After years of litigation, IADU Table Mound MHP and Impact MHC Management, LLC, who own and manage manufactured home communities in Iowa and elsewhere, were vindicated by an Eighth Circuit Court of Appeals decision in which the court held that landlords are not required to accept Section 8 vouchers as a requested reasonable accommodation to a tenant’s disability. In doing so, the Eighth Circuit Court of Appeals reversed the 2021 ruling entered by an Iowa federal district court. With its decision, the Eighth Circuit joined the Second and Seventh Circuits in their approach on the fair housing question at issue.
The background, case history and summary of the Eighth Circuit Court of Appeals’ opinion are below.
Facts of the Case
The plaintiff, Suellen Klossner, is a tenant at a manufactured home community in Dubuque, Iowa, that is owned by IADU Table Mound MHP and managed by Impact MHC Management, LLC (jointly, Impact). Iowa Legal Aid filed the lawsuit on Klossner’s behalf. Impact is represented by Jodie McDougal and Bridget Penick of Fredrikson along with Abbey Furlong and David Waterman of Lane & Waterman.
At one point in her tenancy, Klossner informed Impact that she needed to start using Section 8 vouchers to pay her rent and asked Impact to accept her Section 8 vouchers. Like many Iowa landlords, Impact’s policy is that it does not accept Section 8 vouchers from its Iowa tenants, due to, among other things, the financial and administrative burdens as well as the lease amendments that come with a landlord’s acceptance of Section 8 vouchers. Thus, Impact declined Klossner’s request.
In the litigation, Klossner asserted that Impact must waive its no Section 8 voucher policy and accept her Section 8 vouchers as a reasonable accommodation for her disability. Klossner’s claims included that she was unable to work because of her disability, thereby resulting in her need for Section 8 vouchers to cover her rental payments. Thus, Klossner claimed that Impact had violated the Fair Housing Amendments Act (FHAA) by refusing to accept her Section 8 voucher as a reasonable accommodation for her disability, despite the fact that the Section 8 program is a voluntary program.
Lower Level Decision
At trial, the district court found in favor of Klossner on her FHAA claim, contrary to the decisions reached by the Second Circuit (Salute) and Seventh Circuit (Hemisphere) of the United States. The district court concluded that Impact was legally required to accept Klossner’s Section 8 vouchers—that is, Impact was legally required to sign the HAP Contract with the government and agree to the additional lease terms and obligations imposed under the Section 8 program—to accommodate Klossner’s disability.
Legal Questions and Impact’s Arguments on Appeal
Impact appealed the decision to the Eighth Circuit. The appeal involved two overarching legal questions.
The first question is whether a landlord’s forced acceptance of a Section 8 voucher can even be considered a reasonable accommodation for a disability under the FHAA. There is a Circuit split on this question, with the Second Circuit and Seventh Circuit concluding that courts cannot force landlords to accept Section 8 vouchers as an accommodation for a tenant’s disability. Only the Ninth Circuit’s decision (Giebeler) could be interpreted as supportive of Klossner’s position.
On this question, Impact’s position was that, based on the relevant case law, the forced acceptance of a Section 8 voucher was not a reasonable accommodation under the FHAA as a matter of law. Instead, landlords should have the choice of whether or not they want to participate in the voluntary Section 8 program.
The second question was one of reasonableness. Specifically, even if the court concluded that landlords have an obligation to consider a Section 8 voucher as a means of accommodating a tenant’s disabilities (which Impact maintained it did not), was is the requested disability accommodation—that is, the acceptance of the Section 8 housing voucher—“reasonable” and “necessary to afford a disabled person the equal opportunity to use and enjoy a dwelling,” as required under the FHAA?
On this second question, Impact’s position was that the requested accommodation was not reasonable because of the substantial administrative and financial burdens it entails and because it would impose a fundamental alteration to the nature of Impact’s leases and rental policies. Among other things, when accepting a Section 8 voucher, the landlord is forced to sign an additional contract with the government, called the Housing Assistance Payments Contract or HAP Contract. The HAP Contract requires, among other things, additional “for cause” termination requirements, thereby eliminating a landlord’s right to not renew a lease; required government inspections of the leased premises; and extra administrative work and costs. There are also inefficiencies in recordkeeping, tracking multiple rental payments, imposing late fees, raising rents and enforcing rules. Finally, the landlord is forced to enforce two (in several ways, conflicting) leases, i.e., the HAP Contract and Impact’s lease.
The Eighth Circuit Opinion
In its April 10, 2023, opinion authored by Judge Colloton, the Eighth Circuit vacated and reversed the district court judge’s ruling that Impact must accept Klossner’s housing choice voucher as an accommodation of her disability. (Klossner v. IADU Table Mound MHP, LLC, and Impact MHC Management, LLC, Case No. 21-3503 at p. 8 (8th Cir. 2023)). Instead, the Eighth Circuit held that the FHAA requires only reasonable accommodations that directly ameliorate the effect of a handicap/disability and that the FHAA does not require reasonable accommodation of a disabled tenant’s economic circumstances that result from a handicap/disability. Accordingly, acceptance of a housing choice voucher is not a reasonable accommodation under the FHAA.
Specifically, the court looked to case law that was decided under the FHAA’s predecessor statute (the Rehabilitation Act) in concluding that there is no duty to accommodate the financial hardship related to a handicap/disability, holding as follows:
Consistent with the regulation promulgated under the Rehabilitation Act, these decisions called for accommodations that provided what one court later described as the “direct amelioration of a disability’s effect.” Nothing in the law suggested that the duty of “reasonable accommodation” extended to the dissimilar action of alleviating downstream economic effects of a handicap. When Congress adopted the FHAA in 1988, therefore, it acted against a background understanding that the concept of a “reasonable accommodation” was so limited.
Id. at p. 8.
This is a great decision for landlords in Iowa, the Eighth Circuit and elsewhere in the nation, as the Eighth Circuit is clear that acceptance of a housing choice voucher is not a reasonable accommodation per se under the FHAA. Additionally, the Eighth Circuit aligned with the prior rulings from the Second Circuit in Salute (1998) and the Seventh Circuit in Hemisphere (1999) that reached the same result. In addition, the Eighth Circuit importantly discussed the U.S. Supreme Court’s more recent ruling in Barnett (2002) that Klossner and the district court relied on in calling into question the holdings of Salute and Hemisphere. The court went so far as to state that “the Ninth Circuit in Giebeler…overstated the meaning of Barnett by presuming that it dictates the ambitious interpretation of the FHAA that was rejected in Hemisphere and Salute, despite what Giebeler termed the “facial appeal” of those decisions.” Id. at p. 11.
In Closing
Landlords with fair housing concerns or questions about anything addressed in this article should seek advice from Jodie McDougal at jmcdougal@fredlaw.com, Bridget Penick at bpenick@fredlaw.com or their Fredrikson relationship attorney. Updates will be given if the plaintiff appeals.
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