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Victims of housing discrimination have a direct claim on the personal assets of business owners and officers whose employees were at fault and need not go through the usual hurdles to pierce the corporate veil, the 9th U.S. Circuit Court of Appeals ruled on July 31. The decision in Holley v. Crank, No. 99-56611, opens the way for a mixed-race couple and a homebuilder to seek compensation under the Fair Housing Act (FHA) from the founder of a realty agency, if they can prove that he was still owner and president when one of its agents allegedly discriminated against the couple. David Meyer, the founder of Triad Realty in Twenty-Nine Palms, Calif., will not be allowed to plead that he was unaware that the agent, George S. Crank, referred to the couple as a “salt and pepper team” and refused to present their offer to the homebuilder, Brooks Bauer. Reversing a district judge’s grant of summary judgment in favor of Meyer, the court found that the FHA imposes on owners and officers a duty that cannot be delegated to subordinates. While that might seem “harsh punishment on an otherwise innocent employer,” the court found that result “preferable to leaving the burden on the innocent victim.” For guidance in interpreting the FHA, the court looked to Housing and Urban Development (HUD) regulations, decisions of other circuits that have found corporations vicariously liable for employee violations, and in particular to a 7th U.S. Circuit Court of Appeals decision — City of Chicago v. Matchmaker Real Estate Sales Center, 982 F.2d 1086 — that said a corporate officer could be made to pay out of his own pockets. Pescadero, Calif., attorney Elizabeth N. Brancart represents Bauer and the couple, Emma Mary Ellen and David Holley. She said that Bauer is seeking the $20,000 difference between the Holleys’ offer and the price he ultimately received for the house, while the Holleys have not asked for a specified amount. A specialist in FHA litigation, Brancart added that it was not unusual to find that an agent directly responsible for discrimination or an agency turn out to be judgment-proof. Douglas G. Benedon of Woodlawn Hills, Calif., who represents Meyer, said that the plaintiffs targeted his client’s “imaginary deep pockets” because an insurance company refused to indemnify Crank or Triad for Crank’s intentional act. Benedon faulted the court for giving an overly broad reading of decisions in other circuits and for relying on language that has been removed from current HUD regulations. The California Association of Realtors has expressed an interest in joining Meyer in asking the full circuit court to overturn this panel decision, he said. Meyer claims that he transferred ownership and operation of Triad to Crank in 1995, relieving him of liability for the 1996 incident at issue here. The court seemed to view that claim with some skepticism, pointing to a lack of documentation, but asked the lower court to resolve the dispute. Benedon said his client has evidence of the transfer that wasn’t presented because it was not pertinent to his summary judgment motion.

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