WALNUT CREEK MANOR v. FAIR EMPLOYMENT HOUSING COMMISSION (1990)

This case arises from a complaint by Robert Cannon to the Fair Employment and Housing Department that because he is Black he had been discriminated against by Walnut Creek Manor.   Cannon had unsuccessfully sought to rent an apartment from Manor.   The case presents two issues of first impression.   We are asked to decide whether the power of the Fair Employment & Housing Commission to award unlimited general compensatory damages violates the judicial powers clause of the California Constitution (Art. VI, § 1), and we hold that it does.   We also construe Government Code section 12987' s limitation to $1,000 of a punitive damage award for housing discrimination.

Cannon's claim of racial discrimination was found meritorious by an administrative law judge who awarded Cannon $1,500 in compensatory damages and an additional punitive damage award of $650 against one of the Manor's rental managers, Edith Indridson.   The proposed decision of the ALJ was not adopted by the Fair Employment and Housing Commission (FEHC).  (Gov.Code, § 11517, subd. (c).)

FEHC found that Cannon had also been discriminated against on the basis of marital status.   It made an additional award of damages for the increased rent and utilities Cannon had paid in other housing, an award of attorney's fees of $162.50, an award of $50,000 for emotional distress and an award of $40,635 in punitive damages.   Respondents, Manor, owner Marilyn Boswell and rental manager Indridson were held jointly and severally liable for the punitive damage award.   Manor, Boswell and Indridson sought a writ of administrative mandamus (Code Civ.Proc., § 1094.5) ordering the FEHC to set aside its decision.   A writ of mandate issued remanding the case to the Commission and directing it to reconsider its finding of marital status discrimination and to limit its award of punitive damages to $1,000.

FEHC appeals from only that portion of the writ which limits its punitive damage award to $1,000.   Manor, Boswell and Indridson (hereafter collectively Manor) cross-appeal challenging the sufficiency of the evidence to support findings of racial discrimination and to support damages for emotional distress, and contending that FEHC's power to award unlimited compensatory damages infringes upon various of its constitutional rights.

Standard of Review

The parties dispute the appropriate standard of review to be applied by this court to the appeal by Manor, Boswell and Indridson.¹  The superior court did not decide what standard was appropriate—substantial evidence or independent judgment—because it found that even under the more rigorous independent judgment test the Commission's findings could be upheld.

 Code of Civil Procedure section 1094.5 does not establish which cases must be reviewed under the independent judgment test;  that determination is a judicial one.  (County of Alameda v. Board of Retirement (1988) 46 Cal.3d 902, 906, 251 Cal.Rptr. 267, 760 P.2d 464.)   The independent judgment test is appropriately applied to an administrative decision when the aggrieved party can point to a “fundamental vested right” which has been impinged upon by the administrative action.  (Bixby v. Pierno (1971) 4 Cal.3d 130, 144, 93 Cal.Rptr. 234, 481 P.2d 242.)   Absent such a protected interest the appropriate standard of review is whether the agency's findings are supported by substantial evidence and whether the agency committed any errors of law.  (Ibid;  Code Civ.Proc., § 1094.5, subd. (c).)

 When the independent judgment standard of review is employed by the trial court, on appeal its findings “even where contrary to those of the [agency] cannot be overturned for evidentiary insufficiency if they are substantially supported.”  (Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1981) 29 Cal.3d 101, 108, 172 Cal.Rptr. 194, 624 P.2d 244;  Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770, 782, 163 Cal.Rptr. 619, 608 P.2d 707.)

Past challenges by landlords or employers to FEHC ² findings of discrimination have been upheld under the substantial evidence standard.   (Stearns v. Fair Employment Practice Com. (1971) 6 Cal.3d 205, 211, 98 Cal.Rptr. 467, 490 P.2d 1155;  American National Ins. Co. v. Fair Employment & Housing Com. (1982) 32 Cal.3d 603, 607, 186 Cal.Rptr. 345, 651 P.2d 1151.)

Most recently, however, our Supreme Court has suggested that in cases “in which a private party has a ‘direct pecuniary interest’ in the administrative agency's determination” the appropriate standard of review may be independent judgment.  (McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 348, 375, fn. 36, 261 Cal.Rptr. 318, 777 P.2d 91.)   Landlord McHugh was challenging the authority of the city rent control board to determine that he had charged his tenants rent higher than allowed under rent control.   While the McHugh court does not develop the analysis, it does cite to two earlier Supreme Court decisions where the independent judgment test was held appropriate.

In Interstate Brands v. Unemployment Ins. Appeals Bd., supra, 26 Cal.3d 770, 163 Cal.Rptr. 619, 608 P.2d 707, pure economic loss to an employer was found sufficient to require review under independent judgment.   In that case an employer was challenging a ruling by the administrative agency which would have awarded unemployment benefits to its employees.  (Id. at p. 773, 163 Cal.Rptr. 619, 608 P.2d 707.)   Finding that the employer's reserve account, to which it was required by law to contribute, would be depleted by such a ruling, the court concluded that the employer had at stake a property right of sufficient significance to justify independent judicial examination.   (Id. at pp. 776–781, 163 Cal.Rptr. 619, 608 P.2d 707.)   In the subsequent case of County of Alameda v. Board of Retirement, supra, 46 Cal.3d 902, 251 Cal.Rptr. 267, 760 P.2d 464, the court relied upon Interstate Brands to find that the independent judgment test would also be required when the entity seeking review of an award of retirement benefits was a public, rather than a private, employer.  (Id. at pp. 909–910, 251 Cal.Rptr. 267, 760 P.2d 464.)

The shorthand language in McHugh can be read as a statement that any “direct pecuniary interest” will trigger the higher standard of review.   Clearly the substantial damages awarded against Manor, Boswell and Indridson by the Commission would qualify.

Alternatively “direct pecuniary interest” could be nothing more than a shorthand description of the element common to Interstate, and County—namely a pre-existing obligation imposed by state law to pay into a fund (unemployment or retirement) which gives the paying party who seeks review a fundamental vested right in administrative decisions affecting payments which must be made from the fund.   Under that reading Interstate and County are distinguishable because the direct pecuniary interest Manor, Boswell, and Indridson have is purely an interest in not being required to pay a damage award-albeit a sizable one.  (See American National Ins. Co. v. Fair Employment & Housing Com., supra, 32 Cal.3d at pp. 606–607, 186 Cal.Rptr. 345, 651 P.2d 1151 [backpay award appropriately reviewed under substantial evidence].)   We find it difficult to characterize the interest here in avoiding the damage award as a fundamental, vested right.  (Bixby v. Pierno, supra, 4 Cal.3d at pp. 144–147, 93 Cal.Rptr. 234, 481 P.2d 242.)   This liability for damages arises only because Manor violated the fair housing law which otherwise requires no monetary contribution from landlords.   Manor has a fundamental right to run its business, but it has no vested right to be free from reasonable governmental regulation of its business operations (American National Ins. Co. v. Fair Employment & Housing Com. supra, 32 Cal.3d at p. 607, 186 Cal.Rptr. 345, 651 P.2d 1151) or from liability when it operates unlawfully.

It would have been appropriate for the superior court on reviewing the Commission's award of damages for housing discrimination to apply the substantial evidence standard of review.   In any event, on the petition for mandamus the superior court used the stricter, independent judgment test in its review of FEHC's findings.   Regardless, however, of which standard should have been used by the superior court, we are constrained to uphold the superior court's findings if there is substantial evidentiary support for them.   (Tex–Cal Land Management, Inc. v. Agricultural Labor Relations Bd. (1979) 24 Cal.3d 335, 344, 156 Cal.Rptr. 1, 595 P.2d 579;  Bixby v. Pierno, supra, 4 Cal.3d at p. 143, fn. 10, 93 Cal.Rptr. 234, 481 P.2d 242.)

Sufficiency of the Evidence

 After conducting an independent review of the evidence the trial court concluded that the “evidence shows without question that complainant was discriminated against because of race between November 1979 and to at least April of 1982.”   Manor challenges the sufficiency of the evidence to support various findings made by the Commission and upheld by the trial court.

The Commission found that when Cannon sought an apartment at Manor in November of 1979 he was told by rental manager Betty Facer that he would remain on a waiting list for a year or a year and a half.   Because of conflicting evidence as to the waiting period, Manor argues that this finding cannot be sustained.

Our inquiry, however, is limited to whether there is substantial evidence to support the finding insofar as it is a predicate to the discrimination finding made by the superior court.   Indulging every presumption in favor of the judgment, this court must resolve conflicts in the evidence in favor of the judgment.  (Moran v. Board of Medical Examiners (1948) 32 Cal.2d 301, 308, 196 P.2d 20;  Chodos v. Insurance Co. of North America (1981) 126 Cal.App.3d 86, 97, 178 Cal.Rptr. 831.)

According to Cannon's own testimony he was told that the waiting period was a year to a year and a half.   In an interview with a Department of Fair Employment and Housing investigator Facer said the waiting period was “a year, year and a half, perhaps two years.”

Manor points to two documents which it argues contradict or impeach Cannon.   The first of these is an entry on Cannon's tenant follow-up card prepared at Manor in February 1981.   That entry states that Cannon was told the wait would be 18 months to 2 years.   Since the entry dates some 15 months after Cannon's initial visit it has limited relevance to what he was told at that first visit.   The second document consists of notes made by an employee of the Contra Costa Housing Alliance when Cannon went to complain on April 9, 1982, about his inability to rent at Manor.   According to the notes Cannon said he was warned by the rental manager of a two and a half year wait.   At the hearing Cannon testified that he told the Alliance employee that he had actually waited almost two and a half years.   Despite minor inconsistencies, there is credible evidence to support the finding that when Cannon first applied at Manor he was told by Rental Manager Facer of a wait of one to one and a half years.

Manor also challenges the evidentiary support for the finding that “[i]n January 1981, Facer intended to rent Cannon a unit.”   The evidence asto Facer's intent was presented via testimony of Department investigator Don Henry.   Facer did not appear at the hearing.   According to Henry's notes Facer asserted that she did not rent to Cannon in January of 1981 because Cannon had requested a quiet apartment which was apparently not available at the time.

 On appeal Manor contends that Henry's testimony as to Facer's intent is improperly admitted hearsay.  Government Code section 11513, subdivision (c) provides in pertinent part that “[h]earsay evidence may be used for the purpose of supplementing or explaining other evidence but shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.”   Manor made no hearsay objection to Henry's testimony so the question of whether Facer's statements to him would have been admissible, for example as authorized admissions (Evid.Code, § 1222) was never reached.   Hearsay admitted without objection in an administrative hearing has probative value unless there is evidence admissible in the administrative proceeding which is to the contrary.  (Kirby v. Alcoholic Bev. etc. Appeals Bd. (1970) 8 Cal.App.3d 1009, 1020, 87 Cal.Rptr. 908.)   Manor points to no evidence which contradicts Facer's assertion that she was intending in January 1981 to rent to Cannon.

Arguably there is conflict between Facer's account as related by the investigator and the testimony of owner Boswell.   The investigator testified “Miss Facer informed me that she had intended to rent to the complainant in approximately January of 1981;  that she had checked with Ms. Boswell on that and that Ms. Boswell had approved that rental, but that [Cannon's] requirement of a nice location or a quiet location kept her back.   But she said that Ms. Boswell had told her to treat the complainant like any other person.”   This account was substantially confirmed by Boswell except that she testified to telling Facer to treat Cannon like any other applicant when Cannon first applied, rather than in January 1981.   Only if Facer's statements as recounted by the investigator are construed to all relate to events of January 1981 is there any conflict.   If Facer was simply relating events out of chronological order then there was no conflict in the evidence.

Absent a timely objection by Manor which would have required inquiry into the admissibility of the evidence despite its being hearsay, and absent patent conflict in the evidence as to Facer's intent, we find there is substantial evidence supporting the finding that as of January 1981 Facer intended to rent to Cannon.

“In August 1981, Edith Indridson took over as Manor rental manager from Facer.   In August 1981, Indridson believed Cannon ‘had waitedthe normal time’ and was thus ready to be rented to.”   Manor insists that this finding is also lacking in evidentiary support.

We need only quote from the record.   Indridson was asked about events in August of 1981 when she reassumed the rental manager job.  “Did Betty [Facer], in these discussions about the various people, tell you anything about Mr. Cannon?”   Indridson responded, “She told me that he checks very frequently and at the time I came Mr. Cannon had waited just about the normal time.”

At other times in her testimony Indridson characterized her initial attitude toward Cannon as one of great caution “right from the start.”   She was nervous about Cannon because he called so frequently.   Yet Indridson also testified that she never held repeated inquiries against prospective tenants and conceded that at least two other applicants who made such inquiries were offered apartments.   The testimony of a single witness can be sufficient to support a judgment.  (In re Marriage of Mix (1975) 14 Cal.3d 604, 614, 122 Cal.Rptr. 79, 536 P.2d 479.)   The credibility of a witness is resolved by the trier of fact.  (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925, 101 Cal.Rptr. 568, 496 P.2d 480.)

Indridson's testimony was contradictory and could be viewed as self-serving.   It was the practice at Manor to mark the reports on prospective tenants with the code “when available” for desirable prospects and “if available” for undesirable ones.   Indridson admitted to having altered her November 23, 1981, entries on Cannon from an “if available” to “when available.”   Though she testified that she could not remember when she made the alterations she had given a copy of the unaltered document to the Department's investigator who first interviewed Indridson in June of 1982.

Given the contradictions in, and the credibility problems with, Indridson's testimony we conclude that there is evidentiary support for the Commission's finding that as of August 1981 Indridson believed Cannon had waited the normal time for an apartment at Manor.

Manor also objects to findings relating to a visit by Cannon to the Manor rental office on April 5, 1982.³  The finding makes no mention of anincident which Indridson and part-time rental manager Grace Baldwin both testified occurred on that date.   According to their hearing testimony Cannon arrived on that Sunday afternoon in the rental office when both women were present and insisted upon knowing his position on the waiting list.   According to the two women Cannon was dissatisfied with Indridson's answers and shook his finger in her face and told her not to discriminate against him.

Several documents were entered into evidence which Manor maintains corroborate the incident.   Those documents, however, do not specifically mention anything about finger-shaking.   Instead they characterize Cannon as being “obnoxious” or “very arrogant and insistent.”   Cannon testified that he never shook his finger at Indridson and that at no time did he have such a conversation with her.   The only conflict in the evidence was between the testimony of the two Manor employees and Cannon, since the documentary evidence makes no reference to finger-shaking.   Accordingly, the Commission as the trier of fact was free to find, and did find Cannon's account more credible than that of Baldwin and Indridson.   There is solid evidence to support the finding that the April 5, 1982, encounter did not involve finger-shaking by Mr. Cannon.

Manor also contends that the findings relating to a subsequent April meeting are not supported by the evidence.⁴  Sometime in April of 1982 Indridson called Cannon and asked him to come by.   When Cannon arrived on April 23, 1982, in the company of his daughter, Indridson asked him to fill out a “confidential questionnaire” which asked among other things for the names of people to be called in the event of an emergency, the name and address of the prospective tenant's physician and included a section on how the prospective tenant had learned about Manor and why he wanted to live there, as well as asking him to select his favorite activities from a checklist of Manor amenities and facilities.   Indridson testified that she asked Cannon to come in and fill out the questionnaire because it “would tell me a little bit more about him” and give her “another opportunity to meet with him.”

The Commission concluded that Indridson's explanation of her motive was a “sham,” in part because Indridson made no effort to talk with Cannonwhen he appeared, but merely had him fill out the questionnaire.   Manor insists that the evidence establishes that Cannon became loud and abusive to his daughter and that he left abruptly without giving Indridson an opportunity to meet with him.

There is sufficient evidence to support the Commission's finding that the meeting was not a serious attempt by Indridson to get better acquainted with Cannon.   Indridson testified that when Cannon arrived she was occupied in talking with other prospective tenants.   She admitted that she treated Cannon differently in that she asked him to fill out the questionnaire, although she made no similar request of anyone else then on the waiting list.  (The suggestion that prospective tenants complete such a questionnaire had been made in an October 1980 opinion letter from an attorney, prepared for Boswell and subsequently shown to Indridson).

In describing the April 23 visit Indridson maintained that Mr. Cannon was pleasant to her, but that he shouted at his daughter, “and he took the questionnaire and they left.”   Cannon's daughter testified that her father does talk loudly because he has a hearing problem, but that he had not been rude or impatient with her.   By her account after she and her father had spent some time attempting to fill in the questionnaire, they spoke further with Indridson before leaving the rental office.

While there was conflicting evidence about the circumstances of the April 23 encounter, there is substantial evidence to support the factual findings and inferences from them drawn by the Commission.

Finally, Manor contends that there is no evidence to support the factual finding that from the time Indridson returned as rental manager in August 1981 she discriminated against Cannon because he was Black.   Manor makes two challenges to these findings.   First, Manor suggests Cannon was excluded not because he is Black but because he was unpleasant to Manor personnel.   Second, it argues that, although Indridson between August 1981 and June 1982 admittedly rented 22 apartments to non-Black tenants who applied after Cannon, her nondiscriminatory reasons for these rentals should be taken at face value.

Manor asserts in its brief that the finding Indridson had rented only to non-Black applicants “is true simply because there were no other Black applicants.”   This assertion is incorrect.   There was another Black applicant, Irene Ingram, who testified that she applied to Manor on November 27, 1979.   Mrs. Ingram was not as diligent as Mr. Cannon in pursuing the rental, though she testified that Manor never contacted her to offer her an apartment despite the fact that Manor retained in its rental records a card with her name and phone number.

Unlike Mrs. Ingram other non-Blacks who applied after Mr. Cannon were offered apartments at Manor.   In its brief on appeal Manor justifies these out-of-order rentals as rentals to ex tenants, to couples willing to share a one bedroom apartment, or to other “special circumstances.”   Even if we set aside rentals to two people willing to share a one-bedroom apartment, however, there was ample evidence Indridson rented to non-Black applicants out of order.

Although Indridson never asked Cannon if he had some personal emergency which made a speedy move necessary, she rented to a white woman, Helen Pavon, who applied May 8, 1980, without ever seeing her because Mrs. Pavon's son was concerned over her safety since she was currently living in Oakland.   Similarly, Ignacio de Uriarte, a non-Black man who first applied on August 17, 1981, moved in December 3, 1981.   David Hobbs, another non-Black who had the same 2+ rating as Mr. Cannon, first visited on February 11, 1982, and was rented to June 3, 1982.   Because Mr. Hobbs was the friend and “a real protector” of a Manor resident, Indridson offered him an apartment quickly.   Cannon, like Hobbs, was also recommended by a Manor tenant, Ray Boff.

Indridson advanced a host of reasons for renting to applicants who came after Cannon from the applicants' willingness to take a less desirable location to her subjective assessment that an applicant “was a delightful person.” ⁵  The pattern which emerged, however, from her description of her rental practices and from the documentary evidence was that other individuals indistinguishable from Cannon, in any respect save race, were consistently offered apartments despite the fact that they had applied to Manor after he had.   This pattern coupled with Indridson's admission that she altered her weekly report to give Cannon a more favorable rating after the Department began its investigation, is more than sufficient evidence to support a finding that Indridson was intentionally discriminating against Cannon on racial grounds.   Having put him off repeatedly, she then seized upon his dismayed response to label him as someone who would not be “compatible” with the tenants of Manor.

 Manor also argues that the evidence of emotional distress “did not justify a $50,000 award.”   We take this to be a challenge to the sufficiency of the evidence.   The record contains ample evidence to support an award in some amount for emotional distress.   Cannon testified that virtually all of his friends were Caucasian and that various of his bowling buddies lived at Manor.   He was especially stung by his rejection because he had not been discriminated against in the past, he thought Walnut Creek was the “greatest area” for a Black person to live in, and he believed himself to be just as financially well off as his Caucasian friends who lived at Manor.   His rejection by Manor not only injured his self-esteem but discouraged him from looking for other housing in the area.   This is surely substantial evidence to support an award for emotional distress.

Actual Damage Award

Manor challenges the Commission's statutory authority to award actual damages without a dollar limit (Gov.Code, § 12987, subd. (2)), arguing that such authority offends the judicial powers clause of the California Constitution which vests the judicial power of the state in its courts.  (Cal.Const., art. VI, § 1.) ⁶

Government Code section 12987 sets forth the orders which the Commission may make if it finds that a landlord “has engaged in any unlawful practice.”   In addition to a cease and desist order the Commission may also order the landlord to sell or rent to the injured party the housing unit, if it is still available;  it may order “payment of punitive damages in an amount not to exceed one thousand dollars ($1,000), adjusted annually in accordance with the Consumer Price Index, and the payment of actual damages”;  it may order affirmative or prospective relief.  (Gov.Code, § 12987, subd. (2).)

Legislative History

As originally enacted the predecessor to this section, former Health and Safety Code section 35738, permitted the Commission to order “payment of damages to the aggrieved person in an amount not to exceed five hundred dollars ($500)” if the Commission found the housing or like accommodation was no longer available.  (Health & Saf.Code, § 35738, added by Stats.1963, ch. 1853, § 2, pp. 3828–3829.)   In 1975 the dollar limit on such damages was increased to $1,000.  (Stats.1975, ch. 280, § 1, p. 701.)   In 1977 the damages provision was amended to characterize the types of damages available to the injured party—henceforth the Commission could order “payment of actual and punitive damages to the aggrieved person in an amount not to exceed one thousand dollars ($1,000).”  (Stats.1977, ch. 1188, § 13, p. 3906.)

In 1980 the fair housing statutes were moved into the Government Code with the remedies provision codified as section 12987.  (Stats.1980, ch. 992, § 4, p. 3162.)   With the 1980 amendment of the statute the Legislature expanded the relief which the Commission could offer.   Thus besides issuing a cease and desist order the Commission could also order sale or rental of the housing or like accommodation and damages and affirmative or prospective relief.   (Gov.Code, § 12987, added by Stats.1980, ch. 992, § 4, p. 3162.)

In 1981 the present version of the section was enacted.  (Stats.1981, ch. 899, § 3, p. 3424.)   By that amendment the Legislature made two crucial changes.   First, it removed the language making punitive and actual damages payable to “the aggrieved person.”   Second, it retained the $1,000 cap (plus a cost of living escalator) for punitive damages, but removed any dollar limit upon actual damages.

Discussion

 The first question before us is what types of damages the Legislature intended to encompass with the term “actual damages” in section 12987.

The provision in the 1977 version of the section for “actual damages” and punitive damages limited to $1,000 closely paralleled the damages then available under federal law for a violation of fair housing.   Thus, under former 42 U.S.C., § 3612 a private cause of action was created which specified that a court could award “actual damages and not more than $1,000 punitive damages.”  (Act of Apr. 11, 1968, Pub.L. No. 90–284, Title VIII, § 812, 82 Stat. 88.)

Adoption by our Legislature of the language used in the federal statute was apparently intentional.   The language in question first appeared in Senate Bill 610 introduced in March 1977 by Senator John Dunlap.   The enrolled bill file for Senate Bill 610 includes a chart which compares the provisions of then existing state fair housing laws with those of the Senate Bill and with then existing federal law.   In a letter to the Governor the Chief of the Division of Fair Employment Practices characterized the Senate Bill which contained the “actual damages” language as a measure which would “[expand] the scope of California's Fair Housing Law to conform with the analogous federal act.”   Similarly the author of the Senate Bill wrote the Governor that it was designed “to make California's law as strong as” the federal law.   Such letters cast some light upon legislative intent (Commodore Home Systems, Inc. v. Superior Court, (1982) 32 Cal.3d 211, 219, 185 Cal.Rptr. 270, 649 P.2d 912;  but see id. at pp. 221–222, 185 Cal.Rptr. 270, 649 P.2d 912 (dis. opn. of Mosk,J.)), but primarily serve to confirm that the language in the California statute was derived from the federal model.

The term “actual damages” as used in the federal statute has been construed to be a synonym for compensatory damages.  (Morehead v. Lewis (D.C.Ill.1977) 432 F.Supp. 674, 678.)   That reading is consistent with the dictionary definition of “actual” for which Webster gives “real” as a synonym.  (Webster's New Collegiate Dict. (1977) p. 12.)   We construe the term actual damages as used in Government Code section 12987 to mean compensatory damages.

 Compensatory or actual damages for housing discrimination include general damages for mental anguish or emotional distress.  (Hess v. Fair Employment & Housing Com. (1982) 138 Cal.App.3d 232, 237, 187 Cal.Rptr. 712;  accord Williams v. Joyce (1971) 4 Or.App. 482, 479 P.2d 513, 524.)   Actual damages may also include special damages or those out-of-pocket amounts which the victim spent as a direct result of the discrimination.  (Hess v. Fair Employment & Housing Com., supra, 138 Cal.App.3d at 237, 187 Cal.Rptr. 712;  DFEH v. Norman Green (1986) FEHC Dec. No. 86–07 [1986–1987 CEB 1, 12].)

The actual damages awarded to Cannon by the Commission and upheld by the superior court included special damages for the excess Cannon had to pay in other housing, for rent and utilities and for legal fees of some $2,724.50 and general damages for emotional distress of $50,000.

 The question before us is whether the statutory provision (Gov.Code, § 12987) allowing the Commission to award an unlimited dollar sum in actual damages is impermissible because it amounts to a grant of judicial powers conferred by the Legislature upon an agency of its own creation (Cal.Const., art. VI, § 1), because it violates the separation of powers clause in our state constitution (Cal.Const., art. III, § 3), and because it denies respondents in Commission proceedings their right under the state and federal constitutions to trial by jury?  (Cal.Const., art. I, § 16;  U.S. Const., art. III, § 2, 7th Amend.)

 Because a somewhat similar constitutional challenge to the authority of a local rent control board was recently rejected by our Supreme Court in McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d 348, 261 Cal.Rptr. 318, 777 P.2d 91, we asked the parties to discuss this case in light of that decision.   While their analysis has been helpful, after a careful reading of McHugh, we are convinced that the issue posed here presents a question expressly left unresolved by McHugh.   We conclude in this instance the Commission's actual damage award made under the authority of Government Code section 12987 does represent an unconstitutional exercise of judicial power by a nonjudicial body.

McHugh involves a landlord's challenge to the authority of a local rent control board to determine claims that rent in excess of that permitted under a rent control ordinance had been charged.  (McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at p. 355, 261 Cal.Rptr. 318, 777 P.2d 91.)   The decision sets out the appropriate test for determining when an administrative agency may make a restituitive money award without violating the judicial powers clause of the state Constitution.  (Id. at p. 359, 261 Cal.Rptr. 318, 777 P.2d 91.)

“An administrative agency may constitutionally hold hearings, determine facts, apply law to those facts, and order relief—including certain types of monetary relief—so long as (i) such activities are authorized by statute or legislation and are reasonably necessary to effectuate the administrative agency's primary, legitimate regulatory purposes, and (ii) the ‘essential’ judicial power (i.e., the power to make enforceable, binding judgments) remains ultimately in the courts, through review of agency determinations.”  (McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at p. 372, 261 Cal.Rptr. 318, 777 P.2d 91.)

The Commission insists that its power to award actual damages without dollar limit under section 12987 should be assessed under the rule enunciated in McHugh.  McHugh repeatedly speaks of the restitutive nature of the money award it approves.  (McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at pp. 359, 364, 374, 261 Cal.Rptr. 318, 777 P.2d 91.)   We take that distinction to be a crucial one.   Here the only portion of the actual damage award which we can reasonably characterize as restitutive is the special damage component for out-of-pocket loss.   In Dyna–Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 241 Cal.Rptr. 67, 743 P.2d 1323, our Supreme Court construed the statutory remedies for employment discrimination which included “hiring, reinstatement, upgrading with or without backpay, restoration to membership in a respondent labor organization” to be “exclusively corrective and equitable in kind.   They relate to matters which serve to make the aggrieved employee whole in the context of the employment.”   (Id. at p. 1387, 241 Cal.Rptr. 67, 743 P.2d 1323.)

If, by analogy, we look to what remedies FEHC may offer to the victim of housing discrimination we find a similar array of corrective and equitable orders available under section 12987.   In addition to making the denied housing or like accommodation available, the section's provision for actual damages which reimburse for out-of-pocket costs is nothing more than an effort to make the tenant whole in the context of housing.   The focus of such remedies is to restore the victim to the position he or she would have been in as to housing had there been no discrimination.

Thus, if we apply the McHugh test to a section 12987 award for special damages or out-of-pocket loss we find them to be constitutional.   As we have discussed above special damages are authorized by the statutory language permitting actual damages.   Furthermore those special damages are reasonably necessary to effectuate the agency's statutory purpose of providing effective remedies to eliminate discriminatory practices (Gov.Code, § 12920) by correcting the injury to the victim of housing discrimination.  (Dyna–Med, Inc. v. Fair Employment & Housing Com., supra, 43 Cal.3d at p. 1387, 241 Cal.Rptr. 67, 743 P.2d 1323.)   Finally, the procedural prong of the test is met because such awards may be reviewed by petition for a writ of mandamus.   (Gov.Code, §§ 11523, 12987.)

We are unpersuaded, however, that McHugh applies to the other portion of the actual damage award—that is the general compensatory award for emotional distress.  McHugh expressly states “We are not called on to decide whether an administrative agency's award of general compensatory damages would violate the judicial powers clause and we express no opinion on the issue.”  (McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at p. 375, fn. 38, 261 Cal.Rptr. 318, 777 P.2d 91.)   We would characterize the award for emotional distress as a general compensatory award rather than a restitutive one under McHugh read in conjunction with Dyna–Med.   Even if general damages for emotional distress could be viewed as restitutive, they go beyond the scope of the limited remedy which FEHC may offer for housing discrimination.   That is, the award for emotional distress goes beyond making the victim of discrimination whole as to his housing situation.   It seeks to recompense him for the humiliation and injury to his psyche which resulted from the discrimination, and as such it is an item of general damage which flows from the illegal conduct of the party who has discriminated against him.

FEHC urges us to find the entire actual damage award constitutional on the ground that only if the victim of housing discrimination is made whole for all his injury will the remedy be effective.   FEHC maintains that unless the remedies it can provide parallel those available through the courts to victims of discrimination the Commission's “ability to redress discrimination will be severely limited, and there will be more resort to the courts.”   Therein lies the rub.

If the Commission is awarding general compensatory damages equivalent to those available in a judicial forum, is it not exercising judicial power by resolving a dispute between individuals and awarding affirmative compensatory relief?   (See Youst v. Longo (1987) 43 Cal.3d 64, 80, 233 Cal.Rptr. 294, 729 P.2d 728.)

The very nature of an emotional distress item of damages defies a fixed rule of quantification.  (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 511–512, 15 Cal.Rptr. 161, 364 P.2d 337.)   Setting a dollar figure for such damages is left to the “impartial conscience and judgment of jurors who may be expected to act reasonably, intelligently and in harmony with the evidence.”  (Capelouto v. Kaiser Foundation Hospitals (1972) 7 Cal.3d 889, 893, 103 Cal.Rptr. 856, 500 P.2d 880, quoting Beagle v. Vasold (1966) 65 Cal.2d 166, 181, 53 Cal.Rptr. 129, 417 P.2d 673.)   Such claims are traditionally left to the courts.

Nor can we maintain that the general damage portion of the relief here is merely secondary to, or incidental to, the purely equitable relief, e.g., the cease and desist order and the order requiring Manor to offer Cannon an apartment.  (McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at p. 381, fn. 53, 261 Cal.Rptr. 318, 777 P.2d 91.)   An award of $50,000 for emotional distress can scarcely be characterized as merely the frosting on a cake of equitable or restitutive relief.

Because it offends the judicial powers clause of our state Constitution the general compensatory damage award of $50,000 for emotional distress to Mr. Cannon must be stricken.⁷

Punitive Damages

 The Commission awarded Cannon $40,635 in punitive damages or the statutory maximum of $1,000 adjusted in accordance with the Consumer Price Index base year of 1982.  (DFEH v. Norman Green, supra, FEHC Dec. No. 86–07 [1986–1987 CEB 1, at p. 12].)   The superior court reduced the punitive damage award to the statutory limit of $1,000 as adjusted.   It made that ruling on several grounds, one of which was that the statute “prohibits a course of conduct.”   The Commission appeals the superior court's reading of the statute.

The Commission urges us to read the statutory scheme as permitting a separate award of punitive damages for each act of discrimination which it equated to every rental by Manor to a non-Black applicant who applied after Cannon—or some 35 violations as found by the Commission.   Manor objects to that reading, insisting instead that as to Mr. Cannon it committed at worst a single discriminatory “course of conduct” which supports no more than one punitive damage award of $1,000 as adjusted.

The construction of statutory language given by that administrative agency charged with the statute's implementation is accorded great weight.   (Ontario Community Foundations, Inc. v. State Bd. of Equalization (1984) 35 Cal.3d 811, 816, 201 Cal.Rptr. 165, 678 P.2d 378.)   Nonetheless the final responsibility for statutory interpretation rests in the courts which may not adopt the administrative interpretation if it is erroneous.  (Dreyer's Grand Ice Cream, Inc. v. County of Alameda (1986) 178 Cal.App.3d 1174, 1183, 224 Cal.Rptr. 285.)

In this case the Commission found that “Each time Indridson passed Cannon over to rent to a later, non-Black applicant in his place within the jurisdictional period from February 28, 1982 forward, her conduct constituted a ‘refusal to rent’ and a ‘withholding of a housing accommodation’ within the meaning of Government Code section 12927, subdivision (e).   We therefore determine that each such action was a violation of Government Code section 12955, subdivisions (a) and (d) of the Act.”

The statutory scheme as it now reads empowers the Commission to order “The payment of punitive damages in an amount not to exceed one thousand dollars ($1,000), adjusted annually in accordance with the Consumer Price Index” when it “finds that a respondent has engaged in any unlawful practice as defined in this part․”  (Gov.Code, § 12987, subd. (2).)

Unlawful practices are defined in section 12955.   Those applicable to this appeal include subdivision (a), “For the owner of any housing accommodation to discriminate against any person because of the race ․ of such person” and subdivision (d) “For any person subject to the provisions of Section 51 of the Civil Code [Unruh Housing Act], as that section applies to housing accommodations, as defined in this part, to discriminate against any person because of race.”

Discrimination is defined in section 12927, subdivision (c) as including “refusal to ․ rent,” “representation that a housing accommodation is not available for ․ rental when such housing accommodation is in fact so available,” or “any other denial or withholding of housing accommodations.”

Manor urges us to read the punitive damage provisions in state law by reference to the former federal provisions for punitive damages in housing discrimination actions (Act of Apr. 11, 1968, Pub.L. 90–284, Title VIII, § 812, 82 Stat. 88), upon which as we have noted, our 1977 amendment to state law was modeled.   The federal law permitted a court in a civil action to “award to the plaintiff actual damages and not more than $1,000 in punitive damages․”  (Codified in former 42 U.S.C. § 3612;  emphasis added.)   By analogy to the former federal law Manor argues that the maximum punitive damage award to an injured party must be the statutory limit of $1,000.   That argument has no force, however, since the 1981 amendment to Government Code section 12987 deleted any reference to “aggrieved party.” ⁸

With the deletion of any reference to the recipient of the punitive award came a shift in the focus of section 12987 away from the maximum award that could be made to the victim of discrimination (the 1981 amendment also removed the dollar ceiling on actual damages) to what conduct of the respondent gives rise to a Commission-ordered remedy.   Under the current version of the section a finding of “any unlawful practice” permits the Commission to make an actual and punitive damage award.

The question here is whether Manor's entire pattern of discriminatory behavior is simply one unlawful practice as it in substance argues or whether it committed multiple unlawful acts of discrimination—each a separate unlawful practice within the meaning of section 12955—by refusing to rent or withholding a housing accommodation from Cannon every time it passed him over and rented to a similarly situated non-Black individual.

Manor seems to suggest that the Commission here was not following its own established practice of charging a course of conduct as a single violation.   In its own precedential decision of DFEH v. Norman Green, supra, FEHC Dec. No. 86–07 [1986–1987 CEB 1], a landlord was found to have committed five violations of section 11299.   Most of the discriminatory conduct occurred on a single day in conversations between a rental agent and various checkers from a housing council.  (Id. at pp. 4–6.)   The first violation was for discrimination by means of representing that housing was unavailable.  (Gov.Code, section 12955, subd. (a) and 12927, subd. (c).)  In Norman Green, indeed, the misrepresentations were several in number and made to several individuals.   There the landlord was charged with a single violation or unlawful practice based upon a “clear pattern” of conduct from which theCommission could infer an improper motive to misrepresent on the basis of race or national origin.  (DFEH v. Norman Green, supra, at p. 9.)

In Norman Green the landlord was also found to have committed one violation by inquiring into the racial origin of a potential tenant (Gov.Code, § 12955, subd. (b)) and to have committed three violations by making statements of preference or limitation based upon race or ethnicity (Gov.Code, § 12955, subd. (c);  DFEH v. Norman Green, supra, FEHC Dec. No. 86–07 [1986–1987 CEB at pp. 8–11] ).   Although the opinion is not explicit about the basis for its punitive damage award of $5,000, we can infer that it made the maximum award for each of the five violations found.

The correlation between punitive damages and the number of violations found in Norman Green is consistent with Commission practice in this case except for the single misrepresentation violation.   In Norman Green one violation of section 12955, subdivision (a) was charged, although that violation apparently consisted of a number of misrepresentations made in circumstances which permitted an inference of improper motive.   Here, of course, the basis of the Commission's discrimination finding was not Manor's misrepresentations about the availability of housing, but its refusal to rent and its withholding of accommodations from Cannon.

We have been directed to no authority or evidence ⁹ establishing that except in Mr. Cannon's case the Commission invariably charges a pattern of discriminatory conduct as a single unlawful practice.   However consistent the Commission's interpretation of the statutory scheme, of course, it remains for the courts to resolve the question of what conduct amounts to “any unlawful practice” which subjects the actor to liability for an award of punitive damages.

A careful reading of the several sections convinces us that it is not impermissible for each discrete discriminatory act to support a punitive damage award of the maximum amount.  Section 12987 conditions an order of punitive damages upon a finding that the actor has “engaged in any unlawful practice.”   Any one practice triggers the liability.   Although practice is nowhere defined, discrimination is.  (Gov.Code, § 12927.)   If all acts of discrimination by a single landlord give rise to but one unlawful practice (Gov.Code, § 12955, subd. (a)) then there is absolutely no incentive for landlords not to repeatedly discriminate against a single Black applicant as occurred here or not to repeatedly discriminate against a multitude of Black applicants as a matter of policy.   The very purpose of the housing law is “to provide effective remedies which will eliminate such discriminatory practices.”  (Gov.Code, § 12920.)   Since the focus of the statutory scheme is to eliminate discriminatory conduct then its punitive sanction is most logically linked to the conduct proscribed by the law.   By deleting the language which capped how much in damages an aggrieved party could receive we conclude the Legislature has further indicated its intent that the unlawful act of discriminating, not the number of victims, triggers liability for a punitive damage award of up to $1,000.   Accordingly, we find that the superior court erred as a matter of law when it limited the total punitive award made to Mr. Cannon to $1,000 as adjusted.

Having found that there is nothing in the statutory scheme to prevent multiple awards of punitive damages to Mr. Cannon, we must look to the award which was made by the Commission.   It appears from the Commission's decision that possibly three of the thirty-five rentals which form the basis for its award were instances of marital discrimination.   The finding of marital discrimination was struck by the superior court as unsupported by the evidence;  its ruling on that issue has not been appealed.   Because it is not clear from the Commission's decision if all 35 rentals to later non-Black applicants were also rentals to individual tenants, the case must be remanded to the Commission.

Because we uphold FEHC's reading of the punitive damage provision, however, we also reach Manor's challenges to the FEHC's power to award punitive damages beyond the statutory dollar limit.   Manor argues that the administrative award of punitive damages is unfair because such an award can be made without safeguards present in judicial proceedings.¹⁰  First, Manor argues, nothing in the Act requires the Commission to impose punitive damages only upon a showing by “clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice.”  (Civ.Code, § 3294.)   While it is correct that the requirements of the Civil Code section are not incorporated into the Act, the Commission here and by precedent imposes upon itself the requirement of “oppression, fraud or malice” and the other limitations imposed by section 3294.  (DFEH v. Norman Green, supra, FEHC Dec. No. 86–07 [1986–1987 CEB at pp. 12–13];  DFEH v. Ambylou Enterprises, Inc. (1982) [1982–1983 CEB 3, at pp. 13–14].)   Absent some evidence that the Commission is improperly applying Civil Code section 3294 standards we need not reach the issue of whether the provisions for awarding punitive damages by an administrative agency for conduct contrary to public policy must comply fully with the Civil Code.

In any event, Manor argues that no factual finding of oppression, fraud and malice was made for each of the 35 rentals to later, non-Black applicants.   We are unpersuaded that such a finding is necessary given the finding that Cannon had been discriminated against on the basis of his race and that the subsequent rentals had all been made to non-Black tenants.

The finding of discrimination raises an inference of malice.   By definition discrimination means to make a difference in treatment or favor on a class or categorical basis in disregard of individual merit.  (Webster's New Internat. Dict. (3d ed. 1961) p. 648.)   Malice is defined by the Civil Code as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights ․ of others.”  (Civ.Code, § 3294, subd. (c)(1).)

Here the Commission found that Indridson, knowing her conduct was wrong, acted intentionally and with conscious disregard for Cannon's rights.   Further, it found that by “her active deception of Cannon about his prospects for renting and [her] true intentions toward him” she committed fraud.   Thus, while she was deceiving Cannon about his place on the waiting list she was simultaneously renting apartments which would otherwise have been available to Cannon.   With each out-of-order rental to an later, non-Black applicant Indridson not only withheld an otherwise available apartment from Cannon, but she did so in a manner justifying an award of punitive damages.

 Manor makes an additional challenge to the size of the punitive damage award at least as to Indridson.   We find this point well taken.   Although Indridson testified that her net worth was approximately $50,000, she was made jointly and severally liable for the punitive damage award of more than $40,000.   A punitive damage award which standing alone is the equivalent to more than 80 percent of Indridson's net worth is excessive as a matter of law.  (People ex rel. Dept. of Transportation v. Grocers Wholesale Co. (1989) 214 Cal.App.3d 498, 514–515, 262 Cal.Rptr. 689.)   On remand the Commission should reconsider its punitive damage award as against Indridson in light of the standard we discuss in Grocers Wholesale Co., namely that an award of punitive damages in excess of 10 percent of the defendant's net worth will begin to exceed the range of reasonableness.  (Ibid.)

We reverse the superior court's ruling that the punitive damage award against Manor and Indridson is limited by statute to a total award of $1,000.   However, we remand the punitive damage award to the Commission for determination of whether each of the 35 rentals to later non-Black applicants was rental of a one-bedroom apartment to one person and for redetermination of Indridson's liability for those punitive damages the Commission finds to be appropriate.   In all other respects we affirm the judgment of the superior court.

Manor to bear the costs of FEHC on the FEHC appeal.   Each party to bear its own costs on Manor's cross-appeal.

FOOTNOTES

1.   This portion of our discussion is not relevant to FEHC's appeal because that appeal raises a solely legal issue, namely the appropriate interpretation of Government Code section 12987.

2.   In 1980 FEHC became the successor to the former Fair Employment Practices Commission.  (Stats.1980, ch. 992, § 1, p. 3141.)

3.   The finding challenged is no. 22 which in its entirety reads:  “Cannon visited the Manor rental office on April 5, 1982 to demand to know from Indridson where he stood on the waiting list.   She again refused to tell him.   After this encounter, Indridson wrote a memorandum to Cindy Ruiz at Coldwell Banker, the real estate manager of the Manor, and to respondent Marilyn Boswell accusing Cannon of being loud and arrogant.   She asked for advice on how to treat him.   Coldwell Banker asked Indridson where Cannon stood on the waiting list, and she told them he was number one.   Coldwell Banker advised Indridson to treat Cannon like any other rental applicant.”

4.   This argument is apparently directed not to the factual findings portion of the Commission's decision but to its discussion of whether Indridson discriminated against Cannon on the basis of race.   We say apparently because that is the only record cite we are given by Manor whose brief gives an April 15, 1982, date for the meeting.   The Commission's factual findings date this meeting to April 23, 1982.

5.   Mr. Frank Baum who first visited January 2, 1982, and moved in February 8, 1982.

6.   That section provides in pertinent part:  “The judicial power of this State is vested in the Supreme Court, courts of appeal, superior courts, municipal courts, and justice courts.”

7.   Because we find the statute to be an unconstitutional infringement of the judicial powers clause of the state constitution we do not reach Manor's additional grounds of constitutional challenge.

8.   Hess v. Fair Employment & Housing Com., supra, 138 Cal.App.3d 232, 187 Cal.Rptr. 712, which permitted an award of the statutory maximum of $1,000 to each person in a couple who had been denied housing because they were unmarried, was decided under a version of section 12987 which included the “aggrieved person” language.   Accordingly, its holding as to the appropriate limits on damages payable to a single victim of discrimination is irrelevant to the meaning of the section as it now reads.

9.   One Commissioner dissented to the Commission's decision, and in that dissent he states, “Nothing in the Act suggests that each separate incident in a course of discriminatory conduct is to be charged by the Department, or determined by the Commission, as a separate violation of the Act;  to the contrary, the Commission's usual, and correct, practice is to consider whether a series of incidents in an ongoing course of conduct establishes a violation of the Act.”   Neither the dissenting Commissioner nor Manor offer any evidence of the Commission's usual practice.

10.   At oral argument Manor urged this court, on the authority of McHugh v. Santa Monica Rent Control Bd., supra, 49 Cal.3d at 378–379, 261 Cal.Rptr. 318, 777 P.2d 91, to strike the Commission's power to award punitive damages.   The McHugh court expressly stated that it was not reaching “the propriety of relatively minor ‘punitive damages' under statutory schemes that expressly authorize such damages, and set a cap on such awards.”  (Id. at p. 378, 261 Cal.Rptr. 318, 777 P.2d 91.)   The sentence concludes with a footnote reference specifically to Government Code section 12987, subdivision (2).  (Id. at p. 378, fn. 46, 261 Cal.Rptr. 318, 777 P.2d 91.)  McHugh thus does not compel us to invalidate the Commission's power to award punitive damages.

POCHE, Acting Presiding Judge.

CHANNELL and PERLEY, JJ., concur.