By Andrew McIntyre

Law360 (June 24, 2020, 4:56 PM EDT) -- New York Gov. Andrew Cuomo overstepped his authority when issuing a 60-day moratorium on evictions amid the COVID-19 pandemic, and the governor's order denies landlords their contractual right to court, a lawyer representing landlords challenging the order told a federal judge on Wednesday.

Mark Guterman of Lehrman Lehrman & Guterman LLP, counsel for the landlords, told New York federal Judge Colleen McMahon during a hearing on Wednesday that the governor had made a legislative move when issuing the order, noting that Cuomo has the authority to issue executive orders but not to legislate.

Guterman argued that the order has prevented landlords from exercising their contractual rights in leases to use the court eviction process and suggested that Cuomo had violated New York state law by issuing the order, although Judge McMahon said she did not have the jurisdiction to address that point.

Counsel for Cuomo on Wednesday argued that the governor's actions were within the scope of his authority given the ongoing pandemic and claimed the landlords have failed to meet the bar of providing sufficient evidence that they have been financially harmed by the order. Matthew Conrad from the Office of the New York State Attorney General also suggested that the plaintiffs may be in the wrong jurisdiction.

A group of landlords brought the suit at the end of May.

"It was not within the governor's purview to have issued the order in the first instance," Guterman said Wednesday. "My clients are entitled to their due process rights. … Nobody in the state thought it was worth their while to challenge the governor on this. My clients did. The courts in New York were closed."

Judge McMahon, though, countered that the governor has the right to suspend certain laws during an emergency and said likening that to legislating is "an absurd argument."

"Aren't you in the wrong court for this? I don't have jurisdiction to decide whether under state law the governor has exceeded his power. That's not a federal question. … That requires me to decide an issue of state law that I am constitutionally not allowed to decide."

While Guterman argued the action was beyond the scope of the governor's power, he also argued that his landlord clients have the right to use the court process for evictions, as spelled out in leases.

"All the leases contain default clauses. If there's a default in the payment of rent, my client has the right to go to court. … If nothing else, my client has the right to enforce the delay clauses in court," Guterman said. "Judges are good at getting the parties together. The governor has deprived us of that right, to get together with tenants and make a deal. That's what the system is about. Keeping their contractual relationship. It's nice and neat."

The judge suggested that after the moratorium is lifted, landlords would then be able to get a warrant of eviction and collect money judgment for missed rent and interest, and asked what would be lost. Guterman argued it's not easy to collect money judgment nor is that process guaranteed to work, and often landlords will not bring an action to the state Supreme Court over $2,000 or $3,000 in lost rent.

Judge McMahon did point out that she hasn't noticed policy from Cuomo aimed at helping landlords, and suggested that that could also be considered now. While much of the discussion Wednesday concerned multifamily landlords, the judge noted that Cuomo's order applies to residential and commercial properties.

While part of Wednesday's hearing centered on questions of jurisdiction and contracts, the parties also addressed the question of whether the governor's actions amounted to an unconstitutional taking.

Conrad argued that the takings argument falls short in part because the landlords failed to show proper evidence of harm, something the judge had earlier pointed out.

Takings cases are fact-specific and require a high bar, Conrad emphasized.

"It's a very difficult burden to satisfy," Conrad said. "No scintilla of evidence of economic harm has been presented. … In this particular case, there just isn't the evidence there."

Conrad did say that the takings question could look different if the matter were revisited at a later date, conceding that length of time could be a factor.

"As it gets longer, it might change the calculus on some of these legal questions," Conrad said. "The length of any potential extension of the moratorium is a factor, but it's not the only factor. ... There's no question that the state has the power."

And the question of holdover proceedings — ways to evict a tenant for reasons other than lapses in rent payment — came up as well.

Guterman argued that New York state courts have been reluctant to hear holdover proceedings brought by landlords, and connected the dots between that and the governor's order, which puts a moratorium on evictions for failure to pay rent but does not restrict holdover proceedings.

"If the courts are saying you can't bring a holdover, then you sued the wrong person," the judge said. "The governor never said anything about holdover proceedings."

Conrad also made the same argument.

"The governor is not the right party if the complaint is about how the New York state courts are independently handling some of these proceedings," Conrad said.

But Guterman argued that state courts are influenced by the governor's order on the question of holdover proceedings.

"I did not sue the court system. But if we say that the governor's order does not have any impact beyond its four corners, that's incorrect as well," Guterman said. "I'm asking this court to give us the opportunity to get into court and have our issues heard and addressed. The governor did not have the right to issue this in the first instance. The governor does not have the right to legislate."

The judge, though, disagreed on that last point.

"You're wrong," the judge said. "I hear your argument. You're not going to prevail on that argument."

The judge told the parties Wednesday they'd have a decision "in due course."

Representatives at the governor's office couldn't be immediately reached for comment Wednesday on the latest developments in the case.

The landlords are represented by Mark Guterman of Lehrman Lehrman & Guterman LLP.

Cuomo is represented by Matthew Conrad from the Office of the New York State Attorney General.

The case is Elmsford Apartments Associates LLC et al. v. Andrew Cuomo, case number 1:20-cv-04062, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Craig Clough and Emma Whitford. Editing by Jack Karp.

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