Jan. 6, 2017 – A state appeals court has ruled that prospective tenants in Eau Claire presented insufficient evidence to prove a landlord discriminated against them on the basis of race and family status in refusing to consider them as tenants.

In Jones v. Baecker, 2015AP325 (Dec. 28, 2016), a three-judge panel for the District III Court of Appeals ruled that the plaintiffs could not overcome the landlord’s motion for summary judgment despite the landlord’s harsh words in a phone conversation.

The appeals court noted that a prospective tenant’s “subjective belief” that a landlord discriminated based on race and family status is not enough to overcome the landlord’s adequate nondiscriminatory reason for refusing to consider the prospective tenant.

In this case, the landlord maintained an occupancy policy that generally applied to all prospective tenants and asserted the policy as the reason for his decision.

Phone Conversation

Lindsay Jones learned of a potential vacancy in a three-bedroom unit that Baecker owned, and she phoned Baecker to inquire about it. The phone call served as the basis for the discrimination claims asserted by Lindsay and her husband, Girard.

Lindsay testified that Baecker initially inquired about family size. She noted the family included four children and two adults, but only three would be there permanently. Baecker indicated that the unit could not accommodate that many children.

Then she testified that Baecker started asking questions about their current living arrangement. After discovering where they currently lived, Lindsay said Baecker commented that they “were complete pigs” with “garbage all over the place.”

Then he asked if Lindsay was the one with the “African American boyfriend.” Lindsay affirmed and indicated that they were married. According to Lindsay, Baecker said Girard “must not do anything around there.” Then he said the family was too big for the rental unit. Lindsay did not seek an application for the rental unit after the conversation.

Complaint

Lindsay filed a complaint with the Equal Rights Division of the Wisconsin Department of Workforce Development (DWD), which investigates violations of the state’s Open Housing Law, Wis. Stat. section 106.50. Charges may issue with probable cause.

DWD determined that there was probable cause to believe Baecker violated the law by refusing to accept a housing application based on race and family status. The agency determined that race was a likely factor in Baecker’s refusal to show the apartment.

Baecker opted for judicial review, and the Joneses asserted both state and federal housing discrimination claims. Baecker filed a motion for summary judgment. Viewing the facts in the light most favorable to the Joneses, the court granted Baecker’s motion.

In his deposition, Baecker said he owned 29 rental properties. He said he always asks prospective tenants about marital status, children, and the number of prospective tenants. He said he made his decision once Lindsay disclosed her family size.

Baecker testified that before the conversation with Lindsay, he drove by the Joneses residence frequently and it was “disgusting” with toys and junk in the yard. He said he referred to the residence as a “pigsty” but did not say “they were complete pigs.”

He used the term “African American” in their conversation as a way to identify Girard in an attempt to understand the couple’s relationship status, Baecker said.

The court noted that Baecker’s comments were rude and “perhaps even racist,” but landlords are not prohibited from rejecting prospective tenants based on the number of occupants and he refused to rent based on this, before making additional comments.

Baecker, in circuit court, said he rejected the Joneses because the rental unit at issue was not big enough for a six-person family, even though it had three bedrooms. His policy for that property, a four-plex, was no more than four occupants per unit.

Appeal – Racial Discrimination

The Court of Appeals affirmed on different grounds. The three-judge panel ruled that, based on all the evidence, the Joneses could not win on their discrimination claims.

First, the evidence did not show the Joneses were treated less favorably based on race. The Joneses were required to show discriminatory intent based on direct evidence, or indirect evidence creating an inference of discriminatory intent, the panel noted.

“Although the plaintiff need not establish that discriminatory intent was the sole reason for the housing decision at issue, the evidence must be sufficiently compelling so as to give rise to a reasonable inference of racial discrimination,” wrote Judge Thomas Hruz.

The panel concluded that Baecker had another reason for making his decision – the number of occupants – and the Joneses failed to show race was a substantial factor.

The Joneses argued that racial discrimination was evident when Baecker used the term “African American,” based on the context of the whole discussion. The panel disagreed.

“[T]here is no reasonable, unspeculative basis for a fact finder to reject Baecker’s contention that the phrase was used for identification purposes only, as a description of the individual with whom Baecker believed Lindsay was in a relationship,” Hruz wrote.

The panel also rejected Lindsay’s argument that Baecker indicated his refusal to rent only after learning that Lindsay was married to an African American man and suggesting that Girard’s race contributed to their home’s disordered appearance.

“Although the Joneses urge us to conclude that a reasonable fact finder could draw this connection, their argument is made in a wholly conclusory fashion,” Hruz wrote.

“Without any developed argument or citation to authority on that point, we cannot conclude that a reasonable fact finder would view Baecker’s criticism of the cleanliness of the Joneses’ former residence as being tinged with racial animus.”

And even if Baecker refused to rent after learning of Girard’s race, the panel concluded that Baecker’s comments were too ambiguous to establish discriminatory intent.

The panel did not hold that Baecker “established, as a matter of law, that he did not discriminate against the Joneses on the basis of race,” only that the Joneses presented insufficient evidence to prove it. The panel made a point to clarify that holding.

Appeal – Family Status Discrimination

The panel noted discrimination based on family status, the fact that minor children are among the prospective tenants, is prohibited by state and federal law.

But the panel explained that those laws do not prohibit landlords from limiting the number of tenants that can occupy a unit or from making “individualized determinations” that a rental unit is too small for a family, so long as the restrictions are reasonable.

“[S]tate law, like the relevant federal law, allows landlords to impose ‘reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the dwelling unit,’” wrote Judge Hruz.

“The Joneses have never explained how Baecker’s imposition of a four-person occupancy limit evidences intentional discrimination against persons with children,” wrote Hruz, noting the policy would still allow a family with two parents and two kids.

No Duty to Defend Landlord

When the litigation arose, Baecker tapped his insurer to defend him under his general business liability policy with West Bend Mutual Insurance Company. West Bend intervened and argued that it had no duty to defend Baecker’s “volitional act.”

The circuit court ruled that the Joneses' complaint alleged an “occurrence” that was covered under Baecker’s policy and ordered West Bend to defend him moving forward.

But the appeals court reversed on this point. The policy covered “accidents” that cause “bodily injury.” The panel ruled that the alleged bodily injury of “emotional distress,” as outlined in the Joneses’ complaint, could not be considered “accidental.”

“West Bend argues that the majority (and most recent) of state authorities addressing that matter have concluded that volitional acts intending the complained-of event – here, a refusal to rent – are not ‘accidents’ under a liability insurance policy,” Hruz wrote. “Our survey of Wisconsin case law confirms that West Bend is correct on this point.”

The panel concluded that West Bend had no defense obligations because Baecker’s refusal to rent, as outlined in the complaint, was based on race and family status.

“[A]ssuming the truth of the complaint’s allegations, Baecker intended to deny the Joneses housing on these unlawful bases,” Hruz noted. “As a result, there was no ‘occurrence’ under the relevant case law.” That is, discrimination was not covered.