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October 15, 1996

The Continuing Saga of MBI and Housing Discrimination

by Edmund Tsang

A U.S. magistrate judge will hold an evidentiary hearing on October 28 in a third lawsuit filed recently against the Mitchell Brothers, Inc. (MBI) involving housing discrimination. Meanwhile, another lawsuit is pending in circuit court on whether MBI's insurance policy with Aetna would cover any of the damages that might result from this third lawsuit related to housing discrimination.

Jaime Craft, manager of an MBI property -- Ashford Place -- from August 1993 to March 1994, filed a lawsuit against MBI, Abraham Mitchell, and James Spafford in April, 1996 alleging she was fired from her job after she informed Spafford that she would not follow the company's discriminatory policies against minorities. The defendants claim that Craft was terminated because of her poor work performance, and that her termination had nothing to do with housing discrimination.

Last summer, MBI settled a lawsuit filed by 17 individuals -- Lowman et al vs. MBI -- who claim that the information cards they were asked to fill out when they applied for rental properties managed by MBI in 1990 and 1991 were coded to identify their race for discriminatory purposes. The plaintiffs for the class action lawsuit, which was joined by the Department of Justice, said they become aware in 1994 or 1995 of the existence of the coded cards with their names on them. The existence of the coded information cards was disclosed in affidavits associated with another lawsuit filed by a former MBI employee, Diane Hall, who charges MBI officials with sexual harassment and housing discrimination. One witness produced the coded information cards from rental applicants to Maison de Ville. Hall's lawsuit against MBI officials was also settled earlier this year.

[In September, 1996, Abraham Mitchell submitted an affidavit informing the court that "On July 31, 1996 all apartment units owned by MBI were sold. MBI no longer owns or manages any apartment complex.]

On September 23, U.S. Magistrate Judge William E. Cassady ruled that "after reviewing the motion to compel and for sanction filed by Plaintiff on September 13, 1996, it is determined that the Court should hold an evidentiary hearing to determine if discoverable information has been withheld inappropriately by the defendants. It may also be necessary to take evidence on the amount of sanction that should be awarded, if any. According, this matter is set for an evidentiary hearing on Monday, October 28, 1996 in Room 3-A, United States Courthouse, Mobile, Alabama."

Collecting Evidence

Attorneys for plaintiff and defendants have been taking depositions and collecting evidence since last summer after Judge Cassady ruled on July 8, 1996 against the defendants' objections to plaintiff's request for documents (see "Judge Rules Against MBI In Yet Another Housing Discrimination Lawsuit," The Harbinger, July 16, 1996.) On July 1, defendants' attorneys filed for a protective order regarding discovery. Among the objections listed in court papers filed by defendants' attorneys is that "request for materials concerning Lowman vs. MBI [the class-action lawsuit settled in June, 1996] is irrelevant and immaterial to this cause of action...Essentially, Ms. Craft's complaint is based upon wrongful termination and not race discrimination."

In his deposition, James Spafford, MBI's executive vice president, stated Craft was not a good manager because she did not collect the correct amount of rents nor collect them on a timely basis, and because she did not kept the physical condition of property in good repair. Craft was fired because she failed to carry out her duty, Spafford said in his deposition, adding that Craft received a letter of reprimand.

Plaintiff's attorneys, in court papers filed on September 9, disputed Spafford had ever reprimanded Craft because she was tardy in her duties as apartment manager. Plaintiff's attorneys cited the affidavit by a witness, who said Spafford called Craft "his golden girl" in praising her in front of other employees for achieving a high occupancy rate. Another witness for the plaintiff stated in her affidavit: "I know that Jim Spafford was meticulous about writing everything down and having a person sign it if they were being reprimanded. He was very good about making sure that all discrepancies were documented and any reprimands were documented. I have never seen a written reprimand regarding Jamie Craft."

This witness also stated in her affidavit filed in September, 1996: "Mr. Spafford would call over on the days Jaime was off and question different things in the files or in the computer. This happened several times, and I became very uncomfortable once when he asked me to pull the info on a couple of applicants who were pending and not moved in yet.... I thought Mr. Spafford was on a 'witch hunt,' questioning me about Jaime's work and her habits. I was very aware of the stresses she was under and could see he was directing it at her intentionally."

Craft's attorneys also challenged Spafford during his deposition concerning Spafford's assertion that he sent a memo of reprimand to Craft:

"Q: Do you have a copy of that memo?

A: I do not.

Q: Okay. Have you -- do you know of a copy of the memo existing anywhere?

A: I do not.

Q: And you would agree with me, having reviewed her personal file there is certainly not a copy of it there, is there?

A: There is not a copy of it.

Q: Okay. And having...did you see anywhere in there any notation or the like prepared by you or anyone else with regard to the discussion you had with her in October or November of 1993 on this subject?

A: I did not."

In an effort to show Craft's lack of managment skills was the reason she was fired, attorneys for the defendants submitted last week to the court depositions from Craft's previous employers, and argued that she had no managment experience from her prior employment.

Summary Judgment

On August 8, attorneys for Abraham Mitchell filed a motion for summary judgment that he be dismissed from the lawsuit. Among reasons cited by defendant's attorneys is the claim that "plaintiff has admitted that Mitchell never instructed her directly or indirectly to act in a proscribed manner, and as the uncontroverted evidence demonstrates that Mitchell was not informed of the termination of her [plaintiff's] employment with MBI until well after the date thereof, it would be tautologically impossible for Mitchell to have committed the offense of which Plaintiff complains. Hence, Mitchell's Motion for Summary Judgment should be granted and Mitchell should be dismissed from this action with prejudice."

Briefs filed on September 9 by plaintiff's attorneys argue that Mitchell's motion should be denied "because there is disputed issue of fact concerning Mitchell's notification and authorization of Plaintiff's discharge in violation of Fair Housing Act." The brief further argues that "Defendant's practice and scheme of widespread and pervasive discrimination is documented by half a dozen witnesses.... When viewed in light of Plaintiff's testimony and other witnesses' testimony, which indicate that Mitchell himself promulgated the company practice of discouraging minority occupancy and that he personally saw to it that all MBI employees followed that policy, Mitchell's conflicting testimony demonstrates the existance of a genuine issue of material fact."

In the brief to support his motion for summary judgment, attorneys representing Mitchell said supervisory and management decisions "are made soley within the discretion of Mr. Spafford." Mitchell should be dismissed from the lawsuit, his attorneys said, because he is not involved in the daily operation. In his deposition, Abraham Mitchell, a partner in MBI, said Spafford, not he, is responsible for running the rental properties:

"Q: Is there a supervisory chain?

A: Mr. Spafford pretty much runs his own show.

Q: You don't supervise Mr. Spafford in connection with the letting of apartments.

A: No.

Q: ...If some one claims that MBI there was discrimination in the letting of apartments, Mr. Spafford would be authorized to handle that on his own and never bring it to your attention, correct?

A: Correct."

To dispute Mitchell's assertion that "supervisory and management decisions are made solely within the discretion of Mr. Spafford," plaintiff's attorneys cited the affidavits of current and former MBI employees as well as Spafford's deposition to show that Mitchell is actively involved. According to one affidavit, "Debbie Brown, a resident manager at Maison de Ville and a defendant in the just-settled class-action lawsuit, admonished her leasing agents to make sure prospective tenants were not black because 'Mr. Mitchell would have a fit.'"

The deposition of Debbie Brown, contains the following exchange between her and the attorney representing plaintiff about Mitchell's involvement:

"Q: If I'm understanding you, you didn't have the authority to approve whether someone could or couldn't move in Maison de Ville or Imperial, right? That was Mr. Mitchell...

A: Mitchell.

Q: ...or Mr. Spafford?

A: Mr. Spafford.

Q: What you did is collect the information on an application and then what, fax it over to them?

A: Yes, Sir."

Spafford's deposition contains the following exchange concerning the chain of command:

"Q: Who had authority and, in fact, excerised the authority with regard to approval or nonapproval of prospective tenants?

A: Mr. Mitchell.

Q: Either yourself or Mr. Mitchell?

A: That is correct."

Regarding the arguments by attorneys representing Mitchell that he be dismissed from the lawsuit because "Mr. Spafford is responsible for compliance by Mitchell Brothers, Inc. with the Fair Housing Act," plaintiff's attorneys said "Mitchell had a legal, non-delegable duty to ensure that his subordinates did not violate the Fair Housing Act.

"As a general rule, a corporation and its officers are liable for the discriminatory conduct of an employee both under the doctrine of respondant supervision and because the duty not to discriminate is non-delegable."

On October 1, a motion for Summary Judgment was filed on behalf of all three defendants -- Mitchell, Spafford, and MBI -- by the defendants' attorney. On October 10, the defendants' attorney filed a brief to reply to plaintiff's opposition to Mitchell's motion for Summary Judgment, saying the testimonies of a number of plaintiff's witnesses were based on "hearsay."

Judge Cassady has set a hearing to consider defendants' motion for Summary Judgment on November 4.

Aetna Got In The Mix

On August 16, Aetna Insurance Company filed motion to intervene in the Jaime Craft case. According to court papers, attorney representing Aetna stated: "The instant litigation was commenced by plaintiff on December 7, 1995, making claims against MBI, Abraham Mitchell and James Spafford, for wrongful conduct which falls outside the coverage provision of the Aetna policies, is excluded by the exclusions of the Aetna policies, falls outside the coverage period of the Aetna policies or is not within the condition of the policies."

Aetna's attorney raised the question "regarding the rights, duties, status or legal relations of the parties hereto with regard to the indemnity of the underlying lawsuit filed by the plaintiff in the case at bar," adding "Aetna avers that there is no insurance coverage for the claim asserted against MBI, Abraham Mitchell and James Spafford by the case at bar." Attorney for Aetna petitions Judge Cassady to grant "permissive intervention for the limited purpose of determining the issue of coverage to MBI, Mitchell and Spafford under the policies."

On September 13, attorneys for defendants informed Judge Cassady that "the issue whether that insurance policy provides Defendants coverage for certain of the underlying claims is pending currently before the Circuit Court of Mobile County." A hearing has been scheduled for early November.

Cause for Evidentiary Hearing

Attorneys for the plaintiff said in court papers that a witness "has given sworn statement that sometime at the end of 1994 or beginning of 1995, Defendant Spafford ordered the destruction of all 'rejected applications.' It is obvious that Defendants are destroying the incriminating evidence while maintaining their innocence to the Court through their counsels."

So on September 13, plaintiff's attorneys filed a motion "compelling defendants to make disclosure and to produce documents," including the information cards filled out by applicants to MBI-managed properties, and documents to support the contention that Jaime Craft "either resigned or voluntarily terminated her employment with MBI, or to support the defendants' claim that Craft's job performance was substandard or unsatisfactory."

-- October 15, 1996

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