                                   ___________

                                   No. 95-2980
                                  _____________

Richard D. Carlson; Dale Summy,        *
                                       *
                   Petitioners,        *
                                       *
     v.                                *    Petition for Review of an Order
                                       *    of the United States Department
The United States Department of        *    of Housing and Urban
Housing and Urban Development          *    Development.
(HUD), on behalf of James O.           *
and Delores Bad Horse and              *    [UNPUBLISHED]
Christina Antelope (minor       *
child),                         *
                                        *
                   Respondent.          *
                                   ___________

                         Submitted:    March 13, 1996

                          Filed: April 5, 1996
                                ___________

Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.
                               ___________


PER CURIAM.


     Richard D. Carlson owned a duplex in Sioux Falls, South Dakota.
After Carlson moved out of state, his friend Dale Summy helped Carlson rent
the duplex to various tenants.     On one occasion Summy rented the building's
small upstairs apartment to James O. Bad Horse, who told Summy he would be
living in the apartment with his wife and one child.         The day the Bad
Horses moved in, a tenant living downstairs called Carlson to complain that
the Bad Horses had damaged the yard and the building during the move.     The
complaining tenant also indicated there were four or more people living in
the upstairs apartment.     Carlson then instructed Summy to ask the Bad
Horses to leave.   The Bad Horses moved out as requested and filed a housing
discrimination complaint.     After an investigation, the Secretary of the
United States Department of
Housing and Urban Development (HUD) charged Carlson and Summy with family
status discrimination.          An Administrative Law Judge (ALJ) initially
dismissed     the    charges,   but   the    Secretary   remanded     the     case   for
reconsideration.       On remand the ALJ concluded Carlson and Summy had
unlawfully enforced a policy having a disparate impact on families with
children, and Carlson had made a statement indicating a preference not to
rent to families.      The ALJ found no intentional discrimination, however.
The ALJ awarded damages to the Bad Horses, imposed civil penalties, and
enjoined future discrimination.       Carlson and Summy petition for review of
the ALJ's final order.       See 42 U.S.C. § 3612(i)(1) (1988).         We grant the
petition and reverse.


      The ALJ found Carlson and Summy did not refuse to rent to families
with children, but enforced a neutral policy of not permitting more than
three people to occupy the upstairs apartment.           Based on census data, the
ALJ concluded the policy had a disparate impact on families with children
and thus violated the Fair Housing Act.            See 42 U.S.C. § 3604(a) (1988);
United States v. Badgett, 976 F.2d 1176, 1179 (8th Cir. 1992).              Carlson and
Summy contend the ALJ's decision is not supported by substantial evidence,
and we agree.       See Morgan v. Secretary of HUD, 985 F.2d 1451, 1457 (10th
Cir. 1993).    Carlson concedes he preferred to rent the upstairs apartment
to   three   or   fewer   people   because   the    apartment   is   small,    but   the
overwhelming weight of the evidence shows Carlson never actually limited
the number of occupants in the apartment.            Carlson and Summy rented the
apartment to anyone who wanted to live there, including families of four.
In fact, a family of four moved into the apartment shortly after the Bad
Horses left.


      The Secretary relies on a letter Carlson wrote HUD which states
Carlson asked the Bad Horses to leave because they had a dispute with the
tenant downstairs and because Carlson believed there were four people
living in the Bad Horses' apartment.         The Secretary also points to a letter
from Summy containing similar




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statements.     We must view the letters in light of the whole record, see
id., including Carlson's continuous practice of renting to any size family,
his legitimate concern about the downstairs tenant, and his belief that the
Bad Horses had lied about the number of people who would be living in their
apartment.     The record simply does not support the ALJ's decision that
Carlson and Summy were enforcing a three-person maximum when they asked the
Bad Horses to move out.


     We also reject the ALJ's conclusion that Carlson violated 42 U.S.C.
§ 3604(c) (1988) by making a statement indicating a preference not to rent
to families with children.     The ALJ found Carlson told Summy to rent the
upstairs apartment to a "single person, or at most a married couple/two
single persons."        Carlson and Summy never mentioned this comment to
prospective tenants or anyone else, and there is no substantial evidence
that Summy believed Carlson was asking him not to rent to families.   Summy
was Carlson's personal friend and knew Carlson had rented to families in
the past.    Summy continued to rent the upstairs apartment to families with
children, including the Bad Horses and the family that moved in after the
Bad Horses.    We see no violation of § 3604(c).


     We grant the petition for review and direct the Secretary to dismiss
the charges against Carlson and Summy.


     A true copy.


              Attest:


                   CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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