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January 13, 1998

Update: MBI vs. Aetna Insurance

by Edmund Tsang

The legal dispute between Mitchell Brothers, Inc. (MBI) and Aetna Insurance Company will resume January 14 in the courtroom of District Judge Braxton Kittrell. This trial, which began October 27, 1997, will decide if the liability insurance that MBI took out with Aetna would require the insurance company to cover some of the attorney fees that MBI incurred in defending itself in two recent lawsuits involving allegations of housing discrimination.

One of the cases, Lowman et al vs. MBI, was a class action lawsuit joined by the U.S. Department of Justice, which alleged that MBI used coded cards to identify African- American applicants for purposes of discrimination in renting apartments managed by MBI. The case was settled in August, 1996 for $1.7 million; in addition to damages paid to plaintiffs, MBI also paid a $75,000 fine and allocated $250,000 to start a fair-housing center in Mobile, which opened its door early this year. The plaintiff in the other case, Craft vs. MBI, charged that she was fired from her position as manager of an apartment complex under MBI management because she refused to follow their discriminatory policies. This case was settled in December, 1996, after a jury had already been impaneled, when a witness produced some of the original coded cards that were used over one ten-month period in a MBI property -- Maison de Ville-Imperial -- to identify African-Americans for the purpose of discrimination.

MBI is the plaintiff in the current lawsuit. In court papers, attorneys for MBI stated that the initial delay by Aetna in advising MBI if the insurance company would defend MBI in the housing discrimination lawsuits caused MBI to incur additional attorney fees.

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