail and fading human memories—that a two-year limitation period is
designed to prevent.20
To recapitulate, the 348 Action is not a ―continuing violation,‖ such that its
termination will begin the statutory period. A ―continuing violation is occasioned
by continual unlawful acts, not by continual ill effects from an original
violation.‖21 Here, no wrongful act or practice has occurred within the limitation
period, the sine qua non of a continuing violation.22 The Vesters do not allege that
the litigation, whatever its motivation, has been maliciously maintained or
vexatiously prosecuted, and if they did, separate remedies for such behavior would
be available. Rather, they agree that the retaliatory act, if any, was the
20
See Havens, 455 U.S. at 380 (noting that staleness of claims is of lesser concern in cases where
ongoing violations are occurring).
21
Garcia, 526 F.3d at 462 (emphasis added).
22
Moseke, 202 F.Supp.2d at 504–05.
10
commencement—the filing—of the suit. For purposes of the Federal Fair Housing
Act, the statute of limitations began to run from the occurrence of that filing,
February 7, 2012. The retaliatory act was discovered no later than when the
Vesters’ counsel acknowledged receipt of the complaint on February 15; for
purposes, then, of the State Fair Housing Act, the statute of limitations began to
run no later than February 15, 2012. The Retaliation Counterclaims against Dyer
are time-barred, and the amendment would be futile. Accordingly, the Motion to
Amend, as it relates to the Retaliation Counterclaims against Dyer, is denied.
The matter is remanded to the Master for further proceedings. To the extent
the foregoing requires an Order to take effect, IT IS SO ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
11