In this week's Alabama Law Weekly Update, we review two opinions from the United States Court of Appeals for the Eleventh Circuit, one dealing with the application of the Fair Housing Act and the other addressing fraud under the Securities Act of 1933 and Securities Exchange Act of 1934.
Davis v. Habitat for Humanity of Bay County, Inc., Fed. Appx. _, 2014 WL 785222 (11th Cir. Feb. 28, 2014) (holding that failure to meet every demand of potential resident who is handicapped is not actionable under the Fair Housing Act when reasonable accommodations for the handicapped individual were made).
The Davises are siblings, with Mr. Davis being an able-bodied 38 year-old and Ms. Davis a 35 year-old who is wheelchair bound as a result of a car accident. In 2004, the Davises filed a joint application for a home from Habitat for Humanity ("Habitat"). Habitat builds simple, affordable homes for individuals whose "present housing is inadequate" and who cannot "obtain adequate housing through conventional means." After the Davises filed their application, Habitat met with them to discuss Ms. Davis' needs. Construction of a home for the Davises began thereafter. By August 2007, substantial work on the home had been performed but the Davises were not pleased with the home. An attorney for the Davises sent Habitat a letter describing the Davises' complaints. In October of the same year, the home was substantially completed and the Davises were allowed a walk-through so they could generate a "punch-list" of items they wanted resolved or addressed. The Davises failed to deliver any "punch-list" to Habitat. Communications between the Davises and Habitat then became "adversarial and heated." Habitat offered to build another home for the Davises. The Davises refused this offer because of the locations of the other homes and someone else eventually purchased the home originally built for the Davises. The Davises filed a lawsuit against Habitat on June 17, 2011, claiming Habitat discriminated against them in violation of the Fair Housing Act ("FHA"). The trial court entered a summary judgment in favor of Habitat and the Davises appealed.
On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the trial court's decision. The Eleventh Circuit explained that the FHA "prohibits discriminatory housing practices based on an individual's disability or handicap," which would include a "refusal to make reasonable accommodations ... when such may be necessary to afford [a disabled or handicapped person] equal opportunity to use and enjoy a dwelling." However, the Eleventh Circuit also stated that a person "is not entitled to the accommodation of his or her choice, but is entitled only to a reasonable accommodation." In upholding the trial court's decision, the Eleventh Circuit noted that there was no evidence demonstrating that Habitat refused to make reasonable accommodations requested by the Davises or to communicate with the Davises regarding accommodations. In fact, as the Eleventh Circuit pointed out, Habitat met with the Davises and agreed to modify the building plan for their home. If each and every of the Davises' requests or demands were not met, then that does not necessarily mean a "reasonable accommodation" was not made.
Securities and Exchange Commission v. Monterosso, Fed. Appx. , 2014 WL 815403 (11th Cir. March 3, 2014) (holding individuals liable under the Securities Act of 1933 and Securities Exchange Act of 1934 when they participated in scheme to generate fictitious revenue for public company, regardless of whether they "made" any public misstatements).
Mr. Monterosso and Mr. Vargas, who were at various times officers of a telecommunications company which was a subsidiary of another telecom company, GlobeTel, participated in a fraudulent scheme which generated fictitious revenue for GlobeTel, a publicly traded company. Monterosso, who was also at various times a manager and officer of GlobeTel, and Vargas participated in a scheme which, in essence, "involved creating false invoices to reflect alleged transactions between GlobeTel's subsidiaries and other companies." Monterosso would be given a goal, or amount of revenue needed, for each quarter by a GlobeTel executive. Monterosso and Vargas would then "receive invoices ... from other companies and would change the name to reflect sales to and from GlobeTel's subsidiaries." "At Monterosso's direction, Vargas submitted the phony manufactured invoices ... to GlobeTel's accounting department." As a result of this scheme, "GlobeTel's financial statements misstated the company's revenue by more than $100 million," resulting in public misstatements contained in press releases, reports, and securities registration statements.
In November 2007, the Securities and Exchange Commission (the "SEC") sued Monterosso and Vargas under the Securities Act of 1933 and the Securities Exchange Act of 1934. The trial court granted summary judgment in favor of the SEC for, among other things, violations by Monterosso and Vargas of the antifraud provisions of the Securities Act and the Securities Exchange Act.
On appeal to the United States Court of Appeals for the Eleventh Circuit, Monterosso and Vargas challenged, among other things, the trial court's grant of summary judgment under these antifraud provisions. Monterosso and Vargas argued they could not be liable under these provisions because they did not "make" the public misstatements regarding GlobeTel.
The Eleventh Circuit disagreed with Monterossso and Vargas, explaining that who "made" the misstatements was not the issue. Monterosso's and Vargas' liability was founded on their "commission of deceptive acts as part of a scheme to generate fictitious revenue for GlobeTel." As a result, the Eleventh Circuit found, the trial court did not err on that basis when it entered summary judgment against Monterosso and Vargas.