Apartment Association of Los Angeles County, Inc. v. City of Los Angeles et al, No. 2:2020cv05193 - Document 80 (C.D. Cal. 2020)

Court Description: ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION, 46 by Judge Dean D. Pregerson: DENYING Without Prejudice 46 MOTION for Preliminary Injunction.See order for further details. (shb)

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Apartment Association of Los Angeles County, Inc. v. City of Los Angeles et al Doc. 80 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 APARTMENT ASSOCIATION OF LOS ANGELES COUNTY, INC., 12 Plaintiff, 13 v. 14 CITY OF LOS ANGELES, ET AL., 15 Defendants. ) ) ) ) ) ) ) ) ) ) Case No. CV 20-05193 DDP (JEMx) ORDER DENYING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION [Dkt. 46] 16 17 Presently before the court is Plaintiff Apartment Association 18 of Los Angeles County, doing business as the Apartment Association 19 of Greater Los Angeles (“AAGLA”)’s Motion for Preliminary 20 Injunction. Having considered the submissions of the parties and 21 heard oral argument, the court denies the motion and adopts the 22 following Order.1 23 I. Background 24 25 1 26 27 28 The court has also considered submissions from amici curiae (1) National Housing Law Project (“NHLP”); (2) Professors Ananya Roy and Paul Ong, of the University of California, Los Angeles (“UCLA Scholars”); and (3) the Cities of Chicago, Albuquerque, Austin, Baltimore, Boston, Cambridge, Chelsea, Cincinnati, Columbus, Dayton, Gary, Santa Cruz, Santa Monica, Seattle, St. Paul, Oakland, Portland, Tucson, Somerville, and West Hollywood, and Santa Clara County (“Amici Governments”). Dockets.Justia.com 1 The COVID-19 global pandemic is the gravest public health 2 crisis in over a century. At present, the novel coronavirus has 3 killed at least 230,000 Americans and infected over 9 million 4 more.2 5 significantly higher. 6 Prevention (“CDC”), for example, estimates that the number of 7 “excess deaths” in the United States is closer to 300,000.3 8 Neither the State of California nor the City of Los Angeles have 9 been spared from the ravages of COVID-19. The true toll may never be known, but is likely The Centers for Disease Control and Nearly a million 10 Californians have been infected, and nearly 18,000 have died.4 11 Approximately 300,000 of those cases and 7,000 of those fatalities 12 have occurred in the Los Angeles area.5 13 Eight months into the pandemic, the City of Los Angeles 14 remains in a state of emergency. 15 recommendations from national, state, and local public health 16 authorities, state and local officials have taken hitherto 17 unthinkable steps to slow the spread of the virus. 18 state and city residents were ordered to stay confined to their 19 places of residence, with limited exceptions.6 In accordance with For a time, all Although 20 21 22 23 2 See https://covid.cdc.gov/covid-data-tracker/?CDC AA refVal=https%3A%2F %2Fwww.cdc.gov%2Fcoronavirus%2F2019-ncov%2Fcases-updates%2Fcases-in -us.html#cases casesper100k 3 See https://www.cdc.gov/mmwr/volumes/69/wr/mm6942e2.htm 4 See https://www.cdph.ca.gov/Programs/OPA/Pages/NR20-293.aspx 24 25 5 26 27 See http://dashboard.publichealth.lacounty.gov/covid19 surveillance das hboard/ 6 28 See https://covid19.ca.gov/stay-home-except-for-essential-needs/; 2 1 restrictions have eased somewhat at present, many types of 2 businesses and gathering places remain closed in Los Angeles, 3 including movie theaters, bars, athletic fields, theme parks, gyms 4 and fitness centers, museums, live performance venues, indoor 5 restaurants, and “non-critical” offices.7 6 conjunction with other coronavirus-related concerns, have had 7 devastating economic consequences. 8 million California households have lost employment income as a 9 result of the coronavirus.8 These measures, in By one estimate, over 16 Over the last six months, the 10 unemployment rate in the Los Angeles area has ranged from 15 to 20 11 percent.9 12 Crises of national scope require national responses. 13 Initially, the federal government rose to meet the economic 14 challenge presented by the COVID crisis and passed the Coronavirus 15 Aid, Relief and Economic Security Act (“CARES Act”), Pub. L. No. 16 116-136. 17 stimulus payment to taxpayers and (2) an additional $600 weekly 18 payment to Americans collecting unemployment benefits.10 Among the CARES Act’s provisions were (1) a one-time 11 Those 19 6 20 21 22 23 24 25 (...continued) https://www.lamayor.org/sites/g/files/wph446/f/page/file/20200527%2 0Mayor%20Public%20Order%20SAFER%20AT%20HOME%20ORDER%202020.03.19%20 (REV%202020.05.27).pdf 7 See https://corona-virus.la/sites/default/files/inline-files/MO COVID-1 9 What%27sOpen Updated%2020201007.pdf 8 See https://www.census.gov/data/tables/2020/demo/hhp/hhp14.html 9 26 See https://www.bls.gov/eag/eag.ca losangeles md.htm 10 27 28 See https://home.treasury.gov/policy-issues/cares/assistance-for-americ an-workers-and-families; (continued...) 3 1 additional unemployment payments expired, however, at the end of 2 July, and Congress has not provided for further stimulus payments 3 or other assistance to the American people. 4 abated. 5 have persisted. 6 But the crisis has not As the pandemic has worsened, its economic consequences These economic impacts have, unsurprisingly, affected the 7 ability of many residential tenants to make rent payments. 8 Somewhere between one million and 1.4 million California households 9 are behind on their rent.12 Approximately 14% of renter households 10 in Los Angeles County are behind on rent, largely due to the 11 effects of the pandemic on employment.13 12 over 450,000 people in the City of Los Angeles.14 13 These households include As the CDC has explained, the novel coronavirus “spreads very 14 easily and sustainably between people who are in close contact with 15 one another . . . .”15 “[H]ousing stability helps protect public 16 10 17 18 19 20 21 22 (...continued) https://www.edd.ca.gov/about edd/coronavirus-2019/cares-act.htm 11 Undocumented immigrants, including those who pay federal taxes with an Individual Taxpayer Identification Number, are not eligible for one-time stimulus payments, nor are United States citizens who are married to and file taxes jointly with undocumented spouses. See, e.g., Amador v. Mnuchin, No. CV ELH-20-1102, 2020 WL 4547950, at *4 (D. Md. Aug. 5, 2020). Many vulnerable renters in Los Angeles are concentrated in immigrant neighborhoods. (UCLA Scholars brief at 7.) 12 23 See https://www.census.gov/data/tables/2020/demo/hhp/hhp14.html 24 13 See UCLA Scholars brief at 4:10-11. 25 14 Id. at 5:12. 26 15 27 28 See Dep’t of Health and Human Serv.’s, Centers for Disease Control and Prevention, Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19, https://www.govinfo.gov/content/pkg/FR-2020-09-04/pdf/202 (continued...) 4 1 health because homelessness increases the likelihood of individuals 2 moving into congregate settings . . .” 3 of a pandemic, eviction moratoria – like quarantine, isolation, and 4 social distancing – can be an effective public help measure 5 utilized to prevent the spread of communicable disease,” and 6 “facilitate self-isolation by people who become ill or who are at 7 risk for severe illness from COVID-19.”17 8 9 16 Thus, “[i]n the context Recognizing that “[t]he COVID-19 pandemic threatens to undermine housing security and generate unnecessary displacement of 10 City residents,” the City of Los Angeles adopted, among other 11 measures, Ordinance 186606 (“the Eviction Moratorium,” “City 12 Moratorium,” or “Moratorium”). 13 prohibits evictions of residential and commercial tenants for 14 failure to pay rent due to COVID-19, and prohibits evictions of 15 residential tenants during the emergency for no-fault reasons, for 16 unauthorized occupants or pets, and for nuisances related to COVID- 17 19.” 18 Landlords may continue to seek to evict tenants for other reasons, 19 and do not run afoul of the Moratorium at all if they seek to evict 20 a tenant on the basis of a good faith belief that the tenant does 21 not qualify for the Moratorium’s protections.18 The Moratorium “temporarily (Plaintiff’s Request for Judicial Notice, Ex. 3 at 2.) (Id. at 3, 4). 22 23 24 15 (...continued) 0-19654.pdf 16 Id. 17 Id. 25 26 18 27 28 The Moratorium also creates a private right of action for residential tenants against landlords for certain violations, but only after written notice to the landlord and a fifteen day window to cure the alleged violation. (Moratorium at 4-5.) 5 1 The Moratorium’s prohibition of evictions for COVID-related 2 unpaid rent extends for twelve months after the expiration of the 3 local emergency.19 4 year after the end of the emergency to make any rent payments that 5 were missed as a result of COVID, including as a result of 6 workplace closures, health care expenses, child care expenses due 7 to school closures, “or other reasonable expenditures stemming from 8 government-ordered emergency measures.”20 9 explicitly states, however, that it does not “eliminate[] any (Id. at 3.) In other words, tenants have one (Id.) The Moratorium 10 obligation to pay lawfully charged rent.” 11 end of the one year grace period, a tenant still owes rent that 12 came due during the emergency period, a landlord may seek to evict 13 for that unpaid rent. 14 or interest for missed rent during the emergency or twelve month 15 grace period. 16 (Id. at 4.) If, at the Landlords may not, however, charge late fees (Id. at 3.) Plaintiff AAGLA is comprised of thousands of owners and 17 managers of rental housing units, including over 55,000 properties 18 within the City of Los Angeles. 19 Complaint (“TAC”) alleges that the City Eviction Moratorium and 20 Rent Freeze Ordinance violate landlords’ rights under the Contract 21 Clause of the Constitution, as well as the Due Process Clause, Plaintiff’s Third Amended 22 23 24 25 26 27 28 19 The City also adopted Ordinance No. 186607 (the “Rent Freeze Ordinance”), which prohibits rent increases on units subject to existing rent control provisions for a similar twelve-month period following the end of the COVID emergency. (Plaintiff’s RJN, Ex. 4 at 21.) 20 As discussed in further detail below, this grace period will, by operation of state law, expire no later than March 1, 2022. See California Assembly Bill 3088 § 1179.05(a)(2)(A). 6 1 Takings Clause, and Tenth Amendment. 2 preliminary injunction on the basis of the TAC’s first two claims. 3 II. 4 Plaintiff now moves for a Legal Standard A private party seeking a preliminary injunction must show 5 that: (i) it is likely to succeed on the merits; (ii) it will 6 suffer irreparable harm in the absence of preliminary relief; (iii) 7 the balancing of the equities between the parties that would result 8 from the issuance or denial of the injunction tips in its favor; 9 and (iv) an injunction will be in the public interest. Winter v. 10 Natural Resources Def. Council, 555 U.S. 7, 20 (2008). Preliminary 11 relief may be warranted where a party: (i) shows a combination of 12 probable success on the merits and the possibility of irreparable 13 harm; or (ii) raises serious questions on such matters and shows 14 that the balance of hardships tips in favor of an injunction. 15 Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th 16 Cir. 1987). “These two formulations represent two points on a 17 sliding scale in which the required degree of irreparable harm 18 increases as the probability of success decreases.” 19 hiQ Labs, Inc. v. LinkedIn Corp., 938 F.3d 985, 992 (9th Cir. 20 2019). 21 chance of success on the merits” and a “significant threat of 22 irreparable injury” absent the requested injunctive relief.21 23 Arcamuzi, 819 F.2d at 937. 24 III. Discussion See Id.; see also Under both formulations, the party must demonstrate a “fair 25 26 27 28 21 Even under the “serious interests” sliding scale test, a plaintiff must satisfy the four Winter factors and demonstrate “that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). 7 1 A. Likelihood of Success on the Merits 2 AAGLA contends that the Eviction Moratorium and the Rent 3 Freeze Ordinance run afoul of the Contract Clause’s prescription 4 that states shall not pass “any Law impairing the Obligation of 5 Contracts.” 6 facially absolute, its prohibition must be accommodated to the 7 inherent police power of the State to safeguard the vital interests 8 of its people.” 9 Co., 459 U.S. 400, 410 (1983) (internal quotation marks omitted). U.S. Const., Art. I, § 10. Although this language “is Energy Reserves Grp., Inc. v. Kansas Power & Light 10 “The constitutional question presented in the light of an emergency 11 is whether the power possessed embraces the particular exercise of 12 it in response to particular conditions.” 13 v. Blaisdell, 290 U.S. 398, 426 (1934). 14 the Eviction Moratorium runs afoul of the Contract Clause, this 15 Court must examine (1) whether the law “operate[s] as a substantial 16 impairment of a contractual relationship,” (2) whether the City 17 “has a significant and legitimate public purpose” in enacting the 18 moratorium, and (3) whether the “adjustment” of the rights of the 19 contracting parties is “based upon reasonable conditions and is of 20 a character appropriate to the public purpose justifying the 21 legislation’s adoption.” 22 (alterations omitted); see also Sveen v. Melin, 138 S. Ct. 1815, 23 1821 (2018) (combining public purpose and reasonableness 24 inquiries). 25 Moratorium is motivated by a legitimate public purpose, it Home Bldg. & Loan Ass’n Thus, to determine whether Energy Reserves, 459 U.S. at 411-12 Here, although AAGLA concedes that the Eviction 26 27 28 8 1 nevertheless contends that the moratorium substantially and 2 unreasonably impairs landlords’ contract rights.22 3 4 1. Substantial Impairment Whether a law substantially impairs a contractual relationship 5 depends upon “the extent to which the law undermines the 6 contractual bargain, interferes with a party’s reasonable 7 expectations, and prevents the party from safeguarding or 8 reinstating his rights.”23 9 asserts that the Eviction Moratorium deprives landlords of the Sveen, 138 S. Ct. at 1822. AAGLA 10 “primary enforcement mechanism embodied in residential leases,” and 11 that such mechanisms are “the heart of what the Supreme Court has 12 held must be protected under the Contract Clause.” 13 support of motion at 22:4-7.) This argument is premised upon 14 several mischaracterizations. First, notwithstanding AAGLA’s 15 description of eviction as the “primary” enforcement mechanism of a 16 rental contract, the Eviction Moratorium does not deprive landlords 17 of their contract remedies. 18 from their contractual obligations to pay rent, and landlords 19 remain free to sue in contract for back rent owed. 20 (Memorandum in The Moratorium does not excuse tenants Second, the Blaisdell court, contrary to AAGLA’s 21 representation, did not state that contract enforcement measures 22 are sacrosanct. Although the Court did recount its prior 23 22 24 25 26 27 28 Because the Rent Freeze Ordinance is less burdensome than the Eviction Moratorium, the discussion of the former is subsumed within that of the latter, herein. 23 AAGLA asserts that an impairment is substantial “if it deprives a private party of an important right, thwarts performance of an essential term, defeats the expectations of the parties, or alters a financial term.” S. California Gas Co. v. City of Santa Ana, 336 F.3d 885, 890 (9th Cir. 2003) (internal citations omitted). That slightly looser standard applies, however, to public contracts. Id. 9 1 observation in Von Hoffman v. City of Quincy, 71 U.S. 535, 551 2 (1866), that “[n]othing can be more material to the obligation [of 3 a contract] than the means of enforcement,” the Court explained, in 4 the very same paragraph, that the Von Hoffman court itself limited 5 its “general statement” with the observation that “it is competent 6 for the States to change the form of the remedy, or to modify it 7 otherwise, as they may see fit, provided no substantial right 8 secured by the contract is thereby impaired. . . . 9 be determined upon its own circumstances.” Every case must Blaisdell, 290 U.S. at 10 430 (internal quotation marks omitted).24 11 on to reject the very argument raised by AAGLA here. 12 13 14 15 16 17 18 19 Indeed, the Court went [I]t does not follow that conditions may not arise in which a temporary restraint of enforcement may be consistent with the spirit and purpose of the constitutional provision and thus be found to be within the range of the reserved power of the state to protect the vital interests of the community. It cannot be maintained that the constitutional prohibition should be so construed as to prevent limited and temporary interpositions with respect to the enforcement of contracts if made necessary by a great public calamity such as fire, flood, or earthquake. *** And, if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood, or earthquake, that power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes. 20 Blaisdell, 290 U.S. at 439. 21 That said, it would be difficult to conclude that the 22 Moratorium does not, at a minimum, significantly interfere with 23 landlords’ reasonable expectations. The reasonableness of a 24 party’s expectations will depend, to a significant extent, on the 25 26 27 28 24 The Blaisdell court further explained that none of the cases it cited, including Von Hoffman, were “directly applicable,” and that “broad expressions contained in some of these opinions went beyond the requirements of the decision, and are not controlling.” Blaisdell, 290 U.S. at 434. 10 1 degree of regulation in the relevant industry. See Energy 2 Reserves, 459 U.S. at 413; Allied Structural Steel Co. v. Spannaus, 3 438 U.S. 234, 242 n.13 (1978); Snake River Valley Elec. Ass’n v. 4 PacifiCorp, 357 F.3d 1042, 1051 n.9 (9th Cir. 2004). 5 concedes, as it must, that the landlord-tenant relationship has 6 long been subject to extensive regulation. 7 3604; Cal. Civ. Code § 1942.4. 8 Clause challenges to eviction moratoria in other locales, have 9 relied upon this history of regulation to conclude that eviction AAGLA See, e.g., 42 U.S.C. § Several courts, examining Contract 10 moratoria are relatively minor alterations to existing regulatory 11 frameworks, and therefore do not interfere with landlords’ 12 reasonable expectations. 13 C.A. No. 20-3300, 2020 WL 5095496, *7-8 (E.D. Pa. Aug. 28, 2020); 14 Auracle Homes, LLC v. Lamont, No. 3:20-cv-00829 (VAB), 2020 WL 15 4558682, *17 (D. Conn. Aug. 7, 2020); Elmsford Apt. Assocs., LLC v. 16 Cuomo, No. 20-cv-4062 (CM), 2020 WL 3498456, *1 (S.D.N.Y. June 29, 17 2020). 18 See, e.g., HAPCO v. City of Philadelphia, This Court respectfully concludes that the scope and nature of 19 the COVID-19 pandemic, and of the public health measures necessary 20 to combat it, have no precedent in the modern era, and that no 21 amount of prior regulation could have led landlords to expect 22 anything like the blanket Moratorium. 23 No. 1:20-CV-11335-MLW, 2020 WL 5751572, at *16 (D. Mass. Sept. 25, 24 2020) (“[T]he court finds that a reasonable landlord would not have 25 anticipated a virtually unprecedented event such as the COVID-19 26 pandemic that would generate a ban on even initiating eviction 27 actions against tenants who do not pay rent and on replacing them 28 with tenants who do pay rent.”). See Baptiste v. Kennealy, This Court cannot ignore the 11 1 possibility that some landlords may face, at the very least, the 2 prospects of reduced cash flow and time value of missed rent 3 payments and increased wear and tear on rental properties, and that 4 these effects were, at least in terms of degree, unforeseeable. 5 this stage, therefore, the court concludes that AAGLA is likely to 6 succeed in showing a substantial impairment of its contractual 7 rights.25 8 9 2. At Reasonableness No party disputes that the Moratorium was enacted in pursuit 10 of a legitimate public purpose. The next question, therefore, “is 11 whether the adjustment of the rights and responsibilities of 12 contracting parties is based upon reasonable conditions and is of a 13 character appropriate to the public purpose justifying the 14 legislation’s adoption.” 15 United States Trust Co. of New York v. New Jersy, 431 U.S. 1, 22 16 (1977) (internal quotation marks and alterations omitted)). 17 “Unless the State itself is a contracting party, ... courts 18 properly defer to legislative judgment as to the necessity and 19 reasonableness of a particular measure.” 20 quotation marks omitted). Energy Reserves, 459 U.S. at 412 (quoting Id. at 412-13 (internal 21 22 23 24 25 26 27 28 25 This is not to say, of course, that further factual development could not affect the court’s conclusion. In Baptiste, for example, the court found it “not possible to determine conclusively the extent of the impairment of plaintiffs’ contractual right to evict” because of factual uncertainties regarding the temporal extent of Massachusetts’ eviction moratorium. Baptiste, 2020 WL 5751572, at *17. That particular concern is less salient here, as the Moratorium’s limitation on evictions will persist for at least one year from today, and likely until March 2022. Further factual development, however, such as on the question whether landlords are able, in practice, to secure their contractual rights without recourse to eviction, could yet affect the substantial impairment question. 12 1 Notwithstanding the Supreme Court’s prescription, AAGLA urges 2 this Court to set aside the City’s determination that the 3 Moratorium is necessary to protect public health, life, and 4 property, and to conclude that the law is not a reasonable means of 5 achieving its stated end.26 6 unsupported factual assertions and a misreading of Supreme Court 7 precedent. 8 that “there is no need for the Ordinances now . . ., with COVID 9 cases decreasing . . . .” AAGLA’s argument rests largely upon First, AAGLA asserts, without citation to any source, (Reply at 16:18-19.) It is unclear to 10 the court whether that representation has been true at any point 11 since the onset of the pandemic.27 12 cases were decreasing at the time of writing, that is most 13 definitely not the case now, as fall wanes and winter approaches.28 14 But even assuming that COVID Necessity aside, AAGLA primarily argues that, under Blaisdell, 15 no “government entity, even in an acute and sustained economic 16 emergency, may excuse tenants from paying a reasonable amount of 17 rent contemporaneous with occupancy as a condition to avoiding 18 eviction.”29 19 AAGLA misreads Blaisdell, and subsequent cases interpreting it. (Mem. in support at 24:18-19 (emphasis omitted).) 20 21 22 26 See Moratorium at 2. See https://covid.cdc.gov/covid-data-tracker/#trends totalandratecases 28 See https://covid.cdc.gov/covid-data-tracker/#trends dailytrendscases 29 As discussed in further detail below, in the context of the irreparable harm analysis, this position is somewhat surprising in light of AAGLA’s argument that a separate, statewide eviction moratorium is more reasonable than the City Ordinance, and that “we can certainly assume that the state law is constitutional.” As discussed below, that state law, like the Moratorium, prohibits evictions for COVID-related nonpayment of rent, even where a tenant has paid no rent for a period of as much as eleven months. 27 23 24 25 26 27 28 13 1 In 1933, in the midst of a state of economic emergency brought 2 on by the Great Depression, Minnesota passed the “Mortgage 3 Moratorium Law.” 4 Moratorium Law automatically extended the period of redemption from 5 foreclosure sales for thirty days, and empowered county courts to 6 grant “just and equitable” further extensions, during which 7 mortgagee-purchasers would be unable to take possession or obtain 8 title. 9 year extension of the redemption period, subject to the condition Id. Blaisdell, 290 U.S. at 416. The Mortgage In Blaisdell, defaulting mortgagors obtained a two 10 that they make payments equal to the reasonable rental value of the 11 property. 12 association, contended that the Mortgage Moratorium Law violated 13 the Contract Clause, Due Process Clause, and Equal Protection 14 Clause of the Fourteenth Amendment. 15 Id. at 420. The mortgagee, a building and loan Id. at 416. The Supreme Court, focusing on the Contract Clause, 16 disagreed.30 17 that (1) a state of emergency existed, (2) the moratorium was 18 addressed to “the protection of a basic interest of society” rather 19 than to the benefit of particular individuals, (3) the moratorium’s 20 relief could only be “of a character appropriate to the emergency, 21 and could only be granted upon reasonable conditions,” (4) the 22 moratorium, on balance, met that reasonableness requirement, and 23 (5) the legislation was temporary. Id. at 447; see also Allied 24 Structural Steel, 438 U.S. at 242. In finding the conditions 25 imposed by the Minnesota Moratorium Law reasonable on balance, the 26 Blaisdell court looked to several of the moratorium’s provisions. Id. at 447-48. In so concluding, the Court observed 27 30 28 “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” U.S.Const., Art. I, § 10. 14 1 Blaisdell, 290 U.S. at 445-46; Allied Structural Steel, 438 U.S. at 2 243. 3 mortgage indebtedness, (2) the continued validity of the 4 mortgagee’s right to title or a deficiency judgment, (3) the 5 mortgagor’s obligation to pay the reasonable rental value, and (4) 6 the fact that most mortgagees were corporations and banks “not 7 seeking homes or the opportunity to engage in farming.” 8 9 The relevant conditions included (1) a continuation of the Id. According to AAGLA, the Blaisdell court’s inclusion of reasonable rental value as a factor relevant to the reasonableness 10 of the Mortgage Moratorium Law was tantamount to a requirement that 11 any “adjustment” of rights relating to tenancy or occupancy include 12 rent payments. 13 subsequent pronouncement in Allied Structural Steel that “[t]he 14 Blaisdell opinion [] clearly implied that if the Minnesota 15 moratorium legislation had not possessed the characteristics 16 attributed to it by the Court, it would have been invalid under the 17 Contract Clause of the Constitution.” 18 U.S. at 242. 19 Steel court referred, however, were not the provisions bearing on 20 the reasonableness of the Mortgage Moratorium Law, but rather the 21 five broader considerations, of which reasonableness was but one. 22 Id. 23 24 25 26 27 For support, AAGLA points to the Supreme Court’s Allied Structural Steel, 438 The characteristics to which the Allied Structural As the Court explained, In upholding the state mortgage moratorium law, the [Blaisdell] Court found five factors significant. First, the state legislature had declared in the Act itself that an emergency need for the protection of homeowners existed. Second, the state law was enacted to protect a basic societal interest, not a favored group. Third, the relief was appropriately tailored to the emergency that it was designed to meet. Fourth, the imposed conditions were reasonable. And, finally, the legislation was limited to the duration of the emergency. 28 15 1 Id. (internal citations omitted) (emphasis added). Thus, although 2 the Blaisdell court might conceivably have reached a different 3 conclusion in the absence of a reasonable rent requirement, it did 4 not go so far as AAGLA would suggest. 5 Court has explained that, to the extent any of its post-Blaisdell 6 decisions did impose any specific limitations on legislatures’ 7 powers vis-à-vis contracts, “[l]ater decisions abandoned these 8 limitations as absolute requirements.” 9 n.19. Furthermore, the Supreme U.S. Trust, 431 U.S. at 22 Instead, specific requirements, including such a seemingly 10 fundamental consideration as the existence of an emergency, are 11 “subsumed in the overall determination of reasonableness.” 12 “Undoubtedly the existence of an emergency and the limited duration 13 of a relief measure are factors to be assessed in determining the 14 reasonableness of an impairment, but [even] they cannot be regarded 15 as essential in every case.” 16 Id. Id. In the absence of any specific prerequisite for 17 reasonableness, let alone a requirement that the Moratorium provide 18 for rent payments to landlords, this Court will defer to the City 19 Council’s weighing of the interests at stake. 20 court joins at least four other courts that have found eviction 21 moratoria reasonable in light of the COVID-19 pandemic at the 22 preliminary injunction stage, notwithstanding the lack of any 23 provision for partial rent payments. 24 5751572, at *19; 25 4558682, at *18-19; Elmsford, 2020 WL 3498456, at *15.31 In so doing, the See Baptiste, 2020 WL HAPCO, 2020 WL 5095496, at *10; Auracle, 2020 WL 32 26 31 27 28 To be sure, although all four of these cases involve eviction moratoria with no partial rent requirement, the moratoria at issue differ in their particulars from each other and from the (continued...) 16 1 Notably, here, as in Blaisdell, the Moratorium is addressed to 2 protect a basic societal need, is temporary in nature, does not 3 disturb landlords’ ability to obtain a judgment for contract 4 damages, does not absolve tenants of any obligation to pay any 5 amount of rent, does not appear to impact landlords’ ability to 6 obtain housing, and 7 emergency. 8 than that brought on by the Great Depression, coupling, as it does, 9 the consequences of economic catastrophe with a serious, and 10 11 was implemented in the context of a state of Indeed, the current emergency is arguably more serious worsening, threat to public health. AAGLA makes much of the fact that the Moratorium does not 12 require tenants affected by COVID-19 to make an affirmative 13 declaration to that effect. 14 certainly make it more difficult for ill-intentioned, financially 15 secure tenants to game the Moratorium, landlords remain free to 16 seek to evict such nonpaying tenants, so long as there exists a 17 good faith basis to believe that the tenant falls outside the 18 Moratorium’s protections. 19 appear to this Court to be anything inherently unreasonable about 20 the City Council’s decision to spare legitimately-impacted tenants 21 the burden of attestation. Although such a requirement would (Moratorium at 2.) There does not 22 23 31 24 25 26 27 28 (...continued) Moratorium here. Of the four moratoria at issue in the cited cases, the City’s Moratorium is most akin to the City of Philadelphia’s, discussed in HAPCO, 2020 WL 5095496, at *2-4. 32 The Elmsford court converted a motion for a preliminary injunction into a motion for summary judgment, and, strictly speaking, did not reach the reasonableness question because it concluded, as a matter of law, that New York’s eviction moratorium did not substantially impair landlords’ contractual rights. Elmsford, 2020 WL 3498456, at *15. 17 1 Lastly, although the Moratorium does not mandate that tenants 2 pay a reasonable, or any, amount of rent, neither has the City 3 Council simply thrown landlords to the wolves. 4 Moratorium and other coranavirus-related measures, the City 5 implemented an Emergency Rental Assistance Program (“ERAS”), which 6 will provide over $100 million in rental assistance payments to 7 approximately 50,000 low-income households by the end of this year. 8 (City Request for Judicial Notice, Ex. Y.) 9 be a grant paid directly to the tenant’s landlord . . . .” Along with the This rent subsidy “will (Id. at 10 5-6 (emphasis added).) 11 requirements on landlords beyond those already implemented by the 12 Moratorium and the Rent Freeze Ordinance. 13 unlikely that the ERAS program will be sufficient to make up the 14 entire shortfall of rent owed to AAGLA’s members, the amount is not 15 insignificant, and is at the very least indicative of the City 16 Council’s reasoned balancing of competing interests, including 17 those of tenants, landlords, and the public health.33 The ERAS program does not impose any (Id.) Although it is 18 33 19 20 21 22 23 24 25 26 27 28 AAGLA’s Due Process claim fails for these same reasons. “Substantive due process provides no basis for overturning validly enacted state statutes unless they are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Spoklie v. Montana, 411 F.3d 1051, 1059 (9th Cir. 2005) (internal quotation marks omitted). The Moratorium clearly meets this relatively low bar. Despite AAGLA’s urging, this Court does not read Block v. Hirsh, 256 U.S. 135, 155 (1921) to create some different standard for cases involving regulation of rents. Indeed, AAGLA’s argument appears to be no more than a due process recasting of its “reasonable rental value” theory. The court in Block, as in Blaisdell, conducted a reasonableness analysis to determine whether the District of Columbia Rents Act “goes too far.” Block, 256 U.S. at 156. Although the fact that “[m]achinery is provided to secure the landlord a reasonable rent” was a relevant factor in that due process analysis, the existence of such “machinery” is not a prerequisite to constitutional validity, any more than is “reasonable rent” in the Contract Clause context. Id. at 157. (continued...) 18 1 Thus, even though the court is persuaded that AAGLA will be 2 able to show that the Moratorium substantially impairs landlords’ 3 contract rights, AAGLA is not likely to succeed on its Contract 4 Clause claim because any such impairment appears, at this stage, to 5 be eminently reasonable under the extraordinary circumstances.34 6 B. Irreparable harm 7 A plaintiff seeking a preliminary injunction must demonstrate 8 not just a possibility, but a likelihood of irreparable harm. 9 Winter, 555 U.S. at 22; Alliance for the Wild, 632 F.3d at 1135. 10 Although AAGLA asserts that irreparable harm can be presumed in the 11 context of constitutional violations, the Ninth Circuit has 12 cautioned that the irreparable harm requirement does not “collapse 13 33 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (...continued) Indeed, the Blaisdell court, having concluded that there was no Contract Clause violation, summarily disposed of a corresponding due process claim. Blaisdell, 290 U.S. at 448-49. (“We are of the opinion that the Minnesota statute . . . does not violate the contract clause . . . . Whether the legislation is wise or unwise as a matter of policy is a question with which we are not concerned. What has been said on that point is also applicable to the contention presented under the due process clause.”) (citing Block) (emphasis added). 34 As suggested above, nothing in this Order shall be read to suggest that further litigation of this matter could not affect the Court’s conclusions. See note 25, above. Although the Court finds the Moratorium reasonable on balance at this stage of proceedings, the rationales for each of the Moratorium’s various provisions are not all equally apparent. For example, it stands to reason that economic difficulties will lead to some consolidation of households and an increase in the number of inhabitants in some units, and that to evict that entire expanded household would have serious public health consequences. And it may well be that, absent a prohibition on interest and late fees, tenants might “self-evict” rather than incur additional debt. (Intervenors’ brief at 20 (citing HAPCO, 2020 WL 5095496, at * 12)). This Court will not second-guess the City’s apparent conclusion that the risk of such outcomes warrants a temporary suspension of interest charges, or that impacted renters should not be penalized in the form of late fees for missed payments that are, by definition, attributable to the current emergency. It remains to be seen, however, whether a blanket prohibition on pet-related evictions in fact promotes, or can reasonably be assumed to protect, public safety. 19 1 into the merits question,” even where a plaintiff demonstrates a 2 likelihood of success on the merits of a constitutional claim. 3 Cuviello v. City of Vallejo, 944 F.3d 816, 831 (9th Cir. 2019). 4 the same time, however, the court has stated that certain 5 constitutional violations, including First Amendment violations and 6 unlawful detentions without due process, “unquestionably” 7 constitute irreparable harm. 8 Clemente, 584 F.3d 1196, 1207 (9th Cir. 2009) (First Amendment); 9 Hernandez v. Sessions, 872 F.3d 976, 994 (9th Cir. 2017) (Due See, e.g., Klein v. City of San 10 Process). 11 the level of irreparable harm, this Court need not resolve this 12 apparent tension because, for the reasons stated above, AAGLA has 13 not demonstrated a likelihood of success on the merits of its 14 constitutional claims. 15 At Even assuming that economic injuries could also rise to AAGLA argues further that it is likely to suffer irreparable 16 harm because, in the absence of injunctive relief, “tenants may 17 simply live rent-free for the foreseeable future, without providing 18 any documentation to their landlords.” 19 19.) 20 landlords could possibly be irreparably harmed by the possibility 21 of a temporary delay in rent payments “for the foreseeable future,” 22 AAGLA’s reply makes clear that its theory of irreparable harm is 23 that landlords have “no realistic chance of being paid . . . .” 24 (Reply at 25:24.) 25 economic injury alone does not support a finding of irreparable 26 harm, because such injury can be remedied by a damage award.” 27 Rent-A-Ctr., Inc. v. Canyon Television & Appliance Rental, Inc., 28 944 F.2d 597, 603 (9th Cir. 1991) (citing (Mem. in support at 19:18- Although at first glance, it is somewhat unclear how It has long been established, however, “that 20 1 Los Angeles Memorial Coliseum Comm’n v. National Football League, 2 634 F.2d 1197, 1202 (9th Cir.1980); see also Goldie’s Bookstore, 3 Inc. v. Superior Court of State of Cal., 739 F.2d 466, 471 (9th 4 Cir. 1984) (“Mere financial injury, however, will not constitute 5 irreparable harm if adequate compensatory relief will be available 6 in the course of litigation.”). 7 relied upon that principle in denying a preliminary injunction, 8 even when the economic injury at issue stemmed from an alleged 9 constitutional violation. 10 Indeed, the Ninth Circuit has Amwest Sur. Ins. Co. v. Reno, 52 F.3d 332 (9th Cir. 1995) (unpublished disposition). 11 AAGLA contends that, notwithstanding the Ninth Circuit’s 12 pronouncements, economic harm may be irreparable where there is a 13 significant risk that damages will never be collected. 14 25.) 15 irreparable harm where a plaintiff seeks monetary damages from a 16 defendant that is, or is likely to become, insolvent or may 17 dissipate assets to avoid judgment. 18 Enterprises Glob., Inc., No. 17-06110-DDP-PLA, 2017 WL 4325585, at 19 *5 (C.D. Cal. Sept. 25, 2017); Aliya Medcare Fin., LLC v. Nickell, 20 No. CV1407806MMMSHX, 2014 WL 12526382, at *5 (C.D. Cal. Nov. 26, 21 2014); Laguna Commercial Capital, LLC v. Se. Texas EMS, LLC, No. CV 22 11-09930 MMM PLAX, 2011 WL 6409222, at *6 (C.D. Cal. Dec. 21, 23 2011). 24 instant suit. 25 relief, not monetary damages. 26 Court aware of, any authority for the proposition that an imminent 27 irreparable harm exists simply because a plaintiff may be unable to 28 collect a monetary judgment against some unascertained third party (Reply at Some courts, including this one, have occasionally found See, e.g., DirecTV, LLC v. E&E Those cases, however, bear little resemblance to the Here, AAGLA seeks only declaratory and injunctive AAGLA does not cite, nor is this 21 1 at the conclusion of some unrelated, separate suit that has yet to, 2 and may never, be filed in the first instance. 3 Baptiste is also misplaced. 4 that landlords’ contract remedies “will often be illusory” because 5 tenants may be judgment-proof, it did so in the course of the 6 substantial impairment analysis, and not as part of an irreparable 7 harm inquiry. AAGLA’s reliance on Although the Baptiste court did opine Baptiste, 2020 WL 5751572, at *16. 8 Although monetary losses alone cannot, in this context, 9 constitute irreparable harm, foreclosure theoretically could, as 10 landlords’ properties are unique. 11 First Fed. Sav. & Loan Ass’n, 840 F.2d 653, 661 (9th Cir. 1988). 12 Here, however, AAGLA has failed to demonstrate a likelihood, as 13 opposed to a mere possibility, that landlords are in imminent 14 danger of losing their properties to foreclosure. 15 admittedly submitted declarations from only “a few” of its member 16 landlords, only two of whom make any reference to mortgage 17 difficulties.35 18 that four of twelve units he and his wife manage are not paying 19 rent, but the declarant does not indicate that he is unable to make 20 mortgage payments.36 See Sundance Land Corp. v. Cmty. (Mem. in support at 16-17.) AAGLA has One declarant states (Declaration of Fred Smith ¶¶ 4,6.) Although 21 22 23 24 25 26 27 28 35 Of the other two declarants, only one mentions a mortgage at all, and, despite a pre-Covid negative cash flow of $11,000 to $26,000 per year, does not appear to have any difficulty making mortgage payments. (Declaration of Natalie Adomian ¶ 3). Adomian’s declaration also undercuts AAGLA’s contention that landlords will not be able to recover monetary damages, as she states that her delinquent tenant earns at least $225,000 per year, and likely significantly more. (Id. at ¶ 5.) 36 The court in no way intends to minimize the hardship the declarant faces, and acknowledges that the declarant is paying a portion of the mortgages out of his savings. The monetary harm the declarant describes, however, do not rise to the level of irreparable harm. 22 1 the second declarant does state that her father is unable to make 2 mortgage payments, and that one out of seven of his tenants is 3 currently not paying rent, she further states that the mortgagor 4 bank has agreed to one lengthy extension, and the declaration does 5 not indicate that the bank has expressed any intention to foreclose 6 in the foreseeable future. 7 8.) 8 fact, generally eager or likely to foreclose on residential rental 9 units in the current environment. (Declaration of Evelyn Garcia, ¶¶ 4, The court is not aware of any evidence that mortgagors are, in See Aliya Medcare, 2014 WL 10 12526382, at *4 (“It is not enough that the claimed harm be 11 irreparable; it must be imminent as well.” (citing Caribbean Marine 12 Servs. Co., Inc. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988)). 13 Indeed, under the present circumstances, including the very 14 Moratorium that AAGLA seeks to invalidate, mortgagors may have 15 little incentive to foreclose and significant motivations to come 16 to accommodations with property owners. 17 clear that Mr. Garcia’s difficulties are attributable to the 18 Moratorium, as his mortgage was already delinquent by April 2, 19 2020.37 20 Furthermore, it is not (Garcia Decl., Ex. A.) Even putting all these considerations aside, AAGLA has failed 21 to show that the preliminary injunction it seeks will prevent the 22 harms it alleges. 23 protection Los Angeles renters currently enjoy. 24 authorities have not remained idle in the face of the COVID crisis. 25 In late August, the state legislature passed Assembly Bill 3088, The Moratorium represents but one layer of California state 26 37 27 28 Again, this Court has no intention of minimizing the difficulties faced by Mr. Garcia or any other landlord. Those difficulties do not, however, constitute irreparable harm for purposes of a preliminary injunction enjoining the Moratorium. 23 1 the COVID-19 Tenant Rights Act (the “State Law”). The State Law is 2 similar in some ways to the City’s Moratorium, insofar as it also 3 prohibits no-fault evictions and evictions for COVID-related rent 4 delinquencies, without limiting landlords’ ability to seek unpaid 5 rent through other means. 6 1179.03, 1179.03.5. 7 existing local measures, such as the Moratorium, except to (1) 8 trigger the commencement of any existing local rent repayment grace 9 periods, including those conditioned upon the end of a declared Cal. Code Civ. P. §§ CCP § 116.223, The State Law generally does not affect pre- 10 state of emergency, on March 1, 2021, and (2) terminate any such 11 repayment periods on March 31, 2022. 12 Cal. Code Civ. P. § 1179.05. In some aspects, however, the State Law goes beyond the 13 Moratorium in ways that are more burdensome on landlords. The 14 Moratorium, for example, allows evictions for back rent that 15 remains unpaid at the conclusion of the Moratorium’s twelve-month 16 grace period. 17 be evicted for any COVID-related missed rent incurred between March 18 1, 2020 and August 31, 2020. 19 Similarly, tenants can never be evicted for failure to pay rent 20 that comes due between September 1, 2020 and January 31, 2021, so 21 long as the tenant pays, no later than January 31, twenty-five 22 percent of the rent due during that period.38 23 1179.03(g)(2)(B). 24 shorter grace period than does the City Moratorium, it also 25 essentially forgives, for eviction purposes (and eviction purposes Under the State Law, in contrast, tenants can never Cal. Code Civ. P. § 1179.04(a). Cal. Civ. Code § Thus, although the State Law provides for a 26 38 27 28 These protections only apply to tenants who provide landlords with a declaration that the tenant has missed rent due to decreased income or increased expenses attributable to COVID-19. The City Moratorium has no equivalent attestation requirement. 24 1 only), 100% of six months’ rent and up to 75% of rent for a further 2 five months. 3 “forgiveness” provisions. 4 The City Moratorium includes no comparable Notwithstanding the seemingly greater impacts of the State 5 Law, AAGLA does not challenge the constitutionality of the State 6 Law. 7 reasonable than the Moratorium and, at that “we can certainly 8 assume that the state law is constitutional.” 9 of a presumptively valid State Law, however, it is unclear to the To the contrary, AAGLA argues that the State Law is more Against the backdrop 10 court how a preliminary injunction setting aside the Moratorium 11 would aid Los Angeles landlords or, by the same token, how denial 12 of such relief would put landlords in a materially worse position 13 than that in which they would otherwise be. 14 Moratorium is unreasonable, AAGLA made much of the fact that the 15 City Ordinance does not guarantee landlords even partial payments 16 contemporaneous with occupancy. 17 Under the State Law, for example, a qualifying tenant who paid zero 18 rent for the month of September, and pays zero rent for four months 19 thereafter, cannot be evicted until February. 20 not possibly suffer irreparable harm in the absence of an order 21 preliminarily enjoining a Moratorium that, at the current juncture, 22 does essentially the same thing as the admittedly reasonable and 23 presumptively valid State Law.39 In arguing that the But neither does the State Law. AAGLA’s members will 24 39 25 26 27 28 Of course, as discussed above, the City Moratorium and the State Law are not coterminous. But none of the most salient differences changes the result here. Although the State law does not restrict landlords’ ability to seek late fees or interest at some point in the future, neither does it allow them to pursue evictions for such sums now. Furthermore, such purely economic damages cannot constitute irreparable harm, as explained above. (continued...) 25 1 2 For these reasons, AAGLA has failed to demonstrate any likelihood of irreparable harm. 3 C. Balance of equities and the public interest 4 “Where the government is a party to a case in which a 5 preliminary injunction is sought, the balance of the equities and 6 public interest factors merge.” 7 Enf’t, 953 F.3d 1134, 1141 (9th Cir. 2020) (citing Drakes Bay 8 Oyster Co. v. Jewell, 747 F.3d 1073, 1092 (9th Cir. 2014)). 9 court’s prior discussion makes clear, the COVID-19 crisis is Padilla v. Immigration & Customs As the 10 unparalleled in this country’s modern history. 11 literally, a matter of life and death. 12 pandemic has wrought, if left unmediated by measures such as the 13 City Moratorium, would likely trigger a tidal wave of evictions 14 that would not only inflict misery upon many thousands of displaced 15 residents, but also exacerbate a public health emergency that has 16 already radically altered the daily life of every city resident, 17 and even now threatens to overwhelm community resources. 18 hardships wrought upon residential landlords as an unintended 19 consequence of the City’s efforts are real, and are significant, 20 but must yield precedence to the vital interests of the public as a 21 whole. 22 It is, quite The economic damage the The This Court will defer to the judgment of local authorities, 23 who have the unenviable task of weighing all of the relevant 24 considerations and choosing the least of all possible evils. 25 26 27 28 39 (...continued) And, although AAGLA makes much of the Moratorium’s lack of an attestation requirement, AAGLA does not explain how that lack “deprive[s] landlords of meaningful tools and resources” in a way that causes immediate, irreparable harm. (Reply at 26:6-7.) 26 1 It bears repeating, however, that the COVID-19 crisis is national 2 in scope, and demands a national response. 3 Landlords and tenants alike are victims of the virus, both 4 literally and economically. Tenants should not have to live in 5 fear of eviction because of a calamity that was not of their 6 making. 7 hard-earned investments in our community because of a calamity that 8 was not of their making. 9 each other to avoid economic and personal ruin. Landlords should not have to live in fear of losing their Our citizens should not have to fight 10 Courts are an imperfect tool to resolve such conflicts. 11 too are ordinances and statutes that shift economic burdens from 12 one group to another. 13 lawmakers to treat this calamity with the attention it deserves. 14 It is, but for the shooting, a war in every real sense. 15 of thousands of tenants pitted against tens of thousands of 16 landlords - that is the tragedy that brings us here. 17 court’s reverent hope, expressed with great respect for the 18 magnitude of the task at hand, that our leaders, and not the 19 courts, lead us to a speedy and fair solution. 20 IV. 21 So The court respectfully implores our Hundreds It is the Conclusion Although it appears at this stage of proceedings that the City 22 Moratorium substantially affects landlords’ contract rights, the 23 manner in and extent to which it does so appears reasonable under 24 the circumstances. 25 likelihood of success on the merits of its constitutional claims. 26 Nor has AAGLA demonstrated a likelihood of irreparable harm, or 27 that the balance of the equities or the public interest weigh in AAGLA has not, therefore, demonstrated a 28 27 1 favor of preliminary relief. Accordingly, AAGLA’s motion for a 2 preliminary injunction is DENIED, without prejudice. 3 4 5 6 7 IT IS SO ORDERED. 8 9 10 Dated: November 13, 2020 DEAN D. PREGERSON United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28
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