Developers and owners of multifamily housing nationwide continue to battle fair housing lawsuits brought by representatives of people with disabilities. Most recently, Ballard Spahr lawyers in Las Vegas argued to an en banc hearing of the U.S. Court of Appeals for the Ninth Circuit that suits not filed within two years of completion of a multiunit project should be barred for not being brought in a timely manner.

The full, 11-judge panel convened March 25 to rehear Garcia v. Brockway¸ a case that could affect every multifamily development, including apartments and condominiums, built since 1991. After its initial hearing in September, the court ruled, 2-1, that a suit alleging discrimination in design and construction under the Fair Housing Act (FHA) must be brought within two years of the issuance of the final certificate of occupancy.

Plaintiffs' attorneys, who want the statute of limitations to start running from the time a disabled person encounters a violation, petitioned for the en banc rehearing by the full court. Under their theory, liability would not end until a dwelling is brought into compliance with the FHA. In recognition of the importance of the issue, the court rescinded its earlier opinion and rescheduled a hearing before the 11-judge panel. Numerous national organizations weighed in on both sides of the issue by filing friend of the court briefs. The court is not expected to file its opinion for nine to 12 months.

If lawyers for the disabled have their way, current and past owners of multifamily projects, along with the architects, engineers and contractors, will face unending liability. Suits demanding damages, retrofitting and attorneys' fees would be permitted for projects built since the implementation of the FHA amendments in 1991. Even past project owners who have sold their interest would continue to face liability. The defendant in the Garcia case, for example, retains only a minority interest in the property he sold in 2001.

According to representatives of the multifamily housing industry, so-called testers from advocacy groups and government agencies are scouring multifamily housing developments for violations of the FHA rules. For example, they are looking for dwellings that violate FHA's standards for door width, curb cuts and bathroom accessibility, among other violations, and are often demanding cash settlements, as well as substantial corrective work, which does not necessarily eliminate subsequent suits by other plaintiffs.

The trend of targeting projects for FHA violations is reminiscent of the beginning of the construction-defect era, and fears have been expressed about the potential for a litigation boom against deep-pocket defendants. Such a wave of litigation may have already started with the 10 federal cases brought in recent years in the Washington, D.C., area by an advocacy group, the Equal Rights Center (ERC), against major national multifamily developers and REITs for thousands of properties across the country.

Las Vegas partner Joshua Reisman successfully defended the developer before the court in September and returned to defend against the challenge in the Ninth Circuit last month. Las Vegas partners Bill Curran and Stanley Parry are working with him on the case. Assisting them is Baltimore partner Michael Skojec, who frequently represents developers in FHA cases nationwide, including defending two of the ERC cases.


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