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Jones v. Baecker

Court of Appeals of Wisconsin, District III

December 28, 2016

Girard Jones and Lindsay Jones, Plaintiffs-Appellants-Cross-Respondents,
John Baecker, Defendant-Respondent-Cross-Respondent-Cross-Appellant, West Bend Mutual Insurance Company, Intervenor-Respondent-Cross-Appellant-Cross-Respondent.

         APPEAL and CROSS-APPEALS from a judgment of the circuit court for Eau Claire County, Cir. Ct. No. 2013C238 WILLIAM M. GABLER, SR., Judge. Affirmed in part; reversed in part.

          Before Stark, P.J., Hruz and Seidl, JJ.

          HRUZ, J.

         ¶1 Girard and Lindsay Jones appeal a judgment dismissing their state and federal disparate treatment housing discrimination claims against John Baecker. The Joneses' race discrimination claims rest principally on Baecker's explicit identification of Girard as "African American, " and the Joneses' family status discrimination claims rest principally on Baecker's stated belief that the Joneses' desired rental unit was too small to accommodate their six-person family. We conclude the circuit court properly granted summary judgment to Baecker because no reasonable fact finder could conclude, on this record, that race or family status was a substantial factor motivating Baecker's refusal to rent to the Joneses. Accordingly, we affirm the circuit court on this issue.

         ¶2 West Bend Mutual Insurance Company cross-appeals the circuit court's determination that the complaint's allegations triggered its insurance policy obligation to defend Baecker against the Joneses' intentional discrimination claims. We agree with West Bend: the allegations, analyzed in light of the relevant case law, did not trigger West Bend's duty to defend Baecker against the Joneses' claims because Baecker's refusal to rent to the Joneses was not an "occurrence" (i.e., an "accident") under the relevant policy language. We reverse the circuit court on this issue. Given our conclusion that West Bend had no duty to defend, we need not decide the issue raised in Baecker's cross-appeal regarding when West Bend's defense obligations were triggered.


         ¶3 This case arises out of the Joneses' efforts to obtain rental housing in June of 2011. Lindsay is white; Girard is African American. The Joneses are married and have two children together. Additionally, Girard has two children from previous relationships. Three of the children live with the Joneses full time. The remaining child has a visitation schedule during weekends and the summer.

         ¶4 Between 2008 and September 2011, the Joneses lived in a rental property on State Street in Eau Claire. In March 2011, the Joneses began looking for another rental property. According to Lindsay, they focused their search on three-bedroom rentals in an area that would allow their children to continue attending Putnam Heights Elementary School. The Joneses did not find many locations available that met these criteria, and although they contacted ten to twenty landlords, they did not view any of those properties.

         ¶5 On June 14, 2011, Lindsay met a woman who rented from Baecker and noticed the woman's address was on Kari Drive in the Putnam Heights area. The woman mentioned a potentially suitable vacant unit next to hers, and she provided Lindsay with Baecker's contact information. Lindsay testified she called Baecker right away from work. The telephone conversation between Lindsay and Baecker is the only contact the Joneses and Baecker had prior to this lawsuit, and it is central to the Joneses' discrimination claims. Lindsay's and Baecker's accounts of that conversation differ somewhat, although not materially.[1]

         ¶6 Lindsay testified at her deposition that at the beginning of the conversation, Baecker inquired about her family size. Lindsay informed him that there were four children and two adults in the family. Lindsay testified:

And I explained to him that some of the children aren't always there all the time, but two, three of them are there permanently. And he said that it was too many children for his unit, so then I said, Well, I was under the impression that it was a three bedroom, and he said it was. And so I explained my situation, why I was looking because of the situation with the house.

         When asked at her deposition to explain exactly what was said during the telephone conversation, Lindsay stated Baecker began asking questions about the Joneses' then-current living situation:

[I told him t]hat we lived in a house that was being foreclosed on. There was a catastrophe in the home with the roof, and so we were actively looking and it was urgent. So I was really interested in trying to find a place, especially within that district. Kari Drive would have been perfect. I specified that we lived on the corner of State and Hamilton, and he said that he knew of that house and that we were complete pigs. I was a little taken aback by that. And he had mentioned that he had seen a dumpster there and garbage all over the place, a complete eyesore.[2]
And then he made mention to me that, Oh, you're the one with the African American boyfriend. And I said, Well, actually, that's my husband, and we're a family. And then he said that, He must not do anything around there, and laughed, had a chuckle about it, and then went back to the fact that, Well, it was just too many kids, too big of a family for his unit size.

         Lindsay explained that after hearing these statements, she was not interested in continuing the conversation, politely said "thank you, " and hung up the telephone. The Joneses later moved to a property in the Longfellow Elementary School area.

         ¶7 Lindsay admitted she did not seek an application from Baecker or ask to view Baecker's rental property on Kari Drive, explaining that she would not have done these things only to have Baecker "continue to laugh at me or continue to call us pigs." She also acknowledged Baecker never told her he would not rent to the Joneses because of Girard's race, but she interpreted Baecker's reference to Girard's race as a "racial comment." Lindsay agreed with the notion that Baecker articulated three specific concerns during the conversation: (1) his inability to accommodate a family the size of the Joneses'; (2) his impression that the Joneses had failed to maintain and keep clean the State Street rental; and (3) his repeated observations of toys strewn throughout the yard at that location.

         ¶8 At his deposition, Baecker discussed his history as a landlord and his general rental practices. Baecker has been a landlord for thirty-nine years and owns twenty-nine rental properties. He testified the first thing he does with any rental inquiry is ask for the anticipated number of occupants: "how many children do you have and, you know, are you single or are you married?" He then usually asks who was the previous landlord and the prospective tenant's reasons for moving, as well as whether any of the prospective tenants might present safety risks. Typically, an interested party would ask to see the property, and Baecker would provide an application upon request.

         ¶9 Baecker testified regarding Lindsay's phone call to him in June 2011. He had never spoken with either of the Joneses prior to that call and, though he knew of the Joneses based on observing them as he traveled by their State Street rental, he did not know specifically who they were. Baecker testified that when Lindsay told him her family size, it was clear to him "there's just too many people, it's not going to work." The Kari Drive location Lindsay was inquiring about was a "fourplex, " which Baecker described as a single property consisting of four units.

         ¶10 Baecker believed the units in the Kari Drive property were unsuitable for a six-person family both because of the size of the units and because of his concerns regarding population density on the property as a whole. Baecker averred he has never rented a Kari Drive unit, or a unit with a similar number and size of bedrooms, to more than four people at any one time. Baecker testified:

I made the decision based on protecting the property and the other tenants because … you would be overrun if you had that many people in there. It's a landlord decision. It's my decision. I'm the owner. …
So to protect my property, the value of it, and make life good for the tenants that are there, I don't let more than four people in because they're back-to-back fourplexes. Like I said, that would be 48 people, [3] and they're sharing a common [blacktop] driveway. … And this unit that they were looking [at] … doesn't even have a yard. So it is just not going to work.

         He was unaware it is unlawful to refuse to show a property based on family status.

         ¶11 Baecker also discussed his earlier belief that the City of Eau Claire Housing Code (the "housing code") requirements prohibited him from renting to a family the size of the Joneses'. As Baecker now concedes, the relevant housing code provision requires a bedroom occupied by two people have at least 100 square feet, which all bedrooms in the unit at issue apparently satisfied.[4] At his deposition, Baecker stated that he did not believe the housing code provision (whatever its square-footage requirements) applied to single-family rental units.[5]As a result, Baecker testified he generally applied a 120-square-foot-per-shared-bedroom rule to protect his properties. It is undisputed that this was Baecker's policy and not a regulatory requirement.

         ¶12 Baecker testified extensively regarding his knowledge of the Joneses' prior residence on State Street. Baecker testified he drove past the State Street location frequently. Baecker stated he observed "toys and junk and garbage every day." Baecker felt the State Street property was "disgusting." He disputed, however, that he had called the Joneses "pigs"; rather, he testified he told Lindsay the Joneses kept their State Street residence like a "pigsty."

         ¶13 Baecker acknowledged mentioning Girard's race during the conversation with Lindsay. He testified that he saw Girard at the State Street residence "all the time, " and that, after Lindsay mentioned where she lived, he asked her, "Is that African American, is that your husband or your boyfriend?" Baecker stated this question had nothing to do with race; he wanted to know whether Lindsay and Girard were married, and he used the term "African American" merely to identify Girard. Baecker also acknowledged that his comments about the State Street rental's condition came after he mentioned Girard's race. Baecker stated he was aware it was unlawful to discriminate on the basis of race.

         ¶14 Lindsay filed a written complaint with the Wisconsin Department of Workforce Development Equal Rights Division (the "Division"), in which she recounted her conversation with Baecker and asserted he "made [her] feel that there was no way he would rent to me because my husband is black and we have 4 children." The Division is vested with statutory authority to investigate alleged violations of Wisconsin's Open Housing Law, which is codified in Wis.Stat. § 106.50, and it may issue a charge if it concludes probable cause exists to believe that unlawful discrimination has occurred. See W . S . § 106.50(1s), (6)(c). [6] is tat

         ¶15 On March 25, 2013, the Division concluded there was probable cause to believe Baecker violated Wis.Stat. § 106.50 by refusing to permit inspection of housing because of race and family status. Citing a Milwaukee County Circuit Court decision from 1982, the Division explained that race need only be a "partial motivation" for the housing decision. The Division observed that, here, it was "unclear whether avoidance or refusal to show the apartment was because of race, but likely that race was a factor because of explicitness and apparent context." Baecker's statements bore these qualities, the Division stated, because of his "explicit reference to [the] race of the husband, to a biracial couple by implication, and to protected family status as a family with children."

         ¶16 When the Division issues a discrimination charge, any party may elect to have the claims asserted in that charge decided in a civil action in lieu of an administrative hearing. See Wis. Stat. § 106.50(6)(c)2m. Baecker made such an election, and the Joneses filed the present action in Eau Claire County Circuit Court on April 18, 2013. The Joneses advanced claims for violations of § 106.50 and 42 U.S.C. § 3604, [7] the latter of which is part of the federal Fair Housing Act (FHA). The basis for these state and federal claims was the same: that Baecker had discriminated against the Joneses based on Girard's race and their family status. Baecker denied these allegations.

         ¶17 West Bend had issued to Baecker a general business liability insurance policy effective between January 2011 and January 2012. On April 16, 2014, Baecker's attorney sent a letter tendering defense of the Joneses' lawsuit to West Bend. Approximately one month later, West Bend filed a motion to intervene in the Joneses' action against Baecker. West Bend also requested that the circuit court bifurcate the coverage issue from the merits of the Joneses' action and stay litigation on the merits until the coverage issue was resolved. Neither the Joneses nor Baecker opposed these matters, and the circuit court granted West Bend's motions to intervene, stay and bifurcate.

         ¶18 Despite the stay, Baecker filed a summary judgment motion on the merits. He argued he was entitled to summary judgment because: (1) the Kari Drive apartment was too small to accommodate the Joneses' family, and the housing code prohibited him renting to them; and (2) Baecker would not have rented to the Joneses had they applied because he would have discovered Girard's criminal history and a negative reference from one of their previous landlords.

         ¶19 Five days after Baecker filed his summary judgment motion, West Bend filed a motion for declaratory judgment on the coverage issue. On January 7, 2015, the circuit court denied West Bend's motion and concluded West Bend had a duty to defend Baecker from that date forward. Baecker then filed numerous letter briefs and a "Motion to Amend And/Or Relief From Judgment, " all of which asserted that West Bend's duty to defend commenced at the time of Baecker's tender, on April 16, 2014. The circuit court rejected this argument and entered an order denying Baecker's motion.

         ¶20 Meanwhile, prompted by Baecker's summary judgment motion, the Joneses and Baecker continued litigating the merits of the action. The Joneses filed a response brief in opposition to the summary judgment motion in August 2014. They argued Baecker was not prohibited from renting to them by virtue of the housing code and his reliance on the housing code, as well as his discovery of Girard's criminal history and the negative landlord reference, were after-acquired evidence that affected only the damages available to the Joneses and did not bar their action. In reply, Baecker asserted the Joneses had failed to present evidence sufficient for a reasonable fact finder to conclude he had refused to rent to them on an impermissible basis.

         ¶21 The circuit court granted Baecker's summary judgment motion. Viewing the summary judgment materials in the light most favorable to the Joneses, the court concluded there were no material issues of disputed fact. The court deemed it "apparent [Baecker] decided he was not interested in renting to [the Joneses] because of the number of children in the family." The circuit court found "no persuasive legal authority suggesting a landlord is prohibited from making an individualized determination as to whether or not his/her rental premises are suitable in size or condition for [the] prospective tenants['] proposed use." The court stated Baecker's "gratuitous comments" to Lindsay were "rude, crude, boorish and perhaps even racist, " but it determined race could not have been the basis for Baecker's decision because "as Lindsay's story unfold[ed] in her deposition, it is clear [Baecker] decided not to rent" to the Joneses before he realized he knew where the Joneses previously lived and Girard's race.[8]

         ¶22 The Joneses appeal, asserting the circuit court erroneously granted Baecker's summary judgment motion and dismissed their housing discrimination claims. West Bend cross-appeals, asserting the circuit court erroneously concluded it had a duty to defend Baecker. Baecker also cross-appeals, asserting West Bend's duty to defend arose at the time of Baecker's defense tender.


         ¶23 We review a grant of summary judgment de novo using the same methodology as the circuit court. Water Well Sols. Serv. Grp. v. Consolidated Ins. Co., 2016 WI 54, ¶11, 369 Wis.2d 607, 881 N.W.2d 285. We first examine the moving party's submissions to determine whether they sufficiently establish a prima facie case for summary judgment. Palisades Collection LLC v. Kalal, 2010 WI.App. 38, ¶9, 324 Wis.2d 180, 781 N.W.2d 503. "If they do, then we examine the opposing party's submission to determine whether there are material facts in dispute that entitle the opposing party to a trial." Id. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis.Stat. § 802.08(2).

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