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Seeberger v. Davenport Civil Rights Commission

Supreme Court of Iowa

February 15, 2019

THERESA SEEBERGER, Appellee,
v.
DAVENPORT CIVIL RIGHTS COMMISSION, Appellant, and MICHELLE SCHREURS, Intervenor-Appellant.

          Appeal from the Iowa District Court for Polk County, Michael D. Huppert, Judge.

         On review from the Iowa Court of Appeals.

         Landlord seeks further review of court of appeals decision affirming damage award for housing discrimination and restoring attorney fee award.

          Latrice L. Lacey of Davenport Civil Rights Commission, Davenport, for appellant. Dorothy A. O'Brien of O'Brien & Marquard, P.L.C., Davenport, for intervenor-appellant.

          Randall D. Armentrout, Katie L. Graham, and Ryan G. Koopmans (until withdrawal) of Nyemaster Goode, P.C., Des Moines, for appellee.

          WATERMAN, JUSTICE.

         In this case, we must decide whether the court of appeals erred in awarding attorney fees incurred in agency proceedings under a fee-shifting provision in Division II of the Davenport Civil Rights Ordinance for a housing discrimination violation charged under Division III that lacks a corresponding fee-shifting remedy. The owner of a single-family home terminated the lease of a tenant whose daughter became pregnant, resulting in a complaint filed with the Davenport Civil Rights Commission (Commission) alleging discrimination based on familial status in violation of the Davenport Civil Rights Ordinance and the Federal Fair Housing Act (FHA). The landlord responded that her comments and actions were protected under the First Amendment. An administrative law judge (ALJ) found the landlord committed the Division III fair housing violation, awarded the tenant $35, 000 in damages for emotional distress and $23, 882 in attorney fees and costs, and imposed a $10, 000 civil penalty. The Commission approved the ALJ's decision except that it reduced the emotional distress award to $17, 500. On judicial review, the district court rejected the landlord's free speech defense but reversed the damages award and civil penalty based on a "small landlord" exemption in the Ordinance and directed the Commission to recalculate those amounts. The district court vacated the fee award, ruling that the fee-shifting provision in Division II was inapplicable and that fees could not be awarded by the Commission under the FHA. All parties appealed, and we transferred the case to the court of appeals, which reinstated the fee award under Division II of the Ordinance. We granted the landlord's application for further review.

         On our review, we elect to allow the court of appeals decision to stand on all issues except the award of fees incurred in the agency proceedings. For the reasons elaborated below, we hold the fee-shifting provision in Division II of the Ordinance is inapplicable to the fair housing violation in Division III. We also hold the Commission could not award fees under the FHA. Accordingly, we affirm the district court judgment.

         I. Background Facts and Proceedings.

         In 2011, Theresa Seeberger purchased a three-bedroom, single-family home on North Ripley Street in Davenport. Seeberger lived in the house with her four cats until she got married in 2012. Her spouse was allergic to cats. When Seeberger moved out of the North Ripley house, she left behind her cats, much of her clothing, and some furniture. Seeberger visited the house almost daily to feed her cats.

         In December 2012, Seeberger began renting out bedrooms in the house. In August 2013, Michelle Schreurs and her fifteen-year-old daughter rented one of the bedrooms. There was no written lease, but Schreurs agreed to pay $300 monthly in rent. Although two other tenants lived in the house when they moved in, by July 2014, Schreurs and her daughter were the only tenants.

         On September 16, Seeberger visited the house and found prenatal vitamins on the kitchen counter. She took a photo of the vitamins with her cell phone and sent the photo to Schreurs with a text asking, "Something I should know about?"

         The following day, Seeberger returned and was at the house when Schreurs arrived home from work. Seeberger asked if Schreurs had received the text message and again asked about the prenatal vitamins. Schreurs excitedly told Seeberger that her daughter was pregnant. Seeberger paused for a moment and then responded that Schreurs and her daughter would have to move out in thirty days. When asked why, Seeberger stated, "You don't even pay rent on time the way it is, and . . . [n]ow you're going to bring another person into the mix." Noting the prenatal vitamins, Seeberger continued, "[O]bviously you're going to keep the baby." The following day, Seeberger left a letter at the house informing Schreurs that her lease would expire on October 19. Schreurs and her daughter moved out October 5.

         In November, Schreurs filed a complaint with the Davenport Civil Rights Commission. She amended her complaint twice, ultimately claiming that Seeberger discriminated against her based on familial status in violation of Division III, section 2.58.305(C) of the Davenport Municipal Code (2014), [1] and § 804(c) of the FHA.[2] As a small landlord, Seeberger was only liable for the alleged discriminatory statements she made in violation of section 2.58.305(C). Seeberger was exempt from liability under the remaining subsections of section 2.58.305, including any liability for terminating Schreur's tenancy. See Davenport, Iowa, Mun. Code § 2.58.310 (exempting small landlords from liability for subsections 2.58.305(A), (B), (D), (E), and (F)).[3] The Commission conducted an investigation. In March 2015, the director of the Commission issued a probable cause finding, concluding that there was probable cause to find Seeberger had discriminated against Schreurs based on familial status in violation of section 2.58.305(C) and the FHA, 42 U.S.C. § 3604(c).

         The complaint was set for a public hearing before an ALJ. After the hearing, the ALJ issued a ruling finding that "[a]n ordinary listener listening to Seeberger's statements would find her statements discriminatory on the basis of familial status" and that "Seeberger engaged in a discriminatory housing practice by making the statements." The ALJ issued a cease and desist order, awarded Schreurs $35, 000 in emotional distress damages, and assessed a $10, 000 civil penalty against Seeberger. On December 23, Schreurs filed an application for attorney fees. Seeberger resisted. The ALJ found that Schreurs was entitled to attorney fees under Davenport Municipal Code section 2.58.350(G) and awarded Schreurs $23, 200 in attorney fees and $681.80 in costs.

         In January 2016, the Commission approved the ALJ's decision, except that it reduced the award of emotional distress damages to $17, 500. The Commission also approved the ALJ's decision with regard to attorney fees and costs and determined Seeberger was responsible for the costs of the hearing.

         Seeberger filed a petition for judicial review. Seeberger argued, among other things, that the Ordinance violated her right to free speech under the United States and Iowa Constitutions and did not authorize an award of attorney fees incurred in the agency proceedings. Schreurs intervened in the judicial review proceedings. Schreurs and the Commission argued that Seeberger's statements were not protected speech and that Schreurs was entitled to attorney fees under Davenport Municipal Code section 2.58.175(A)(8) in Division II of the Ordinance and under the FHA, 42 U.S.C. § 3612(p).

         The district court concluded that Seeberger's statements were not protected speech under the First Amendment of the United States Constitution or article I, section 7 of the Iowa Constitution. The court found that, contrary to the limitation of liability for small landlords, "the damages that were awarded were tied to the termination of the tenancy by [Seeberger], not just her discriminatory statements." The court reversed the damages award and civil penalty, concluding,

Although the [Commission] reduced the ALJ's award by half, there is no analysis that would reflect whether they differentiated between damages properly related to the discriminatory statement and improperly related to the termination of the tenancy. As a result, the award of damages to [Schreurs] was improper and should be reversed. As it is unclear whether the [Commission's] calculation of an appropriate civil penalty may have relied upon such an improper causal connection, that penalty should also be reversed.

         The district court also concluded that Davenport Municipal Code section 2.58.175(A)(8) "does not clearly authorize an award of attorney fees in the context of a discriminatory housing practice." The district court vacated the attorney fees award.

         Schreurs and the Commission moved for additional findings. They requested the court reconsider its ruling on attorney fees under section 2.58.175(A)(8) and expand its findings to address whether Schreurs was entitled to fees under the FHA. The Commission also asked the court to award attorney fees under section 2.58.350(G). Both Schreurs and Seeberger requested an award of fees incurred during the judicial review proceedings.

         The district court denied all of the motions. The court declined to reconsider its ruling disallowing fees under section 2.58.175(A)(8). The court concluded that "the mere fact that the . . . complaint was cross-filed with the federal authorities does not expand the [Commission's] authority to award attorney fees beyond what is allowed under the city ordinance" and fees under the FHA "were unavailable to [Schreurs] in her state court proceeding." The court concluded that Schreurs waived her claim to attorney fees under Municipal Code section 2.58.350(G). Finally, the district court declined to award attorney fees to either Seeberger or Schreurs for fees incurred during judicial review.

         All parties appealed. We transferred the case to the court of appeals. The court of appeals concluded that the Davenport Municipal Code was not unconstitutional as applied to Seeberger and did not infringe upon her right to free speech. The court of appeals also concluded that Schreurs was entitled to attorney fees under Municipal Code section 2.58.175(A)(8) and reversed the district court's denial of fees. Finally, the court of appeals concluded the district court's denial of fees for the judicial review proceedings was not "clearly unreasonable or untenable," and affirmed the district court on that ground.

         Seeberger filed an application for further review.[4] We granted her application.

         II. Scope of Review.

         On further review, we have the discretion to "review any or all of the issues raised on appeal." Cote v. Derby Ins. Agency, Inc., 908 N.W.2d 861, 864 (Iowa 2018) (quoting Papillon v. Jones, 892 N.W.2d 763, 769 (Iowa 2017)). We choose to confine our review to the award of attorney fees incurred in the agency proceedings and let the court of appeals decision stand as the final decision on the remaining issues. See id. We review the district court's ruling construing the Ordinance for correction of errors at law. Simon Seeding & Sod, Inc. v. Dubuque Human Rights Comm'n, 895 N.W.2d 446, 455 (Iowa 2017).

         III. Analysis.

         We must construe the Davenport Civil Rights Ordinance to determine whether the district court correctly ruled that the fee-shifting provision in Division II is inapplicable to a housing discrimination complaint prosecuted under Division III. We must also decide whether the district court correctly ruled that the Commission lacked authority to award fees under the FHA. We address each issue in turn. We begin with an overview of fee awards under local civil rights ordinances.

         A. Attorney Fee Awards Under Municipal Civil ...


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