to these standards. You can meet
the safe harbor by complying with
section R321.3 of the North Car-
olina Building Code.

Damages and remedies
NCFHA violations can be costly
for owners, designers, and contrac-
tors. The statute provides a wide
range of legal and equitable reme-
dies for an injured claimant. In addi-
tion to actual damages, a claimant
can obtain punitive damages, court
costs and attorneys’ fees, and tem-
porary or permanent injunctions.

There are no North Carolina
cases interpreting the law’s reme-
dies provision. In federal cases,
however, claimants have been
awarded compensatory damages
for a variety of loses and harms:
• out-of-pocket costs to make the
residence more handicap acces-
sible, • emotional distress and humilia-
tion resulting from being unable
to use the living space,
• costs of testing housing units for
compliance with the standards,
and • diversion of resources when an
organizational claimant imple-
ments a program to identify and
counteract discriminatory hous-
ing practices.

In addition to monetary dam-
ages, courts are empowered to
grant equitable relief, which could
include ordering the defendant to
retrofit a property so it complies
with the accessibility standards or
to establish a retrofitting fund to
pay for future retrofitting. Retro-
fitting can be among the most
costly remedies and is also fre-
quently a part of any settlement
agreement. Indemnification
While indemnity provisions are
common in construction and design
contracts, be aware these clauses
may not be enforceable when it
comes to fair housing claims. Given
that a fair housing complaint can
ensnare the owner, the designer,
and the contractor, it’s natural to as-
sume that some of those parties
would seek to mitigate their risk
through contractual indemnification
provisions. For example, a contrac-
tor with no design responsibility
who built the project according to
the contract documents might seek
indemnification from the owner
since the owner hired the designer.

Unfortunately, though, it’s un-
clear whether the NCFHA allows
parties to shift their liability through
indemnification. The statute itself is
silent on this issue, but a 2010 deci-
sion from a federal appeals court
suggests that contractual indemnifi-
cation is incompatible with the
statute’s purpose.

Indemnification disputes are part
of the reason the commission staff
makes every effort to include all the
potential parties in the original in-
vestigation, and, if necessary, bring
legal action against all project par-
ticipants. The commission’s way of
thinking is that if all designers, ar-
chitects, contractors, developers,
owners, etc. are included, then they
all have an opportunity to be part of
the inspection of the property, and
make comments before the com-
mission investigators issue a deter-
mination. In addition, by including all proj-
ect participants, the respondents
have a chance to craft a compre-
hensive settlement and work out
apportionment of damages among
themselves. It also means that, if
the case ends up in court, the litiga-
tion isn’t further complicated by
third-party indemnity actions, and
damages can be apportioned
among the various defendants as
the court finds appropriate.

Practice and procedure
The procedures for adjudicating a
fair housing complaint are found in
a long, convoluted statute reminis-
cent of a Choose Your Own Adven-
ture novel. The statute establishes
several procedural paths. In general,
though, a fair housing complaint will
ultimately be resolved by either (1)
the administrative-judicial route,
which culminates in a hearing be-
fore the N.C. Human Relations
Commission with a right of appeal
12 — February – March 2019 — The North Carolina Construction News
to superior court, or (2) the purely
judicial route where the case is
heard in superior court. Regardless
of the procedural path your case
may take, the NCFHA requires that
commission staff attempt to resolve
the dispute through “informal con-
ference, conciliation, or persua-
sion.” Even after conducting an
investigation and determining there
are reasonable grounds to believe
there’s been a violation of the act,
the Human Relations Commission
staff must still attempt to resolve
the issue through negotiation.

While overall 20 percent to 40
percent of cases are resolved
through conciliation, practically all
construction and design complaints
end in settlement. “Conciliation
agreements” must be made public.

Conclusion The NCFHA may not immediately
spring to mind when you think of
the laws that govern the construc-
tion and design process in our
state, but failure to comply with this
law can have far-reaching conse-
quences for owners, designer, and
contractors. Contractors in particular may
have unanticipated exposure for de-
sign deficiencies—a total departure
from traditional construction law
grounded in the rules of contract.

It’s unclear whether project partici-
pants can mitigate risk through con-
tractual indemnification—though
they should certainly try until a
court rules otherwise. These open
questions leave room for creative
lawyering by construction lawyers
to help clients faced with a fair
housing complaint.

Luke J. Farley, Sr. is a
construction and surety
lawyer in the Raleigh of-
fice of Conner Gwyn
Schenck PLLC. From
2014 to 2018, he served
as a commissioner on
N.C. Human Relations Commission. This
article has been edited from a compre-
hensive version with endnotes to be pub-
lished in the near future. The views in this
article are solely those of the author.