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Sexual harassment in housing.

In the last few years there has been a rise in the number of sexual harassment complaints against residential property owners and managers. New awareness of harassment, evolving legal developments, and current events have increasingly brought it to the public's attention. Recent events in the Clarence Thomas hearings have further crystalized awareness and concern.

Sexual harrassment in real estate most often takes the form of a male owner or manager demanding sexual favors from single or divorced female tenants. These demands are made in return for allowing the tenants to rent or remain in a rental unit.

A study conducted by Regina Cahar published in a 1987 Wisconsin Law Review estimates that, nationwide, there may have been as many as 7,000 to 15,000 recent cases of sexual harassment, most of them unreported. The estimate was based on a 1986 survey of public and private fair housing centers. The actual number of complaints was 288, all by females.

There have been several court cases brought by plaintiffs seeking injunctive relief or damages from offending parties. There also has been legislation introduced by some states and court cases which delineate illegal conduct by owners or managers of residential property. At least one case also held the owner liable for the actions of the manager. Thus, the owners of the property or the owners of a property management company may be liable for the actions of their employees.

In this article, the authors propose to do several things: First, review the Federal Fair Housing Act and sexual harassment in housing with reference to several court cases. Second, examine one case, Shellhammer v. Lewallen, that may have broad implications for residential property owners and managers.

Finally, the authors will comment on how liability for sexual harassment may be extended beyond the offending employee to the owner of the property or of the property management company. The article also will demonstrate how the development of this area of the law is likely to follow in the area of sexual discrimination in employment.

The Federal Fair Housing Act

The Fair Housing Act, passed in 1968, was amended in 1974 to prohibit sex discrimination. The application of the Act to sexual harassment, however, has generally lagged behind other areas of enforcement. Several reasons have been offered as an explanation.

One is that the theoretical development of sexual harassment as a form of sex discrmination did not begin to evolve until the early 1980s with the case of Henson v. City of Dundee (682 F. 2d 897 [11th Cir. 1982]). Henson, and the later Supreme Court case of Meritor Bank v. Vinson (477 U.S. 57 [1986]), were among the first cases to apply Title VII of the Civil Rights Act of 1964 to sexual harassment in the work place.

In turn, Title VII and the Henson interpretation were imported theoretically to the commission of sexual harassment in housing through the watershed case of Shellhammer v. Lewallen (770 F. 2d 167 [6th Cir. 1985]). This decision was the first to hold that such harassment violates the Fair Housing Act.

In a more curious twist, David Linn, writing in American Jurisprudence Proof of Fact, contends that jurisprudential application of sexual harassment to housing may have been partially impeded by the fact that the Shellhammer case was not published in the West reporter system. Consequently, its text was generally available only through such expensive computer software as Lexis, usually only accessed by attorneys, clerks, and judges. Nevertheless, Henson and Shellhammer together indicate how employment legislation can be imported and applied in housing.

Section 3604(a) of the Fair Housing Act states that it is illegal: "To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin."

It could be argued that this section is violated when a owner or property manager will not rent or sell housing after the person seeking the housing refuses sexual advances. The statutory basis for this argument can be grounded on the foregoing phrase "otherwise make unavailable or deny," which has been applied to many types of race and gender discriminatory practices.

Section 3604(b) states that it is illegal: "To discriminate against any person in the terms, conditions, or privileges of sale or rental when such dwelling is in fact so available." A violation of this section could occur if a landlord or seller lies by stating to a prospective renter or buyer that the dwelling is not available after the latter has rebuffed the landlord or seller's sexual advances.

Section 3617 of the Fair Housing Act states that "[i]t shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment or any right granted or protected by section...3604...of this title." As in the Shellhammer case, Section 3604 has been construed to proscribe sexual harassment in housing that may involve coercion, intimidation, threatening behavior, or interference in enjoying the housing.

Lastly, Section 3617 states that any retaliatory acts by, for example, a landlord, after a tenant has asserted his or her rights under this section, is outlawed. This provision even encompassess retaliatory actions against someon who assists the victim in advancing these rights.

The Shellhammer case

The Shellhammer case was the first to apply the Fair Housing Act to sexual harassment in housing. In Shellhammer, the plaintiffs, a married couple, executed a lease with the owner of the apartment. Shortly thereafter, the owner requested that Mrs. Shellhammer pose for nude pictures. She refused and told her husband. A month later, the owner asked her to have sexual intercourse with him, which she also refused.

Soon after the last incident, the owner and the Shellhammers had a dispute over his refusal to provide them with a refrigerator that worked, and the lessees were evicted. The Shellhammers subsequently sued the owner.

The Shellhammers asserted that the owner had violated the Fair Housing Act in two ways. Borrowing heavily from the Henson case, the plaintiffs contended that the owner's actions created an "offensive environment" due to his sexual overtures. Secondly, they argued that their eviction was a direct result of, or "quid pro quo" for, Mrs. Shellhammer's rejections.

In Shellhammer the court enunciated the five elements which are necessary to prove an offensive-environment action. First, the plaintiff must be in a protected classification. Second, the plaintiff must be subjected to unwelcome and extensive sexual favors and other verbal or physical conduct of a sexual nature, which has not been solicited by the plaintiff and is viewed as undesirable or offensive.

Third, the harassment must be because of sex. In other words, "but for" the victim's gender, the harassment would not have occurred. Fourth, the harassment results in the tenancy being significantly less desirable than if the harassment was not happening. Lastly, if liability is being vicariously asserted against someone as the landlord or or property manager, the victim must prove that the person knew or should have known about the harassment, but did not do anything about it.

The court pronounced two additional and important aspects of Shellhammer which should be emphasized. One is that the effect of the sexual abuse on the victim is to be viewed according to a subjective standard. In other words, one should only view the defendant's actions from the perspective of the victim to see if he or she personally regarded them as offensive. Thus, what might be a casual remark to one person may be harassment to another. Second, the court stated that the offender's actions must be "pervasive and persistent."

Due to the "pervasive and persistent" requirement, the court declared that the Shellhammers had failed to establish that an offensive environment existed. One might question this result as, in essence, it states that a victim must endure a repugnant living situation for a relatively long time (in Shellhammer it was for three to four months) before an action accrues.

The "quid pro quo" case

The Shellhammers were more successful in proving that a "quid pro quo" case existed. The court stated that five elements must be established.

The first is that the plaintiff again must belong to a protected classification. Secondly, the plaintiff must be the object of demands of sexual favors that the victim did not ask for or desire. Third, the request was again as a result of the plaintiff's gender. Fourth, the victim's reaction to the request affected one or more tangible terms, conditions, or privileges of the tenancy. And lastly, if liability is going to be asserted against other parties such as the owner, it must be demonstrated that the owner knew or should have known and failed to correct the situation quickly.

The court additionally stated that, unlike an offensive-environment case, the frequency of the harasser's sexual overtures is not a factor. This implies that even one incident might be sufficient in establishing a "quid pro quo" case. This was obviously pivotal in allowing the Shellhammers to prevail.

In addition, vicarious liability was found against the owner's spouse who, it was shown, was a co-owner who actively knew about the owner's behavior.

Vicarious liability

The issue of the vicarious liability of a property owner or property management company could become of great importance if sexual harassment in housing becomes a more litigious issue. Vicarious liability is rooted in the principle of respondeat superior or "let the master respond." The rationale for it is that the master or principal has a social responsibility to back up his or her employees' actions.

In addition, because the principal has "deeper pockets" than the employee, he or she is better able to pay. Hence, under vicarious liability principles, if an apartment manager engages in one or more of the legal actions discussed above while in the course and scope of his or her job, that manager's superior (i.e., the property owner or owner of the management company) might be liable as well.

It should be noted that the principal does have a right of indemnification against the employee who commits the wrong-doing. However, attempting to collect what is due might be fruitless.

The issue of vicarous liability is arguably more ambiguous and confusing than other aspects of sexual harassment in housing. The Shellhammer case is one of the few to deal with the issue. As was pointed out earlier in the article, the owner's wife was actually told by tenants about her husband's conduct, but failed to take corrective action despite the fact she was as general manager of the property. Accordingly, she was also judged to be vicariously liable to pay damages to the Shellhammers.

There is no way of knowing whether the Shellhammer approach to vicarious liability will be adopted by other jurisdictions when the issue ripens elsewhere. But if the analogous sexual harassment in employment is any indication of where the rule is headed, the manner in which the issue will be treated will continue to be ambiguous.

The genesis of the ambiguity lies in the U.S. Supreme Court case of Meritor Bank v. Vinson, which states that an employer's liability for sexual harassment in the workplace should be decided by the application of common-law principles of agency law. Similarly, the Fair Housing Act has been construed by the Sixth Circuit, in the case of Marr v. Rife (503 F. 2d 735 [6th Cir. 1974]), to also apply general agency principles in race discrimination cases.

It is clear that differing approaches to the issue of vicarious liability are taken by the courts in the area of sexual harassment in housing. A strict liability standard, for example, could be imposed by a future court on owners of rental property for the sexual harassment of their tenants by their manager.

This interpretation could mean that liability would attach even if there was no way the owner could have discovered sexual harassment and took all possible steps to prevent it from happening. This was essentially the approach taken by the Henon court, which concerned sexual harassment in employment, but was repudiated by the Shellhammer court.

Remedies for victims

Under the Fair Housing Act, both damages and equitable remedies are available. In addition, attorney's fees and court costs are provided. The Act, moreover, can be enforced by a variety of means, including administrative actions by HUD, civil prosecution by the Attorney General, or private actions by victims. HUD may also refer cases to appropriate state and local agencies.

Equitable remedies, such as injunctions and specific performance, can also be used when appropriate. For instance, in Moore v. Townsend (525 F. 2d 482 [7th Cir. 1975]), specific performance of rental agreement was issued when the plaintiff was deprived of the property for unlawful reasons.

Numerous types of compensatory damages potentially can be computed for a victim of sexual harassment in housing. For example, moving costs (including security deposits), increased rent due to a move, meals, temporary lodging because of the move, and even the increased cost of transportation to work caused by a new location could be awarded.

Necessary and reasonable medical expenses for physical injuries, as well as pain and suffering for these injuries, may also be incurred by the victim. This category might include damages for mental problems resulting from the harassment, such as anxiety, depression, sexual dysfunction, loss of sleep, past and future impairment of ability to enjoy life, and other such problems.

Parties other than the victim who may witness or are forced to tolerate the harassment also may be able to sue. Accordingly, Mr. Shellhammer was awarded damages because he proved he was injured as well.

Lastly, it should be pointed out that if an "offensive environment" case exists, no actual economic losses must be demonstrated to collect damages. This rule, articulated in Shellhammer and in the case of Gnerre v. Massachusetts Commission Against Discrimination (525 N.E. 2d 84 [Mass. 1988]), states that sexual harassment does not have to affect a tangible condition of tenancy, like higher rent, because the harassment alters the "terms, conditions, or privileges" of housing.

Conclusion

Cases of sexual harassment are likely to increase in the future. The courts are also likely to apply many of the principles of sexual discrimination in employment to sexual harassment in housing. It should also be noted that there are a number of common law and state statutory actions that will likely be asserted by victims of sexual harassment in housing in order to find liability for an offending property owner or property management firm.

Liable parties are more likely, in the future, to be subject to damages, especially if the property owner has deep pockets and it is demonstrated that an "offensive environment" existed.

Property owners and property management companies must be prudent in selecting their managers and should advise their employees of proper and improper conduct so as to avoid potentially litigious situations that might result in damage awards.

Robert J. Aalberts is professor of business law and Terrence M. Clauretie is professor of finance in the Department of Finance, University of Nevada, Las Vegas.
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Author:Aalberts, Robert J.; Clauretie, Terrence M.
Publication:Journal of Property Management
Date:Jan 1, 1992
Words:2557
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