Although a trio of Gunnison landlords recently avoided being held in contempt of court, a judge has registered new concerns about their ongoing failure to comply with a non-discrimination agreement they entered into with the federal government.

On Jan. 17, the U.S. Department of Housing and Urban Development asked for a status conference with David Welch, John Welch and Ruth Welch to discuss their continued disobedience of a four-year-old consent decree committing them to take certain steps to comply with the Fair Housing Act. The Welches signed the agreement in response to allegations they denied or discouraged families with children from renting at their 12-unit complex at 1412 W. Gunnison Ave.

Despite a warning last summer from U.S. District Court Judge Gordon P. Gallagher that “punishments are going to start happening” if the Welches did not hold up their end of the bargain, the government reported the scolding from the bench had little effect.

“Respondents are either unwilling or unable to comply with the consent order, and thus, Petitioner is now requesting further action from the Court to achieve compliance,” wrote Assistant U.S. Attorney Zeyen J. Wu.

As part of the consent decree to remedy their alleged discrimination, the Welches committed to advertise their property with the phrase “families with children welcome to apply” and provide records of rental inquiries and applications to the government.

But the Welches went silent, prompting the government to go to the U.S. Court of Appeals for the 10th Circuit to seek enforcement of the consent decree. In 2022, the 10th Circuit restarted the three-year monitoring period and told the Welches to begin complying.

From there, the case moved to Colorado’s federal trial court. Initially, after the Welches failed to appear at a hearing, U.S. Magistrate Judge N. Reid Neureiter recommended holding them in contempt. U.S. District Court Judge Daniel D. Domenico, who was presiding over the case, held off on imposing punishment after the government indicated it may be making progress with the Welches.

By spring 2023, any move toward compliance evaporated. Domenico told the Welches he would fine them $150 per day and potentially jail them if they continued to ignore their obligations.

In an unusual move, Domenico enlisted Gallagher, who is stationed in Grand Junction, to come to Gunnison for a hearing with the Welches at the local courthouse. He outlined the requirements of the consent decree and informed the Welches their compliance “needs to start now.”

“I’ve never seen a court put somebody in jail for this,” Gallagher said. “But at some point, the court’s going to say, ‘Enough is enough,’ and the punishments are going to start happening.”

On Dec. 1, Domenico noted the Welches had filed “at least some” documentation with the court following the hearing with Gallagher. Based on the “apparent good-faith attempt” to fulfill their obligations, Domenico declined to hold them in contempt as Neureiter previously recommended. Instead, he reminded the Welches they risked fines, community service or imprisonment if they ignore court orders again.

In the latest update from the Department of Housing and Urban Development, however, Wu noted the Welches had run another advertisement for their property in the local paper that did not contain the mandatory family-inclusive language. When Wu called Ruth Welch’s phone number, “a female voice answered the phone but stated that she was not Ruth Welch, and then hung up the phone.”

Most problematically, the rental records the Welches submitted to the court did not disclose the ages of any children living at their property, as the consent decree requires.

“Considering that the allegation in this case is Respondents’ refusal to rent to families with children, the ages of any minor tenants is the critical piece of information in ensuring compliance with the Fair Housing Act,” Wu wrote.

In response, the court reassigned the case from Domenico to Gallagher. Gallagher issued an order acknowledging the government’s allegations of noncompliance. He gave the Welches 14 days to respond to the request for a status conference.

As of the morning of Feb. 1, the deadline, the Welches had not filed anything with the court.