National Housing Law Project Housing Law Bulletin

A sharply divided Connecticut Supreme Court has held that a Connecticut statute prohibiting landlords from discriminating in the rental of a dwelling on the basis of an applicant’s lawful source of income precludes a landlord from refusing to lease a unit to a tenant assisted by the Section 8 program on the grounds that the tenant’s income does not meet a minimum threshold set by the landlord for all prospective renters or on the grounds that the landlord refuses to execute a Section 8 lease because it does not conform to the landlord’s lease used for all of its rentals. Commission on Human Rights and Opportunities v. Sullivan Associates, ___ A.2d ___, 250 Conn. 763, 1999 WL 810644 (Conn. Oct. 12, 1999).

The case arose when two potential renters with Section 8 certificates sought to rent houses advertised by the defendant landlord, Sullivan Associates. The landlord, following a uniform practice of screening all applicants by phone before identifying and showing the rental unit, advised them that they would need to pay the first month’s rent and a two-month deposit in advance and that they would need to have an annual income of at least $38,000, equivalent to four times the annual rent, in order to rent the houses. When the callers identified themselves as participants in the Section 8 program, the landlord advised them that the deposit requirement did not meet the Section 8 program requirement as it understood them and that their income did not meet the landlord’s minimum income requirement.

The applicants filed a complaint with the Connecticut Commission on Human Rights and Opportunities. The commission, after confirming the landlord’s practices through the use of testers, brought an action against the landlord in Connecticut’s Superior Court for violating Connecticut’s statute making it a discriminatory practice to refuse to sell or rent a dwelling or to discriminate against any person in the terms and conditions of sale or rental of a dwelling on the basis, among others, of lawful source of income./1/

At trial, the landlord and the commission stipulated to the landlord’s uniform rental practices including the fact that the landlord required all tenants to sign its own standard form lease. Based on these facts, the trial court ruled in the landlord’s favor on the ground that the statute permitted the landlord to decline to rent to the complainants as long as the landlord consistently conducted its rental business by use of a standard lease and consistent income requirements.

The commission appealed the decision to a Connecticut appellate court and, prior to the conduct of a hearing, the Connecticut Supreme Court assumed jurisdiction over the case. Before the court, the commission argued that the trial court improperly construed the statute with respect to both the mandatory Section 8 lease terms and the application of the general income requirement to potential Section 8 tenants. The landlord sought to have the trial court judgment affirmed either on the ground articulated by the trial court or on the alternate ground that the state statute was preempted by federal law.

Addressing the potentially dispositive preemption argument first, the Connecticut Supreme Court rejected the landlord’s argument that the Connecticut statute, requiring landlords’ participation in the Section 8 program, was preempted by federal law making participation in the Section 8 program voluntary. Following the lead of a majority of the jurisdictions that have considered the issue,/2/ the court concluded that the Section 8 statute does not expressly or impliedly preempt state law because there is no express peremptory language in the Section 8 statute and because the federal statute does not "occupy the field" to the point of leaving no room for a state to supplement federal law or interfering with its objectives. To the contrary, the court found that requiring landlords to participate in the Section 8 program furthered the program’s objectives and that the state statute did not prevent a landlord from complying with both the state and federal laws because nothing in the Section 8 program requires participation to be voluntary./3/

The question before the court was whether the Connecticut statute, which forbids discrimination in the terms, conditions, or privileges of sale or rental or in the provision of services or facilities in connection therewith because of lawful source of income, was intended to excuse landlords from participating in the Section 8 program if they did not wish to accept the terms of the standardized Section 8 lease required at the time./4/ In addressing the issue, the court assumed that Section 8 assistance was encompassed by the Connecticut statute, that participation in the Section 8 program does not require a landlord to forbear from insisting on adequate security for its lease, including a two-month security deposit, or on reasonable provisions for its termination, and that nothing in the statute requires landlords to accept tenants who may be unqualified because of poor rental history, credit or references./5/

Finding that the issue is one of statutory interpretation--namely, a determination as to the scope of the statute--the court conceded that the statute does not speak directly to the issue of whether a landlord must adhere to the terms of the Section 8 lease or whether the use of its own lease constitutes a defense to the statute’s antidiscrimination mandate. The court, therefore, turned to the statute’s legislative history to discern the Legislature’s intent. Finding ample legislative history that the statute was intended to protect recipients of Section 8 assistance from discrimination by landlords who sought to exclude them from their housing, the court concluded that to allow a landlord to avoid the statute by recognizing an exception for those landlords who refused to use the required Section 8 lease would eviscerate the basic protection envisioned by the statute.

It would lead to the unreasonable result that while the legislature mandated that landlords may not reject tenants because their income included section 8 assistance, the legislature at the same time also intended that landlords might avoid the statutory mandate by refusing to accede to a condition essential to its fulfillment. Such a result is untenable."Statutes are to be construed in a manner that will not thwart [their] intended purpose or lead to absurd results . . . ."/6/

In reaching this conclusion the court rejected the trial court’s expression of doubt that the Connecticut Legislature was unaware of the Section 8 program’s regulatory requirements, which mandated the use of a uniform lease, and that it therefore could not have intended to bring those requirements within the scope of the antidiscrimination statute. To the contrary, the court found that the Connecticut Legislature was quite familiar with the Section 8 program because it modeled a pilot program after the federal program in 1995, and made it permanent two years later in 1987. The fact that the Legislature enacted the anti-discrimination statute four years after first enacting the state subsidy program and only two years after making it permanent, led the court to conclude that the Legislature’s knowledge of the Section 8 program and its regulations informed the legislature’s decision to adopt the prohibition of discrimination on the basis of lawful source of income./7/

Moreover, the court found reinforcement for its conclusion from the fact that on two occasions the legislature rejected proposals that would have explicitly allowed landlords to reject Section 8 residents on the ground that they did not want to execute the Section 8 lease. It stated, "[ i]n choosing not to enact this exception to the antidiscrimination mandate, the legislature was aware of the commission’s policy and practice of interpreting the [statute] as requiring landlords to use section 8 leases for section 8 tenants."/8/

The statutory prohibition against discrimination on the basis of lawful source of income contains an exception which provides that "[t]he provisions of this section with respect to the prohibition of discrimination on the basis of lawful source of income shall not prohibit the denial of full and equal accommodations solely on the basis of insufficient income."/9/ The landlord argued that its practice of requiring any potential tenant to have weekly income that approximates or equals the amount of the total monthly rent fell within that exception, thus protecting it against prosecution under the statute. The trial court agreed, finding that the applicant’s income was insufficient and that even though the requirement resulted in the disqualification of all low-income tenants, the express terms of the statutory exception made the conduct legal. The trial court concluded that the statutory rule "is not to protect all low-income groups, or a particular subset within the low income group, but to protect all groups from discrimination based on source of income."/10/

Relying on its interpretation of the meaning of the phrase "insufficient income" and its proper application to the instant case, the Connecticut Supreme Court disagreed and reversed the trial court’s opinion. Like the trial court, the Connecticut Supreme Court found no legislative history to define the term "insufficient income" and to explain the facial inconsistency between making it mandatory for landlords to accept low income section 8 tenants and making it permissible to reject tenants with insufficient income. Unlike the trial court, however, the Supreme Court did not agree that the Legislature left the determination to the business discretion of the property owners. Thus, the court chose to construe the phrase in terms of the remedial statute’s overall purpose. In so doing, the court found that it had to pay particular attention to the societal problem that the legislature sought to address while being mindful that in the absence of legislative guidance it was not free to simply designate an independent numeric value as determinant of what constitutes sufficient income. The court observed:

That it would be inconsistent with the remedial mandate of [the statute] for the legislature to have afforded to landlords carte blanche authority to define the term ‘insufficient income’ so as to qualify for the exception. . . . Such a construction would swallow the statute whole and render it meaningless. We have long held to the rule that statutory exceptions are to be strictly construed. In light of the remedial nature of the statute, we are not persuaded that the legislature contemplated such a hands-off approach./11/

Finding that in its common meaning the word "sufficient" is a relative term meaning "[a]dequate, enough, as much as may be necessary, equal or fit for end proposed, and that which may be necessary to accomplish an object,"/12/ the court decided that it must consider the meaning of the term with respect to the need or purpose that the income is to serve. It concluded that the reasonable need or purpose that the Legislature would likely have considered would be the sufficiency of the tenant’s income to meeting his or her own financial obligations to the landlord, ordinarily the tenant’s own periodic rental obligation./13/

Thus, the court construed the statute narrowly to afford the landlord the opportunity to determine whether, for reasons extrinsic to the Section 8 housing assistance calculations, a potential tenant lacks sufficient income to give the landlord reasonable assurance that the tenant’s portion of the stipulated rental will be paid promptly and that the tenant will undertake to meet the other obligation implied in the tenancy. According to the court, the statutory exception does not prescribe a single methodology for making such a determination, and in that respect, as the trial court held, leaves room for discretion to be exercised by the landlord. It does contemplate, however, that in accordance with the statute’s anti-discrimination mandate, any method adopted by the landlord must be applied consistently with respect to all potential tenants./14/

In reaching this conclusion, the court explicitly rejected the argument that because Section 8 payments are calculated with the expectation that the prospective tenant will have sufficient income to cover the personal share of the rent, the tenant’s income will never fall within the "insufficient income" exception./15/

Applying its definition of insufficient income to the instant case, the court disagreed with the trial court’s acceptance of the landlord’s business judgement as the basis for finding that the statutory exception applied to the two Section 8 applicants. In both cases, the court calculated that the applicant’s weekly income greatly exceeded the applicant’s personal rent obligation to the landlord. Nonetheless, because the court accepted the underlying characterization of the nature of the landlord’s income requirement and because the landlord’s business judgement or good faith had not been questioned, it concluded only that the landlord had not demonstrated that the two applicants had insufficient income to qualify them as tenants in the defendant’s property and that the landlord should be accorded an opportunity to make such a showing, if it can, before the trial court. Therefore, the court remanded the case for a new trial on the narrow issue whether the defendant can establish that the applicants were denied access to its rental property because they had insufficient income within the statutory exception. On remand the court emphasized the burden of showing insufficient income lies with the landlord and the trier of fact. In determining whether the landlord had met its burden, the trial court may consider criteria that include the potential tenant’s income, personal rental obligation, foreseeable utility expenses and foreseeable liability for other than ordinary wear and tear. It warned, however, that the defendant may not rely solely on Section 8 eligibility as a basis for denial and not apply more stringent income requirements to Section 8 rental applicants than to others. Moreover, the court warned that even if the landlord demonstrably treats all applicants the same, its facially neutral conduct is not sufficient to shield it under the statute if such neutral conduct has a disparate impact on potential Section 8 applicants./16/

Two dissenting opinions were filed in the case. One by the Chief Justice, which was joined by Justice McDonald who also wrote a separate dissent. The Chief Justice disagreed with the court’s conclusion that the statute prohibited discrimination on the basis of an insufficient amount of income. Relying on excerpts from statements made by legislators during consideration of the statute, the Chief Justice argued that the Legislature merely intended to protect against discrimination based on source but not amount of income.

The Chief Justice also argued that the case should have been decided using the same framework that is used in deciding federal fair housing and employment discrimination cases and that given the facts of the case the appeal should have only required the type of analysis applied in disparate treatment types of cases. Applying that analysis to the facts, the Chief Justice concludes that the evidence does not support a finding that the defendant landlord discriminated against the Section 8 applicants for impermissible reasons and therefore did not violate the statute.

In a separate and harshly critical dissent, Justice McDonald contended that there is no violation of the statute every time a landlord declines to accept a lease dictated to the landlord by the tenant’s income source, whether the source is a public assistance program, a spendthrift trust or some other benefactor of the tenants:

If the legislature wished to impose on all landlords of this state a requirement that they accept all the lease term required by a tenant’s source of income, it simply could have said so. It did not. The legislature’s addition of the language "lawful source of income" was not intended to turn every property in this state into a government regulated and "lease controlled" rental facility./17/

Justice McDonald characterized the majority’s decision as revolutionary both in terms of property as well as the fundamental law of American government. Justice McDonald accused the majority of legislating and thereby violating the Separation of Powers Doctrine and fostering bad

public policy. Pointing to New York City’s experience with rent control, which, according to Justice McDonald, brought about the urban decay of an unprecedented number of units, Justice McDonald predicted that the decision will have a negative effect upon investment in decent rental units in Connecticut because rent control could be yet another lease term mandated by a tenant’s income source. Justice McDonald questioned whether the legislature could have intended such a result in Connecticut. Justice McDonald further stated:

[t]he very implementing of statewide lease control by court fiat fails to recognize the basic American rights to property and freedom. The freedom to own and control private property is fundamental to freedom. As Harvard professor Richard Pipes concludes from his study of the failed Soviet system and other totalitarian systems, "[p]roperty is an indispensable ingredient of both prosperity and freedom."/18/

Lastly, Justice McDonald viewed the majority opinion as requiring landlords to either lease properties on terms dictated by the Section 8 program or not to lease them at all and likened the results to a taking without just compensation.

Notes

1    Conn. Gen. Stat. § 46a-64c(a)(1) and (2).

2    See, e.g. Franklin Tower One v. N.M., 157 NJ 602, 622, 725 A.2d 1104 (N.J. 1999).

3    Commission on Human Rights and Opportunities v. Sullivan Associates, ___ A.2d___, 250 Conn. 763, ___, 1999 WL 810,644, Slip op. at 10 (Conn. 1999) (hereinafter all cites will be to the slip opinion only).

4    Current law no longer requires a standardized lease, although leases must conform to certain standards. See 24 C.F.R. § 982.308 (1998).

5    Slip op. at 11-12.

6    Id. at 12 (citation omitted).

7    Id. at 14.

8    Id. at 15.

9    Conn. Gen. Stat. § 46a-64c (b)(5).

10    Slip op. at 17.

11    Slip op. at 18-19 (Citation omitted).

12    Id. at 19.

13    Id.

14    Id.

15    Id.

16    Id. at 22.

17    Id. at 30.

18    Slip op. at 31.