The Situation:
Certain covered dwellings that are not designed or constructed in strict compliance with the Fair Housing Act are increasingly subject to suit, with strict liability befalling developers, designers, and contractors alike. In fact, contractors are strictly liable for FHA violations even if they correctly follow a designer’s noncompliant drawings. Further, courts across America are consistently holding that potentially liable parties cannot sue each other for alleged contribution toward an FHA defect, which enhances exposure for those sued directly by FHA protected class members. Needless to say, the financial risk for FHA noncompliance is grave.
FHA Coverage:
The FHA applies strict liability to developers, designers, and contractors who participate in the design or construction of a covered dwelling. Under the FHA, each participant in the design and construction of covered dwellings has an independent obligation to comply with the FHA. The term "covered dwelling" is construed broadly and applies to points of access in popular mixed-use commercial, retail, and residential properties.
Those held liable for FHA non-compliance risk more than a "slap on the wrist." Rather, FHA damages include (1) the cost to rebuild a covered dwelling; and (2) the prevailing party’s attorney’s fees. Thus, developers, architects, engineers, and contractors must take caution and ensure their own compliance with the FHA.
Devoted FHA Enforcers:
The National Fair Housing Alliance (the "Alliance") is "dedicated solely to ending discrimination in housing" and consists of an impressive "consortium of more than 220 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States." Alliance backers include Jesse Jackson of the U.S. House of Representatives, musician Bruce Hornsby, NAACP Chairman Julian Bond, and actor Ed Asner. In short, the Alliance is sophisticated, well-funded, and dedicated to FHA compliance.
The Midwest has a special connection to the Alliance. Jim McCarthy is the current Alliance Executive Committee Chair. McCarthy also heads the Miami Valley Fair Housing Center, which is centrally located in Dayton, Ohio. McCarthy’s team is well-versed in FHA law and has the ability to select and sue any developers, architects, engineers, or contractors they believe to be responsible for alleged FHA neglect.
No Indemnity or Contribution Amongst Potentially Liable Parties:
Notably, the statutory scheme of the FHA and Congress’ intent prohibit any claim–no matter how it is couched–for indemnity or contribution between designers and constructors on a project. Therefore, if the Alliance sues a developer, but the developer’s principal contractor is responsible for a FHA defect, the developer cannot offset its damages by way of indemnity or contribution from its principal contractor. In other words, if the Alliance does not sue the principal contractor directly, the developer has no means by which to add the principal contractor to the lawsuit to remedy the defect.
The "Solution":
Developers, architects, engineers, and contractors would be prudent to assume that the Alliance will carefully inspect all aspects of a project covered by the FHA. Anticipatory measures should include educating relevant personnel, including project managers, risk teams, foremen, and designers, of FHA requirements. The U.S. Department of Housing and Urban Development’s Fair Housing Act Design Manual is an excellent (and free on-line) starting point for FHA compliance. For those failing to institute protective measures, the penalty could be quite harsh.