Source-of-Income Housing Discrimination Claims Proceed Against Elliman, Others

In Housing Rights Initiative, Inc. v. Elliman et al, No. 154472/2022, 2023 WL 1387426 (N.Y. Sup Ct, New York County Jan. 30, 2023), the plaintiff – a nonprofit housing group – alleges that defendants (real estate agents, brokerage firms, property management companies, and property owners) “willfully and intentionally refused to rent apartments to individuals who intend to pay rent with CityFHEPS vouchers.”

Specifically, plaintiff “alleges it has been injured by having to expend resources to investigate and to respond to Defendants’ discriminatory practices, which not only diverted Plaintiff’s resources, but frustrated Plaintiff’s mission.”

It utilized “testers” – fictitious applicants – “whose investigations allegedly revealed source of income discrimination perpetuated by Defendants who refused to accept CityFHEPS vouchers for advertised apartments.”

In denying the defendant’s (750 Tenth Ave Realty LLC) motion to dismiss, the court held, inter alia, that plaintiff was a “person” under the applicable statutes, and that its claims were not barred by the use of “fictitious” applicants.

From the decision:

Plaintiff alleges that it fits the statutory definition of a “person” under N.Y. Exec. Law § 292(1) (NYSCEF Doc. 1 at ¶ 169). Moreover, N.Y. Exec. Law § 296(5)(a)(1)(a) makes it unlawful for housing owners and agents to make statements expressing limitations or discrimination based on a prospective tenant’s lawful source of income. N.Y. Exec. Law § 296(5)(c)(1) imposes the same requirements “for any real estate broker, real estate salesperson or employee or agent thereof.” Further, N.Y. Exec. Law § 296(5)(c) states it is “unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden [by section 296(5)], or attempt to do so.” Accepting the allegations as true, it is alleged that Amos, who was working as an employee or agent of Moving Defendant, told Plaintiff’s tester that an apartment was available, but when asked if the landlord accepts CityFHEPS vouchers for the apartment, Amos responded that “no. Its rent stabilized so the landlord is looking for an excellent applicant.” (Id. at ¶ 104).
Although Defendants are correct that Plaintiff did not expressly plead that the tester was “qualified” to use a voucher or rent the apartment, this argument rests on the incorrect assumption that it is the testers who are asserting claims against Moving Defendants or that Plaintiff is asserting claims on behalf of the testers. Rather, Plaintiff is alleging that Defendants have willfully and intentionally violated N.Y. Exec. Law §§ 296(5)(a)(3), 296(5)(c), and 296(6), and that these willful and intentional violations have caused Plaintiff to suffer injury (id. at ¶¶ 169-177). The source of the alleged injuries which Plaintiff is purportedly suffering was merely uncovered by the testers, and therefore it is of no import whether the testers actually qualified for a CityFHEPS voucher. Indeed, alleged willful and intentional violations of the NYSHRL and NYCHRL brought by housing advocacy non-profits uncovered through the use of testers have survived motions to dismiss under a more stringent FRCP 12(b)(6) standard (See Fair Housing Justice Center, Inc. v JDS Development LLC, 443 F.Supp.3d 494 [SDNY 2020]; Fair Housing Justice Center, Inc. v Silver Beach Gardens Corp., 2010 WL 3341907 at *6 [SDNY 2010]).

Moreover, Plaintiff’s use of fictitious applicants is no bar to Plaintiff’s claims because Defendants’ complete refusal to deal with any applicants to the Apartment who wanted to use a CityFHEPS voucher removes the need for Plaintiff to plead specific violations (CNY Fair Housing, Inc. v Swiss Village, LLC, 2022 WL 2643573 [NDNY 2022]). It would be illogical and encourage forum shopping if an organizational plaintiff’s claims of intentional violations of the NYSHRL and NYCHRL brought in Federal Court would survive under a more stringent pleading standard while being dismissed in the laxer pleading standard in New York State Court.

A similar analysis applies to the NYCHRL, which Courts are instructed to interpret independently of state and federal anti-discrimination laws to create an independent body of jurisprudence that is maximally protective of civil rights (See New York Local Law 35 § 1). Plaintiff alleges it is an “aggrieved person” under N.Y.C. Admin. Code § 8-502(A). Further, Plaintiff alleges that the Defendants, who are owners, real estate brokers, and/or real estate salespeople are “persons” and “covered entities” under § 8-107. N.Y.C. Admin. Code § 8-107(5)(c) makes it an “unlawful discriminatory practice for any real estate broker, real estate salesperson or employee or agent thereof, to refuse to sell, rent, lease any housing accommodation….to any person or group of persons… because of any lawful source of income of such persons.” N.Y.C. Admin. Code § 8-107(6) makes it “unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden [by Section 8-107(5)], or to attempt to do so.” Accepting the allegations as true, Plaintiff has stated a claim, for purposes of surviving a pre-answer motion to dismiss, against Moving Defendant for intentional and willful violation of N.Y.C. Admin. Code §§ 8-107(5)(a) and (c).

Further, although Moving Defendant argues the allegations fails to give rise to an inference of discrimination, the Court disagrees. On a motion to dismiss pursuant to CPLR § 3211(a)(7), the Court is required to give Plaintiff the benefit of all favorable inferences which may be drawn from the allegations (Sassi v Mobile Life Support Services, Inc., 37 NY3d 236, 239 [2021]). Since the tester was told the Apartment was available but a CityFHEPS voucher could not be used, and that the Landlord was instead “looking for an excellent applicant” the Plaintiff is entitled on this motion to an inference of source of income discrimination emanating from Moving Defendant’s agent’s alleged statements. Indeed, Moving Defendant did not produce any documentary evidence that would rebut this inference which, procedurally, the Plaintiff is entitled. Although counsel for Moving Defendant relies on a Civil Court case, counsel omits that the Civil Court’s decision was issued after a bench trial, not a pre-answer motion to dismiss (Ketchakeu v Secka, 66 Misc.3d 603 [N.Y. Co., Civ. Ct. 2019]).

Finally, although Moving Defendant claim that Plaintiff is not a “person” under the NYCHRL, given the legislative mandate that the NYCHRL must be construed broadly and liberally to give effect to its remedial efforts, the Court finds that “person” under the NYCHRL can include a non-profit organization such as Plaintiff (Morse v Fidessa Corporation, 165 AD3d 61, 72 [1st Dept 2018] [finding that the overall mandate to construe the NYCHRL to achieve its uniquely broad purpose was envisioned to obviate the need for a wholesale textual revision of the myriad specific substantive provisions of the law]).

Based on this, the court denied the moving defendant’s motion to dismiss pursuant to CPLR § 3211(a)(7).

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