THE INCLUSIVE COMMUNITIES PROJECT, INCORPORATED, Plaintiff - Appellant
LINCOLN PROPERTY COMPANY; LEGACY MULTIFAMILY NORTH III, L.L.C.; CPF PC RIVERWALK, L.L.C.; HLI WHITE ROCK, L.L.C.; BRICK ROW APARTMENTS, L.L.C., Defendants - Appellees
from the United States District Court for the Northern
District of Texas
DAVIS, JONES, and ENGELHARDT, Circuit Judges.
D. ENGELHARDT, CIRCUIT JUDGE.
this appeal, we review the district court's dismissal
with prejudice, pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure, of Fair Housing Act claims -
including claims of "disparate treatment" and
"disparate impact" - asserted against the owners
and management company of apartment complexes in the greater
Dallas, Texas area that decline to participate in the federal
"Section 8" Housing Choice Voucher Program. For the
reasons stated herein, we affirm.
plaintiff, The Inclusive Communities Project
("ICP"), "is a fair housing focused nonprofit
organization working with households seeking access to
housing in predominately non-minority locations in the Dallas
area."In furtherance of its mission, ICP provides
"counseling, financial assistance, and other services to
Black or African American households participating in the
[federal] Section 8 Housing Choice Voucher (HCV or voucher)
Program administered by the Dallas Housing Authority
(DHA)." According to ICP, its voucher clients seek
assistance in finding and obtaining "dwelling units in
safe and secure communities with higher median incomes, good
schools, low poverty rates, and adequate public and private
serve and facilities (high opportunity areas)."
financial assistance offered by ICP may include the payment
of landlord incentives or bonus payments (to encourage
leasing to voucher participant households), application fees,
and security deposits. ICP also offers landlords in higher
opportunity areas the option of a contract with ICP as a
guarantor for voucher households or with ICP as the
sub-lessor for voucher households. ICP alleges that it
proposed these alternative contractual arrangements in
response to reasons stated by landlords and landlord
associations for refusing to negotiate with or rent to
identifies Defendants-Appellees Legacy Multifamily North III,
LLC ("Legacy"), CPF PC Riverwalk, L.L.C.
("Riverwalk"); HLI White Rock, L.L.C. ("White
Rock"); and Brick Row Apartments, L.L.C. ("Brick
Row") (collectively, Owners") as owners of
apartment complexes in the "higher opportunity" or
"high opportunity" areas identified by ICP.
Defendant-Appellee Lincoln Property Company (Lincoln) manages
these complexes in addition to managing or owning and
operating numerous other properties in "the Dallas
contends "its ability to assist its voucher clients in
obtaining dwellings in high opportunity areas is obstructed
by Defendants' discriminatory housing practices."
ICP alleges that Lincoln has a general policy that it
will not negotiate with, rent to, or otherwise make
units available in "White non-Hispanic areas" to
voucher households; moreover, Lincoln's written
advertisements state that housing vouchers, Section 8
vouchers, and any government-subsidized rent programs are not
accepted. According to ICP, the only apartment complexes for
which Lincoln will negotiate with and rent to
voucher households are those in predominately minority
locations. These apartment complexes include complexes
required by law or contract to not discriminate against
voucher households based on their status as voucher program
general "no vouchers" policy is applied at
approximately 43 apartment complexes, located in majority
white census tracts, that have at least some units available
at rents payable under the voucher program. These complexes
include the units owned by the Owners. ICP further contends
that it has black voucher clients who are otherwise eligible
under Lincoln's application criteria, and with whom ICP
would have entered into subleases, but for Lincoln's
policy against voucher tenants.
alleges that it has attempted, on several occasions, to
negotiate with Lincoln on behalf of voucher clients seeking
rental units in properties that Lincoln manages and/or owns
in majority white areas. The most recent requests, ICP
reports, were letters that ICP sent to Lincoln, in 2015 and
2016, asking that it "reconsider" its policy of not
accepting voucher families as tenants at the aforementioned
apartment complexes. According to ICP, neither Lincoln nor the
Owners responded to ICP's request to negotiate and rent
under the sublease/guarantor proposal. At least one
Defendant-Appellee notes, however, that ICP alleges its
transmittal of the letters but not their receipt. Nor is it
clear when the Owners, as opposed to Lincoln, the manager,
became aware of the letters and/or ICP's requests to
discuss the "no vouchers" policy.
asserts that the "no vouchers" policy forces
voucher households in the Dallas metro area to seek housing
in areas where vouchers are accepted, which are
"racially concentrated [predominately minority] areas of
high poverty that are marked by substantially unequal
conditions." Further, ICP contends, Lincoln's
refusal to negotiate with or rent to voucher holders
disparately impacts black households in the Dallas area. In
short, ICP maintains that landlords who accept vouchers are
disproportionately located in minority areas of Dallas, and
property management companies located in non-minority areas
disproportionately refuse vouchers. The waiting lists for the
area voucher programs also are disproportionately black.
support its disparate impact contentions, ICP references the
most recent United States Department of Housing and Urban
Development (HUD) "Picture of Subsidized Housing"
reporting a total of 30, 745 voucher households in the
Dallas-Irving-Plano Metropolitan Division. According to ICP,
90% of those households are minorities, with the total
breakdown being 81% black, 6% Hispanic, and 10% white
non-Hispanic (white). Approximately 17, 000 of the 30, 745
voucher households in the Dallas-Irving-Plano Metropolitan
Division participate in the program through the DHA, which
has a voucher population that is 86% black and 6% white. The
voucher households in the City of Dallas are 87% Black and
likewise characterizes the voucher program in the Dallas
metro area as racially segregated into predominantly minority
census tracts. On average, voucher households in the Dallas
metro area are located in 74% minority census tracts; voucher
households in the City of Dallas are located in 88% minority
and 33% poverty census tracts.
also alleges the following facts regarding individual
apartment complexes that the Defendants-Appellees own or
• Park Central at Flower Mound Complex
o No Black renters in the "small census tract block
group" containing this complex;
o 307 units in the complex; and
o Zero voucher households in the census tract containing this
• McKinney Uptown Complex
o No Black renters in the "small census tract block
group" containing this complex;
o 144 units in the complex; and
o No voucher households in the census tract containing this
• Parkside at Legacy Complex
o Black renters are 14% of the 630 renter-occupied units in
the "small census tract block group" containing
o 293 units in the complex; and
o No voucher households in the census tract containing this
• White Rock Lake Apartment Villas
o Black renters are 11% of the 1, 022 renter-occupied units
in the "small census tract block group" containing
o 296 units in the complex; and
o No voucher household in the census tract containing this
• Brick Row Apartments, LLC
o Black renters are 11% of the 532 renter-occupied units in
"small census tract block group" containing this
o 500 units in the complex;
o 45 voucher households in the census tract containing this
o Majority of the voucher households in the census tract live
in single family or semi-detached structures.
ICP attaches city maps to its complaint showing that voucher
households are concentrated in parts of Dallas where
minorities live, with few voucher households in the parts of
Dallas where non-minorities live.
it received no responses from Lincoln or the Owners to its
latest letters, ICP filed a complaint on January 23, 2017,
seeking declaratory and injunctive relief from the district
court. Specifically, ICP seeks a declaration that Lincoln and
the Owners have violated 42 U.S.C. § 3604(a) and 42
U.S.C. § 1982 by declining to participate in the federal
"Section 8" Housing Choice Voucher Program. ICP
also seeks a permanent injunction compelling Lincoln and the
Owners to accept Section 8 vouchers and requiring them to
negotiate and contract with ICP under ICP's
complaint, ICP alleges a total of four claims. Two claims -
disparate impact and disparate treatment - are asserted
against all Defendants-Appellees (Lincoln and the Owners).
Relative to disparate impact, ICP alleges that
Defendants-Appellees' policy of declining to negotiate
with or rent to voucher holders disparately impacts black
households as evidenced by statistics establishing that more
than 80% of the voucher holders in the Dallas area are
black. Relative to disparate treatment, ICP
alleges that Defendants-Appellees' refusal to negotiate
with or rent to ICP, pursuant to ICP's guarantor or
sublease proposals, constitutes disparate treatment based on
race and color, because ICP's voucher clients are
also alleges two claims solely against Lincoln. The first
concerns Lincoln's publication of its policy of refusing
to "negotiate with or rent to voucher households"
by including the following statements in advertisements
placed with apartment locator services:
Our community is not authorized to accept housing vouchers.
Our community is not authorized to accept Section 8 housing.
Our community is not authorized to accept ANY government
subsidized rent programs.
maintain these advertisements "appeal to the stereotype
that because voucher holders are Black, voucher tenants are
undesirable as tenants . . ." and, thus, perpetuate
racial stereotypes in violation of 42 U.S.C. § 3604(c).
second claim against only Lincoln is for disparate treatment
liability based on Lincoln's alleged refusal to negotiate
with or rent to otherwise qualified voucher households in
predominately white areas while, at the same time,
negotiating with and renting to voucher holders in
predominately minority areas. ICP argues
Lincoln's conduct violates the disparate treatment
standard of liability because the differing policies
regarding vouchers are based on the race and color of the
response to ICP's claims, Lincoln and the Owners filed
motions to dismiss, pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure, for failure to state claims upon
which relief can be granted. The district court granted the
motions in two orders dated July 13, 2017 (Brick Row's
motion) and August 16, 2017 (the remaining motions). The
district court entered final judgment on August 16, 2017.
This appeal followed.
courts conduct a de novo review of a district
court's dismissal of a complaint under Federal Rule of
Civil Procedure 12(b)(6). See Clyce v. Butler, 876
F.3d 145, 148 (5th Cir. 2017). We may affirm the district
court's dismissal on any basis supported by the record.
See, e.g., Torch Liquidating Tr. ex rel. Bridge Assocs.,
L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir. 2009).
12(b)(6) authorizes the filing of motions to dismiss
asserting, as a defense, a plaintiff's "failure to
state a claim upon which relief can be granted."
See Fed. R. Civ. P. 12(b)(6). Thus, claims may be
dismissed under Rule 12(b)(6) "on the basis of a
dispositive issue of law." Neitzke v. Williams,
490 U.S. 319, 326 (1989). Dismissal under Rule 12(b)(6) also
is warranted if the complaint does not contain sufficient
factual matter, accepted as true, to "state a claim to
relief that is plausible on its face." Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Where the
well-pleaded facts of a complaint do not permit a court to
infer more than the mere possibility of misconduct, the
complaint has alleged - but it has not 'show[n]' -
"that the pleader is entitled to relief."
Iqbal, 556 U.S. at 678 (quoting Fed. Rule Civ. P.
8(a)(2)). Thus, a complaint's allegations "must make
relief plausible, not merely conceivable, when taken as
true." United States ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 186 (5th Cir. 2009); see
also Twombly, 550 U.S. at 555 ("Factual allegations
must be enough to raise a right to relief above the
speculative level . . . on the assumption that all the
allegations in the complaint are true (even if doubtful in
plausibility standard is not akin to a 'probability
requirement,' but it asks for more than a sheer
possibility that a defendant has acted unlawfully."
Id. Factual allegations that are "merely
consistent with a defendant's liability, stop short of
the line between possibility and plausibility of entitlement
to relief," and thus are inadequate. Id.
(internal quotations omitted). Accordingly, the requisite
facial plausibility exists "when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. (emphasis added).
"Determining whether a complaint states a plausible
claim for relief" is "a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense." Iqbal, 556 U.S.
at 679 (internal citations omitted). See also Robbins v.
Oklahoma, 519 F.3d 1242, 1248 (10th Cir. 2008) (degree
of required specificity depends on context, i.e., the type of
claim at issue).
evaluating motions to dismiss filed under Rule 12(b)(6), the
court "must accept all well-pleaded facts as true, and .
. . view them in the light most favorable to the
plaintiff." Campbell v. Wells Fargo Bank, N.A.,
781 F.2d 440, 442 (5th. Cir.), cert. denied, 476
U.S. 1159 (1986). Further, "[a]ll questions of fact and
any ambiguities in the controlling substantive law must be
resolved in the plaintiff's favor." Lewis v.
Fresne, 252 F.3d 352, 357 (5th Cir. 2001). On the other
hand, courts "are not bound to accept as true a legal
conclusion couched as a factual allegation." Papasan
v. Allain, 478 U.S. 265, 286 (1986); see also
Iqbal, 556 U.S. at 678 ("tenet that a court must
accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions").
"Nor does a complaint suffice if it tenders 'naked
assertion[s]' devoid of 'further factual
enhancement.'" Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557); see also
Christopher v. Harbury, 536 U.S. 403, 416 (2002)
(elements of a plaintiff's claim(s) "must be
addressed by allegations in the complaint sufficient to give
fair notice to a defendant").
determining whether a plaintiff's claims survive a Rule
12(b)(6) motion to dismiss, the factual information to which
the court addresses its inquiry is limited to (1) the facts
set forth in the complaint, (2) documents attached to the
complaint, and (3) matters of which judicial notice may be
taken under Federal Rule of Evidence 201. See Norris v.
Hurst Trust, 500 F.3d 454, 461 n. 9 (5th Cir. 2007);
R2 Invs. LDC v. Phillips, 401 F.3d 638, 640 n. 2
(5th Cir. 2005). When a defendant attaches documents to its
motion that are referenced in the complaint and are central
to the plaintiff's claims, however, the court can also
properly consider those documents. Causey v. Sewell
Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.
2004); In re Katrina Canal Breaches Litig., 495 F.3d
191, 205 (5th Cir. 2007). "In so attaching, the
defendant merely assists the plaintiff in establishing the
basis of the suit, and the court in making the elementary
determination of whether a claim has been stated."
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496,
499 (5th Cir. 2000).
federal Housing Choice Voucher Program pays rental subsidies
to "aid[ ] low-income families in obtaining a decent
place to live" and to "promot[e] economically mixed
housing." 42 U.S.C. § 1437f(a). The voucher program
is funded by HUD and administered by state and local public
housing authorities (PHA's) in accordance with
regulations promulgated by HUD. When a rent payment exceeds a
specified percentage of a family's monthly income, the
federal program pays the balance.
participation in the voucher program is voluntary under both
federal and Texas state law. See 42 U.S.C.
§1437f; 24 C.F.R. §§ 982.301(b)(11),
982.302(a), 982.307; Tex. Local Gov't Code §
250.007(a); Tex. Gov't Code. § 2306.269; Knapp
v. Eagle Prop. Mgmt. Corp., 54 F.3d 1272, 1280 (7th Cir.
1995) ("Owner participation in the section 8 program is
voluntary and non-participating owners routinely reject
section 8 voucher holders."); Salute v. Stratford
Greens Garden Apartments, 136 F.3d 293, 300 (2d Cir.
1998) ("We think that the voluntariness provision of
Section 8 reflects a congressional intent that the burdens of
Section 8 participation are substantial enough that
participation should not be forced on landlords, either as an
accommodation to handicap or otherwise.").
admitted to the voucher program, program participants are
responsible for finding a landlord in the private rental
market willing to rent to them. 24 C.F.R. § 982.302(a).
Landlords who participate in the program are responsible for
screening prospective tenants and reject them if screening
reveals red flags in terms of paying rent and utility bills,
caring for rental housing, respecting neighbors, criminal
activity, and the like. Id. at § 982.307(a).
Fair Housing Act (FHA), Title III of the Civil Rights Act of
1968, 42 U.S.C. § 3601, et seq., prohibits
discrimination in the rental or sale of a dwelling based on
certain protected characteristics, including race.
See 42 U.S.C. § 3604(a). That statute reflects
"the policy of the United States to provide within
constitutional limitations, for fair housing throughout the
United States." 42 U.S.C. § 3604. Thus, the
voluntary nature of landlord participation in the voucher
program does not render it immune from liability if
actionable discrimination under the FHA is established.
here, § 3604(a) provides:
[I]t shall be unlawful to refuse to sell or rent after the
making of a bona fide offer, or to refuse to negotiate for
the sale or rental of, or otherwise make unavailable or deny,
a dwelling to any person because of race, color, religion,
sex, familial status, or national origin.
42 U.S.C. § 3604(a). ICP's advertisement liability
claim against Lincoln is governed by 42 U.S.C. §
3604(c), which provides:
[I]t shall be unlawful to make, print, or publish, or cause
to be made, printed, or published any notice, statement or
advertisements, with respect to the sale or rental of a
dwelling that indicates any preference, limitation, or
discrimination based on race, color, religion, sex, handicap,
familial status, or national origin, or an intention to make
any such preference, limitation, or discrimination.
Disparate Impact Liability
Texas Department of Housing & Community Affairs v.
Inclusive Communities Project, Inc.,135 S.Ct. 2507
(2015) ("ICP"), the Supreme Court,
construing 42 U.S.C. §§ 3604(a) and 3605(a),
determined that both disparate treatment claims (claims
asserting "discriminatory intent or motive") and
disparate impact claims ("claims asserting an
unjustified, disproportionally adverse effect on
minorities") are cognizable under the FHA. ICP,135 S.Ct. 2507, 2513, 2518. In recognizing the viability of
disparate impact FHA claims, the Supreme Court emphasized,
inter alia, the inclusion of the
"results-oriented" phrase - "or otherwise make
unavailable or deny" - in §3604(a), reasoning that
it "refers to the consequences of action rather than the
actor's intent." Id. at 2518, 2525. The
Court also found "[r]ecognition of disparate-impact
claims [to be] ...