HIRSCHMANN v. HASSAPOYANNES (2005)

This action and third-party action arise from a decision of the board of a cooperative apartment building to withdraw its approval of the sale of a unit to a disabled individual, upon the individual's request for a reasonable accommodation for his disability.   The seller of the co-op apartment brought this action, seeking a declaration that she is entitled under the contract of sale to keep the buyer's deposit, in light of the co-op board's decision.   In the third-party action, the buyer is alleging that the co-op board discriminated against him based on his disability, in violation of the Fair Housing Act and State and City Human Rights Laws.

Defendant/third-party plaintiff Constantine Hassapoyannes now moves, by order to show cause, for a preliminary injunction directing the sale of the apartment, and to dismiss the second, third, and fourth causes of action of the complaint.   Plaintiff and third-party defendant Jon Schechter each cross-move for summary judgment dismissing the third-party complaint as against them.   This decision addresses both the motion and the cross motions.

BACKGROUND

Plaintiff Merle Hirschmann is the owner of cooperative shares in Unit 18J of an apartment building located at 201 East 66th Street, New York, New York. Pursuant to a contract of sale dated April 8, 2004, plaintiff agreed to sell the unit to defendant Constantine Hassapoyannes for $265,000, with a closing set for June 8, 2004.   Hassapoyannes claims that he wanted the apartment because of its proximity to Memorial Sloan Kettering Hospital, where he has been regularly receiving cancer treatments.   Hassapoyannes had undergone resection of primary rectal cancer, and had part of his liver removed due to metastasis of his cancer.

Hassapoyannes interviewed with members of the board of the cooperative apartment building (the Board) on May 24, 2004.   At the interview were third-party defendants Roberta E. Tarshis, S. Barry Winet, and Rujeanne Bleemer.   The Board gave him information about the building's house rules, which prohibited laundry equipment in the apartments.   The Board members allegedly asked him if he understood the building's policies and asked if he had any questions or problems, to which he allegedly responded, “No, I think you have answered all my questions.”   On May 25, 2004, the Board allegedly approved the sale of the apartment shares to Hassapoyannes.

On the day of the closing, Hassapoyannes asked third-party defendant Jon Schechter, the building's managing agent, if he could install a washer/dryer in the apartment, as a reasonable accommodation for bowel incontinence that resulted from cancer surgery.   Schechter then allegedly called Tarshis, who was upset that Hassapoyannes had not revealed at his interview that he wanted his own washing machine.   By his attorney, Hassapoyannes then offered to provide an affidavit stating that he would no longer need a washer and would not install it.   However, the closing was adjourned until the Board's next meeting on June 15, 2004, during which the Board resolved to rescind its approval of the sale.   The Board believes that Hassapoyannes should have informed the Board during the interview that he needed a washing machine in his apartment, and that he therefore “lied” at the interview.

On June 18, 2004, without any explanation, the Board notified Hassapoyannes that it did not approve of the sale of the apartment.   On June 23, Hassapoyannes filed a complaint with the Department of Housing and Urban Development, Fair Housing Enforcement Center (HUD), claiming discrimination.   By a letter dated June 29, 2004, Hassapoyannes's attorney informed Hirschmann that she could not advertise or promote the sale of her apartment while the HUD complaint was pending, or else Hassapoyannes would consider it a breach of the contract of sale.

Pursuant to 42 USC § 3610(f), HUD transferred the complaint to the New York State Division of Human Rights (N.Y.SDHR) on July 9, 2004. Before NYSDHR, both the Board and Hirschmann argued that Hassapoyannes should have informed the Board at the interview that he wanted to install a washing machine.

On August 11, 2004, Hirschmann commenced this action against Hassapoyannes, who then brought a third-party action against the Board and Hirschmann.¹  On February 8, 2005, NYSDHR issued a finding of probable cause that the Board had unlawfully discriminated against Hassapoyannes.   Hirschmann is now willing to sell the apartment to Hassapoyannes, but the Board is unwilling to settle the dispute.

DISCUSSION

Hassapoyannes's MotionA. Preliminary Injunction

 The Fair Housing Act permits a court to grant a temporary injunction as it deems appropriate, if it finds that a discriminatory housing practice has occurred or is about to occur (42 USC § 3613[c] ).  To be entitled to a preliminary injunction, Hassapoyannes must show a likelihood of success on the merits, the danger of irreparable injury in the absence of an injunction, and a balance of the equities in his favor (Fair Hous. in Huntington Comm. Inc. v. Town of Huntington, 316 F.3d 357, 365 [2d Cir.2003];  Grant Co. v. Srogi, 52 N.Y.2d 496, 517, 438 N.Y.S.2d 761, 420 N.E.2d 953 [1981] ).

1. Likelihood of Success

 The Fair Housing Act states that it is unlawful to refuse to sell or rent or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of a handicap (42 USC § 3604[f][1] ).   The Fair Housing Act applies to cooperative apartment buildings (see Robinson v. 12 Lofts Realty, Inc., 610 F.2d 1032, 1036 [2d Cir.1979] ).

 In the absence of direct evidence of discrimination, Hassapoyannes may establish a prima facie case of housing discrimination using the familiar burden-shifting framework that the United States Supreme Court first articulated in McDonnell Douglas v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (Mitchell v. Shane, 350 F.3d 39, 47 [2d Cir.2003] ).   He must show:  (1) membership in a protected class;  (2) that he sought and was qualified to rent or purchase the housing;  (3) that he was rejected;  and (4) that the housing opportunity remained available to other renters or purchasers (ibid.).   Once he establishes a prima facie case, the burden then shifts to the Board to show a legitimate, nondiscriminatory reason for the challenged decision (ibid.).   Regardless of the burden shifting, the “ ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff” (St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 507, 113 S.Ct. 2742, 125 L.Ed.2d 407 [1993][internal quotation marks and citations omitted] ).

 Here, Hassapoyannes is likely to establish a prima facie case of housing discrimination.   There is sufficient evidence to show that he is in a protected class, i.e., that he has a disability, which the Fair Housing Act defines as “a physical or mental impairment which substantially limits one or more of such person's major life activities” (42 USC § 3602[h][1] ).   The inability to control one's bowel movements constitutes a physical impairment (see 24 CFR 100.202[a][1] ).   In this case, Hassapoyannes avers that he soils his trousers, bed sheets, towels, and carpets, even though he wears sanitary pads (diapers) and changes them several times a day (id. ¶ 7).   A jury could reasonably find that his condition therefore substantially limits his major life activities (cf. Workman v. Frito-Lay, Inc., 165 F.3d 460, 467 [6th Cir.1999][jury could find that irritable bowel syndrome significantly restricted ability to perform major life activities, as compared to an average healthy person] ).

The remaining elements of the prima facie case are not in dispute. The parties do not dispute that Hassapoyannes applied for, and obtained the Board's approval initially, and that the Board later withdrew its approval at closing.   After the Board's rejection, Hirschmann wanted to keep Hassapoyannes's deposit and find another buyer for the apartment (see Complaint ¶ 17).   Therefore, Hassapoyannes will likely establish a prima facie case of housing discrimination based on a disability.

 In opposition, the Board argues that it rejected Hassapoyannes because he did not disclose his disability and his need for a reasonable accommodation at the interview.²  This argument is unavailing.   The regulations of the Fair Housing Act explicitly prohibit any inquiry into whether an applicant for housing has a handicap, or the nature or severity of a handicap (24 CFR 100.202[c] ).  As a corollary, the U.S. Equal Employment Opportunity Commission (EEOC) takes the position that an employer may also not inquire into an applicant's need for a reasonable accommodation.   The EEOC compliance manual states, in pertinent part:

“In general, an employer may not ask questions on an application or in an interview about whether an applicant will need reasonable accommodation for a job.   This is because these questions are likely to elicit whether the applicant has a disability (generally, only people who have disabilities will need reasonable accommodations)”

(EEOC Enforcement Guidance on Pre-Employment Inquiries Under the American with Disabilities Act, 2 BNA EEOC Compliance Manual, No. 290, 902:0072 [Oct. 10, 1995] ).   The EEOC's rationale is clearly persuasive and applicable to the context of housing discrimination.³  Like the Fair Housing Act, the Americans with Disabilities Act expressly forbids an employer from inquiring about whether an applicant has a disability (42 USC § 12112[d][2][A] ).   The definition of “disability” in the Americans with Disabilities Act is the same as the definition of “handicap” under the Fair Housing Act (compare 42 USC § 12102[2][A] with 42 USC § 3602[h][1] ).

Of course, the Board did not, in fact, inquire into Hassapoyannes's disability at the interview.   However, because the Fair Housing Act expressly prohibits inquiry of an individual's handicap, it is illogical to impose on the applicant a concomitant duty to disclose that handicap.   Otherwise, those protections would be circumvented and rendered meaningless.   Indeed, in the employment context, “terminating an employee for failure to disclose a physical disability has the same effect as inquiring into the disability before hire” (Lowe v. Angelo's Italian Foods, 1993 WL 560905, *2, 1993 U.S. Dist. LEXIS 18931, *7 [D. Kansas, Oct. 8, 1993] ).⁴

Therefore, the Board's reliance on cases imposing a duty to disclose in the context of fraud is misplaced.   None of the cases that the Board cited involved a duty to disclose an individual's disability, or the need for a reasonable accommodation (Sorbaro Co. v. Capital Video Corp., 245 A.D.2d 364, 667 N.Y.S.2d 388 [2d Dept. 1997][defendant fraudulently represented use of lease premises to sell adult materials];  Lopez v. Time, Inc., 219 A.D.2d 569, 632 N.Y.S.2d 65 [1st Dept. 1995] [plaintiff not entitled to severance package because she failed to disclose she obtained employment elsewhere];  Post v. Xerox Corp., 163 A.D.2d 908, 558 N.Y.S.2d 428 [4th Dept. 1990][omission of prior unethical conduct in application for company's job benefits] ).

 The Board also argues that it may inquire to an individual's handicap to fulfill its fiduciary obligations to its shareholders, citing Laurenti v. Water's Edge Habitat, Inc., 837 F.Supp. 507 [E.D.N.Y.1993].   In Laurenti, the plaintiffs alleged that the board of a cooperative apartment violated the Fair Housing Act by refusing to sublet to a family based on familial status, i.e., because they had four children.   However, the family had lied about the status of the mother's employment, and had lied about the number of occupants, which exceeded the allowable number of persons under the occupancy code of the Village of Patchogue.   The court denied plaintiffs' request for an injunction, finding that the board offered a legitimate, non-discriminatory reason for evicting the sublettors.  Laurenti is inapposite, because although the Fair Housing Act prohibits discrimination based on familial status, it does not prohibit inquiry regarding the number of occupants who intend to reside in an apartment.   Thus, in Laurenti, the court found that plaintiff failed to demonstrate that discrimination occurred given the board's claim that its refusal to sublet was based on plaintiffs' violations of the occupancy code and upon plaintiffs' misrepresentations concerning the number of occupants, which was not protected under the Fair Housing Act. To the extent that the Board argues that its fiduciary duties entitle it to inquire into a person's handicap, the court notes only that its fiduciary duties can never trump the obligation to act lawfully, i.e., without violating the Fair Housing Act.

 The fact that the Board has allowed other persons with wheelchairs and “emotional support animals” to live in the building is not a defense (cf. Furnco Constr. Corp. v. Waters, 438 U.S. 567, 579, 98 S.Ct. 2943, 57 L.Ed.2d 957 [1978][“A racially balanced work force cannot immunize an employer from liability for specific acts of discrimination”] ).

In sum, the Board offers no legitimate, non-discriminatory reason to rebut a prima facie case of housing discrimination.   The Board's erroneous understanding of the law, even if in good faith, is not a defense to liability in a discrimination action (Parker v. Sony Pictures Entertainment, Inc., 260 F.3d 100, 112-113 [2d Cir.2001] ).   Therefore, Hassapoyannes has established a likelihood of success on the merits.

The likelihood of success of Hassapoyannes's claims under the New York State's and City's Human Rights Laws (Executive Law § 296 et seq.;   Administrative Code of the City of N.Y. § 8-101 et seq.) is the same as the analysis of his claim under the Fair Housing Act (see Forrest v. Jewish Guild for the Blind, 3 N.Y.3d 295, 305 n. 3, 786 N.Y.S.2d 382, 819 N.E.2d 998 [2004] ).   Like the Fair Housing Act, New York State's and City's Human Rights Laws expressly prohibit an owner of a housing accommodation “to make any record or inquiry in connection with the prospective purchase, rental or lease of such a housing accommodation which expresses, directly, or indirectly, any limitation, specification, or discrimination as to ․ disability” (Executive Law § 296 [5] [a][3];  see also Administrative Code § 8-107[5][a][3] ).

2. Irreparable Harm

The Court of Appeals for the 9th and 11th Circuits hold that irreparable injury is presumed once a person alleging discrimination has established a violation of the Fair Housing Act (Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 826 [9th Cir.2001];  Gresham v. Windrush Partners, Ltd., 730 F.2d 1417, 1423 [11th Cir.1984];  see also Illinois Bell Tel. Co. v. Illinois Commerce Commn., 740 F.2d 566, 571 [7th Cir.1984] [traditional showing of irreparable harm not required if statute specifically provides for injunctive relief] ).   The Second Circuit has avoided the issue (see Fair Hous. in Huntington Comm. Inc., 316 F.3d at 365 n. 4).

 In any event, the record establishes that the apartment is unique due to its proximity to a cancer hospital where Hassapoyannes needs specialized medical care.   Thus, money damages would not be an adequate remedy for him if the Board allowed Hirschmann to transfer or sell the apartment to a third party during the pendency of the action (cf. Seitzman v. Hudson Riv. Assocs., 126 A.D.2d 211, 214, 513 N.Y.S.2d 148 [1st Dept. 1987][medical doctors established irreparable injury against co-op board which refused approval for medical office in the same building where doctors lived] ).   Moreover, “ [d]epriving members of the handicapped community of the right to live where they choose deprives [the handicapped] of much of what makes for human freedom and fulfillment-the ability to form bonds and take part in the life of a community' ” (Epicenter of Steubenville, Inc. v. City of Steubenville, 924 F.Supp. 845, 853 [S.D. Ohio 1996], quoting City of Cleburne, Tex. v. Cleburne Living Center, 473 U.S. 432, 461, 105 S.Ct. 3249, 87 L.Ed.2d 313 [1985] ).

3. Balance of the Equities

 The balance of the equities tips in Hassapoyannes's favor.   The injury he would suffer if the injunction were not granted is not redressable in money damages.   By contrast, Hirschmann would suffer only the lost opportunity of selling the apartment at this time, which, at most, is an economic injury.

 Notwithstanding the above, Hassapoyannes is not entitled to a preliminary injunction at this time because generally, the court cannot grant the ultimate relief that he seeks under the guise of a preliminary injunction (see SportsChannel Am. Assocs. v. Natl. Hockey League, 186 A.D.2d 417, 418, 589 N.Y.S.2d 2 [1st Dept. 1992] ).  “A mandatory injunction should not be granted, absent extraordinary circumstances, where the status quo would be disturbed and the plaintiff would receive the ultimate relief sought, pendente lite” (St. Paul Fire and Marine Ins. Co. v. York Claims Serv., 308 A.D.2d 347, 349, 765 N.Y.S.2d 573 [1st Dept. 2003];  see also WarnerVision Entertainment Inc. v. Empire of Carolina, Inc., 101 F.3d 259, 262 [2d Cir.1996] ).   Nor, as a general rule, will the court issue a mandatory preliminary injunction requiring one person to surrender the possession of real estate or other property in dispute to another (see Knower v. Atkins, 273 A.D. 356, 77 N.Y.S.2d 559 [1st Dept.] affd. 298 N.Y. 750, 83 N.E.2d 150 [1948] ).   However, this branch of his motion is denied with leave to renew within 45 days.   The record is not clear as to whether this case presents the extraordinary and very rare situation where a mandatory preliminary injunction should be granted.

B. Dismissal of the Complaint

In the second cause of action, Hirschmann seeks a declaration that she did not breach the contract of sale, and that she is entitled to keep Hassapoyannes's deposit.   Because there are questions of fact as to whether the Board discriminated against Hassapoyannes, he is not entitled to dismissal of this cause of action as a matter of law.

In the third cause of action, Hirschmann seeks “extra-contractual” damages from Hassapoyannes because he “blocked” her from selling the apartment, in that he filed a housing discrimination complaint, and notified her that he would consider her in breach of the contract of sale if she sold the apartment to another buyer.   Damages include the monthly maintenance paid to the co-op, and damages for “lost opportunity.”

 Hassapoyannes has established that this cause of action lacks merit as a matter of law.   The only discernible theories of liability against Hassapoyannes that these allegations raise are abuse of process and prima facie tort, both of which cannot be sustained.  “While process' is defined as a direction or demand that one perform or refrain from doing some prescribed act, it is clear that the judicial process must in some manner be involved' [citations omitted]” (Varela v. Investors Ins. Holding Corp., 185 A.D.2d 309, 311, 586 N.Y.S.2d 272 [2d Dept. 1992], affd. 81 N.Y.2d 958, 598 N.Y.S.2d 761, 615 N.E.2d 218 [1993] ).   Thus, the letter from Hassapoyannes's attorney directing Hirschmann not to advertise or promote the sale of her apartment during the pendency of the HUD complaint does not constitute process susceptible of abuse.   Moreover, no claim for abuse of process can be sustained in the absence of any evidence that Hassapoyannes's counsel issued process with an ulterior motive to cause harm, or that it was completely devoid of social or economic justification (Greenfield v. Schultz, 251 A.D.2d 67, 67, 673 N.Y.S.2d 684 [1st Dept. 1998] ).   As discussed above, the NYSDHR determined that Hassapoyannes had shown probable cause that the Board engaged in housing discrimination.   As for prima facie tort, “New York courts have consistently refused to allow retaliatory lawsuits based on prima facie tort predicated on the malicious institution of a prior civil action” (Curiano v. Suozzi, 63 N.Y.2d 113, 118, 480 N.Y.S.2d 466, 469 N.E.2d 1324 [1984] ).

 The fourth cause of action, for attorneys' fees and exemplary damages, is equally without merit.  “Under the general rule, attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule” (Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 549 N.Y.S.2d 365, 548 N.E.2d 903 [1989] ).   Hirschmann does not cite any agreement or statute that would entitle her to legal fees from Hassapoyannes.   Nor does she articulate any valid basis to impose exemplary damages against him.   The fact that Hassapoyannes did not disclose his handicap or his request for a reasonable accommodation does not constitute fraudulent concealment, but rather reflects the valid exercise of his rights under the Fair Housing Act.

Therefore, this cause of action is dismissed.

Plaintiff's Cross Motion for Summary Judgment

The standards for summary judgment are well settled.

“[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact.   Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers.   Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action”

(Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986][internal citations omitted] ).   Hirschmann argues that the third-party complaint should be dismissed as against her, because she did not discriminate against Hassapoyannes in any way (Hirschmann Aff. ¶ 18).   Once the Board withdrew its approval, Hirschmann directed her attorney to tender the deposit back to Hassapoyannes, who refused it (id. ¶ 13).   In her own words, Hirschmann never balked at selling her apartment to him (id. ¶ 21).

 The complaint does not specifically state in what manner Hirschmann has discriminated against him, but rather lumps Hirschmann together with the Board.   It is undisputed that Hirschmann had originally agreed to sell her shares to Hassapoyannes, and so the complaint fails to state a cause of action against Hirschmann for violation of the Fair Housing Act. Though Hassapoyannes argues that Hirschmann's lawsuit “advanced” the unlawful discrimination, the act of commencing a lawsuit is not a discriminatory housing practice (see 42 USC § 3602[f];  42 USC § 3604).

Therefore, the first, second, third, sixth, and seventh causes of action of the third-party complaint are dismissed as against her.   The fourth cause of action, for tortious interference, is clearly directed against the Board, and not Hirschmann.   Therefore, this cause of action is also dismissed as against her.   However, the fifth cause of action, for breach of contract against her, cannot be dismissed as a matter of law.   Whether Hirschmann was entitled to cancel the contract of sale depends upon whether the Board's decision to withdraw its approval was a discriminatory act.

The remaining branches of the cross motion are otherwise denied.   The remainder of the cross motion does not seek any affirmative relief, but rather opposes Hassapoyannes's motion for a preliminary injunction and for dismissal of Hirschmann's complaint against him.

Defendants' Cross Motion

Defendants argue that Jon Schechter has no liability for housing discrimination because he allegedly acted as an agent for the Board.   Defendants argue that, under principles of agency, an agent is not liable for the actions of a disclosed principal (see Degenshein Aff., at 6 n. 1).   Schechter states that he first met Hassapoyannes when he arrived for a closing at Schechter's office on June 8, 2004 (Schechter Aff. ¶ 2).   Schechter called the Board's president when Hassapoyannes allegedly announced that he was disabled and requested installation of a washer in the apartment (id. ¶ 5).   Schechter told Hassapoyannes that the Board's president wanted to adjourn the closing until the Board's next meeting, which Schechter later attended (id. ¶ 7).

In opposition, Hassapoyannes argues that Schechter is liable for housing discrimination because he participated in the Board's discussions at its board meeting.

 Summary judgment is premature.   Because Schechter attended the meeting during which the Board decided to withdraw its approval, discovery is necessary to reveal whether Schechter had any authority to influence the Board in any manner, or if he was nothing more than a conduit or avenue of communication between the Board and Hassapoyannes (see Sassower v. Field, 752 F.Supp. 1182, 1187 [S.D.N.Y.1990] ).   The cross motion is therefore denied.

Accordingly, it is

ORDERED that the motion, by order to show cause, of defendant/third-party plaintiff Constantine Hassapoyannes, is granted to the extent that the third and fourth causes of action of the complaint are dismissed, and is otherwise denied, except that, with respect to the injunction, leave to renew within 45 days is granted;  and it is further

ORDERED that the cross motion of plaintiff/third-party defendant Merle Hirschmann is granted to the extent that the first, second, third, fourth, sixth, and seventh causes of action of the third-party complaint are dismissed as against her, and the cross motion is otherwise denied;  and it is further

ORDERED that the cross motion by defendant Jon Schechter is denied;  and it is further

ORDERED that the parties and their attorneys shall appear at a conference in Part 17 on December 9, 2005 at 11 A.M.

FOOTNOTES

1.   Under the Fair Housing Act, Hassapoyannes is entitled to commence a civil action without regard to the status of any discrimination complaint filed with HUD, except where there is already a conciliation agreement in place, or when an administrative law judge has already commenced a hearing on the record (42 USC § 3613[a][2], [3] ).

2.   Thus, whether the washer/dryer is a reasonable accommodation for Hassapoyannes's disability is not at issue in this case.   Even if the installation of washer/dryer was neither reasonable, nor an accommodation, the board could not reject Hassapoyannes for requesting that accommodation.

3.   The interpretations of the EEOC Compliance Manual “are entitled to respect ․ only to the extent that [they] have the power to persuade' ” (United States v. City of New York, 359 F.3d 83, 93 [2d Cir.2004], quoting Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 [2000] ).

4.   In Lowe, the plaintiff alleged, among other things, that her employer terminated her position in inventory control and purchasing based on a disability.   The defendants justified the termination on the ground that plaintiff was not candid about her ability to perform the job.   The court agreed with plaintiff that termination based on her failure to disclose a disability would constitute discrimination.

EMILY JANE GOODMAN, J.