Law360 (June 11, 2020, 11:08 PM EDT) -- A landlord association sued the city of Los Angeles on Thursday over its moratorium on evictions and rent increases amid the novel coronavirus pandemic, saying the two ordinances are overbroad and violate landlords' constitutional rights.
The Apartment Association of Los Angeles County argues in its complaint against the city, the city council and Mayor Eric Garcetti that their "hastily instituted" eviction moratorium ordinance and a rent freeze ordinance, both passed in late March 2020, should be barred because they deprive members of their rights under the Fifth, Tenth and Fourteenth amendments of the U.S. Constitution, as well as under California law.
The eviction moratorium "will operate as rent forgiveness" as tenants are not likely to be in a position to pay back rent on top of their normal rent when the emergency period ends, according to the association, which was founded in 1917 and describes itself on its website as a "powerful advocate and lobbyist for rental housing providers."
The association, which says it has over 10,000 members owning or managing over 150,000 rental housing units in Los Angeles, Ventura and San Bernardino counties, claims the Los Angeles moratorium ordinance doesn't require tenants to provide notice or documentation of their inability to pay rent and gives them a full year after the emergency period is lifted to pay their back rent.
"As for those tenants who move prior to the time owners may sue to recover back rent, there is simply no chance to recover such rent and, even if there was, the owner would incur a tremendous (and likely unrecoverable) litigation expense just to get that to which the owner is entitled," the association says.
The lobbyist group says its members are "sympathetic to tenants who have actually suffered hardship due to the pandemic," but that the two ordinances passed in March "allow tenants who actually have the ability to pay all or some of their rent to ignore their contractual obligations for the foreseeable future."
"Under the eviction moratorium, tenants may continue to occupy their respective premises at no charge, utilizing the water, power, trash, sewage, and other fees that the landlords must continue to pay without reimbursement," the association says.
Regarding the rent freeze ordinance, the association spells out that landlords are prohibited from raising rent on any property subject to the city's pre-existing rent stabilization ordinance, and are prohibited from doing so for a full year after the local emergency is lifted and even on properties where tenants do not claim financial hardship.
The association says the rent freeze ordinance violates landlords' rights by not including a mechanism to determine whether rent increases are necessary for the landlords to obtain a fair return.
An online survey for association members states that the group is exploring litigation options in order "to win back private property rights that have been stolen from us" and goes on to ask landlords if they would like to be plaintiffs. In addition to asking for their COVID-19 stories, the association asked its members to provide information about their ethnicity and whether they were born in the U.S.
In arguing that the city's premise behind the ordinances is "simply false," the complaint lays out in detail the various financial resources available to individuals during the pandemic, including those provided by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
"One of the more notable 'loopholes' of the CARES Act is the 'windfall' received by many employees, where individuals actually receive higher wages through available unemployment benefits in comparison to their wages pre-pandemic," the association says.
The association claims many of their members are likely to face foreclosure or bankruptcy if a significant number of their tenants fail to pay rent for a prolonged period of time.
The association says landlords and property owners remain "responsible for paying mortgages, property taxes, utilities, security, managers, government imposed fees, employee salaries, and a host of other expenses needed to maintain and operate their rental properties," but under the CARES Act, businesses with less than 500 employees can apply to receive loans to cover costs including payroll, mortgage interest and utilities under the Small Business Administration's Paycheck Protection Program.
The group says the ordinance violates their members' due process rights under the Fourteenth Amendment, their members' property rights under the Tenth Amendment, the Takings Clause under the Fifth Amendment and the contract clauses under both the California and U.S. constitutions.
Daniel Yukelson, the association' executive director, told Law360 in an emailed statement Thursday that the eviction moratorium is in effect making landlords "private welfare providers to the city's renters."
"The City's housing providers are predominantly smaller 'mom and pop' owners who, like renters, already struggled financially and lived month-to-month before the onset of the pandemic," Yukelson said. "Many of the City's housing providers have also lost fulltime [sic] jobs or been inflicted with the Coronavirus and have very little in financial reserves to weather a long term emergency."
The Los Angeles City Attorney's Office did not immediately respond to requests for comment Thursday afternoon.
The Apartment Association of Greater Los Angeles is represented by Douglas J. Dennington, John A. Ramirez, Peter J. Howell and Kelsey E. Quist of Rutan & Tucker LLP.
Counsel information for the city could not immediately be determined Thursday.
The case is Apartment Association of Greater Los Angeles v. City of Los Angeles et al., case number 2:20-cv-05193, in the U.S. District Court for the Central District of California.
--Editing by Emily Kokoll.
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