1st Step Sober Living LLC and Scott Smith v. Bill Cleveland, Sherri McClain, Terry Garrett, Dori Garrett, Lunsford Warner, Richard Burkhalter, John C. Bell, Tim Overton, Shannon Overton, Justin Chandler, Jeni Chandler, Scott Castillo, Karen Castillo, Doug Mansell, Heather Mansell, Lee Blanton, Kelly Blanton, Dallas Allgood, Holly Allgood, Rhett Puckett, Leigh Ann Puckett, Brett Brooks, Carla Brooks, Josh Dufford, Kelli Dufford, Troy Neuhaus, Robin Neuhaus, Scott Neuhaus, Ann Neuhaus, Phil Hopper, Johnnie Hopper, Cathy Sanders, William McCaulley, Julie McCaulley, Jim Ingram, Heather Ingram, Lucas Smith, Kama Smith, Larry Roberts, Kathy Lott, Kevin Lott, Larry Benton, Barbara Benton, Alicia Hinton, Joyce Ann Tubb, Patti O'Neill, John Bell, William Hodge, Paula Hodge, Cathy Sanders, Esther Dunlap, Benjamin Riley, Ryan French and Jaquel French, Monachia French, Freddie Samuels, Mary Samuels, Thomas E. Gilmer, Sondra Gilmer, Michelle Turberville, Larry Walker, Cherie Walker, Walter C. Partlow, Ruthlyn Partlow, Wayne Francis, Katherine Riley, Joy Asters, David R. Fowler, Cynthia Fowler, Evangeline Jabil, Troy Duncan, Julie Duncan, Parrish Alford, Laurie Alford, Travis Gallaher, Connie Gallaher, Austin Brooks, Emily Brooks, Julie M. Wright, John L. Armour, Jr., Richard McCharen, Lynn McCharen, Sally Shaull, Keith J. Gardner, Wes Asters, Cliff Hobby, Dana Hobby, Shellie Fitzpatrick, Antonio Cook, Ashley Cook, Mohamed Alrazski, Leigh Moser, Nick Demoran, Cherie Demoran, Daniel G. Smith, Dale W. Smith, Cynthia R. Roberts, Ben Scott, Elizabeth Scott, Amanda Golding, Steve Golding, Montine Posey, Ron Blackwell, Francis Blackwell, Ruth Hollingsworth and City of Tupelo, Mississippi

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2023-CA-00665-COA

1ST STEP SOBER LIVING LLC AND SCOTT APPELLANTS
SMITH

v.

BILL CLEVELAND, ET AL., AND CITY OF APPELLEES
TUPELO, MISSISSIPPI

DATE OF JUDGMENT: 05/02/2023
TRIAL JUDGE: HON. BRADLEY D. TENNISON
COURT FROM WHICH APPEALED: LEE COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANTS: MARK WHITBURN
LAURANCE NICHOLAS CHANDLER
ROGERS
ATTORNEYS FOR APPELLEES: JESSIE WAYNE DOSS JR.
DAVID D. O’DONNELL
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED - 02/18/2025
MOTION FOR REHEARING FILED:

BEFORE CARLTON, P.J., WESTBROOKS AND LAWRENCE, JJ.

LAWRENCE, J., FOR THE COURT:

¶1. William Brand owned a residence in the Meadow Lake Park subdivision in Tupelo,

Mississippi. Brand entered a lease with 1st Step Sober Living LLC (1st Step) for the home

to be used by individuals recovering from substance abuse disorder. Residents of the

subdivision filed a complaint in the Lee County Chancery Court requesting temporary and

permanent injunctive relief as well as damages. The complaint alleged that the intended use

of the residence violated restrictive covenants in place requiring the home to be used for

residential purposes. 1st Step argued against the injunction, contending that (1) the Fair
Housing Act (FHA), 42 U.S.C. §§ 3601–3619, prevented the residents from discriminating

against recovering drug users and (2) the house would not be operated as a business, meaning

it did not violate the restrictive covenants. The chancellor granted the residents’ request for

injunctive relief and prevented the home from opening. Aggrieved, 1st Step appeals. The

property was sold to uninterested parties during the course of this appeal. The City of Tupelo

filed a motion with the supreme court to supplement the record with the warranty deed

evidencing the sale and asserted the sale made this appeal moot. The supreme court passed

the motion to this Court to be considered with the merits of the appeal. Upon review, we

grant the motion for supplementation but disagree the case is moot, as 1st Step requested

damages and raised issues under the FHA. However, after a review of the issues raised in

this appeal, we affirm the ruling of the chancery court.

FACTUAL AND PROCEDURAL HISTORY

¶2. William Brand owned a residence—a single home with three bedrooms and two

bathrooms—in the Meadow Lake Park Subdivision in Tupelo, Mississippi.1 The subdivision

had restrictive covenants in place as follows:

2. Land Use and Building Type: This lot shall be used only for private
residential purposes. No building shall be constructed or altered on the lot
except one detached single-family dwelling. However, such building may have
attached thereto (or separately constructed) a garage or automobile carport and
servants quarters, provided that any such separate quarters shall never be used
or occupied by anyone other than an actual bona fide servant of the principal
dwelling.

....

1
The specific address for the residence at issue is 4646 Meadow Lake Drive.

2
6. Non-Conforming Uses and Nuisances: This lot or any portion thereof
shall not be put to any use, except as permitted by these covenants, and no
noxious or offensive activity shall be undertaken or carried on upon any lot
which may become an annoyance to the neighborhood.

....

10. Enforcement: Enforcement of these covenants may be undertaken
by a proceeding at law or in equity, by the owner of any one or more of
the lots in said subdivision, against any person or persons violating or
attempting to violate any one of more of said covenants. Any requirement that
any such litigation shall be considered as class litigation, for the use and
benefit of all of the owners of said lots, shall be and the same is hereby
waived. Such litigation may be to restrain or enjoin violation or to recover
money damages.

(Emphasis added). It appears Brand rented the property to Patrick Elkins from approximately

2017 to 2020. During that time, Elkins developed plans with Scott Smith, who owned 1st

Step, to use the residence as a sober living home. Brand orally agreed to lease the residence

to 1st Step and the company’s members2 (collectively referred to hereafter as “1st Step”), but

no written lease was formed.3 1st Step planned to open the home on October 1, 2020, and

operate as a sober living home for people with substance use disorders. At that time, 1st Step

had eight prospective tenants who were expected to move into the home once it was opened.

¶3. As of August 2020, 1st Step had not yet applied to the City of Tupelo for approval of

their proposed use of the residence. The city attorney contacted Smith the following month

and later sent a letter on September 22, 2020, captioned, “Notice of failure to comply with

city ordinances and codes at 4646 Meadow Lake Drive[.]”

2
Those members included in the suit were Scott Smith, the chief executive officer,
and Patrick Elkins, the chief operations officer.
3
There is no dispute that no written lease was executed.

3
¶4. On September 23, 2020, Bill Cleveland and 105 other residents of the subdivision

(collectively referred to as “the residents”) filed a complaint in the Lee County Chancery

Court against Brand, Smith, Elkins, 1st Step Sober Living LLC, and the City of Tupelo. The

residents contended that the intended use of the property was in violation of the subdivision’s

restrictive covenants—specifically that the property “be used only for private residential

purposes.” Attached to the complaint were 1st Step’s LLC certification and an application

and handbook for prospective 1st Step tenants. In addition, the subdivision residents filed

a motion for a temporary restraining order or, in the alternative, a preliminary and permanent

injunction to prevent the sober living home from opening.

¶5. On September 24, 2020, the chancellor entered an order stating that a hearing was

held that day during which 1st Step “announced an agreement to maintain the status quo” of

the property at issue “until further order of the [c]ourt.”4 On September 30, 2020, 1st Step

filed a response to the motion and an answer to the complaint. 1st Step also filed a

counterclaim against the residents for “refusing to make reasonable accommodations in their

rules, policies, practices, or services[,]” therefore violating the FHA. On November 2, 2020,

1st Step filed a motion to vacate the order maintaining the “status quo” and for other relief.

¶6. On October 13, 2021, 1st Step filed a motion for leave to file an amended

counterclaim and cross-claim. After receiving responses from the residents and the City, the

chancellor set a hearing on the motion in November 2021. Following the hearing, the

chancellor granted 1st Step leave to file an amended complaint. On December 13, 2021, the

4
Also on September 24, 2020, the chancellor entered an order of recusal and
reassignment of the case.

4
chancellor entered an agreed scheduling order outlining the proceedings moving forward.

¶7. On December 14, 2021, 1st Step filed their first cross-claim against the City of Tupelo

and their amended counterclaim against the residents. The cross-claim asserted that the City

had also violated the FHA. The City responded to the claim on January 7, 2022. On March

10, 2022, 1st Step filed a motion for sanctions and default judgment against the residents and

the City for failing to respond to requests for production of documents and interrogatories.

A hearing on the motion was held on April 19, 2022. On the following day, the chancellor

entered an order resetting the deadlines for the case and imposing a $500 sanction on the

residents. On July 8, 2022, the residents filed an answer to 1st Step’s amended counterclaim.

¶8. On August 2, 2022, 1st Step and its members filed a motion for partial summary

judgment, again arguing the grounds of an FHA claim. The same day, 1st Step filed an

additional motion for sanctions and an amended motion for partial summary judgment. Also

on the same day, the residents filed a motion for summary judgment issuing declaratory relief

and a permanent injunction against 1st Step and the City. Finally, on August 2, 2022, the

City filed its own motion for summary judgment. On September 19, 2022, the chancellor

denied all motions for summary judgment.

¶9. A bench trial was held from October 5 to October 7, 2022. At trial, it was established

that the residence at issue would “be occupied by eight adult male participants in the 1st Step

sober-living program, who will be supervised by a . . . [h]ouse [m]anager” who would also

live in the home. The participants would be required “to pay a $650 monthly fee in exchange

for living accommodations, random drug testing, required attendance at relapse meetings,

5
and general support, accountability, and counseling” from the house manager. An expert

witness testified for 1st Step at trial to explain those services. At the conclusion of the trial,

the chancellor granted the parties time to file post-trial briefs. Post-trial briefs were filed

with the chancery court by the residents, 1st Step, and the City of Tupelo between December

2022 and January 2023 for additional review.

¶10. On May 2, 2023, the chancellor summarized his findings from the bench trial and

review of the briefs and entered the final judgment in the cause. He found that “[w]hile there

may be a residential aspect to 1st Step’s business model[,] . . . it [was] clear that 1st Step’s

business model involve[d] more than providing a place to eat, sleep, and bathe, and that its

primary purpose [wa]s to provide alcohol and drug recovery services for” its tenants.

(Emphasis added). In addition, the chancellor noted that while the residence’s “fair rental

value . . . [wa]s approximately $1100 monthly[,]” 1st Step would be “generat[ing]

approximately $5200 monthly in collections . . . which [wa]s reflective of the provision of

additional services provided at the site.” He reasoned that were the residence to be used only

“as a place of abode,” then the rental for each occupant would be lower “based on the fair

market rental of the property[.]” The chancellor concluded that “the combination of

obligations and services to be coordinated between 1st Step and its prospective tenants would

violate the subject [r]estrictive [c]ovenants regarding its use only for private residential

purposes.” In addition, the chancellor denied 1st Step’s requests for relief under the FHA.

¶11. On May 23, 2023, 1st Step appealed. On appeal, 1st Step asserts that (1) its use of the

residence would not violate the subdivision’s restrictive covenants, (2) the arrangement

6
would not violate the Mississippi Residential Landlord Tenant Act, (3) there should have

been opportunity for reasonable accommodations to be made, and (4) not allowing 1st Step

to operate within the residence violated the FHA.

¶12. On April 11, 2024, the City of Tupelo filed a motion in the supreme court to

supplement the record with a warranty deed evidencing the sale of the subject property,

arguing the sale rendered the case moot. The deed indicated Brand sold the property to Scott

Smith on June 2, 2023. However, on October 29, 2023, Smith then sold the property to

Cristhoper Mendoza Gonzalez5 and Juana Elizabeth Ortiz Ruiz. The deeds were certified

and filed in Lee County’s official land records. On April 12, 2024, the subdivision’s

residents filed a motion for joinder in the City’s motion. On April 24, 2024, the Supreme

Court passed both motions for consideration with the merits of the appeal. The case was then

assigned to this Court.

STANDARD OF REVIEW

¶13. We “will not disturb the factual findings of a chancellor when supported by substantial

evidence unless we can say with reasonable certainty that the chancellor abused his

discretion, was manifestly wrong, clearly erroneous or applied an erroneous legal standard.”

Ruff v. Est. of Ruff, 989 So. 2d 366, 369 (¶11) (Miss. 2008) (quoting Biglane v. Under The

Hill Corp., 949 So. 2d 9, 13-14 (¶17) (Miss. 2007)). “Where the chancellor makes no

specific findings, [we] proceed[] on the assumption that the chancellor resolved all fact

issues in favor of the appellee.” Id. (citing City of Picayune v. S. Reg’l Corp., 916 So. 2d

5
Cristhoper’s name varies in spelling in the motion to supplement and attached
documents. We use the spelling found on the warranty deed to the property.

7
510, 519 (¶22) (Miss. 2005)).

ANALYSIS

¶14. This Court has previously dismissed appeals as moot when facts proving mootness

became available after the notice of appeal was filed, and we have allowed the record to be

supplemented when mootness has been raised. See Williams v. State, 228 So. 3d 381, 382

(¶¶1-4) (Miss. Ct. App. 2017) (dismissing appeal after defendant asked this Court “to revisit

the question whether incest is a sex crime” while MDOC argued his post-release supervision

mooted the appeal); see also Lafayette Cnty. Bd. of Sup’rs v. Third Cir. Drug Ct., 80 So. 3d

785, 788 (¶¶12-15) (Miss. 2012) (dismissing appeal as moot after parties filed supplemental

briefs stating Union County “replaced” Lafayette County as the “lead county” for the drug

court). After review, we grant the motion to supplement the record with the warranty deed.

I. Mootness

¶15. The City and the residents assert that the sale of the residence at the center of this

dispute renders the case moot. Indeed, “[t]he appellate courts do not adjudicate questions

that are moot.” In re Caldwell, 326 So. 3d 503, 504 (¶4) (Miss. Ct. App. 2021) (citing Davis

v. Guido, 308 So. 3d 874, 882 (¶29) (Miss. Ct. App. 2020)). “A case is moot if a judgment

on the merits would be of no practical benefit to the plaintiff or detriment to the defendant.”

In re City of Biloxi, 113 So. 3d 565, 572 (¶21) (Miss. 2013) (quoting Gartrell v. Gartrell, 936

So. 2d 915, 916 (¶8) (Miss. 2006)). Our appellate courts generally “will dismiss an appeal

when no useful purpose could be accomplished by entertaining it, when so far as

concerns any practical ends to be served the decision upon the legal questions involved

8
would be merely academic.” Id. (emphasis added) (quoting Koestler v. Koestler, 976 So. 2d

372, 379 (¶19) (Miss. Ct. App. 2008)). “[A] case is deemed moot where an actual

controversy existed at trial but has expired at the time of review[.]” Id. (emphasis added)

(quoting Davis, 308 So. 3d at 882 (¶29)).

¶16. We note that there are exceptions to the mootness doctrine, including the public

interest exception;6 regardless, this Court finds the sale of the subject property did not render

all the issues of 1st Step’s proposed use of the property moot, as explained below. In this

case, 1st Step also sought actual and punitive damages in their counterclaim when the

restrictive covenant was sought to be enforced. Federal district courts have stated that

“[c]laims for damages are largely able to avoid mootness challenges.” Ermold v. Davis, 855

6
The mootness doctrine “will not be applied when the question or questions
involved are matters affecting the public interest.” In re Validation of Tax Anticipation
Note, Series 2014, 187 So. 3d 1025, 1033 (¶22) (Miss. 2016) (quoting Sartin v. Barlow, 196
Miss. 159, 16 So. 2d 372, 376 (1944)). In other words, this exception arises “when the
question concerns a matter of such a nature that it would be distinctly detrimental to the
public interest that there should be a failure by the dismissal to declare and enforce a rule for
future conduct.” Id. This state’s appellate courts have utilized the public interest exception
in a variety of cases. See Allred v. Webb, 641 So. 2d 1218, 1220 (Miss. 1994) (finding a
dispute concerning whether a DA could fire an ADA at his own discretion was not moot
when the DA lost re-election while the case was still pending because it was “clearly not a
mere private dispute between two parties since future district attorneys inevitably will find
themselves in the same quandary”); Alford v. Miss. Div. of Medicaid, 30 So. 3d 1212, 1214
(¶9) (Miss. 2010) (finding a wife’s petition to consider her husband’s disability to increase
certain allowances within the Medicaid program before applying to the program was not
moot following the husband’s death because the issue fell under the public interest exception
“[a]s our current population continues to age and our state’s coffers become more strained”);
Smith v. State, 229 So. 3d 178, 181 (¶7) (Miss. Ct. App. 2017) (defendant’s petition to be
transferred from the state hospital was not moot even after his release because “the possible
conflict regarding which court has jurisdiction under the circumstances” was in the public’s
interest). This opinion does not address the public interest exception to mootness. The FHA
damages alleged by 1st Step as a result of the enforcement of the restrictive covenant survive
the sale. See supra ¶16.

9
F.3d 715, 719 (6th Cir. 2017) (citing 13C Charles Alan Wright, Arthur R. Miller & Edward

H. Cooper, Federal Practice and Procedure § 3553.3 (3d ed. 2017)); see also CMR D.N.

Corp. v. City of Philadelphia, 703 F.3d 612, 622 (3d Cir. 2013) (“[D]amages should be

denied on the merits, not on grounds of mootness.” (quoting Nat’l Iranian Oil Co. v. Mapco

Int’l Inc., 983 F.2d 485 (3d Cir. 1992))); see also Memphis Light, Gas & Water Div. v. Craft,

436 U.S. 1, 8 (1978) (finding the appellees’ “claim for actual and punitive damages arising

from” actions of the appellant “saves this cause from the bar of mootness” (citing Powell v.

McCormack, 395 U.S. 486, 496-500 (1969))).

II. Restrictive Covenants

¶17. 1st Step’s argument essentially revolves around the restrictive covenants in the

Meadow Lake Park subdivision. Foremost, it is true that “[r]estrictive covenants are not

favored in law[.]” Timber Lake Foods Inc. v. Estess, 72 So. 3d 521, 525 (¶12) (Miss. Ct.

App. 2011) (quoting Texas Rd. Boring Co. of La.-Miss. v. Parker, 194 So. 2d 885, 889 (Miss.

1967)). “But they are valid unless unreasonable, and when reasonable, the courts will not

hesitate to hold the parties to their contracts.” Id. (citing Frierson v. Sheppard Bldg. Supply

Co., 247 Miss. 157, 172, 154 So. 2d 151, 156 (1963)).

¶18. Here, however, it is not the validity of the restrictive covenant that is at issue. Rather,

1st Step argues its proposed use of the residence is within the confines of the restrictive

covenant, and the residents disagree. Consequently, this Court must determine whether the

proposed use of the residence as a sober living home for individuals recovering from

substance-use disorders falls within a “private residential purpose.” If the answer to this

10
question is no, then that is dispositive to the outcome of the entire case on appeal.

¶19. The Mississippi Supreme Court handled a similar issue in Scioto Properties SP-16

LLC v. Graf, 349 So. 3d 172 (Miss. 2022). Scioto Properties was a “for-profit limited-

liability company . . . specializ[ing] in helping individuals with developmental and/or

physical disabilities to find residential housing.” Id. at 174 (¶5). The company purchased

a residence in a Tupelo subdivision and “agreed to abide by any and all protective covenants”

when signing the express warranty deed. Id. Of note, one of the covenants expressly

specified that “[o]nly one single family residence shall be constructed or permitted on each

lot and it shall be used for residence purposes only.” Id. at (¶7). In 2017, Scioto leased the

residence to Brandi’s Hope, “a for-profit Mississippi limited-liability company that

provide[d] services to individuals with developmental and/or physical disabilities[.]” Id. at

(¶8).

¶20. Brandi’s Hope subleased the residence to four separate individuals for “separate

private bedrooms” and the right to use the home’s common areas. Id. at (¶9). The

individuals were disabled and, as part of their lease agreement, “agreed to exclusively use

Brandi’s Hope’s residential support services” including those that involved getting dressed

and completing day-to-day tasks. Id. at (¶10). These services also included employees who

“provided around-the-clock care, taking turns tending to clients overnight.” Id. The

“subleases acknowledged that all individuals have a choice in the provider of all services”

but mandated that individuals living in the home use Brandi’s Hope’s services. Id. at (¶11).

¶21. The owners of the residence across the street filed a complaint against both Scioto and

11
Brandi’s Hope, alleging that the residence “was being used for business purposes, which

violated the protective covenants.” Id. at (¶13). The chancellor agreed, and Scioto appealed

to the Mississippi Supreme Court. Id. at 173 (¶1). The court held that “the covenants clearly

and unambiguously express the intent to prohibit commercial use of the property.” Id. at 174

(¶7). Further, it was undisputed that “Brandi’s Hope d[id] not merely come to the home to

provide services” but, rather, was “a business that leases the home for the express purpose

of providing residential home services for which it is paid.” Id. at (¶3).

¶22. Here, the prospective use of the property was exactly like the use declared a

“business” by the supreme court’s decision in Scioto. It is obvious that 1st Step’s sober

living home was a for-profit business. Testimony given at the bench trial as well as the

testimony contained in the briefings and documents support this fact. We agree with the

residents’ brief that the “primary draw” for prospective tenants was not the home itself.

Instead, that draw was “the services that [1st Step] plan[ned] to offer, including access to

clinical support, supervision and basic life skill coaching by a house manager, drug testing,

and employment recommendations to its tenants.” The tenants were paying to live in the

home to receive those services. Such services are certainly meritorious but as stated in

Scioto, “these residential purposes cannot be unlinked from the commercial purpose of [1st

Step]’s venture.” Id. at 179 (¶34). We find that the proposed use of the residence was indeed

a commercial endeavor and, similarly to the Mississippi Supreme Court’s holding in Scioto,

was prohibited by the restrictive covenants. Id. at (¶¶34-37).

III. FHA

12
¶23. 1st Step also asserts they are entitled to damages because the residents and City

violated the FHA, 42 U.S.C. § 3604, by “discriminating” against potential tenants of the

sober living home. The threshold requirement here was the question of whether the potential

tenants of 1st Step were handicapped and, thus, a protected group under the FHA. In

relevant part, the chancellor’s final judgment in this case determined that “taking into

account the totality of credible proof, Brand and 1st Step have failed to satisfy the threshold

requirement in 42 U.S.C.A. § 3602(h) to invoke the protections of the FHA.” The chancellor

gave the following reasoning for such a finding:

No potential applicants testified. The application omits crucial information
necessary to ascertain the applicant’s deficiencies regarding major life
activities or to determine whether any exclusions apply. Further, the manner
in which those applications would be assessed to determine admission
generates considerable uncertainty. Based on the testimony at trial, the
admissions process appears to operate with such subjectivity that it was
unpersuasive that appropriate criteria and assessment will be maintained to
ensure its compliance and continued adherence to the directives which would
offer protection under the FHA.

¶24. In relevant part, “[t]he FHA makes it unlawful to discriminate against any person in

the terms, conditions, or privileges of sale or rental of dwelling, or in the provision of

services or facilities in connection with such dwelling, because of a handicap[.]” Oxford

House Inc. v. City of Baton Rouge, 932 F. Supp. 2d 683, 687-88 (M.D. La. 2013) (quoting

42 U.S.C. § 3604(f)(1)).

¶25. The FHA defines a handicap as “(1) a physical or mental impairment which

substantially limits one or more of such person's major life activities, (2) a record of having

such impairment, or (3) being regarded as having such an impairment.” Id. at 688 (emphasis

13
added) (quoting 42 U.S.C. § 3602(h)). This definition does not, however, “include

current, illegal use of or addiction to a controlled substance.” Id. (emphasis added).

“Alcoholism and drug-addiction are impairments, see, e.g., Reg’l Econ. Cmty. Action

Program Inc. v. City of Middletown, 294 F.3d 35, 46 (2d Cir. 2002)[, but] the FHA ‘does not

include current, illegal use of, or addiction to, a controlled substance,’ 42 U.S.C. § 3602(h).

Therefore, a recovering alcoholic, or an individual recovering from drug addiction, i.e., not

currently using illegal drugs, may be handicapped under the FHA if his alcoholism or

addiction substantially limits one or more of his major life activities.” Harmony Haus

Westlake L.L.C. v. Parkstone Prop. Owners Ass’n, 851 F. App’x 461, 463 (5th Cir. 2021).

¶26. To prevail on its FHA claim, 1st Step first needed to prove that its tenants were

handicapped. Chavez v. Aber, 122 F. Supp. 3d 581, 595 (W.D. Tex. 2015) (quoting DuBois

v. Ass’n of Apartment Owners of 2987 Kalakaua, 453 F.3d 1175, 1179 (9th Cir. 2006)).

However, 1st Step presented little to no proof of such handicap to the chancellor. When 1st

Step’s CEO Scott Smith was called to testify during the hearing, the following exchange took

place between counsel for the residents and himself:

Q: So what sort of answers are you looking for when you’re
reviewing these applications in order to determine whether
someone is under a substance use disorder?

[SMITH]: Well, I mean, first, let me just say that the people coming to our
house will be coming directly from substance use disorder
treatment, so they will already be diagnosed with substance use
disorder through the treatment facility, which is why they come
to us in the first place, so that’s already done.

Q: Is that a requirement under the application?

14
[SMITH]: That is a -- no, it won’t be a requirement, but if somebody
comes to us, we are going to, you know, request that they
identify as an alcoholic, or an addict, which is, basically, what
the 12-step rooms you know, I told you we were abstinence
based, and we run off the principles of the 12 steps, so if
someone identifies as an alcoholic, or an addict, we are going
to accept that as true.

Q: So you’ll accept as true the statement by these folks that they are
under a substance use disorder; correct?

[SMITH]: Correct.

Q: And you’re not going to corroborate that in any way, are
you?

[SMITH]: Not unless I’m suspicious of them not being honest about that.

(Emphasis added).

¶27. 1st Step itself was not absolutely sure whether its tenants were handicapped, and

without more, the chancellor could not have found a handicap under the FHA. None of the

potential tenants of 1st Step offered testimony. The application for entry into 1st Step merely

asked for the applicant to list his or her addiction and “drug(s) of choice[.]” Medical records

were not required for entry. Further, the application did not include any questions or sections

ascertaining whether the applicant’s major life activities were “substantially limit[ed].” The

only step beyond filling out an application was an “interview with the house manager[,]” who

was only required to be trained to know CPR and how to administer Narcan. In short, we

agree with the chancellor that 1st Step did not provide support for or sufficiently prove that

the tenants of the proposed rehabilitation business fit the “handicap” criteria as set out in the

FHA.

15
CONCLUSION

¶28. In summary, this Court grants the City’s joint motion with the residents of Meadow

Lake Park subdivision to supplement the record on appeal with the warranty deeds

evidencing the sale of the subject property. However, we do not find this appeal is moot due

to the assertion of damages under issues raised in this appeal. We find 1st Step was indeed

a business endeavor and subject to prohibition by the restrictive covenants. Further, we find

that 1st Step failed to prove its tenants were “handicapped” as defined by the FHA.

Accordingly, we affirm the chancery court’s final judgment.

¶29. AFFIRMED.

BARNES, C.J., CARLTON AND WILSON, P.JJ., WESTBROOKS,
McDONALD, McCARTY, EMFINGER, WEDDLE AND ST. PÉ, JJ., CONCUR.

16