## Facts

- Smith & Lee Associates, Inc., a Michigan for-profit operator of adult foster care homes, ran Mortenview Manor in Taylor, Michigan.
- Mortenview Manor housed six elderly, disabled residents with dementia-related conditions requiring 24-hour supervision.
- The property was located in a single-family residential zone where state law permitted up to six disabled adults as of right.
- Smith & Lee sought to increase occupancy from six to twelve residents and asked the City to rezone the parcel from single-family to multi-family.
- After a public hearing, the City denied rezoning, citing opposition to spot zoning and inconsistency with its master land-use plan.
- Smith & Lee and the United States sued under the Fair Housing Amendments Act (FHAA), alleging intentional discrimination and failure to make reasonable accommodations.
- The district court found FHAA liability on both theories, ordered broad injunctive relief (including ordinance changes and permission for twelve residents), and awarded damages and a civil penalty.
- The City appealed.

## Issues

1. Whether the City intentionally discriminated against handicapped persons, in violation of the FHAA, by denying rezoning and related relief.
2. Whether the City refused a reasonable accommodation “necessary to afford” handicapped persons an equal opportunity to use and enjoy housing under 42 U.S.C. § 3604(f)(3)(B).
3. Whether the district court’s injunction, damages, and civil penalties were properly tailored to the FHAA violation.

## Decision

- The Sixth Circuit reversed the finding of intentional discrimination, concluding the record showed legitimate land-use reasons rather than discriminatory animus.
- The court affirmed FHAA liability on the reasonable-accommodation theory, holding some increase above a six-person cap was necessary for equal housing opportunity.
- The court modified the required accommodation, holding that permitting up to nine residents (not twelve) satisfied necessity and reasonableness.
- The court vacated the ordinance-amendment requirement and other overly broad injunctive provisions, remanding for narrower equitable relief.
- The court vacated or required recalculation of monetary relief, including civil penalties and profit-based damages, to reflect the nine-resident limit and the absence of intentional discrimination.

## Legal Principles

- The FHAA defines discrimination to include refusing reasonable accommodations in rules or policies when necessary to afford handicapped persons equal opportunity to use and enjoy a dwelling.  
- A municipality may be required to adjust facially neutral zoning or occupancy limits for group homes when the adjustment is necessary to prevent exclusion of disabled residents from residential neighborhoods.
- Reasonableness requires a fact-specific balance between the benefits to disabled residents and the burdens on the municipality; the accommodation must not fundamentally alter the nature of the zoning scheme or neighborhood character.
- Evidence of a consistently applied, legitimate zoning policy may defeat a claim of intentional discrimination even if the policy burdens disabled residents.
- FHAA remedies must be tailored to the minimum relief needed to cure the violation; damages and penalties must track the lawful scope of the required accommodation and the proven theory of liability.

## Conclusion

The Sixth Circuit held that the City’s denial of rezoning was not proven to be intentionally discriminatory, but that the FHAA required a reasonable accommodation to allow the adult foster care home to expand to nine residents; the court narrowed injunctive relief and sent the case back to recalculate damages and remove penalties unsupported by the modified liability findings.


Smith & Lee Assocs., Inc. v. City of Taylor, 102 F.3d 781 (6th Cir. 1996)