February 11, 2008
WILLIAM MILLER, PLAINTIFF-APPELLANT,
BROOKSIDE AT SOMERVILLE, LLC, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Special Civil Part, DC-2464-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 19, 2007
Before Judges R. B. Coleman and Lyons.
We granted leave to plaintiff William Miller to appeal from a June 1, 2007 order denying his request for emergent relief and vacating an order to show cause with temporary restraints. Plaintiff contends that defendant Brookside at Somerville, LLC:
(1) discriminated against plaintiff in violation of the New Jersey Law Against Discrimination (NJLAD), N.J.S.A. 10:5-1 to -49m, when it declined plaintiff's rental application; (2) wrongfully refused to examine plaintiff's actual credit history and failed to provide him with a reasonable accommodation; and (3) refused to examine plaintiff's credit history in violation of public policy. Those issues were not decided on the merits by the trial court, whose determination was limited to the propriety of a preliminary injunction, and after carefully considering plaintiff's arguments in light of the applicable law and the procedural posture of this interlocutory appeal, we affirm the denial of a preliminary injunction.
On April 30, 2007, plaintiff filed a verified complaint against defendant alleging that plaintiff is a participant in the Section 8 rent subsidy program, 42 U.S.C.A. § 1437f, and that defendant's refusal to rent an apartment to plaintiff violated the NJLAD, N.J.S.A. 10:5-12g(4). Based upon plaintiff's verified complaint, the court entered an Order to Show Cause with temporary restraints, dated April 30, 2007. That order required defendant to ensure that there would be an apartment of the type sought by plaintiff available in the event plaintiff was successful. It also required defendant to show cause why an order should not be entered converting the temporary restraint into a preliminary injunction requiring defendant to execute a Section 8 lease and other documents necessary to commence plaintiff's subsidized tenancy. On May 16, 2007, plaintiff filed an amended verified complaint containing additional assertions of discrimination under NJLAD, the Rehabilitation Act of 1973, 29 U.S.C. § 794, and the Fair Housing Amendment Act, 42 U.S.C. §§ 3601-3619, requiring landlords to make reasonable accommodations with regard to a disabled person.
In an oral decision accompanied by a lengthy written Statement of Reasons, the trial court vacated the April 30, 2007 Order to Show Cause and denied the requested injunctive relief because it determined that plaintiff is unlikely to succeed on the merits of his claim. On June 19, 2007, plaintiff moved for leave to appeal, which we granted on July 11, 2007.
The pertinent facts of the case are as follows. Plaintiff, a seventy-seven-year-old retiree, is blind in one eye. He receives $1,000 per month in Social Security retirement benefits and his rent is subsidized by the Section 8 rental assistance program. Prior to and apparently at the time he filed his verified complaint in this litigation, plaintiff resided in a portion of a two-family home in Somerville, as to which plaintiff's landlord brought an action for possession so that the landlord could occupy the premises in its entirety. As a result, plaintiff was seeking alternate living accommodations.
Defendant owns and operates an apartment complex that consists of over 600 units. Plaintiff applied to rent an apartment in that complex and paid defendant a processing fee in connection with his application. According to defendant's Director of Property Management, defendant processed plaintiff's application in accordance with a screening procedure that uses a mathematical formula to assess an applicant's credit history, landlord-tenant history, income and criminal background. The analysis is designed to be neutral with regard to race, gender, creed, source of income and other protected class statuses, such as handicapped. Defendant maintains that data is input into a computer program that generates a score and an "accept" or "decline" indicator. The formula is applied to all applicants uniformly, and defendant uses only the scoring system based on the mathematical formula to determine the applicant's creditworthiness and whether the applicant is approved for a rental.
Plaintiff's application score did not come within the acceptable ranges of defendant's scoring system; thus, defendant informed plaintiff, through an adverse action letter, that his application was denied. In response plaintiff attempted to obtain his credit information from the third-party reporting agency providing the adverse credit information, but he could not reach the agency. Thereafter, plaintiff obtained the assistance of the Somerset County Division of Legal Services of Northwest Jersey and at some point, he learned from defendant that his credit score was low and that his report disclosed three lawsuits with prior landlords.
Plaintiff asserts that the report, generated by the third-party reporting agency and relied on by defendant, was erroneous and unreliable. For example, the report identified three tenancy court records involving plaintiff. Plaintiff notes that he was not a party to the reported September 18, 2001 case; that the November 15, 2004 case concerned a dispute over a security deposit on which he prevailed; and that the January 25, 2007 case involved the action by plaintiff's last landlord for possession based on the landlord's desire for personal occupancy. Plaintiff emphasizes that he has never been evicted for non-payment of rent.
Plaintiff further asserts that the reported credit history is misleading. In that regard, he notes that five unpaid medical bills identified in the report totaled a mere $354 and that the referenced child support obligation is not his, but rather it is the obligation of his son who shares the same name.
Plaintiff's counsel contacted defendant and provided the aforementioned explanatory and corrective information. He also charged that defendant engaged in source of income discrimination because defendant allegedly had not considered plaintiff's Section 8 housing voucher in connection with his application. Defendant notes that contrary to plaintiff's assertion, it does not discriminate against Section 8 voucher holders as there are approximately forty tenants with Section 8 vouchers in the complex. In addition, defendant asserts that it re-evaluated plaintiff's application, adding the Section 8 subsidy to his income, but in spite of the increase in plaintiff's income that resulted from the Section 8 voucher, his score still fell short of defendant's criteria.
Plaintiff raises the following issues on appeal:
THE COURT'S DECISION IS NOT SUPPORTED BY CONTROLLING LAW AND CONSTITUTES HARMFUL ERROR.
A) DEFENDANT'S "NEUTRAL TEST" IS IRRATIONAL AND ITS REFUSAL TO RENT TO PLAINTIFF VIOLATES THE LAW AGAINST DISCRIMINATION.
B) DEFENDANT'S REFUSAL TO EXAMINE PLAINTIFF'S CREDIT HISTORY WITH REGARD TO PAYMENT OF RENT VIOLATES ITS OBLIGATIONS UNDER APPLICABLE SECTION 8 REGULATIONS AS WELL AS ITS OBLIGATION TO MAKE A REASONABLE ACCOMODATION.
C) DEFENDANT'S REFUSAL TO EXAMINE PLAINTIFF'S ACTUAL CREDIT HISTORY WITH REGARD TO PAYMENT OF RENT VIOLATES PUBLIC POLICY (NOT RAISED BELOW).
While defendant's arguments are directed at the ultimate merits of his claims, this appeal is from the trial court's interlocutory order denying injunctive relief pending the adjudication of the claims. The trial court, in exercising its discretion, found that preliminary injunctive relief was not proper because plaintiff was unlikely to succeed on the merits. See, e.g., Princeton Ins. Co. v. Profeta and Assoc., Inc., 147 N.J. 337, 340 (1997) (citing Crowe v. De Gioia, 90 N.J. 126, 132-34 (1982)). Pursuant to the four prong test of Crowe, supra, 90 N.J. at 132-33, (1) preliminary injunctive relief should not issue except when necessary to prevent irreparable harm; (2) temporary relief should be withheld when the legal right underlying plaintiff's claim is unsettled; (3) a preliminary injunction should not issue where all material facts are controverted; and (4) the relative hardship of a preliminary injunction must be considered. Ibid. Our review is limited to deciding whether the trial court properly exercised its discretion in denying the interlocutory relief sought by plaintiff. We conclude it did.
Plaintiff asserts that defendant's screening process discriminated against him based on his source of income and thereby violated NJLAD. NJLAD states that:
It shall be . . . an unlawful discrimination:
g. For the owner . . . or managing agent of . . . any real property or part or portion thereof, or any agent or employee of these:
(4) To refuse to sell, rent, lease . . . or otherwise to deny to or withhold from any person . . . any real property or part or portion thereof because of the source of the income of any lawful income received by the person or the source of any lawful rent payment to be paid for the real property . . . .
The Court has recognized that a landlord cannot refuse to accept a Section 8 voucher from a low-income tenant. Franklin Tower One, LLC v. N.M., 157 N.J. 602, 618 (1999). Thus, the Court observed, "a landlord's refusal to accept a Section 8 voucher violates both the letter and the spirit of N.J.S.A. 2A:42-100[,]" the predecessor to N.J.S.A. 10:5-12g(4)).*fn1 Ibid. Though the issue was not directly before the Court in Franklin Towers One, the Court also acknowledged that "a landlord approached by a prospective tenant eligible for Section 8 assistance has the full right to screen and review the tenant's references, background, employment and rental history to verify that the tenant is otherwise qualified to reside in the landlord's building." Id. at 622. In support of that statement, the Court referenced 42 U.S.C.A. § 1437f(d)(1)(A) and 24 C.F.R. § 982.307, which enumerated the factors that a landlord may use to evaluate a prospective Section 8 tenant. Ibid. The factors include payment of rent and utility bills and compliance with other essential conditions of tenancy. 24 C.F.R. § 982.307.
In a similar case, T.K. v. Landmark W., 353 N.J. Super. 353 (App. Div. 2001)*fn2 , a prospective Section 8 tenant, T.K., sought to compel the defendant-landlord to rent her an apartment. The defendant informed T.K. that her application was denied "due to credit" and because of her unemployment. Id. at 357. Specifically, the defendant referred to T.K.'s credit rating obtained from a consumer credit report as well as her insufficient income. Id. at 357-58. To further the argument that the defendant did not discriminate against T.K., defendant's manager certified that the rental complex housed approximately ten Section 8 families at the time of T.K.'s application. Id. at 357.
We concluded that the defendant did not reject T.K.'s application solely based on financial reasons. Id. at 362. We opined that "there [was] no doubt that the plaintiff's economic status, including her unemployment, lack of sufficient income and her participation in the Section 8 program, motivated the defendant to reject the plaintiff." Id. at 363. We further remarked that the defendant "failed to utilize any formula or uniform standards when evaluating plaintiff's creditworthiness; that determination was within the sole discretion of the manager . . . . Thus, the decision-making process was somewhat subjective." Id. at 361. As a result, we ordered the defendant to enter into a lease with T.K. Id. at 363.
Conversely, in Pasquince v. Brighton Arms Apartments, 378 N.J. Super. 588, 599 (App. Div. 2005), we determined that it was lawful for the defendant to use creditworthiness as a selection criterion for Section 8 tenants, holding that rejection of plaintiff's application based on a poor credit history did not violate NJLAD. The plaintiff alleged that the defendant rejected his lease application because he was a Section 8 recipient, not due to his lack of creditworthiness. Id. at 591. The defendant's apartment building housed more than a dozen Section 8 recipients and the defendant had a written policy to obtain credit checks on all applicants. Id. at 592. Also, the defendant had a minimum income requirement from which Section 8 recipients were exempt. The plaintiff, a wheelchair-bound individual who received social security benefits, had numerous outstanding obligations, such as unpaid medical, utility, and credit card bills, as well as a debt owed to a former landlord. Id. at 592. The defendant denied the plaintiff's application based on poor credit and informed him that he could contact the reporting agency to dispute his credit report. Ibid.
We noted in that decision that although N.J.S.A. 10:5-12 is not an exact replica of its predecessor, N.J.S.A. 2A:42-100, "it is well established that creditworthiness is a legitimate, non-discriminatory criteria which landlords are permitted to consider when evaluating prospective tenants, including recipients of Section 8 housing assistance." Id. at 595. We observed that the NJLAD was amended to codify the holding of Franklin Tower One, that landlords cannot refuse to rent to individuals solely due to the applicant's use of a Section 8 voucher. Ibid. However, we again cited relevant federal law recognizing the right of landlords to conduct background and credit checks on prospective Section 8 tenants. Id. at 596. We also observed that "both the U.S. Department of Housing and Urban Development (HUD) and the Department of Community Affairs (DCA) have published documents encouraging landlords to utilize credit checks and rental history as a means by which to screen rental applications submitted by recipients of Section 8 housing assistance." Id. at 597. Furthermore, we distinguished Pasquince from T.K., supra, noting that, unlike T.K., the record supported a finding that the defendant's assessment of the applicant's credit report and subsequent denial of plaintiff's application was proper. Id. at 600.
The facts of this case are very close to the facts of Pasquince, supra, and similarly distinguishable from T.K., supra. Unlike T.K., defendant in this case utilized a formula that was applied in a standard fashion to all prospective lessees. There is nothing in the record indicating that plaintiff's Section 8 status negatively influenced defendant's decision to reject plaintiff's application. Defendant employed the same formula to determine plaintiff's creditworthiness that it would have used with any other prospective lessee, regardless of whether the applicant had Section 8 status. As demonstrated by the above-cited cases, employing a standardized, objective check of an applicant's creditworthiness is not only proper, but recommended. Thus, the trial court appropriately concluded that defendant did not necessarily violate NJLAD when it rejected plaintiff's lease application due to plaintiff's inadequate credit score.
Plaintiff attempts to distinguish Pasquince, supra, from the present case, because Pasquince relied on "a rational analysis of the facts," whereas plaintiff contends defendant relied on an erroneous credit report and refused to examine the accuracy of the report. Essentially, plaintiff argues that defendant should "delve" into plaintiff's credit history, looking beyond the standardized score. As the trial judge indicated, there is no authority for such a proposition. Landlords are responsible for "screening and selection of the family to occupy the owner's units . . . on the basis of [the family's] tenancy history." 24 C.F.R. 982.307(2) and (3). Whether landlords must examine the validity of third-party credits checks, as suggested by plaintiff, is a fact sensitive inquiry that was understandably not fully undertaken on the Order to Show Cause entertained in this case. What the court was evaluating was the likelihood of plaintiff's success on the merits. Crowe, supra, 90 N.J. at 133. As to that preliminary assessment, we find no mistaken exercise of discretion.
If an applicant is not satisfied with the information contained in his or her credit report, one recourse is for the applicant to obtain a disclosure from the reporting agency and to dispute with the reporting agency the accuracy of the information contained in the report in accordance with the Federal Fair Credit Reporting Act, 15 U.S.C.A. §§ 1681-1681t. Another may be to join the reporting agency as a party if that is necessary to ensure a fair and complete adjudication of the issue.
On this appeal, we are not in a position to ascertain whether the credit report was, in fact, inaccurate and, if so, what effect any inaccuracies may have had on plaintiff's score. We appreciate that plaintiff argues that so long as any inaccurate information remains as part of or a basis for his credit report, it adversely affects his score. We merely comment at this juncture that the lawsuit relating to plaintiff's allegedly successful dispute over the security deposit and his landlord's action to regain possession of his rental unit for personal occupancy do not appear to pertain to the applicant's prior ability or inclination to pay rent. Accordingly, reliance on those items would provide little insight into an individual's creditworthiness. Still, this does not cause us to disturb the determination of the trial court.
First, the record does not indicate if, and to what extent, the lawsuits with prior landlords, regardless of the cause or outcome, may have actually affected plaintiff's credit score.
Second, plaintiff is essentially asking the court to assess the third-party credit agency's reporting practices and policies without joining the third-party reporting agency, First Advantage SafeRent, Inc., as a party to this litigation. Third, the trial court's decision was quite limited in nature. The court merely decided to vacate the temporary restraints pending the further adjudication of plaintiff's claims. Given the procedural position of the case, our review is similarly limited.
Plaintiff amended his verified complaint to contend that the Fair Housing Amendments Act, 42 U.S.C.A. § 3601, and the Rehabilitation Act, 29 U.S.C.A. § 701, require defendant to make an accommodation for plaintiff's application in light of his disability. Plaintiff has not, at least at this juncture, provided adequate support for that contention. Plaintiff has not articulated how defendant failed to make reasonable accommodations for him based on his disability or, for that matter, what accommodations would be reasonable or appropriate. Plaintiff's disability did not prohibit him from applying for an apartment in the same manner as any other individual. In addition, based on the previous discussion, plaintiff's assertion that defendant should have accommodated him by looking beyond his credit report is misplaced.*fn3
Finally, plaintiff argues that defendant's application process, specifically the erroneous use of lawsuit history, violates public policy. For the reasons already outlined, we are not in a position to address further either the alleged content or import of the report of the third-party credit reporting agency. As we cannot divine how the inclusion of the lawsuit history affected plaintiff's credit score, we merely affirm the limited decision of the trial court in its determination to deny injunctive relief. Because this appeal was interlocutory, our affirmance does not end the matter. The trial court is now free to explore all of the issues raised by the pleadings that it and the parties may deem appropriate. We do not retain jurisdiction.
Affirmed and remanded.