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Cervelli v. Aloha Bed & Breakfast

Intermediate Court of Appeals of Hawaii

February 23, 2018

DIANE CERVELLI and TAEKO BUFFORD, Plaintiffs-Appellees,
v.
ALOHA BED & BREAKFAST, a Hawai'i sole proprietorship, Defendant-Appellant, and WILLIAM D. HOSHIJO, as Executive Director of the Hawai'i Civil Rights Commission, Plaintiff-Intervenor-Appellee.

         APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 11-1-3103)

          Shawn A. Luiz James Hochberg for Defendant-Appellant.

          Joseph P. Infranco Joseph E. La Rue (Alliance Defending Freedom) for Defendant Appellant.

          Jay S. Handlin Linsay N. McAneeley (Carlsmith Ball LLP) Peter C. Renn (Lambda Legal Defense and Education Fund, Inc.) For Plaintiffs-Appellees.

          Robin Wurtzel Shirley Naomi Garcia April L. Wilson-South (Hawai'i Civil Rights Commission) for Plaintiff-Intervenor-Appellee.

          NAKAMURA, CHIEF JUDGE, and FUJISE and REIFURTH, JJ.

          OPINION

          NAKAMURA, C.J.

         Defendant-Appellant Aloha Bed & Breakfast (Aloha B&B) is owned and operated by Phyllis Young (Young) as a sole proprietorship. Aloha B&B provides lodging to transient guests, averaging between one hundred and two hundred customers per year. Plaintiffs-Appellees Diane Cervelli (Cervelli) and Taeko Bufford (Bufford) (collectively, Plaintiffs), lesbian women in a committed relationship, planned a trip to Hawai'i and sought lodging with Aloha B&B. Aloha B&B and Young refused to accommodate Plaintiffs' request for lodging based solely on their sexual orientation.

         Plaintiffs filed a Complaint in the Circuit Court of the First Circuit (Circuit Court)[1] against Aloha B&B, alleging discriminatory denial of public accommodations in violation of Hawaii Revised Statutes (HRS) Chapter 489.[2] The Hawai'i Civil Rights Commission (HCRC) intervened in the case as a plaintiff, after it had determined that there was reasonable cause to believe that unlawful discriminatory practices had occurred.

         Plaintiffs and the HCRC filed a partial motion for summary judgment on the issues of liability and injunctive relief, and Aloha B&B filed a competing cross-motion for summary judgment. The Circuit Court granted Plaintiffs and the HCRC's motion and denied Aloha B&B's motion. The Circuit Court ruled that Aloha B&B violated HRS § 489-3 by discriminating against the Plaintiffs on the basis of their sexual orientation. The Circuit Court also enjoined Aloha B&B from "engaging in any practices that operate to discriminate against same-sex couples as customers."

         On appeal, Aloha B&B argues that the Circuit Court erred in ruling that it is liable for discriminatory practices under HRS Chapter 489. Aloha B&B maintains that because Aloha B&B operates its business out of Young's residence, the Circuit Court should have applied an exemption from prohibited discriminatory practices in real property transactions set forth in HRS Chapter 515 for the rental of rooms by a resident. Alternatively, Aloha B&B argues that the application of HRS Chapter 489 to prohibit discriminatory practices under the circumstances of this case would violate Young's constitutional rights. Based on these arguments, Aloha B&B contends that the Circuit Court erred in granting Plaintiffs and the HCRC's motion for partial summary judgment and in denying Aloha B&B's motion for summary judgment. We affirm.

         BACKGROUND

         I.

         Aloha B&B operates out of a four bedroom home in the Mariner's Ridge section of Hawai'i Kai, where Young and her husband reside. Young operates Aloha B&B as a sole proprietorship and offers three rooms in her residence to guests for overnight lodging. Rooms at Aloha B&B are offered at a nightly rate of $80 to $100, and there is a three-night minimum booking requirement. In addition to the nightly rate, Aloha B&B charges and collects general excise taxes from its customers as well as transient accommodation taxes, which only providers of transient accommodations are required to pay. Aloha B&B remits these taxes to the State of Hawai'i.

         Aloha B&B does not offer rooms to customers for use as a permanent residence, and Young never describes herself as a landlord to her guests. Aloha B&B averages one hundred to two hundred customers per year. The median length of stay for Aloha B&B customers is four to five days. The majority of customers stay for less than a week, about 95 percent or more stay for less than two weeks, and more than 99 percent stay for less than a month. In addition to overnight lodging, customers at Aloha B&B are provided breakfast, pool access, wireless internet access, and other amenities. Almost all of Aloha B&B customers, an estimated 99 percent, are travelers who do not live in Hawai'i.

         Aloha B&B advertises its services to the general public through its own website as well as through multiple third-party websites. Aloha B&B's website, freely accessible through the internet, provides a phone number and email address for potential customers to contact Aloha B&B, and it contains graphics stating "Best Choice Hawaii Hotel" and "Best Choice Oahu Hotels." Aloha B&B also advertises through various bed-and-breakfast-related websites to generate more business for itself, including paying an annual fee of between $400 to $500 to BedandBreakfast.com.

         II.

         Plaintiffs Cervelli and Bufford, two lesbian women in a committed relationship, began planning a trip to Hawai'i to visit a friend. Plaintiffs, who resided in California, wanted to stay near their friend, who lived in Hawai'i Kai. Cervelli emailed Aloha B&B to inquire if a room was available for their planned trip. Young responded by email the same day, stating that a room was available for six days and providing instructions on how to complete the reservation.

         Two weeks later, Cervelli called Aloha B&B to book the reservation and spoke with Young, who indicated that the room was still available. While Young was writing up the reservation, Cervelli mentioned that she would be accompanied by another woman named "Taeko." Young stopped and asked whether Cervelli and her companion were lesbians. When Cervelli said "yes, " Young responded, "[W]e're strong Christians. I'm very uncomfortable in accepting the reservation from you." Young refused to accept the reservation from Cervelli and terminated the phone call by hanging up.

         Cervelli called Bufford in tears and explained what had happened. Bufford then called Young and attempted to reserve a room, but Young again refused to accept the reservation. Bufford asked Young if her refusal was because Bufford and Cervelli were lesbians, to which Young responded "yes." Bufford had two phone conversations with Young that day. Young referred to her religious beliefs in discussing her refusal to provide a room to Plaintiffs. Apart from Plaintiffs' sexual orientation, there was no other reason for Young's refusal to accept Plaintiffs' request for a room.

         III.

         Cervelli and Bufford each filed a complaint against Aloha B&B with the HCRC alleging discrimination in public accommodations on the basis of sexual orientation. Young was interviewed during the HCRC's investigation and was asked to describe the religious beliefs that she claimed precluded her from accepting Cervelli and Bufford's reservation. Young stated that she is Catholic; that she believes that homosexuality is wrong; that she believes that sexual relations between same-sex couples (regardless of whether they are legally married) are immoral; and that she therefore refused to provide Cervelli and Bufford with a room. The HCRC found that there was reasonable cause to believe that Aloha B&B had committed an unlawful discriminatory practice against Cervelli and Bufford in violation of HRS § 489-3. The HCRC subsequently closed its cases based on Cervelli's and Bufford's election to pursue a court action, and it issued "right to sue" notices to Cervelli and Bufford.

         IV.

         Plaintiffs subsequently filed in the Circuit Court a Complaint for injunctive relief, declaratory relief, and damages against Aloha B&B, alleging discrimination on the basis of sexual orientation in violation of HRS Chapter 489. The HCRC filed a motion to intervene in the case as a plaintiff because it found the case was one of "general importance" given the HCRC's mission to eliminate discrimination. The Circuit Court granted the HCRC's motion to intervene as a plaintiff.

         Plaintiffs and the HCRC filed a motion for partial summary judgment with respect to liability and injunctive relief.[3] Aloha B&B filed a cross-motion for summary judgment.

         The Circuit Court held a hearing on the parties' competing motions for summary judgment. At the hearing, counsel for Aloha B&B acknowledged that "discrimination is a horrible evil" and that "in places of public accommodation discrimination is a horrible evil." Aloha B&B's counsel also acknowledged that Aloha B&B admits that it "does provide lodging to transient guests."[4] However, Aloha B&B's counsel argued that the law prohibiting discrimination in public accommodations, HRS Chapter 489, does not apply to Aloha B&B because it uses Young's residence to provide lodging to transient guests. Aloha B&B's counsel argued that Aloha B&B's use of a residence means that it is not a "place of public accommodation" subject to the requirements of Chapter 489, but instead is governed by HRS Chapter 515.

         The Circuit Court granted Plaintiffs and the HCRC's motion for partial summary judgment with respect to liability and declaratory and injunctive relief, and it denied Aloha B&B's cross-motion for summary judgment as moot. In its Summary Judgment Order, [5] the Circuit Court found that:

[Aloha B&B] is governed by Chapter 489, HRS, not Chapter 515, HRS, and [Aloha B&B] constitutes a place of public accommodation under HRS § 489-2, because its goods, services, facilities, privileges, advantages, or accommodations are extended, offered, sold, or otherwise made available to the general public as customers, clients, or visitors. [Aloha B&B] also constitutes "[a]n inn, hotel, motel, or other establishment that provides lodging to transient guests" and " [a] facility providing services relating to travel or transportation." HRS § 489-2. [Aloha B&B] violated HRS § 489-3 by discriminating against Plaintiffs Diane Cervelli and Taeko Bufford on the basis of their sexual orientation as lesbians.

(Certain brackets in original.) The Circuit Court enjoined and prohibited "Defendant Aloha Bed & Breakfast, a Hawai'i sole proprietorship of Phyllis Young, " and its officers, agents, and employees "from engaging in any practices that operate to discriminate against same-sex couples as customers of Aloha Bed & Breakfast[.]"

         The Circuit Court entered its Summary Judgment Order on April 15, 2013. The parties subsequently submitted a stipulated application to file an interlocutory appeal from the Summary Judgment Order, which the Circuit Court granted.

         DISCUSSION

         I.

         Aloha B&B argues that the Circuit Court erred in ruling that it is liable for discriminatory practices under HRS Chapter 489. Aloha B&B argues that it is not subject to HRS Chapter 489, but that its activities are governed by HRS Chapter 515. In particular, Aloha B&B asserts that an exemption from prohibited discriminatory practices in real property transactions set forth in HRS § 515-4(a)(2) protects it from liability in this case.

         Plaintiffs and the HCRC, on the other hand, argue that Aloha B&B is clearly a place of public accommodation that is subject to HRS Chapter 489. Plaintiffs and the HCRC argue that Aloha B&B cannot "borrow" an exemption applicable to a different law (HRS Chapter 515) to avoid liability for violating the public accommodations law (HRS Chapter 489) on which Plaintiffs seek relief. They also argue that the HRS Chapter 515 exemption relied upon by Aloha B&B only applies to long-term living arrangements in which tenants are seeking permanent housing, and not to the short-term transient lodging provided by Aloha B&B to its customers.

         As explained below, we conclude that the Circuit Court properly granted partial summary judgment in favor of Plaintiffs and the HCRC.

         A.

         The statutory provisions relevant to this appeal are as follows.

         Plaintiffs' Complaint against Aloha B&B alleged discrimination on the basis of sexual orientation in public accommodations, in violation of HRS Chapter 489. HRS § 489-3 provides:

Unfair discriminatory practices that deny, or attempt to deny, a person the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of a place of public accommodation on the basis of race, sex, including gender identity or expression, sexual orientation, color, religion, ancestry, or disability are prohibited.

         HRS § 489-2 (2008) defines the terms "place of public accommodation" and "sexual orientation" for purposes of HRS Chapter 489, in relevant part, as follows:

"Place of public accommodation" means a business, accommodation, refreshment, entertainment, recreation, or transportation facility of any kind whose goods, services, facilities, privileges, advantages, or accommodations are extended, offered, sold, or otherwise made available to the general public as customers, clients, or visitors. By way of example, but not of ...

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