On September 30, 2010, the United States Department of Justice (U.S. Attorney's Office) filed a lawsuit in the U.S. District Court for the Southern District of New York, under the Fair Housing Act, 42 U.S.C. §3601-3619, against the developer and designer/builder of the Melar, a large apartment building on the Upper West Side of New York City. The U.S. alleged the defendants designed and constructed the Melar to be inaccessible to persons with disabilities, especially people who use wheelchairs, both in its common areas and in individual apartments. The complaint sought a declaratory judgment, injunction, money damages, and civil penalties.

The United States submitted two consent decrees a few days apart in September 2010, one with the architect and the other the developer. The consent decree with the architect included education/training for all employees; payment of a $40,000 penalty to the United States; and an injunction from discriminating against individuals on the basis of disability. The consent decree with the developer was more comprehensive. It not only enjoined the defendant from discriminating on the basis of disability, it required substantial modifications and retrofitting of the Melar--both in common and other areas--at the builder's expense. It also directed notification of all residents of the property to ensure that they would be aware of the modifications being made to the property, provided for the payment of $180,000 to individuals impacted by the building's inaccessibility by the developer; and required the developer to create an Accessibility Payment Fund of $288,300.

On October 22, 2010, the Court (Judge Richard Berman) filed an administrative order requesting additional information about the proposed consent decree between the United States and Defendant L&M 93rd Street LLC. Judge Berman explained his concern that the consent decree would create unnecessary expense to the Developer-Defendant. He expressed skepticism about the appropriateness of numerous provisions of the decree: the Developer-Defendant's agreement to compensate individuals affected by the building defects of the Melar; the Accessibility Project Fund; the list of names and addresses of buildings constructed by the Developer-Defendant; training; and the three-year compliance period. The Court requested that the parties respond to the administrative order by October 29, 2010.

The U.S. response was to urge the Court to approve the decree as submitted; the U.S. filing focused on the fact that the decree was an arms' length agreement resulting from two years of negotiations. Beginning with filings in early November 2010, the defendants' response (unsurprisingly) was to express misgivings about the Decree it had previously signed, agreeing with the Court that the decree was probably too onerous. Several additional entities then weighed in: The Real Estate Board of New York (REBNY) filed a letter with the Court arguing against the agreed-upon consent decree out of concern that this settlement would create heightened building requirements for the real estate industry in New York City. In addition, the defendant provided the Court with a letter written by the Corporation Counsel for New York City, Michael Cardozo, to the U.S. Attorney, expressing the view that compliance with the relevant local law constituted compliance with the Fair Housing Act.

The U.S. disagreed, but to resolve this part of the dispute, the City contacted the federal Department of Housing and Urban Development to discuss the interrelationship between New York City's current local accessibility code and the FHA. HUD offered to provide
technical assistance to the City upon request.

The parties reopened negotiations, but were, at least at first, unable to come to a different agreement. Judge Berman expressed the view that a private settlement agreement--entirely outside the Court's enforcement--might be an appropriate way to proceed, and the government then proposed to split the settlement into an enforceable consent decree and a private settlement agreement that contained just the provisions of concern to the Court. It appears that this approach was either unsatisfactory to the Court or to the developer.

According to a motion filed by the U.S. in July 2011, what happened next is that In March 2011, the Developer informally sought leave to withdraw its consent to the Original Developer Decree. In addition, REBNY filed a motion to intervene as a defendant to this case because of its extensive presence and wide membership in the real estate industry. The motion was opposed by the U.S., and on April 5, 2011, Judge Berman denied intervention. Both the Developer and the Architect then filed motions seeking to withdraw their consent to the still-unapproved decrees.

While this motion was pending, settlement negotiations resumed. The parties then agreed on a revised consent decree. The revisions each made the decree slightly more favorable to the developer. For example, where the original Decree required the Developer to pay to a disability rights organization any portion of the Aggrieved Persons Fund not distributed to aggrieved persons by the end of that decree's term, the revised decree returned the unpaid money to the developer. Similarly, the rules governing the Accessibility Project Fund gave the developer more control over the expenditure of that $288,000. The retrofits required were also scaled back in some particulars. In total, though, it does not appear that the Decree was scaled back very much. On July 22, 2011, Judge Berman approved the revised decree, and on July 25, 2011, Judge Berman approved the architect decree as well.

In February 2012, some of the deadlines in the Decree were extended by 150 days. The docket does not include any other post-decree activity. The decree is scheduled to expire in July 2014.

Megan Richardson - 04/21/2014
- 04/21/2014


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