L.A. landlords urge 9th Circuit to block city eviction freeze

4 minute read

Protesters surround the LA Superior Court to prevent an upcoming wave of evictions and call on Governor Gavin Newsom to pass an eviction moratorium, amid the global outbreak of coronavirus disease (COVID-19), in Los Angeles, California, U.S., August 21, 2020. REUTERS/Lucy Nicholson/File Photo

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(Reuters) - A Los Angeles landlord association on Wednesday urged a federal appeals court to block an eviction moratorium enacted by the city last year in response to the COVID-19 pandemic, which they argued violate landlords' constitutional rights.

Doug Dennington of Rutan & Tucker, representing the Apartment Association of Los Angeles County (AAGLA), told a 9th U.S. Circuit Court of Appeals panel the moratorium "obliterated" landlords' security in their contracts with tenants, violating the Contract Clause of the U.S. Constitution, which generally bars laws relieving particular parties of contractual obligations.

Jonathan Eisenman of the Los Angeles City Attorney's Office argued that U.S. District Judge Dean Pregerson in Los Angeles had not abused his discretion denying the landlords' bid for a preliminary injunction.

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The panel - Circuit Judges Jay Bybee and Daniel Bress and U.S. District Judge Kathleen Cardone of the Western District of Texas, sitting by designation - did not clearly indicate how it would rule.

The U.S. Centers for Disease Control and many states have passed broad freezes on residential evictions aimed at curbing the spread of COVID-19, giving rise to numerous court challenges. A federal judge last week struck down the CDC's moratorium, though the decision has been stayed.

In its lawsuit against Los Angeles, AAGLA said the city's ban went further than others by allowing tenants to withhold rent during the COVID emergency without any notice to the landlord, and gave them a one-year grace period after the end of the emergency to pay back rent.

Pregerson refused to grant a preliminary injunction last November, finding that the loss of landlord's theoretical right to sue for eviction in the future could not support a claim of irreparable harm.

On appeal, Dennington said the judge had failed to account for the fact that Los Angeles tenants would still be protected by California's statewide moratorium if the city's were enjoined. He reiterated his client's position that the city ban was a "substantial impairment" of their contractual relationship with tenants.

Bybee told Dennington his case was "very difficult" in light of the U.S. Supreme Court's 1934 ruling in Home Building & Loan Association v. Blaisdell, which upheld a Minnesota law restricting lenders' ability to foreclose on properties.

Dennington said the eviction ban was fundamentally different because mortgagors still had a security, in the form of the underlying property, while landlords' only security in their leases was the ability to replace a non-paying tenant with a paying one.

"Once that's gone, there is no way a landlord can ever mitigate his damages," he said.

Eisenman, defending the moratorium, said there was "no demonstration that the district court abused its discretion in balancing the benefit and burden here."

Bress pressed him on whether there could be constitutional issues if the moratorium lasted six years, or if the grace period lasted 20 years.

"I'm sure there would be," Eisenman said. "I don't think it's beneficial to speculate in a vacuum as to when they would arise."

The case is Apartment Association of Los Angeles County v. City of Los Angeles et al, 9th U.S. Circuit Court of Appeals, No. 20-56251.

For plaintiff: Doug Dennington of Rutan & Tucker

For Los Angeles: Jonathan Eisenman of the Los Angeles City Attorney's Office

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.