PHA May Be Liable for Owner's Alleged Discrimination Against Disabled Resident

Facts: In August 2007, a resident fell asleep after taking prescribed medication for depression. He fell asleep while cooking a pork chop in a frying pan. While he was asleep, the pork chop burned and the microwave above the stove was damaged. The site owner later served him with a notice of termination and filed an eviction lawsuit against him.

The resident sued both the site's management company and the Chicago Housing Authority (CHA), which had a subsidy agreement with the site owner. The resident claimed that the filing of the eviction action as well as the owner's subsequent refusals to provide a reasonable accommodation for his condition of depression constitute discrimination under the Fair Housing Act.

CHA asked the court to dismiss the lawsuit because it had no relationship with the owner on which to base the lawsuit. It argued that it could not be held liable for any of the owner's actions or the actions of the owner's agents.

Ruling: An Illinois district court denied CHA's request and ordered the trial to continue.

Reasoning: The court found that there was a relationship between CHA and the owner that could be a basis for the lawsuit. Even though the agreement between them state that neither is an agent for or representative of the other, the resident was able to point to the actual operational relationship as spelled out throughout the agreement to show otherwise. The agreement sets forth a number of conditions that the owner must meet to receive its subsidy payment from CHA. Those conditions include performing administrative requirements; complying with federal, state, and local laws; getting approval of management plans; maintaining records on CHA's system; and using CHA's rent calculations.

The court found that these conditions made it clear that despite the disclaimer in the agreement, CHA maintains substantial control over the owner's actions and the owner carries out those functions for CHA. Because there is a plausible agency relationship between the owner and the CHA, the CHA cannot be removed from the lawsuit.

• Washington v. Kass Management, April 2011