Case: Housing Opportunities Made Equal a/k/a HOME v. Nationwide Insurance

No. LB-2704-4 | Virginia state trial court

Filed Date: 1996

Closed Date: 2000

Clearinghouse coding complete

Case Summary

This lawsuit concerned the practice of redlining, under which businesses refuse to offer services, or offer services at unreasonably high charge, in areas populated by minorities, which are deemed to be “high-risk” locations. In the U.S., redlining has often made it difficult for residents of those areas to take out bank loans and get insurance. In 1994, several fair-housing advocacy groups, including the Toledo Fair Housing Center(TFHC), Housing Opportunities Made Equal (HOME) of Cincinnati, M…

This lawsuit concerned the practice of redlining, under which businesses refuse to offer services, or offer services at unreasonably high charge, in areas populated by minorities, which are deemed to be “high-risk” locations. In the U.S., redlining has often made it difficult for residents of those areas to take out bank loans and get insurance. In 1994, several fair-housing advocacy groups, including the Toledo Fair Housing Center(TFHC), Housing Opportunities Made Equal (HOME) of Cincinnati, Metropolitan Milwaukee Fair Housing Council, the National Fair Housing Alliance (NFHA), and HOME of Richmond (later renamed HOME of Virginia), joined together to seek funding from the Department of Housing and Urban Development (HUD) to conduct an investigation of redlining by insurance companies nationwide. They received that funding and proceeded to launch a joint investigation of racial discrimination by insurance companies across the country, which they called the Homeowners Insurance Project.

The investigation resulted in several lawsuits against major insurers both nationally and in individual state courts. In Richmond, Virginia, HOME compared matched pairs of houses that were similar in almost all respects, the only difference being that one of the homes was in a majority white neighborhood while the other was in a majority African-American neighborhood. In the course of its investigation, HOME found that Nationwide had used racial profiling to identify target neighborhoods, labeling every zip code with substantial minority populations undesirable; it had also pulled all of its agents from neighborhoods with substantial minority populations, hired agents only from predominantly white areas, denied insurance to owners of homes that would be insurable if they were in white neighborhoods, and excluded older homes from insurance without adequate actuarial justification.

Based on those findings, in 1996, HOME asked Tim Kaine, then a lawyer with Mezzullo & McCandish, P.C., to sue Nationwide over its practices in Richmond Circuit Court, on behalf of HOME and three African American Homeowners who had participated in HOME’s investigation of Nationwide. HOME, Kaine, and another lawyer at Kaine’s firm named Rhonda Harmon argued that Nationwide’s practices violated Virginia’s Fair Housing Law, which prohibits anyone whose business is engaged in residential, real estate-related transactions, including insurance or appraisal of residential real property, from, “discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, or in the manner of providing such a transaction, because of race, color, religion, national origin, sex, elderliness, familial status, or handicap.” VA Code Ann. § 36-96.4.

Trial took place in 1998, Tim Kaine -- by that time the Mayor of Richmond -- was the lead trial lawyer. A jury in the Circuit Court of Richmond returned a huge victory for HOME, handing Nationwide $500,000 in compensatory damages and $100,000,000 in punitive damages, the largest redlining damage award at that time.

Nationwide appealed that decision to the Supreme Court of Virginia, and a divided court overturned the verdict. The majority opinion, by Virginia Chief Justice Harry Carrico explained the court's view that under common law principles, HOME wasn’t an injured party and therefore couldn’t sue Nationwide over its practices. Nationwide Mutual Insurance Company v. Housing Opportunities Made Equal, Inc. Nationwide Ins. Co. v. 523 S.E.2d 217 (Va. 2000).

Justice Leroy Hassell (joined by Justices Elizabeth Lacy and Barbara Milano Keenan) dissented. The dissent argued that the majority's reasoning would render effectively meaningless the Virginia General Assembly’s 1991 amendment of the Virginia Fair Housing Law to include housing organizations within the definition of “person.”

HOME sought reconsideration, supported by numerous amicus briefs. The Virginia Supreme Court granted the motion, taking the rare step of retracting its previous opinion against HOME and scheduling reargument. With this hint that it might lose on reargument, Nationwide reevaluated its position. Its victory on standing looked fragile, and the courts had so far supported HOME’s underlying arguments that Nationwide’s practices constituted illegal discrimination. Moreover, the case was drawing Nationwide increasing amounts of bad publicity. With that in mind, Nationwide reached a settlement with HOME in April, 2000. The settlement agreement included $17.5 million for HOME, a donation of $8 million to the National Fair Housing Alliances, and agreements by Nationwide to review and change underwriting guidelines, procedures, and practices to ensure that its insurance was offered on a non-discriminatory basis. The agreement further stipulated that HOME’s share was to be spent on the Home Repair Program, the Down Payment Assistance Program and on Default Counseling in the City of Richmond.

The actual settlement documents are confidential, so we don't have them.

Summary Authors

Ryan Berry (7/21/2016)

People


Judge(s)

Carrico, Harry Lee (Virginia)

Johnson, Randall Jr. (Virginia)

show all people

Documents in the Clearinghouse

Document

No. LB-2704-4

Order

Feb. 17, 1999

Feb. 17, 1999

Order/Opinion

1999 WL 1999

990733

Va. Supreme Court Opinion [NOTE: LATER WITHDRAWN]

Nationwide Mutual Insurance Company v. Housing Opportunities Made Equal, Inc.

Virginia state supreme court

Jan. 14, 2000

Jan. 14, 2000

Order/Opinion

523 S.E.2d 523

990733

Va. Supreme Court Opinion and Dissent [Later withdrawn]

Nationwide Mutual Ins. Co. v. Housing Opportunities Made Equal, Inc.

Virginia state supreme court

Jan. 14, 2000

Jan. 14, 2000

Order/Opinion

523 S.E.2d 523

Resources

Docket

Last updated Aug. 30, 2023, 2:45 p.m.

Docket sheet not available via the Clearinghouse.

Case Details

State / Territory: Virginia

Case Type(s):

Fair Housing/Lending/Insurance

Key Dates

Filing Date: 1996

Closing Date: 2000

Case Ongoing: No reason to think so

Plaintiffs

Plaintiff Description:

Fair housing advocacy group Housing Opportunities Made Equal (HOME) and three African American residents discriminated against by insurance redlining policies

Plaintiff Type(s):

Private Plaintiff

Public Interest Lawyer: Yes

Filed Pro Se: No

Class Action Sought: No

Class Action Outcome: Not sought

Defendants

Nationwide Mutual Insurance Company , Private Entity/Person

Defendant Type(s):

Insurer

Case Details

Causes of Action:

State law

Available Documents:

Any published opinion

Outcome

Prevailing Party: Plaintiff

Nature of Relief:

Injunction / Injunctive-like Settlement

Damages

Source of Relief:

Settlement

Form of Settlement:

Private Settlement Agreement

Content of Injunction:

Discrimination Prohibition

Develop anti-discrimination policy

Amount Defendant Pays: $25.5 mil

Order Duration: 2000 - None

Issues

General/Misc.:

Pattern or Practice

Racial segregation

Record-keeping

Discrimination Area:

Disparate Treatment

Insurance

Discrimination Basis:

Race discrimination

Affected Race(s):

Black