Flat Iron Partners, LP v. The City of Covington

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
March 10, 2015 Session
FLAT IRON PARTNERS, LP, ET AL. v. THE CITY OF COVINGTON, ET AL.
Appeal from the Circuit Court for Tipton County
No. 5363 Ben H. Cantrell, Judge
No. W2013-02235-COA-R3-CV – Filed April 30, 2015
This is an appeal from the trial court‘s grant of summary judgment to Appellees on their
Open Meetings Act claim, and the grant of partial summary judgment to Appellees on
their Fair Housing Act claims, i.e., disparate treatment and disparate impact. We
conclude that the trial court erred in granting summary judgment on the Open Meetings
Act claim. We further conclude that there are disputes of material fact that preclude the
grant of partial summary judgment on the FHA claims. Accordingly, we reverse the trial
court‘s grant of summary judgment and vacate the trial court‘s entry of judgment on a
jury verdict on the issue of damages. Reversed in part, vacated in part, and remanded.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is
Reversed in Part, Vacated in Part, and Remanded
KENNY ARMSTRONG, J., delivered the opinion of the court, in which ARNOLD B. GOLDIN,
J., and BRANDON O. GIBSON, J., joined.
Edward J. McKenney, Jr., Memphis, Tennessee, for the appellants, City of Covington
and City of Covington Municipal-Regional Planning Commission.
J. Houston Gordon, Covington, Tennessee, for the appellees, Cottonwood Associates,
LLC; Cottonwood Properties, Inc.; Flat Iron Partners, LP; John Coleman Hayes, Jr.;
Wilrus Company, LLC; and A. Richard Wilson.
OPINION
I. Background
There are two separate groups of Appellees in this case. The first group is
comprised of Flat Iron Partners, LP, a Tennessee limited partnership; Wilrus Company,
LLC, a Texas limited liability company; and Richard Wilson, a Texas resident, who was
the managing member of the Wilrus Company and the personal guarantor of the financial
obligations of Flat Iron. We will refer to these Appellees collectively as ―Flat Iron.‖ The
second group of Appellees is comprised of Cottonwood Associates, LLC, a Tennessee
limited liability company; Cottonwood Properties, Inc., the general partner of
Cottonwood Associates, LLC; and John Coleman Hayes, Jr., a Tennessee resident, who
was the president of Cottonwood Properties, Inc. and the individual guarantor of the
financial obligations of Cottonwood Properties, Inc. and Cottonwood Associates, Inc.
We will refer to these Appellees collectively as ―Cottonwood.‖ We will refer to Flat
Iron and Cottonwood collectively as ―Appellees.‖
On March 20, 2000, Flat Iron purchased land in Covington, Tennessee. The
purchased tract of land was zoned R-3 (High Density Residential), and Flat Iron planned
to construct multi-family unit housing (―MFUH‖) on the land. On November 28, 2000,
Cottonwood purchased two tracts of land in Covington. These tracts, which were 9.99
acres and 8.399 acres respectively, were zoned R-2 (Medium Density Residential). Like
Flat Iron, Cottonwood intended to construct MFUH on these tracts.
Although the plan ―was nowhere near complete,‖ on September 5, 2000, Flat Iron
was allowed to present a ―conceptual plan‖ to the City of Covington Municipal-Regional
Planning Commission (the ―Commission‖). As is relevant to the instant appeal, Flat Iron
represented that its proposed development would not be Section 8 housing, but would be
a gated community, targeting individuals making between $30,000 and $40,000 per year.
Flat Iron‘s expert, Dr. John Gnuschke, conceded that the target tenant for both apartment
projects was not considered ―low income‖ for the City of Covington (the ―City,‖ and
together with the ―Commission,‖ ―Appellants‖).1 At the time Flat Iron presented the
conceptual plan, the City‘s Zoning Ordinances defined ―multi-family‖ to include
duplexes, triplexes, quadraplexes, and apartments. The City‘s Zoning Ordinances are
liberal and would have allowed a multi-family dwelling to be built on a lot as small as
7,000 square feet. It is undisputed that Flat Iron‘s proposed 104-units could have been
built on a tract as small at 3.58 acres. Likewise, Cottonwood could have built the
proposed 217-units on a 10-acre tract, and as many as 400 apartment units could have
been built on a 20-acre tract.
At a Commission meeting on October 3, 2000, several deficiencies in Flat Iron‘s
1
In 1997, the Commission adopted the Covington Land Use and Transportation Plan, which was
approved and certified by the Mayor and board of Aldermen pursuant to Tennessee Code Annotated
Section 13-4-301. The City‘s formally adopted plan recognized the fact that vacancy rates and waiting
lists for existing MFUH indicated a demand for more of these types of developments. After an analysis
of census and subsequent special survey data, the plan noted that ―[t]he City‘s median household income
was ‗the lowest of all municipalities in Tipton County.‘‖
2
proposed plan were noted. Of particular concern with the proposed plan was drainage.
The Flat Iron property bordered a flood zone that was known to experience flooding after
heavy rain. Another concern was the fact that the proposed building was adjacent to a
single-family neighborhood and was close to another MFUH development
(Broadmeadow). Also of concern were: (1) the fact that the proposed plan did not satisfy
the setback requirements of the City‘s subdivision regulations; the fact that the buildings
were too close together; and (3) the fact that the streets within the proposed complex
were not wide enough to allow a fire truck to turn around.
By the November 14, 2000 Commission meeting, Flat Iron still had not addressed
all of the site plan concerns. Accordingly, the decision regarding the site plan was
deferred until the December 5, 2000 meeting. However, on November 27, 2000, the
City‘s Board of Mayor and Aldermen (―BMA‖) met with the City‘s attorney. The
purpose of the meeting was informational—to advise the BMA members that a
Resolution would be presented at the November 28, 2000 Commission meeting to impose
a temporary moratorium on the issuance of building permits. Specifically, the temporary
moratorium would impose a moratorium on the issuance of building permits until July 1,
2001. No vote was taken at the November 27 meeting, nor was there any decision or
deliberation as to how any BMA member would vote.
On November 28, 2000, at the regularly scheduled Commission meeting, the
Moratorium Resolution was presented to the BMA. After extensive public debate, during
which members of the public were allowed to comment (including Mr. Johnny Howard,
who spoke on behalf of Flat Iron), a public vote was taken, and the Moratorium
Resolution was adopted. The BMA also adopted, on first reading, an Ordinance
amending the Zoning Ordinances to impose the temporary moratorium until July 1, 2001
on the issuance of any building permits.
Special called meetings of the BMA, for which notices were given, were held on
November 29 and November 30, 2000 to consider the moratorium resolution. There was
public debate at both meetings, and spokespersons, on behalf of Flat Iron, were allowed
to speak in opposition to the moratorium. Following a vote, the BMA adopted an
Ordinance amending the Zoning Ordinance to impose the temporary moratorium upon
the issuance of building permits.
On December 5, 2000, Flat Iron‘s lawyer, Michael Acree, appeared before the
Commission and advised it that Flat Iron was amenable to comply with any amendments
that might be made to the Zoning Ordinance so long as the Commission would approve
Flat Iron‘s preliminary site plan.
3
In mid-January, 2001, Flat Iron requested a building permit. It is undisputed that
Flat Iron had presented only a preliminary site plan at this time. Specifically, it had not
submitted its building plans, had not completed its grading plans, drainage plans, water
and sewer plans, or construction plans, and it had not submitted a final site plan for
approval. Accordingly, its request for a building permit was denied at that time.2
On January 31, 2001, Flat Iron and Cottonwood filed suit against the Appellants.3
Appellees‘ claims included: (1) a mandamus claim ordering the City to immediately issue
building permits to Appellees; (2) issuance of a writ of certiorari under Tennessee Code
Annotated Section 27-8-101 and a finding that the zoning amendments were illegal,
unconstitutional, confiscatory, arbitrary and unreasonable; (3) a takings claim under
federal law; (4) a State inverse condemnation claim under Tennessee Code Annotated
Section 29-16-123; (5) a claim for violation of Tennessee Code Annotated Section 13-3-
402, et seq.; (6) a claim for violation of State zoning statutes, Tennessee Code Annotated
Section 13-2-401, et seq.; (7) a claim that the challenged actions were retrospective laws
in violation of Art. I, § 20 of the Tennessee Constitution; (8) an Open Meetings Act claim
pursuant to Tennessee Code Annotated Section 8-44-101, et seq.; (9) a claim for violation
of Appellees‘ substantive and procedural due process rights; (10) a Section 1983 claim;
(11) a Fair Housing Act (―FHA‖) violation claim; and (12) a declaratory judgment action.
On February 14, 2001, Appellees filed a motion for preliminary injunction and partial
summary judgment.
On August 15, 2001, the trial court granted in part and denied in part Appellees‘
motion. The trial court granted summary judgment to Appellees on the Open Meetings
claim based upon its finding that no notice was given of the attorney-client meeting on
November 27, 2000. Accordingly, the court reasoned that the subsequent actions taken at
the public meetings on November 28 and 30, 2000 meetings were ―null and void.‖ The
trial court also found that the ordinance imposing a temporary moratorium on the
issuance of building permits until July 1, 2001 violated the provisions of Tennessee Code
Annotated Section 13-7-203, which requires that zoning amendments be approved by the
Commission and published in a newspaper fifteen days prior to adoption. The court
denied Appellees‘ request for equitable relief requiring the City to approve Flat Iron‘s
site plan as it existed before the amendment. Specifically, the court found that ―Flat Iron
must conform to any timely amendments, and is required to get a preliminary plan
approved.‖ The court subsequently reaffirmed, in its April 1, 2009 order, that it had
2
The City granted Flat Iron building permits on April 22, 2002. Thereafter, Flat Iron built 104 units. The
City granted Cottonwood certificates of occupancy for Phase I in November 2002 and for Phase II in
April 2003.
3
Appellees filed an amended complaint on September 8, 2004 to add the Planning Commission
and members of the Planning Commission as parties. The substantive claims were not amended.
4
―determined that the new ordinances passed in June 2001 must be complied with for a
building permit to issue to [Appellees].‖
The parties then filed cross motions for summary judgment. Appellees filed their
motion on or about June 16, 2005; Appellants filed their motion on August 1, 2006. On
April 1, 2009, the trial court ruled on these motions.4 With respect to the FHA claims,
the trial court denied Appellants‘ motion for summary judgment, stating that there were
―contested issues of fact.‖ As to Appellees‘ motion, the trial court also found that ―there
are contested issues of fact;‖ nonetheless, the court granted partial summary judgment to
Appellees because it found that Appellees ―have established a prima facie case of
discriminatory intent and are entitled to summary judgment on the issue of liability under
the Fair Housing Act as a matter of law.‖ The court also found that Appellees ―have
shown facts to establish a prima facie case of disparate impact,‖ and, thus, ―were entitled
to summary judgment.‖
Appellants then filed a motion for interlocutory appeal on May 1, 2009. The
motion was denied by the trial court on April 6, 2011 in an order, which, again, noted that
the trial court had found that ―there are contested issues of fact for determination by the
trier of fact‖ with respect to Appellees‘ FHA claim. Appellants then filed a Tennessee
Rule of Appellate Procedure 10 appeal on April 25, 2011; the application was denied on
May 6, 2011. Following additional discovery, Appellants filed a motion to revise the
trial court‘s ruling on the FHA claim. The case was set for trial on August 20, 2012. On
August 14, 2012, the trial judge issued an order recusing himself. The case was then
assigned to Senior Judge Ben H. Cantrell, who denied Appellants‘ motion to revise the
FHA ruling. Appellants‘ motion to revise the Open Meetings Act ruling was also denied
by order of January 13, 2013.
The case was tried to a jury beginning on February 5, 2013. The sole issue was
the amount of damages on Appellees‘ FHA claim. At the beginning of the trial, the trial
court denied Appellants‘ renewed motion to reconsider the summary judgment rulings
and denied Appellants‘ motion to be allowed to present evidence as to the reasons for the
challenged actions. The court reasoned that the initial trial judge had already determined
that issue. Likewise, the trial court denied Appellants‘ motion in limine to exclude
evidence or argument to the jury that the moratorium ordinance was ―illegal‖ or
―unlawful‖ or anything more than a violation of Tennessee Code Annotated Section 8-44-
102 and 103 or Tennessee Code Annotated Sections 13-7-203 and 204.
On February 15, 2014, the jury returned a verdict in favor of Flat Iron in the
amount of $1,201,095 and in favor of Cottonwood in the amount of $4,551,835. As to
4
There is no explanation in the record for the time between the filing of the motions for summary
judgment and the trial court‘s ruling on the motions.
5
both Appellees, the jury found that they had suffered damages as a result of the actions of
the City, but found that Appellees had suffered no damages as a result of the actions of
the Commission. The trial court entered judgment on the jury verdict on March 21, 2013.
On April 19, 2014, Appellants filed a motion for judgment notwithstanding the verdict,
for new trial, or, in the alternative, for remittitur. By order of September 3, 2013, the trial
court denied the motion for judgment notwithstanding the verdict, denied the motion for
new trial, denied the motion for remittitur as to Flat Iron, but granted remittitur as to the
Cottonwood verdict, reducing its judgment to $2,983,744. Cottonwood accepted the
remittur under protest on September 3, 2013.
II. Issues
Appellants appeal. They raise seven issues for review as stated in their brief:
1. Whether the trial court erred in ruling that [Appellees] were entitled to
summary judgment on their Open Meeting Act claim based upon its finding
that there was no notice given of an attorney-client meeting on November
27, 2000, when Flat Iron lacked standing to assert an Open Meetings claim
and the pending ordinance doctrine made the moratorium issue irrelevant as
to Cottonwood, and when it was undisputed that no decision was made nor
was their deliberation towards a decision at that meeting; that the
termporary moratorium on the issue of building permits for multi-family
housing was debated in three subsequent public meetings on November 28-
30, 2000, at which the public was allowed to speak reagarding the
moratorium; and that a public vote was taken on November 30, 2000,
which had the legal effect of curing any Open Meetings Act violation?
2. Whether the trial court erred in ruling that [Appellees] were entitled to
summary judgment on their claim of disparate treatment under the Fair
Housing Act and denying [Appellants‘] motion for summary judgment and
their motions to revise and reconsider based upon its finding that
[Appellees] had established a prima facie case, despite finding that there
were disputed issues of fact; when [Appellees] lacked standing to assert a
Fair Housing Act claim; when [Appellants] came forward with sworn
testimony not only denying discriminatory intent but setting forth
legitimate, non-discriminatory reasons for their actions; when there was no
evidence that the moratorium or new density regulations were adopted
because of the FHA-protected status of [Appellees‘] prospective tenants;
and when the trial court failed to utilize the applicable burden-shifting
principles?
6
3. Whether the trial court erred in ruling that [Appellees] were entitled to
summary judgment on their claim of disparate impact under the Fair
Housing Act and denying [Appellants‘] motion for summary judgment and
their motions to revise and to reconsider based upon its finding that
[Appellees] had established a prima facie case, despite finding that there
were disputed issues of fact; when [Appellees] did not allege a disparate
impact claim in their complaint or amended complaint; when the express
language of the Fair Housing Act does not include ―effects‖ language and
the Supreme Court has never recognized such a claim; when Plaintiffs
lacked standing to assert a FHA claim; when [Appellees] failed to prove
that the moratorium and new density regulations had a significant disparate
impact upon the FHA-protected classes as compared with non-FHA-
protected classes; when there was no evidence that the moratorium and new
density regulations were adopted because of the FHA-protected status of
[Appellees‘] prosepective tenants; and when the trial court failed to utilize
the applicable burden-shifting principles?
4. Whether the trial court erred in allowing improper arguments to be made
by counsel for [Appellees‘] in the presence of the jury which made it
impossible for [Appellants] to get a fair trial?
5. Whether the trial court erred in making comments in the presence of the
jury which were prejudicial to [Appellants]?
6. Whether the jury verdicts are inconsistent?
7. Whether the jury instructions given by the trial court did not fairly
define the legal issues involved and misled the jury?
III. Standard of Review
Summary judgment is appropriate when a party establishes that there is no genuine
issue as to any material fact and that a judgment may be rendered as a matter of law.
Tenn. R. Civ. P. 56.04; Stovall v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003). It is
appropriate in virtually all civil cases that can be resolved on the basis of legal issues
alone. Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993); Pendleton v. Mills, 73 S.W.3d
115, 121 (Tenn.Ct.App.2001). It is not appropriate when genuine disputes regarding
material facts exist. See Tenn. R. Civ. P. 56.04. The party seeking summary judgment
bears the burden of demonstrating that no genuine disputes of material fact exist and that
the party is entitled to judgment as a matter of law. Godfrey v. Ruiz, 90 S.W.3d 692, 695
(Tenn. 2002). To be entitled to summary judgment, the moving party must affirmatively
7
negate an essential element of the nonmoving party‘s claim or show that the moving
party cannot prove an essential element of the claim at trial. Martin v. Norfolk S. Ry.
Co., 271 S.W.3d 76, 83 (Tenn. 2008).
Summary judgments do not enjoy a presumption of correctness on appeal.
BellSouth Adver. & Publ'g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn. 2003). Because
the resolution of a motion for summary judgment is a matter of law, we review the trial
court‘s judgment de novo with no presumption of correctness. Martin v. Norfolk
Southern Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008) The appellate court makes a fresh
determination that the requirements of Tenn. R. Civ. P. 56 have been satisfied. Hunter v.
Brown, 955 S .W.2d 49, 50–51 (Tenn. 1977). As does the trial court, the appellate court
considers the evidence in the light most favorable to the nonmoving party and resolves all
inferences in that party‘s favor. Martin, 271 S.W.3d at 84; Stovall v. Clarke, 113 S.W.3d
715, 721 (Tenn. 2003); Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). When
reviewing the evidence, the appellate court first determines whether factual disputes
exist. If a factual dispute exists, the court then determines whether the fact is material to
the claim or defense upon which the summary judgment is predicated and whether the
disputed fact creates a genuine issue for trial. Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn.
1993).
A party is entitled to summary judgment only if the ―pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits . . . show
that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.‖ Tenn. R. Civ. P. 56.04. A properly supported motion
for summary judgment must show that there are no genuine issues of material fact and
that the moving party is entitled to judgment as a matter of law. Staples v. CBL &
Assocs., Inc., 15 S.W.3d 83, 88 (Tenn. 2000); McCarley v. W. Quality Food Serv., 960
S.W.2d 585, 588 (Tenn. 1998). If the moving party makes a properly supported motion,
then the nonmoving party is required to establish the existence of the essential elements
of the claim. McCarley, 960 S.W.2d at 588; Byrd, 847 S.W.2d at 215. If, however, the
moving party does not properly support the motion, then the nonmoving party‘s burden to
produce either supporting affidavits or discovery is relieved and the motion must fail.
McCarley, 960 S.W.2d at 588; Martin, 271 S.W.3d at 83.
To make this showing and shift the burden of production, a moving party may: (1)
affirmatively negate an essential element of the nonmoving party‘s claim; or (2) show
that the nonmoving party cannot prove an essential element of the claim at trial. Martin,
271 S .W.3d at 83; Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd,
847 S.W.2d at 215 n. 5. Whichever approach the moving party takes, both require more
than assertions of the nonmoving party‘s lack of evidence. Martin, 271 S.W.3d at 83-84.
In addition, the moving party must present evidence that more than ―raises doubts‖ about
8
the ability of the nonmoving party to prove its claim at trial. Id. at 84. The moving party
must produce evidence or refer to previously submitted evidence. Id.; accord Hannan,
270 S.W.3d at 5. Thus, to negate an essential element of a claim, a moving party must
refer to evidence that tends to disprove an essential element of the claim made by the
nonmoving party. Martin, 271 S.W.3d at 84.5 As stated by this court in Evco Corp. v.
Ross, 528 S.W.2d 20, 25 (Tenn. 1975):
The summary judgment procedure was designed to provide a quick,
inexpensive means of concluding cases, in whole or in part, upon *25
issues as to which there is no dispute regarding the material facts. Where
there does exist a dispute as to facts which are deemed material by the trial
court, however, or where there is uncertainty as to whether there may be
such a dispute, the duty of the trial court is clear. He is to overrule any
motion for summary judgment in such cases, because summary judgment
proceedings are not in any sense to be viewed as a substitute for a trial of
disputed factual issues.
IV. Analysis
A. Open Meetings Act
Tennessee‘s Open Meetings Act is codified at Tennessee Code Annotated Section
8-44-101, et seq. The purpose provision of the Act states: ―[I]t [is] to be the policy of this
state that the formation of public policy and decisions is public business and shall not be
conducted in secret.‖ Tenn. Code Ann. § 8-44-101(a). To effectuate this purpose, the Act
provides that ―[a]ll meetings of any governing body are declared to be public meetings
open to the public at all times, except as provided by the Constitution of Tennessee.‖
Tenn. Code Ann. § 8-44-102(a) (2002). The term ―meeting‖ is statutorily defined as ―the
convening of a governing body of a public body for which a quorum is required in order
to make a decision or to deliberate toward a decision on any matter.‖ Tenn. Code Ann. §
8-44-102(b)(2) (2002). In seeking to balance the policy favoring open government
against the need for efficiency in government, the Act notes that not every encounter
among members of a public body will be considered a meeting, but also cautions that
such other encounters are not to be used to circumvent the Act:
5
Tennessee Code Annotated § 20-16-101 (2011), a provision enacted to replace the summary judgment
standard adopted in Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 8-9 (Tenn.2008), is inapplicable to this
case because this case was filed before July 1, 2011. See Sykes v. Chattanooga Hous. Auth., 343 S.W.3d
18, 25 n. 2 (Tenn. 2011) (noting that section 20-16-101 is only applicable to actions filed on or after July
1, 2011).
9
Nothing in this section shall be construed as to require a chance meeting of
two (2) or more members of a public body to be considered a public
meeting. No such chance meetings, informal assemblages, or electronic
communication shall be used to decide or deliberate public business in
circumvention of the spirit or requirements of this part.
Tenn. Code Ann. § 8-44-102(c). The consequences of an Open Meetings Act violation
are harsh: ―Any action taken at a meeting in violation of this part shall be void and of no
effect.‖ T.C.A. § 8-44-105. Tennessee courts interpreting the Act, however, have
recognized that its provisions should not be interpreted in such a way that, once a
violation of the Open Meetings Act has occurred, the public body is thereafter foreclosed
from acting on the measure that was the subject of the violation:
We do not believe that the legislative intent of this statute was forever to
bar a governing body from properly ratifying its decision made in a prior
violative manner. However, neither was it the legislative intent to allow
such a body to ratify a decision in a subsequent meeting by a perfunctory
crystallization of its earlier action. We hold that the purpose of the act is
satisfied if the ultimate decision is made in accordance with the Public
Meetings Act, and if it is a new and substantial reconsideration of the issues
involved, in which the public is afforded ample opportunity to know the
facts and to be heard with reference to the matters at issue.
Neese v. Paris Special Sch. Dist., 813 S.W.2d 432, 436 (Tenn. Ct. App.1990) (citations
omitted). Thus, even if there has been a violation of the Act, the public body‘s action will
not be voided if, after the violative conduct occurred, there was a ―new and substantial
reconsideration of the issues involved‖ at which the public could be present. Id.
In their motion for summary judgment, Appellees argued that the Appellants
violated the foregoing statutory provisions by holding a private meeting of the BMA on
November 27, 2000. In its August 15, 2001 order on the motion the trial court held, in
pertinent part, that:
The purpose of the November 27, 2000 meeting was to allow the Mayor
and Board of Aldermen to discuss and to consider the action of amending
the zoning ordinance concerning the imposition of a moratorium to stop
any multi-family development in the City of Covington. As indicated by
Alderman Phelps, the specific purpose of the meeting was made known and
it was explained why specific action to be taken would be taken. The
actions that resulted from this private meeting violated the Open Meeting[s]
10
Statute. Failure to comply with the notice requirements make the ordinance
invalid.
Turning to the record, after Appellees filed their motion for summary judgment on
the issue of the Open Meetings Act violation, Appellants countered with sworn
deposition testimony of Mr. Keith Phelps, who was on the Board of Alderman on
November 27, 2000. In relevant part, Mr. Phelps testfied that the purpose of the
November 27, 2000 meeting was ―[t]o introduce the idea or proposing a moratorium on
multifamily housing the following night.‖ When asked whethere there was ―discussion
among the board members who were there about who would support [the moratorium]
and who would not support it,‖ Mr. Phelps answered, ―[n]ot that I recall. I mean, I guess
there were positive and negative comments made, but no one—there was nothing such as
who will vote, you know, and how will you vote . . . .‖ In Johnston v. Metro Gov’t of
Nashville and Davidson County, 320 S.W.3d 299 (Tenn. Ct. App. 2009), this Court held
that there was no violation of the Open Meetings Act where members of the Nashville
Metropolitan Council held a meeting to dissiminate information prior to a public meeting
on a zoning issue, to wit:
The Appellants term the April 5, 2005 gathering in the Council‘s
back conference room a ―back room meeting,‖ and argue that deliberations
must have taken place there, and therefore the ―back room meeting‖
constituted an additional violation of the Open Meetings Act. The trial
court concluded that nothing in the record showed that deliberations
occurred in the Council conference room; instead, the purpose of the
gathering was to make information available to Council members,
especially newer members with no prior experience with historic overlays.
We agree with the holding of the trial court. Despite the Appellants‘
ominous characterization of the gathering as a ―back room meeting,‖ the
record indicates only that the conference room was utilized to make
information available to Council members. Unless the activities in the back
conference room went beyond the provision of information, and extended
to substantive discussion of positions and attempts to develop a consensus,
then this gathering did not constitute a ―meeting,‖ did not involve
―deliberation,‖ and did not violate the Open Meetings Act. See John F.
O‘Connor & Michael J. Baratz, Some Assembly Required: The Application
of State Open Meetings Laws to Email Correspondence, 12 Geo. Mason L.
Rev. 719, 747 (Spring 2004) (citing Wood v. Battle Ground Sch. Dist., 107
Wash. App. 550, 27 P.3d 1208, 1217–18 (2001)).
Johnston, 320 S.W.3d at 312. As set out in the Standard of Review section above, in
11
ruling on the motion for summary judgment, the trial court was required to take
Appellants‘ proof as true and to give all reasonable inference in favor of Appellants as
the non-moving parties. Accordingly, taking Mr. Phelps‘ sworn statements as true, the
November 27, 2000 meeting is similar to the meeting at issue in Johnston in that Mr.
Phelps stated that there was no vote or deliberation at the meeting; rather, Mr. Phelps
stated that the purpose of the meeting was to introduce the proposed moratorium, and to
make relevant information available. As in Johnston, there is no indication that the
activities at the November 27, 2000 meeting ―went beyond the provision of information,
and extended to substantive discussion of positions and attempts to develop a consensus.‖
In this regard, the November 27, 2000 gathering did not constitute a ―meeting‖ under the
Open Meetings Act.
In addition, as noted above, in Neese, the Court held that even if members of a
public body engage in conduct that violates the Open Meetings Act, the action of the
public body will not be deemed void if, in the interim, there was a ―new and substantial
reconsideration of the issues involved, in which the public is afforded ample opportunity
to know the facts and to be heard with reference to the matters at issue.‖ Neese, 813
S.W.2d at 436. In Johnston, for example, the trial court held that even if the Council‘s
activities were considered to be deliberations in violation of the Act, ―the ultimate
decision was made in accordance with the ... Act in that substantial and substantive
deliberations were held and the vote on the bill [was] conducted at the public meeting of
the council.‖ The trial court observed that no decision was made prior to the Council's
public vote, and ―prior to the vote, extensive discussion was had on the floor of the
council.‖ Id. Likewise, in the instant case, there is no dispute that the vote on the
proposed moratorium was held after subsequent meetings on November 28, 29, and 30,
2000, for which notice was given and at which members of the public spoke and debated.
Under the holding in Neese, therefore, we conclude that, even assuming arguendo that
deliberations occurred at the November 27, 2000 meeting in violation of the Act, such
violation was cured by the subsequent meetings where the BMA fully and fairly
considered the proposed moratorium ordinances. As stated in Neese:
We do not believe that the legislative intent of this statute [Tennessee Code
Annotated Section § 8-44-105] was forever to bar a governing body from
properly ratifying its decision made in a prior violative manner. However,
neither was it the legislative intent to allow such a body to ratify a decision
in a subsequent meeting by a perfunctory crystallization of its earlier action.
We hold that the purpose of the act is satisfied if the ultimate decision is
made in accordance with the Public Meetings Act, and if it is a new and
substantial reconsideration of the issues involved, in which the public is
afforded ample opportunity to know the facts and to be heard with
reference to the matters at issue.
12
Neese, 813 S.W.2d at 436 (internal citation omitted).
Based upon our conclusion that, under the holdings of Johnston and Neese, there
was no Open Meetings Act violation in this case, we reverse the trial court‘s grant of
summary judgment in favor of Appellees on this issue.
B. Disparate Treatment Claim
To establish a disparate treatment claim under the FHA, Appellees must prove that
a discriminatory purpose was a motivating factor in the Appellants‘ actions. In other
words, Appellants have the burden to prove that housing was made unavailable to FHA-
protected persons because of race, religion, sex, familial status, national origin, or
disability. 42 U.S.C. § 3604(a) and (c) (emphasis added); see also Spann v. Abraham,
36 S.W.3d 452, 463 (Tenn. Ct. App. 1999) (holding that, in order to prevail on a
disparate treatment claim involving pregnancy discrimination, the plaintiff must prove
that she was treated differently than other temporarily disabled employees because of her
pregnancy) (emphasis added)).
To establish a prima facie case for disparate treatment where plaintiffs are not
members of a protected class, they must show that: (1) they contracted with members of a
class protected by the FHA; (2) those persons sought and were qualified to rent the
housing in question; (3) defendants ―otherwise made unavailable‖ or refused to allow
those persons to rent the housing because of their FHA-protected status; and (4) housing
opportunities remained available to other renters outside the FHA-protected categories.
Lynn v. Village of Pomana, 373 F. Supp. 2d 418, 428-29 (S.D. N.Y. 2005).
When analyzing evidence of intentional discrimination in FHA cases, the three-
part burden-of-proof test developed in McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973) and Texas Dep’t of Comm. Affairs v. Burdine, 450 U.S. 248 (1981) is applicable.
Maki v. Laako, 88 F.3d 361, 364 (6th Cir. 1996); Selden Apts. V. U.S. Dept. of Hous.
and Urban Dev., 785 F.2d 152, 159 (1986). Under this framework, the plaintiff has the
burden of proving a prima facie case of discrimination by a preponderance of the
evidence. ―Establishing a prima facie case of discrimination creates a rebuttable
presumption that the [defendant] unlawfully discriminated against the [plaintiff].‖ St.
Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 506 (1993). If the plaintiff satisfies this
burden, then the burden shifts to the defendant to articulate a legitimate, non-
discriminatory reason for its actions. McDonnell-Douglas, 411 U.S. at 802); see also
Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989); Lindsay v. Yates, 578 F.2d
407, 421 (6th Cir. 2009). The defendant‘s burden is simply a burden of production, not
persuasion. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 142 (2000);
13
Wilson v. Rubin, 104 S.W.3d 39, 50 (Tenn. Ct. App. 2002); Moore v. Nashville Elec.
Power Bd., 72 S.W.3d 643, 652 (Tenn. Ct. App. 2001). The defendant is not required to
persuade the court that it ―was actually motivated by the proferred reasons, and there is
no credibility assessment at this point of the analysis.‖ St Mary’s, 509 U.S. at 510.
―[B]y producing evidence of a non-discriminatory reason, persuasive or not, defendant
meets its burden of production.‖ Davis v. Reliance Elec, 104 S.W.3d 57, 62 (Tenn. Ct.
App. 2002). Even if the court ultimately rejects the defendant‘s proffered reason, that
does not compel a judgment for the plaintiff. Reeves, 530 U.S. at 146.
If the defendant carries its burden of production, ―the presumption of
discrimination [created by the establishment of a prima facie case] drops out of the
picture.‖ St. Mary’s, 509 U.S. at 511; Wilson, 104 S.W.3d at 50; Moore, 72 S.W.3d at
652; Spann, 36 S.W.3d at 465. The burden of persuasion then shifts back to the plaintiff
to prove by a preponderance of the evidence that the reasons proferred by the defendant
were not the true reasons for its action, but were merely pretext and that the true reason
was discrimination because of the FHA-protected status of the plaintiff‘s prospective
tenants. Marpaka v. Hefner, 289 S.W.3d 308, 313 (Tenn. Ct. App. 2008); Wilson, 104
S.W.3d at 50; Moore, 72 S.W.3d at 652.
With the foregoing principles in mind, we turn to the record. In support of their
motion for partial summary judgment on the disparate treatment claim, Appellees
claimed that the undisputed facts showed that the Appellants, acting through the BMA,
passed an illegal and void amendment to the City‘s general ordinance for the specific
purpose of, first, stopping Appellees from building high-density, MFUH developments in
Covington. Furthermore, Appellees asserted that the undisputed facts showed an express
intent on the part of Appellants to prevent any more ―low income,‖ ―Section 8,‖ high-
density, MFUH from being built in Covington. According to Appellees, the foregoing
actions were taken despite the City‘s 1997 Land Use and Transportation Plan, in which
the City had officially made findings of rampant poverty and of the severe need for such
housing. In 1997, the City had adopted an overarching policy that it ―should encourage
high density housing development.‖ However, according to Appellees‘ statement of
undisputed facts, no low-income housing had, in fact, been built in Covington between
1997 and November 2000. Under the McDonnell-Douglas framework, Appellees
arguably met their initial burden to state a prima facie case for disparate treatment. 6 The
burden (of production), then shifted to Appellants to show a non-discriminatory reason
for its action in passing the amended zoning ordinance.
Appellants filed the affidavit of the former Mayor of Covington, Russell Bailey, in
opposition to Appellees‘ motion for partial summary judgment. In relevant part, Mr.
6
The trial court is not precluded from revisiting the issue of whether Appellees established a prima facie
case for disparate treatment on remand.
14
Bailey testified that the City ―had no intention nor desire to discriminate against either
[Appellee] in the lawsuit nor to any class of persons. We had to come up with an overall
plan for multi-family housing and had started before either project was brought up.‖
Furthermore, former City of Covington Alderman, Shelvie Ross, stated in his deposition,
which was offered by Appellants in opposition to the motion for summary judgment, that
―I had no intent to discriminate against Flat Iron or Cottonwood or multi-family unit
housing for low income residents. My vote in favor of the moratorium ordinance and for
new zoning density regulations was to ensure that Covington citizens, particularly those
who moved into Flat Iron and Cottonwood, would live in a high quality, not crowded,
beautiful space.‖ Other former aldermen testified along similar lines. In addition,
Commission Chairman Joe Swaim provided a sworn affidavit, stating that
[i]n 2000-2001, all Planning Commission members and I recognized that
Covington‘s multi-family regulations, particularly regarding density, were
insufficient and that the Planning Commission needed to address them. We
believed that Covington had a pattern of multi-family development that
needed to be discontinued. The moratorium passed in 2000 gave the
Planning Commission approximately six months to complete a study of
multi-family unit housing and density and to make a recommendation to the
City Board. We used our time well, studied the issues, reviewed different
proposed changes and recommended new density regulations that we
believed were fair and reasonable.
From the record, Appellants provided ample evidence to rebut the presumption of
discriminatory treatment by providing legitimate, non-discriminatory reasons for their
actions. At the summary judgment stage, the trial court was required to take this
countervailing evidence as true. It does not, however, appear that the trial court did so.
Here, contrary to the foregoing evidence, the trial court found that the City had not
reviewed MFUH density, either before or after the moratorium. The testimony of
Chairman Swaim, the former mayor, and the aldermen directly contradicts the trial
court‘s finding and creates a factual issue as to the true reason for the challenged action.
―At the summary judgment phase, if the plaintiff succeeds in making the [defendant‘s]
stated non-discriminatory reason a disputed fact, then it is up to the fact-finder to resolve
the factual dispute as well as the ultimate question—whether the [defendant]
discriminated against the [plaintiff].‖ Frame v. Davidson Transit Org., 194 S.W.3d 429,
438 (Tenn. Ct. App. 2005); Smith v. Bridgestone/Firestone, Inc., 2 S.W.3d 197, 203
(Tenn. Ct. App. 1999). For this reason, the trial court erred in granting partial summary
judgment on the Appellees‘ disparate treatment claim.
15
C. Disparate Impact Claim
As it did with Appellees‘ disparate treatment claim, the trial court also found that
Appellees ―have shown facts to establish a prima facie case of disparate impact.‖ Based
on this finding, the trial court granted Appellees‘ motion for summary judgment on this
claim.
As noted in 2 Arden H. Rathkopf, and Daren A. Rathkopf, Edward H. Ziegler, Jr.,
Rathkopf‘s The Law of Zoning and Planning § 25:22 (4th ed. 2015):
A violation of the Fair Housing Act‘s provisions with respect to
discrimination in housing may be shown by either discriminatory intent
(disparate treatment) or disparate impact or effect. The U.S. Supreme Court
has not addressed the issue of what test or standard to apply in disparate
impact cases under the Fair Housing Act. Lower courts, however, generally
have held that a claim of disparate impact, unlike a claim of disparate
treatment, does not require a finding of intentional discrimination. Indeed,
―the necessary premise of the disparate impact approach is that some
[housing] practices adopted without a deliberately discriminatory motive,
may in operation be functionally equivalent to intentional discrimination.‖
In applying disparate impact analysis under the Fair Housing Act, courts
may consider:
(1) the strength of the plaintiff's showing of discriminatory impact;
(2) evidence of discriminatory intent;
(3) the defendant‘s interest in taking the action complained of; and
(4) whether plaintiff seeks to compel the defendant to provide housing
affirmatively or merely to restrain the defendant from interfering with
private provision of housing.
Not every showing of discriminatory impact will be held to constitute a
violation of the Act. The strength of the showing of disparate impact may
be rebutted or outweighed by the defendant's legitimate interest in taking
the action complained of.
Id. (footnotes omitted).7
7
Aside from their substantive argument, Appellants also assert that Appellees did not make a claim for
disparate impact in their amended complaint. Appellants also argue that there is not a disparate impact
cause of action in FHA-violation claims and further claim that Appellees may not have standing to assert
a claim under the FHA. Because we conclude that there are disputed material facts that preclude
summary judgment on all of Appellees‘ claims, we will not address these issues in this opinion.
16
Appellees‘ disparate impact claim is based, in part, on the testimony of their
expert, John Gnuschke, an economist, and Mike Ritz, a businessman with some
experience in real estate development and financing. Messrs. Gnuschke and Ritz opined
that Appellants‘ action ―adversely impacted‖ protected classes. Specifically, Mr. Gnchke
Gnuschke‘s affidavit states that the moritorium ―reduced the supply of affordable housing
and adversely impacted minorities, low and moderate income residents, families with
children, female headed families with children, [and] female non-family households.‖
Mr. Gnuschke made the following statements in his analysis, which was attached as
Exhibit B to his affidavit:
1. Any action on the part of the community that reduces the supply of
housing will also reduce the availability of affordable housing units for
low-income residents
2. Through the process of filtering, the supply of bottom-quality housing
is dependent on new housing construction at all levels, not just newly built
―affordable housing.‖
3. Metropolitan area growth in the quantity of low-quality housing units is
quite sensitive to the quantity of new, higher-quality housing supplied.
4. To the extent that the cities make it difficult to build new housing, any
type of new housing, the availability of low-cost housing will be reduced
and the affordability of all housing will decline.
5. Poor people tend to fill properties left behind by more mobile, higher-
income residents that fill higher quality single and multi-family properties.
6. Because the rents under consideration at the time [by Appellees] were
slightly higher than those allowed by HUD under the Section 8 program, it
was assumed that the [Appellees‘] property would not be available to
Section 8 renters.
Likewise, Mr. Ritz‘s affidavit stated that the Appellants‘ actions ―discriminated against
and adversely impacted Black/African Americans, low and moderate income residents,
families with children, female headed families with children, female non-family
households and handicapped citzens.‖8
However, our holding does not preclude Appellants from raising these issues in the trial court on remand.
8
Appellants argue that the legal conclusions offered by the Appellees‘ experts ―do not constitute such
facts as would be admissible in evidence.‖ Wadlington v. Miles, Inc., 922 S.W.2d 526 (Tenn. Ct. App.
17
In cross-examining Mr. Gnuschke in his deposition, which was filed in support of
the motion for partial summary judgment, Appellants created disputes of fact concerning
Mr. Gnuschke‘s analysis and conclusions:
Q [to Mr. Gnuschke]: Has anyone suggested at any time that Covington did
anything to try to preclude female heads of household from moving into
any apartment in Covington?
A. No.
Q. Has anyone at any time told you that Covington had done anything to
preclude African Americans from moving into any apartment in
Covington?
A. No, sir.
* * *
Q. And . . . you‘ve seen nothing that would document that there was an
impact that was significantly different for African Americans because of
the moratorium, than on non-African Americans?
A. . . . I have not seen who‘s occupying the Flat Iron project and who‘s
occupying the Cottonwood project. No.
* * *
Q. You can‘t identify any female head of household that was looking to
rent during that period of time that was not allowed to do so?
A. No, sir.
In addition to creating a dispute of fact concerning the actual existence of any disparate
1995). Accordingly, Appellants contend that the trial court ―committed reversible error in failing to
determine the admissibility of [Appellees‘] experts‘ reports and affidavits and by considering such
inadmissible, conclusory legal opinions in its determination of the parties‘ motions for summary
judgment because such opinions are insufficient to create a genuine issue.‖ Shipley v. Williams, 350
S.W.3d 527, 551 (Tenn. 2011); Ward v. City of Lebanon, 273 S.W.3d 628, 636 (Tenn. Ct. App. 2008);
Dempsey v. Correct Manuf. Corp., 755 S.W.2d 798, 806-807 (Tenn. Ct. App. 1988). Our disposition of
this appeal is based upon the dispute of material fact; however, our holding does not preclude Appellants
from raising these issues on remand.
18
impact, Appellants also created factual disputes concerning the validity of Mr.
Gnuschke‘s research methods:
Q. The opinions you‘ve reached in this case didn‘t result from any
independent research done by you unrelated to this lawsuit, though?
A. No.
Q. Your opinions are directly related to what you‘ve been asked to testify
to in this case?
A. Yes.
Q. With respect to a white person who might have wanted to rent property
in Covington in 2001, the moratorium would have the same impact on a
white person as it would for an African American, wouldn‘t it? If any
delay for Flat Iron to build, if a white person was looking to rent, it would
have the same impact on that white person that it would on an African
American?
A. Didn‘t, didn‘t distinguish between African Americans and non-African
Americans.
Q. So the impact would be the same?
A. Yes.
Likewise, Appellants created dispute as to whether Mr. Ritz‘s opinion was based
on proper methodology:
Q [to Mr. Ritz]: Is there any peer review information that you‘re aware of
that would be helpful in testing your methodology?
A. I don‘t know.
Q. Is there any publication or treatise that you would consider authoritative
that would provide support for your methodology in reaching [your]
conclusion [of disparate impact]?
A. I don‘t know. Not that I know of.
19
Viewing the foregoing testimony in the light most favorable to the Appellants, as the
non-moving party, and giving all reasonable inference in Appellants‘ favor, we conclude
that there are disputed material facts concerning the existence of disparate impact in this
case. Accordingly, the trial court erred in granting partial summary judgment in favor of
Appellees. Because summary judgment was not warranted in this case, we pretermit
Appellants‘ issues concerning the trial and vacate the judgment on the jury verdict.
V. Conclusion
For the foregoing reasons, we reverse the trial court‘s grant of summary judgment
on the Open Meetings Act claim, and its grant of partial summary judgment on the FHA
claims in favor of Appellees. Accordingly, we vacate the trial court‘s judgment on the
jury verdict and remand the case for such further proceedings as may be necessary and
are consistent with this opinion. Costs of the appeal are assessed against the Appellees,
Cottonwood Associates, LLC, Cottonwood Properties, Inc., Flat Iron Partners, LP; John
Coleman Hayes, Jr., Wilrus Company, LLC, and A. Richard Wilson, for all of which
execution may issue if necessary.
_________________________________
KENNY ARMSTRONG, JUDGE
20