Theresa Seeberger v. Davenport Civil Rights Commission

IN THE COURT OF APPEALS OF IOWA
No. 16-1534
Filed April 18, 2018
THERESA SEEBERGER,
Petitioner-Appellee/Cross-Appellant,
vs.
DAVENPORT CIVIL RIGHTS COMMISSION,
Respondent-Appellant/Cross-Appellee,
and
MICHELLE SCHREURS,
Intervenor-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Michael D. Huppert,
Judge.
The Davenport Civil Rights Commission and Michelle Schreurs appeal and
Theresa Seeberger cross-appeals a district court ruling on Seeberger’s petition for
judicial review. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
ON APPEAL; AFFIRMED ON CROSS-APPEAL.
Latrice L. Lacey, Davenport, for appellant Davenport Civil Rights
Commission.
Dorothy A. O’Brien of O’Brien and Marquard, P.L.C., Davenport, for
appellant Michelle Schreurs.
Randall D. Armentrout and Katie L. Graham of Nyemaster Goode, P.C.,
Des Moines, for appellee.
Heard by Potterfield, P.J., and Mullins and Bower, JJ.
2
MULLINS, Judge.
The Davenport Civil Rights Commission (Commission) and Michelle
Schreurs appeal a district court ruling on Theresa Seeberger’s petition for judicial
review following an agency determination of Schreurs’s housing-discrimination
complaint. The Commission contends the district court erred in concluding
Schreurs’s complaint was not filed under the federal Fair Housing Act (FHA) and
the Davenport Municipal Code (2014) does not authorize an award of attorney fees
in the context of discriminatory housing practices. Schreurs argues the district
court erred in concluding the municipal code and FHA do not entitle her to an award
of attorney fees incurred during administrative proceedings and abused its
discretion in refusing to award her attorney fees in the judicial-review proceeding.
Theresa Seeberger cross-appeals the same ruling. She asserts that
holding her liable for her discriminatory statements violates the First Amendment
to the United States Constitution and article I, section 7 of the Iowa Constitution
because the statements she made amount to protected speech.
I. Background Facts and Proceedings
Seeberger purchased a three-bedroom residential property in Davenport,
Iowa in 2011. After living in the residence for approximately one year, Seeberger
married in October 2012 and moved into her spouse’s home. Seeberger owned
four cats at this time, but her spouse was allergic to them. Seeberger was not
willing to give up her house or her cats, so she decided to retain ownership of the
home and rent the rooms to tenants. After she began renting the property to
tenants, she visited the property nearly every day to feed her cats. She also kept
much of her clothing and many of her furnishings in the home. In or about August
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2013, Schreurs and her daughter moved into the property as tenants; the tenancy
was not memorialized in a written agreement. At that time, there were also two
other tenants residing in the home. Also around that time, Seeberger separated
from her spouse and moved to a nearby apartment, where she lived until the end
of August 2014. By mid-2014, Schreurs and her daughter were the only tenants
in the home. Seeberger testified that, overall, Schreurs and her daughter were
good tenants.
On or about September 16, 2014, Seeberger visited the home and
discovered a bottle of prenatal vitamins on the kitchen counter. Seeberger took a
photograph of the bottle, text messaged it to Schreurs, and questioned,
“Something I should know about?” The following day, Seeberger returned to the
home and asked Schreurs if she had received the text message. When Schreurs
responded in the negative, Seeberger showed her the photograph of the prenatal
vitamins. Schreurs excitedly advised Seeberger her daughter, around fifteen years
old at the time, was pregnant. Seeberger, after contemplating the situation for
“thirty seconds to a minute,” angrily advised Schreurs, “You guys will have to be
out in thirty days.” Seeberger then stated, “You don’t pay rent on time the way it
is, now you’re bringing another person into the mix.” Seeberger also stated “she’s
taking prenatal vitamins, . . . . obviously you’re going to keep the baby.” Seeberger
testified she was disappointed with Schreurs for her irresponsibility in allowing her
young daughter to become pregnant. Seeberger also asserted she terminated the
tenancy because she wanted her house back to herself. Seeberger testified she
began drafting a notice to terminate Schreurs’s tenancy on September 15, but she
did not tender the notice to Schreurs until after her discovery of the prenatal
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vitamins. In her interview with the Commission, however, she stated she did not
draft this notice until September 18. This notice advised Schreurs she needed to
vacate the property by October 19. Seeberger subsequently advised Schreurs
she would start staying at the home on September 26.
On October 1, Seeberger, via text message, asked Schreurs whether one
of her ex-boyfriends was the father of her grandchild-to-be. Schreurs came to the
home with her boyfriend. At this time, Seeberger, who was at the home, confronted
Schreurs, repeating her inquiry. This exchange upset Schreurs. Schreurs and her
daughter were completely moved out of the home by October 5. After Schreurs
and her daughter’s eviction, Seeberger allowed another tenant to live in the home.
In November 2014, Schreurs filed a housing-discrimination complaint with
the Commission alleging Seeberger discriminated against her on the basis of her
familial status by making discriminatory statements. The complaint was amended
in February 2015 and again in March. Her complaint and amended complaints
noted they were filed pursuant to Davenport Municipal Code section 2.58.305(C)
and Section 804(c) of the FHA.1 Following its investigation, the Commission
issued a probable cause finding of discrimination.
The matter proceeded to a public hearing before an administrative law judge
(ALJ) in November. The ALJ concluded, with regard to Seeberger’s statements
on September 16 and 17, that “[a]n ordinary listener listening to [her] statements
would find her statements discriminatory on the basis of familial status” and
“Seeberger engaged in a discriminatory housing practice by making the
1
Codified at 42 U.S.C. § 3604(c).
5
statements.” The ALJ awarded Schreurs $35,000.00 in emotional-distress
damages and imposed a civil penalty in the amount of $10,000.00. The ALJ
subsequently awarded Schreurs $23,881.80 in costs and attorney fees pursuant
to Davenport Municipal Code section 2.58.350(G).2 The Commission approved
the ALJ’s decision in its entirety, with the exception of the award of damages, which
it reduced to $17,500.00.
In February 2016, Seeberger filed a petition for judicial review. In her
subsequent brief in support of her petition, Seeberger argued, among other things,
that the agency action was unconstitutional because it violated her freedom-of-
speech rights and the Davenport Municipal Code does not provide for an award of
attorney fees prior to judicial review. In their briefings, Schreurs and the
Commission argued Seeberger’s statements were not protected speech and
Schreurs was entitled to attorney fees under municipal code section
2.58.175(A)(8)3 or, in the alternative, the FHA.
The district court entered a written ruling in July 2016. The court concluded
(1) Seeberger’s discriminatory statements amounted to commercial speech, their
utterance was illegal, and they were therefore not protected by the First
Amendment and (2) Davenport Municipal Code section 2.58.175(A)(8) “does not
clearly authorize an award of attorney fees in the context of a discriminatory
housing practice.” The court therefore vacated the attorney fee award.
2
This section, entitled “Fair Housing – Judicial Review,” provides: “The [ALJ] or the court
may at its discretion allow the prevailing party, other than the commission, reasonable
attorney fees and costs resulting from any administrative proceeding brought under this
section, any court proceeding arising therefrom, or any civil action.”
3
Schreurs and the Commission did not argue on judicial review that Schreurs was entitled
to fees under the municipal code provision the ALJ actually awarded them, section
2.58.350(G).
6
Schreurs moved for additional findings. In her motion, she requested the
court to reconsider her entitlement to attorney fees under the municipal code and
expand its ruling to consider her argument that she was also entitled to attorney
fees under the FHA. The Commission also moved for additional findings and
requested the court to consider Schreurs’s entitlement to attorney fees under
Davenport Municipal Code section 2.58.350(G) and the FHA. Thereafter, pursuant
to Davenport Municipal Code sections 2.58.175(A)(8) and 2.58.350(G) and the
FHA, Schreurs requested an award of attorney fees incurred in the judicial-review
proceeding.
Following a hearing, the district court denied all pending motions. With
regard to Schreurs’s entitlement to attorney fees under the FHA, the court ruled
“the mere fact that the . . . complaint was cross-filed with the federal authorities
does not expand the [Commission’s] authority to award attorney fees beyond what
is allowed by the city ordinance” and fees under the FHA “were unavailable to
[Schreurs] in her state court proceeding.” The court further concluded that the
issue of Schreurs’s entitlement to fees under municipal code section 2.58.350(G)
was waived because the parties “chose not to argue this statutory basis for any
claim for fees, relying instead entirely on § 2.58.175[(A)](8).” The court declined
to reconsider its determination as to Schreurs’s entitlement to fees under section
2.58.175(A)(8). Finally, the court declined both Seeberger and Schreurs’s
requests for attorney fees on judicial review. As noted, all parties appeal.
II. Standards of Review
We review constitutional claims under the First Amendment de novo. See
Mitchell Cty. v. Zimmerman, 810 N.W.2d 1, 6 (Iowa 2012). The sole question on
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appellate review of a district court’s judicial review of an agency determination is
whether the district court correctly applied the law. See Foods, Inc. v. Iowa Civil
Rights Comm’n, 318 N.W.2d 162, 164 (Iowa 1982). “To the extent we are asked
to engage in statutory interpretation, our review is for correction of errors at law.”
DuTrac Cmty. Credit Union v. Hefel, 893 N.W.2d 282, 289 (Iowa 2017). Review
of the district court’s decision to not award attorney fees in the district court
proceeding is for an abuse of discretion. See Fennelly v. A-1 Mach. & Tool Co.,
728 N.W.2d 163, 167 (Iowa 2006).
III. Freedom of Speech
Seeberger lodges an as-applied challenge to Davenport Municipal Code
section 2.58.305(C), which provides it shall be 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.
Seeberger argues her statements are not subject to the commercial-speech
doctrine because they were inextricably intertwined with fully-protected speech or,
in the alternative, if her statements amount to commercial speech, then the
statements are still protected speech because they relate to a lawful activity.
The United States Supreme Court has recognized a “distinction between
speech [involving] a commercial transaction, which occurs in an area traditionally
subject to government regulation, and other varieties of speech.” Cent. Hudson
Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 562 (1980) (quoting
Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 455–56 (1978)). These other
varieties of speech generally include communications concerning “politics,
8
nationalism, religion, or other matters of opinion.” See Agency for Int’l Dev. v. All.
for Open Soc’y Int’l, Inc., 133 S. Ct. 2321, 2332 (2013) (quoting W.V. State Bd. of
Educ. v. Barnette, 319 U.S. 624, 642 (1943)). “The Constitution . . . accords a
lesser protection to commercial speech than to other constitutionally guaranteed
speech.” Cent. Hudson, 447 U.S. at 563. However, where some commercial
speech and some protected speech are “inextricably intertwined” as “component
parts of a single speech,” courts “cannot parcel out the speech, applying one test
to one phrase and another test to another phrase.” Riley v. Nat’l Fed’n of the Blind
of N.C., Inc., 487 U.S. 781, 798 (1988). Under such circumstances, the test for
fully-protected speech is applicable. Id.Seeberger does not contest that her statements were discriminatory and
related to a commercial transaction. Instead, she contends her discriminatory,
commercial statements to Schreurs were inextricably intertwined with fully-
protected speech that she thought Schreurs was an irresponsible parent.
Seeberger’s first statement—by text message, and later in person—was,
“Something I should know about?” The obvious context of the question was based
on Seeberger’s status as a landlord and Schreurs’s status as a tenant. The
exchange between them that followed cements the conclusion that all of
Seeberger’s remarks were in the context of their relationship as landlord and
tenant. Although Seeberger also made reference to a history of Schreurs paying
rent late, the context makes clear Schreurs’s changing familial status was the basis
for the termination of the tenancy. While Seeberger may hold political, religious,
or other beliefs the expression of which might be protected in some contexts, the
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statements made to Schreurs were plainly directed at telling Schreurs her tenancy
was being terminated because of her familial status.
Seeberger testified she was disappointed with Schreurs for her
irresponsibility in allowing her young daughter to become pregnant.4 Seeberger’s
statements, on their face, do not indicate that her speech was non-commercial in
nature or was otherwise based on a matter of religion, ideology, or philosophy, or
on a position concerning responsible parenting. Rather, her September 17
statements purely amounted to her pronouncement to Schreurs that her familial
status was the primary basis for terminating Schreurs’s tenancy. We conclude
Seeberger’s statements were not inextricably intertwined with any form of fully-
protected speech. Seeberger’s concession that the statements terminating the
tenancy were commercial in nature, together with our conclusion that such
statements were not inextricably intertwined with protected speech, necessitate
the application of the commercial-speech analysis laid out in Central Hudson.
For commercial speech to be protected by the First Amendment, “it at least
must concern lawful activity and not be misleading.” Cent. Hudson, 447 U.S. at
566.5 Our only concern in this case is whether the statement concerned a lawful
activity. Seeberger concedes that her statements were in violation of Davenport
Municipal Code section 2.58.305(C), which prohibits all landlords from making
discriminatory statements in relation to the rental of a dwelling. She argues,
4
Our analysis is based on the words spoken to Schreurs in the course of Seeberger’s
termination of the tenancy, and not on Seeberger’s later testimonial characterizations.
5
“The four parts of the Central Hudson test are not entirely discrete. All are important
and, to a certain extent, interrelated: Each raises a relevant question that may not be
dispositive to the First Amendment inquiry, but the answer to which may inform a judgment
concerning the other three.” Greater New Orleans Broad. Ass’n, Inc. v. United States,
527 U.S. 173, 183–84 (1999).
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however, because she owned fewer than four single-family homes, the actual
termination of Schreurs’s tenancy on the basis of her familial status was not illegal
and, as such, the statement concerned a lawful activity. See Davenport, Iowa
Mun. Code § 2.58.310(A)(1)(a) (“Nothing in subsection 2.58.305 of this Chapter
other than subsection 2.58.305(C) shall apply to . . . [a]ny single-family house sold
or rented by an owner provided that . . . [t]he private individual owner does not own
more than three (3) such single-family houses at any one time.” (emphasis
added)). For the purposes of Seeberger’s as-applied challenge, we will assume
without deciding that her statements concerned a lawful activity.
The next step in the Central Hudson test “asks whether the asserted
governmental interest served by the speech restriction is substantial.” Greater
New Orleans Broad. Ass’n, Inc., 527 U.S. at 185. The Commission argues the
interest in prohibiting discriminatory statements in housing is substantial. The Iowa
Supreme Court has stated the government has a substantial interest in preventing
discrimination in employment. Baker v. City of Iowa City, 867 N.W.2d 44, 54 (Iowa
2015). We conclude the government’s interest in preventing discriminatory
statements in housing is at least equally substantial to its interest in preventing
discrimination in employment.
Finally, we are required to determine if the ordinance advances the
objective of preventing discriminatory statements in housing and, if so, whether it
is more extensive than necessary. Cent. Hudson, 447 U.S. at 566. The ordinance
clearly advances the objective of preventing the making of discriminatory
statements in housing. This is so even though the ordinance does not effectually
prohibit discrete discrimination in all housing transactions. As applied in this case,
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the ordinance simply renders it unlawful to make any statement with respect to the
“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.” Davenport, Iowa Mun. Code § 2.58.305(C). As Seeberger
correctly points out, landlords owning no more than three single-family homes may
legally discriminate in housing decisions on the basis of familial status, so long as
they do not make a statement to that effect. Id. §§ 2.58.305(C), .310(A)(1)(a). The
challenged ordinance merely prohibits landlords from subjecting prospective
tenants to the stigmas associated with knowingly being discriminated against. For
these reasons, we find the ordinance is not more extensive than necessary to
serve the substantial interest of preventing discriminatory statements in housing
transactions.
As such, we conclude the ordinance is not an unconstitutional infringement
upon Seeberger’s freedom-of-speech rights. We therefore affirm the district
court’s decision to uphold Seeberger’s liability under the ordinance.
IV. Attorney Fees
A. Administrative Proceedings
Schreurs and the Commission contend Schreurs was entitled to attorney
fees incurred in the administrative proceeding under Davenport Municipal Code
sections 2.58.175(A)(8) and 2.58.350(G) or, in the alternative, the FHA. The
district court considered the argument under section 2.58.350(G) waived and
concluded fees under the FHA were unavailable. The court also concluded section
2.58.175(A)(8) “does not clearly authorize an award of attorney fees in the context
of a discriminatory housing practice.” The court reasoned section 2.58.175,
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entitled “Remedial Action,” only concerns unfair or discriminatory practices in areas
other than housing.
Chapter 258 of the municipal code is set out in three divisions: (1) general
provisions, (2) unfair practices, and (3) fair housing. We first focus on division two,
unfair practices, which is comprised of sections 2.58.100 through 2.58.190.
Section 2.58.175 falls within division two. The first four sections concern unfair
practices in employment, accommodations or services, credit, education, and
aiding or abetting. See id. §§ 2.58.100, .110, .120, .125, .130. The next section
relates to retaliation, and specifically includes housing matters, as does the
following section, which concerns complaint procedures. Id. §§ 2.58.140, .150.
The next two sections govern conciliation and public hearing; neither section
excludes housing complaints, and our review of the record indicates both sections
applied in this case. See id. §§ 2.58.160, .170. The public hearing provision
provides that, if
the hearing officer determines that the respondent has engaged in a
discriminatory or unfair practice, the hearing officer shall . . . issue an
order in writing requiring the respondent . . . to take the necessary
remedial action as in the judgment the hearing officer will effectuate
the purposes of this chapter.
Id. § 2.58.170(J) (emphasis added). Thereafter, the Commission reviews the
decision and, if in agreement with the hearing officer, “shall issue an order requiring
the respondent . . . to take necessary remedial action as in the judgment of the
commission will carry out the purposes of this chapter.” Id. § 2.58.170(L)
(emphasis added).
Next is the remedial action provision, which provides, “The remedial action
ordered by the Commission may include . . . [p]ayment to the complainant of . . .
13
reasonable attorney fees [and] payment of costs of hearing.” Id. § 2.58.175(A)(8)–
(9). Another provision in the remedial action section allows the Commission to
order, obviously in relation to housing cases, the “[s]ale, exchange, lease, rental,
assignment or sublease of real property to an individual.” Id. § 2.58.175(A)(4).
The section also provides specific remedial actions in relation to employment,
credit, education, and public accommodations. Id. § 2.58.175(A)(1), (2), (3), (5),
(7). The final two sections of division two govern judicial review and court
enforcement. See id. §§ 2.58.180, .190. Again, housing complaints are not
specifically exempted from these provisions.
On the other hand, division three of chapter 258, governing fair housing,
includes a provision that, “[i]f the administrative law judge finds that a respondent
has engaged in or is about to engage in a discriminatory housing practice, such
administrative law judge shall promptly issue an order for such relief as may be
appropriate, which may include actual damages and injunctive or other equitable
relief.” Id. § 2.58.340(F)(3) (emphasis added).
Despite these dual and differing modes for relief, based on the plain
language and statutory scheme of the ordinance, we conclude the remedial action
provision in division two, section 2.58.175, encompasses all areas of
discrimination, including housing. Because the section provides specific remedies
for each of the differing areas, we conclude the overall remedies included in
subsections 8 and 9 cover all of those differing areas. We therefore reverse the
district court’s determination that Schreurs was not entitled to the attorney fees
incurred in the administrative proceeding. Because the district court noted its
“disposition render[ed] moot [Seeberger’s] alternative argument that the fee award
14
was excessive,” we remand the case to the district court to determine whether the
attorney-fee award was excessive. See De Stefano v. Apartments Downtown,
Inc., 879 N.W.2d 155, 191 (Iowa 2016). This disposition makes it unnecessary for
us to decide whether Schreurs was entitled to attorney fees under 2.58.350(G) or,
in the alternative, the FHA.
B. Judicial-Review Proceeding
Finally, Schreurs argues the district court abused its discretion in refusing
to award her attorney fees in the judicial-review proceeding. Pursuant to
Davenport Municipal Code section 2.58.350(G), “the court may at its discretion
allow the prevailing party . . . reasonable attorney fees and costs resulting from” a
judicial-review proceeding. (Emphasis added.) “[F]ee provisions using the word
‘may’ place the decision about whether to award any attorney fees within the sound
discretion of the district court.” Lee v. State, 874 N.W.2d 631, 644 (Iowa 2016).
Similar to the FHA, an award of attorney fees in a judicial-review proceeding under
the Davenport Municipal code is not mandatory. See id. at 644–45 (noting that
when a “fee provision employs the word ‘shall’ instead of the word ‘may,’ it requires
the district court to award attorney fees”); see also 42 U.S.C. § 3612(p). Because
the ordinance renders any award of attorney fees discretionary, “[r]eversal is
warranted only when the court rests its discretionary ruling on grounds that are
clearly unreasonable or untenable.” GreatAmerica Leasing Corp. v. Cool Comfort
Air Conditioning & Refrigeration, Inc., 691 N.W.2d 730, 732 (Iowa 2005) (quoting
Gabelmann v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000)).
In its ruling on attorney fees, the district court noted its prior affirmance of
the determination concerning Seeberger’s liability, but also its reversal of the
15
Commission’s award of damages and remand for reconsideration. With this
dichotomy in mind, the district court determined neither party was the “prevailing
party” in the judicial-review proceeding and therefore entitled to attorney fees. We
do not find this ground for denying an award of attorney fees clearly unreasonable
or untenable. We therefore affirm the district court’s denial of Schreurs’s request
for attorney fees in the judicial-review proceeding.
V. Conclusion
In sum, we conclude the challenged ordinance is not an unconstitutional
infringement upon Seeberger’s freedom-of-speech rights and affirm the agency
and district court’s findings of liability. We reverse the district court’s determination
that Schreurs was not entitled to the attorney fees incurred in the administrative
proceeding and remand the matter to the district court to consider whether the
attorney-fee award was excessive. We affirm the district court’s denial of
Schreurs’s request for attorney fees in the judicial-review proceeding.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED ON
APPEAL; AFFIRMED ON CROSS APPEAL.