NY CASE DOCUMENTS AND COURT FINDINGS
The Federal District Court issued a ruling which may be seen as precedent as other courts around the country tackle landlords claims against eviction bans. Below we will pull some of the highlights out of the document and provide a “in plain English” one sentence explanation, so you can easily understand the jist of the legalese.
The court found several interesting findings in their opinion, here are a few, followed by the actual documents.
I. This Court Does Not Have Jurisdiction to Enjoin Purported Violations of the Executive Law or the New York State Constitution.
Before reaching the constitutional issues, the Court must first make clear that it lacks the jurisdiction necessary to reach the merits of the state law questions raised in Plaintiffs’ papers. Plaintiffs claim that the Governor “has effectively legislated new laws” in violation of the Executive Law and the New York Constitution (Pl.’s Br. at 7-13; Reply at 14-16.) For instance, Plaintiffs object to the imposition of a 60-day eviction moratorium in light of the language in §29-a forbidding suspensions “in excess of thirty days.” (Id. (citing N.Y. Exec. Law Art. 2-B §
29-a(2)(a)).) Federal courts do not have the power to address claims that Governor Cuomo has violated state law. While it may be the case that Governor has overstepped his authority under New York’s Executive Law, curing those alleged harms would require this Court to ignore the doctrine of state sovereign immunity and principles of federalism embodied in the Eleventh Amendment. As the Supreme Court has said, “it is difficult to think of a greater intrusion on state sovereignty than . . . a federal court instruct[ing] state officials on how to conform their conduct to state law.” Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). In Pennhurst, the Supreme Court ruled that federal courts could not grant relief against state officials for their purported violations of state law, because doing so does not implicate any aspect of federal law, nor does it “vindicate the supreme authority of federal law.” Id. Therefore, efforts to cure violations of state law fall beyond the jurisdiction of federal courts, because they do not “aris[e] under the Constitution, the Laws of the United States,
[or] Treaties . . . .” U.S. Const. Art. III § 2.
In plain English, the court is not considering state law claims here.
II. EO 202.28 Does Not Violate Plaintiffs’ Rights Under the Takings Clause.
The Takings Clause of the Fifth Amendment provides that no “private property shall be taken for public use, without just compensation.” U.S. Const. Amend. V. The clause applies to the states through the Fourteenth Amendment. See Kelo v. New London, 545 U.S. 469, 125 S.Ct. 2655, 2658 n. 1, 162 L.Ed.2d 439 (2005). Courts have construed “private property” to include rights secured in private contract, but parties cannot simply “‘remove the subject matter of their agreement by making contracts about them’.” Sanitation I, 928 F. Supp. at 416 (citing Connolly v. Pension Ben. Guar. Corp., 475 U.S. 211, 223-24, 106 S. Ct. 1018, 89 L. Ed. 2d 166 (1986)). “The law recognizes two species of takings: physical takings and regulatory takings.” Buffalo Teachers Fed’n v. Tobe, 464 F.3d 362, 374 (2d Cir.2006).
Plaintiffs have temporarily lost the ability to expel tenants facing COVID-related financial setbacks. They argue that these restrictions prohibit them from asserting their implied contractual rights to summary proceedings for nonpayment under RPAPL § 711(2), thereby “effectively creat[ing] an actual, state-sponsored occupancy” of the units that amounts to a physical taking. (Dkt. No. 10, Pl.’s Br. at 14.) However, the intrusions at issue in this case pose a much shorter and less significant burden to Plaintiffs’ property rights than those upheld in Kirsh. First, contrary to the Plaintiffs’ insinuation that the Governor will extend duration of the Order as long as he can, into 2021 (Dkt. No 24, Pl.’s Reply at 6), there is nothing permanent about EO 202.28; it expires on August 19. Second, the Order preserves Plaintiffs’ rights as property owners to either obtain a warrant for eviction or sue their tenant (or former tenants, or the successors and assigns of the former tenant) for back rent.
Kirsh. First, contrary to the Plaintiffs’ insinuation that the Governor will extend duration of the Order as long as he can, into 2021 (Dkt. No 24, Pl.’s Reply at 6), there is nothing permanent about EO 202.28; it expires on August 19. Second, the Order preserves Plaintiffs’ rights as property owners to either obtain a warrant for eviction or sue their tenant (or former tenants, or the successors and assigns of the former tenant) for back rent. Plaintiffs have temporarily lost the ability to expel tenants facing COVID-related financial setbacks. They argue that these restrictions prohibit them from asserting their implied contractual rights to summary proceedings for nonpayment under RPAPL § 711(2), thereby “effectively creat[ing] an actual, state-sponsored occupancy” of the units that amounts to a physical taking. (Dkt. No. 10, Pl.’s Br. at 14.) However, the intrusions at issue in this case pose a much shorter and less significant burden to Plaintiffs’ property rights than those upheld in
In plain English, you can have a taking in two different flavors, but because you theoretically could collect from a non-paying tenant, no taking occurred under Federal Law.
The economic impact of EO 202.28 can only qualify as a regulatory taking if it “effectively prevented [Plaintiffs] from making any economic use of [their] property.” Sherman v. Town of Chester, 752 F.3d 554, 565 (2d Cir. 2014) (emphasis added). To compare the value that the property has lost with the value it held prior to the Order, the court must first determine the “unit of property whose value is to furnish the denominator of the fraction.” Keystone, 480 U.S. at 497. For example, an ordinance prohibiting construction on the curtilage of a singlefamily dwelling does not cause a regulatory taking, because courts focus “on the nature of the interference with rights in the parcel as a whole,” including the portions of the property not subject to restrictions. Id. (quoting Penn Central, 438 U.S., at 130-31).
In plain English, you can still use the property you leased out some, so no taking exists.
Besides, even if an unspecified number of tenants are behind in their rental payments, that is not enough for Plaintiffs to prevail on a facial challenge to the Order under the Takings Clause. Plaintiffs may not frame their takings claim by “narrowly defin[ing] certain segments of their property [to] assert that . . . [EO 202.28] denies them economically viable use” of their property. Keystone, 480 U.S. at 496. In Keystone, the Supreme Court rejected a Takings Clause challenge to a Pennsylvania law that prevented a mining company from extracting 2% of its coal from the ground, reasoning that some 2% of the company’s total raw materials, “do not constitute a separate segment of property for takings law purposes.” Id. at 498. The same is true for the subset of rental units currently occupied by tenants behind in their rent.
In plain English, the plaintiff’s in this case did not properly plead what is needed to get relief.
Because landlords understand that the contractual right to collect rent is conditioned on compliance with a variety of state laws, their reasonable investment-backed expectations cannot extend to absolute freedom from “public program[s] adjusting the benefits and burdens of economic life to promote the common good.” Penn Central, 438 U.S. at 124. That is why numerous New York rent regulations have withstood Takings Clause challenges over the years, and why New York landlords do not enjoy a constitutional right to realize a profit from their rental properties – let alone all the profits contemplated in each of their individual rental agreements. Park Avenue Tower Associates v. City of New York, 746 F.2d 135, 140 (2d Cir. 1984), cert. denied, 470 U.S. 1087, 105 S.Ct. 1854, 85 L.Ed.2d 151 (1985). In Park Avenue, the court upheld a zoning amendment limiting the height of commercial real estate towers, rejecting the argument that the Takings Clause protects commercial landlords’ right “to use . . . property in a ‘profitable’ manner.” Because the property retained economically beneficial use to the current owner as long as “others ‘might be interested in purchasing all or part of the land’ for permitted uses,” the court held that the height restriction did not qualify as a regulatory taking. Id. at 139 (quoting Pompa Constr. Corp. v. Saratoga Springs, 706 F.3d 418, 424 (2d Cir. 1983)).
In plain English, the landlords should expect as part of the business changes like this to occur.
III. EO 202.28 Does Not Violate Plaintiffs’ Rights Under the Contracts Clause
Article I, Section 10 of the U.S. Constitution prohibits the states from passing any law “impairing the Obligation of Contracts.” U.S. Const. Art. I § 10, cl. 1. “Although facially absolute, the Contracts Clause’s prohibition ‘is not the Draconian provision that its words might seem to imply’ and does not trump the police power of a state to protect the general welfare of its citizens, a power which is ‘paramount to any rights under contracts between individuals.’ ” Buffalo Teachers, 464 F.3d at 367 (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 240, 98 S.Ct. 2716, L.Ed.2d 727 (1978)).
When, as in this case, the challenged law only impairs private contracts, and not those to which the state is a party, courts “must accord substantial deference to the [State’s] conclusion that its approach reasonably promotes the public purposes for which [it] was enacted.” Sal
Tinnerello & Sons, Inc. v. Town of Stonington, 141 F.3d 46, 54 (2d Cir. 1998) (citing Energy
Reserves Grp., Inc. v. Kan, Power & Light Co., 459 U.S. 400, 412-13, 103 S.Ct. 697, 74 L.Ed.2d
569 (1983)). Accordingly, the law affords States a wide berth to infringe upon private contractual rights when they do so in the public interest rather than sel. See U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 16, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977).
Because the Court concludes that neither of the challenged sections of the Order substantially impairs Plaintiffs’ contract rights, it does not address the purpose of the Order, or the means that Governor Cuomo chose to pursue that purpose.
In plain English, the state doesn’t have to uphold your contract rights, and failing to do so is not an impairment.
Furthermore, the Order does not displace the civil remedies always available to landlords seeking to recover the costs of repairs or unpaid rents still owed at the end of a lease term. The security deposit is held as security for repairs the landlord might be required to make at the end of a tenancy. If the tenant uses the security deposit to pay a month’s rent, and the tenancy ends before the deposit is fully replenished, the landlord can obtain a judgment for the amount expended in repairs. The whole scheme is no different than what actually happens in the real world, where tenants routinely forfeit their security deposit by allowing it to “cover the last month’s rent” on a lease. And I again emphasize that nothing in the Order diminishes the tenant’s rental obligation by even a nickel. The landlord can collect all he is owed at the end of the day by the simple expedient of going to some court when the courts are fully reopened. The fact that landlords would prefer not to avail themselves of their legal remedies – because it is often not worth the trouble to pursue a deadbeat tenant – does not mean that the state has impaired their contractual rights
In plain English, “The fact that landlords would prefer not to avail themselves of their legal remedies – because it is often not worth the trouble to pursue a deadbeat tenant – does not mean that the state has impaired their contractual rights”.
Below are links to the major case documents:
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