2 Rulings Instruct On Eviction Moratorium Constitutionality

By Thomas O'Neill and Melissa Manesse
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Law360 (July 27, 2020, 6:07 PM EDT) --
Thomas O'Neill
Thomas O'Neill
Melissa Manesse
Melissa Manesse
In an effort to assist tenants in the wake of the global pandemic, many states and cities have enacted into law moratoriums preventing evictions by landlords.

For example, on April 20, the governor of Massachusetts signed into law An Act Providing for a Moratorium on Evictions and Foreclosures during the COVID-19 Emergency.[1]

The Massachusetts act creates an eviction moratorium for nonessential evictions, defined as evictions "(i) for non-payment of rent; (ii) resulting from a foreclosure; (iii) for no fault or no cause; or (iv) for cause" that does not involve certain criminal activities which could affect health or safety of others.[2][3] The definition excludes small business premises for which the default occurred before the governor of Massachusetts declared a state of emergency on March 10.

The eviction moratoriums provide several safeguards to protect tenants against evictions, such as by prohibiting property owners from terminating a tenancy or sending termination notices, prohibiting courts from accepting eviction complaints, prohibiting courts from scheduling hearings or deciding motions, prohibiting courts from entering judgments of possession and barring the enforcement of existing judgments.

The eviction moratoriums may also provide various financial benefits for tenants, such as prohibiting landlords from imposing late fees or submitting adverse credit reports if the tenants notify them that they did not pay rent as a result of the financial impact of COVID-19.

The eviction moratoriums, and other laws enacted in response to the global pandemic, are being challenged as unconstitutional.

On May 29, residential landlords Mitchell Matorin and Linda Smith[4] filed an emergency petition[5] in the Massachusetts Supreme Judicial Court seeking a temporary restraining order and preliminary injunction enjoining the enforcement of the Massachusetts act and related regulations.[6][7][8] The petitioners argue that the Massachusetts act is unconstitutional under both the Massachusetts Declaration of Rights and the U.S. Constitution.

The petitioners claim that the Massachusetts act violates the separation of powers mandate in Article 30 of the Declaration of Rights, which prohibits one branch of the government from exercising powers entrusted to another branch of government.[9]

According to the petitioners, by enacting the Massachusetts act, the legislative and executive branches have improperly "restricted or abolished a court's inherent powers" by interfering with the court's ability to consider and decide summary process cases.[10]

Specifically, under the Massachusetts act, courts that have jurisdiction over summary process cases were now prohibited from accepting eviction complaints, entering judgments, scheduling court events including trials, entering judgments of possession, or denying requests for a stay of execution or a continuance.[11]

The petitioners also claim that the Massachusetts act violates Articles 11 and 29 of the Declaration of Rights,[12] and the First Amendment to the U.S. Constitution,[13] because it denies litigants the right to free access to the courts without undue delay, and fails to provide "an impartial interpretation of the laws, and administration of justice."[14][15][16]

According to the petitioners, they and all landlords have been completely deprived of their right to access and petition the courts to redress disputes with tenants through a "total shutdown and indefinite ban on virtually every eviction case being filed and pending in the Commonwealth of Massachusetts for an unknown period of time."[17]

The petitioners next claim that the ban on notices to terminate a tenancy and the requirement that landlords must provide missed rental notices advising tenants that they are not being evicted and providing contact information for agencies who can assist them violates their First Amendment right to free speech.[18]

Finally, the petitioners claim that the Massachusetts act results in an unlawful taking of real property without just compensation, in violation of Article 10 of the Declaration of Rights and the Fifth Amendment of the Constitution,[19] because it forces property owners to house nonpaying tenants and improperly interferes with their contract rights, in violation of the contracts clause of the Constitution, because it impairs landlords' rights and remedies in their lease agreements with tenants.[20][21]

As of the writing of this article, the trial court has not reached the merits of the petition.[22] It is unclear how the court in Matorin will rule, but at least two other courts have provided some insight on how a court may resolve the constitutional issues.

Most recently, in ACA International v. Healey,[23] a case cited by petitioners, the U.S. District Court for the District of Massachusetts resolved a constitutional challenge to a law applicable to debt collectors that was enacted in response to the economic impact of COVID-19.

In that case, ACA International[24] sought a temporary restraining order and preliminary injunction enjoining the enforcement of a debt collection regulation targeting unfair and deceptive practices during the COVID-19 state of emergency.[25] The debt collection regulation prohibited debt collectors from initiating a lawsuit to collect a debt[26] or even making telephone calls to debtors, and rendered such conduct an unfair and deceptive act or practice.[27][28]

In response, ACA International commenced the action, arguing that the debt collection regulation violates, among other things, the right to free speech under the First Amendment, the due process clause of the 14th Amendment, and separation of powers under both the state and federal constitutions.[29][30]

As support for its claim that the debt collection regulation violated the right to free speech, ACA International argued that the debt collection regulation improperly interfered with the ability of debt collectors to communicate with debtors "to exhaust all options before resorting to litigation and to honor crisis-related requests to forbear on existing legal remedies during national or state-specific emergencies."[31]

Applying the factors in the U.S. Supreme Court case, Central Hudson Gas & Electric Corp. v. Public Service Commission,[32] the court found that the telephone communication by debt collectors was commercial speech entitled to constitutional protection because a state "has no constitutional power to suppress 'truthful, nonmisleading commercial messages.'"[33]

After finding that only one of the expressed governmental interests[34] was sufficiently substantial to support the debt collection regulation, namely to preserve domestic tranquility, the court determined that the blanket prohibition on all telephone communications did not advance that interest to a material degree, and that the debt collection regulation was more extensive than necessary.[35]

Specifically, the court found that the "best that can be said for the [debt collection regulation] is that it decreases incrementally the number of times that a phone might ring in a debtor's home with a wanted or unwanted call from one species of debt collector — although in this day and age of cell phones and caller ID the option of simply not answering the phone or placing it in silent mode is a viable alternative to consumers."[36]

Also, the debt collection regulation did not insulate debtors from collection efforts, "rather it singles out one group of debt collectors and imposes a blanket suppression order on their ability to use what they believe is their most effective means of communication by telephone," and its ban on all deceptive and misleading calls was merely redundant since that already was the law.[37][38]

As a result, although the court applauded the attorney general's desire to protect citizens during the time of financial and emotional stress created by the COVID-19 pandemic, it did not believe that the debt collection regulation "adds anything to their protections that the existing comprehensive scheme of law and regulation already affords to debtors, other than an unconstitutional ban on one form of communication."[39]

ACA International also claimed that the prohibition against commencing a lawsuit violates the right to petition the government by "usurp[ing] the power of the courts to decide who and who may not file petitions and who may carry out valid judicial orders for relief."[40]

The court agreed noting that the constitutional guarantee of the right to have access to the courts is "among the most precious of the liberties safeguarded by the Bill of Rights."[41]

Although the Massachusetts attorney general did not dispute this right, she claimed that the law "permits measures that impose mere procedural obstacles to the vindication of substantive rights," and that the debt collection regulation is temporary and as

[a]ll state statutes of limitations have been tolled ... no creditor will find itself without legal recourse for recovery of alleged debts. ... Thus, the effect ... is merely to delay a creditor's day in court, while temporarily protecting consumers from a method of debt collection that is uniquely threatening under circumstances of the pandemic.[42]

The court rejected this argument recognizing that "the mere fact of an emergency does not increase constitutional power, nor diminish constitutional restrictions,"[43] and finding that, given the plethora of protection already provided to debtors by existing laws and regulations, "the interest a debtor may have in the [r]egulation may not weigh as heavily as the threat of extinction faced by smaller collection agencies who have been effectively put out of business."[44]

In contrast, in Elmsford Apartments Associates LLC v. Cuomo, the U.S. District Court for the Southern District of New York recently addressed landlords' claims that the New York eviction moratorium[45] violated their rights under the contracts clause, takings clause, due process clause and petition clause of the U.S. Constitution.[46]

The landlords argued that the New York moratorium violated their rights under the contracts clause by allowing the use of security deposits contrary to the terms of the lease agreements and by denying them a forum to commence an eviction proceeding for nonpayment of rent, a remedy which they claim was at least an implied contract right.[47]

They also argued that the denial of access to the housing court violated their rights under the petition clause and the temporary suspension of evictions forced them to provide "their property for use as housing without just compensation" in violation of the right to due process before the state can take their property.[48]

The court immediately set the tone for its decision explaining that:

The world is navigating the deadliest pandemic in over a century [and] the United States has suffered more than any other country, reporting over two million cases of the novel coronavirus known as COVID-19, and over one hundred and twenty thousand deaths as a result.[49]

It then rejected each constitutional claim, initially finding that the New York moratorium did not violate the takings clause because the landlords failed to prove that they suffered either a physical taking[50] or a regulatory taking.[51][52]

The court also rejected the argument that the New York moratorium "has foisted exclusively upon landlords the burden of rental issues" because "state governments may, in times of emergency or otherwise, reallocate hardships between private parties, including landlords and their tenants, without violating the Takings Clause."[53]

The court then rejected the claim that the New York moratorium violated the contracts clause, noting that the contracts clause:

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.[54] ... [When] 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 purpose for which it was enacted.[55][56]

Based on the law and legal standards, the court found that the New York moratorium did not substantially impair the landlords' contract rights because, in light of the fact that the landlord tenant relationship is already regulated, landlords could not reasonably expect to be free of additional rental regulations.

The court further found the moratorium did not prevent landlords from safeguarding or reinstating their rights and that, in the case of evictions, it "merely postpones the date on which landlords may commence summary proceedings against their tenants."[57]

Finally, the court found that the landlords failed to demonstrate a substantial impairment of their property rights in violation of their right to due process[58] or the right to petition the courts.

The court concluded that the landlords had not identified a property interest independent of the interests addressed by their other constitutional claims, which was fatal to the due process claim because the "Second Circuit has forbidden this sort of duplication."[59] Also, the landlords had not shown a deprivation of a property interest because the only complaint was the possibility that "they will have to wait before pursuing the remedies otherwise available to them."[60]

Similarly, the landlords did not show that the New York moratorium violated their right to petition the court because

[a]lthough nonpayment proceedings have been suspended, [landlords] can still sue their tenants for arrearages through a breach of contract action in the New York Supreme Court — and the fact that is not their preferred remedy is of no moment [and they still can] bring eviction proceedings for reason of nonpayment once the order expires, a right preserved by the portion of the [New York moratorium] that extends the relevant statute of limitations for the duration of the court closures.[61][62]

In conclusion, although these are unprecedented and uncertain times for landlords and tenants alike, courts are beginning to provide guidance on the constitutionality of various laws and orders that have been enacted to address the economic hardships created by the global pandemic.

The holdings in ACA International and Elmsford Apartment Associates are instructive and provide some insight as to how the Massachusetts trial court may resolve the various constitutional claims raised by the petitioners.

The resolution of the constitutional issues in the Massachusetts case may hinge on whether the Massachusetts trial court is persuaded by the argument that the emergency order merely postpones and does not permanently deprive landlords of property or certain rights and remedies.

The Massachusetts trial court could follow the reasoning in Elmsford Apartment Associates, a case more analogous to Matorin, and determine that a temporary suspension of rights and remedies does not violate the landlords' constitutional rights.

On the other hand, the trial court could reject that reasoning and, as in ACA International, determine that even a temporary postponement or suspension of the landlords' rights and remedies does not justify an impairment or interference with fundamental constitutional rights.

Thomas J. O'Neill is a partner and Melissa Bruynell Manesse is an associate at Day Pitney LLP

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] 2020 Mass. Acts ch. 65. See also Mayor of San Francisco, California, Executive Order Extending Residential eviction moratorium (June 26, 2020); Tenant Safe Harbor Act, 2020 N.Y. Laws ch. 127 (signed June 30, 2020); An Act Relating to evictions; and declaring an emergency, 2020 Or. Laws ch. 13 (1st Spec. Sess. signed June 30, 2020).

[2] 2020 Mass. Acts ch. 65, § 1, or Massachusetts act.

[3] The Massachusetts act also contains additional limitations regarding foreclosures.

[4] Matorin previously filed a summary process complaint against his tenants for the nonpayment of rent. In accordance with the Massachusetts act, the March trial date was continued and the case indefinitely suspended. Petition at 4. Smith's tenant failed to pay April rent because "the Governor said I do not have to" and the act prohibited Smith from serving the tenant with a 14-day notice to quit for nonpayment of rent. Id. at 5-6.

[5] The petitioners named as respondents Chief Judge Timothy Sullivan, chief justice of the Housing Court Department of the Trial Court, Chief Judge Paul W. Dawley, the chief justice of the District Court Department of the Trial Court, Chief Judge Judith Fabricant, chief justice of the Superior Court Department of the Trial Court, the Executive Office of Housing and Economic Development, and the Commonwealth of Massachusetts. Id. at 6-8.

[6] Regulations supporting the Massachusetts act and providing additional detail have been codified under 400 CMR ch. 5.0, the COVID-19 emergency regulations.

[7] Similar cases have been filed in other jurisdictions. E.g., Apartment Ass'n of Greater L.A. v. City of L.A., No. 2:20-cv-05193 (C.D. Cal. filed June 11, 2020) (alleging, among other things, that the Los Angeles eviction moratorium violated landlords' 14th Amendment due process rights, 10th Amendment property rights, Fifth Amendment takings clause, the California Constitution's takings clause, the contract clause in both the California and U.S. Constitutions, and was preempted by California law); Elmsford Apartment Assocs. LLC v. Cuomo, No. 1:20-cv-04062 (S.D.N.Y. filed May 27, 2020) (claiming the executive order extending the eviction moratorium in New York was illegal); JL Props. Grp. B LLC v. Pritzker, No. 20CH601 (Ill. Cir. Ct. Ch. Div. Will Cty. filed June 23, 2020) (seeking to enjoin the governor of Illinois from extending the eviction moratorium in Illinois).

[8] Matorin v. Sullivan, No. SJ-2020-0442 (Mass. filed May 29, 2020), transferred to No. 2084-cv-01334 (Mass. Super. Ct. Suffolk Cty. June 24, 2020).

[9] Petition at 31.

[10] Id. at 32-33.

[11] Id. at 34.

[12] Article 11 ensures the right to access the courts to "obtain right and justice freely, and without being obligated to purchase it; completely, and without any denial; promptly, and without delay; conformably to the laws," and Article 29 provides that "[i]t is essential to the preservation of life, liberty, property and character, that there be an impartial interpretation of the laws, and administration of justice."

[13] The First Amendment, applicable to the states through the 14th Amendment, provides that governments shall not abridge the right of the people "to petition the Government for a redress of grievances."

[14] Petition at 38-39.

[15] The petitioners also make several other arguments including that the Massachusetts act amounts to an unfair shift of the burden of the pandemic on landowners and, if denied an injunction, they will suffer irreparable harm. Id. at 62-68. They also assert that they are seeking relief which will serve the public interest because the Massachusetts act broadly impacts property owners in Massachusetts. Id. at 68-70.

[16] Petition at 42.

[17] Id. at 40-41.

[18] Id. at 45-47, 52-53.

[19] Article 10 provides that "whenever the public exigencies require that the property of any individual should be appropriated for public uses, he shall receive a reasonable compensation therefore," and the Fifth Amendment provides that "private property [shall not] be taken for public use, without just compensation."

[20] Petition at 55, 58.

[21] See Constitution, Art. 1, § 10, Clause 1 ("No state shall ... pass any ... Law impairing the Obligation of Contracts").

[22] The defendants submitted a preliminary response to the petition in which they address mainly procedural issues and reserve their rights to address the merits at a later time.

[23] ACA International v. Healey , No. CV20-10767-RGS, 2020 WL 2198366, at *10 (D. Mass. May 6, 2020).

[24] ACA International is a registered Minnesota nonprofit trade association with more than 2,300 members who work in the credit and collection industry, including debt buyers and collection agencies. ACA Intern'l, 2020 WL 2198366, at *1.

[25] 940 CMR 35.00. This debt collection regulation became effective on March 26, and was enacted "to provide emergency regulations to protect consumers from unfair and deceptive debt collection practices during the State of Emergency declared by the Governor of Massachusetts on March 10, 2020 pursuant to Executive Order No. 591." ACA Intern'l, 2020 WL 2198366, at *1.

[26] Section 35.03 of the debt collection regulation provided that, for the 90 day period after enactment or until the state of emergency period expires, it is an unfair or deceptive practice for any creditor to (q) initiate, file or threaten to file a lawsuit; (2) initiate, threaten to initiate, or act upon any legal or equitable remedy for the garnishment, seizure, attachment or withholding of wages, earnings, property, or funds for the payment of a debt; (3) initiate, threaten to initiate, or act upon any legal or equitable remedy for the repossession of any vehicle; (4) apply for, cause to be served or enforce any capias warrant; (5) visit or threaten to visit the household of a debtor at any time; (6) visit or threaten to visit the place of employment of any debtor at any time; and (6) confront or communicate in person with a debtor regarding the collection of a debt in any public place at any time. Id., at *2.

[27] Id., at *1.

[28] Section 35.04 of the debt collection regulation provides that, for the 90 days following the effective date or until the state of emergency period xpires, whichever occurs first, it shall be an unfair or deceptive act or practice for any debt collector to initiate a communication with any debtor via telephone, either in person or by recorded audio message to the debtor's residence, cellular telephone, or other telephone number.

[29] ACA Intern'l, 2020 WL 2198366, at *3.

[30] The court did not reach or address the due process claim or the claim based on the alleged violation of the separation of powers under federal and state constitutions.

[31] Id., at *5.

[32] Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n , 447 U.S. 557 (1980). Under the Hudson test, the court first must determine whether the expression is protected by the First Amendment and if it is, the court then must determine whether the asserted governmental interest is substantial, whether the disputed regulation advances that interest, and whether the regulation is more extensive than necessary to serve that interest.

[33] Id. (quoting 44 Liquormart Inc. v. Rhode Island , 517 U.S. 484, 501 (1996))

[34] The Massachusetts attorney general claimed that, during the coronavirus pandemic, the debt collection regulation advanced the substantial government interest of shielding consumers from aggressive debt collection practices that wield undue influence, protecting residential tranquility while citizens have to remain at home, and temporarily vouchsafing citizen's financial wellbeing. ACA Intern'l, 2020 WL 2198366, at *5.

[35] Id., at *6.

[36] Id.

[37] The Federal Trade Commission Act, 15 U.S.C.A. § 45(a)(1), prohibits unfair or deceptive acts or practices in or affecting commerce, and the Federal Debt Collection Practices Act, 15 U.S.C. § 1692, which provides that a violation is a per se violation of FTCA, protects consumers against abusive, deceptive and unfair debt collection practices act. Massachusetts Gen. Laws ch. 93A, which prohibits unfair and deceptive acts or practices, defines the prohibited acts and practices by reference to interpretations of those terms in the FTCA, and violations of FTCA and FDCPA also are violations of 93A. Id., at *7. Moreover, Massachusetts has its own unfair debt collection statute, Mass. Gen. Laws ch. 93, § 49, and comprehensive debt-collection regulations. Id., at *8.

[38] Id.

[39] Id.

[40] Id. (quotation marks omitted).

[41] Id., at *9 (quotation marks omitted).

[42] Id. (quotation marks omitted).

[43] Id.

[44] Id., at *10.

[45] See Executive Order 202.28, Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency. The order suspends the operation of certain laws and modified existing relationships between landlords and their tenants, including the prohibition against evictions of residential or commercial tenants initially for 90 days. The order also provided a procedure for landlords to use tenant security deposits provided the landlord repaid the tenant with interest.

[46] Elmsford Apartment Associates LLC v. Cuomo . No. 1:20-cv-04062, 2020 WL 3498456, at *1 (S.D.N.Y. June 29, 2020).

[47] Id., at *5.

[48] Id.

[49] Id., at *1.

[50] This occurs only when the government requires the landowner to submit to the physical occupation of the land, and the action that merely affects the use and value of the land does not amount to a physical taking. Id., at *7. With the New York moratorium, tenants will continue to accrue arrearages and the landlord will be able to collect with interest once the order expires, and they will regain the ability to evict tenants. Id., at *8. As a result, the order is an example of a "government regulation of the rental relationship that does not constitute a physical taking." Id.

[51] Id., at *8-*11.

[52] Regulatory takings are categorical and noncategorical. "A categorical regulatory taking occurs in the extraordinary circumstance when no productive or economically beneficial use of land is permitted" and "[a]nything less than a complete elimination of value, or a total loss" is a non-categorical taking. Id., at *9. The three factors set forth in Penn Central Trans. Co. v. New York City , 438 U.S. 104 (1978) that a court considers include: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with investment-backed expectations; and (3) the character of the government action. Id. In this case, the court found that the landlords did not satisfy their burden to support a regulatory taking.

[53] Id., at *12.

[54] Id. (quotation mark omitted). 

[55] Id.

[56] When deciding whether the state action affecting contracts is unconstitutional, courts consider: (1) whether the impairment is substantial and if so, (2) whether the law serves a legitimate public purpose and if such a purpose is demonstrated, (3) whether the means chosen are reasonable and necessary. Id. (citing Sullivan v. Nassau Cty. Interim Fin. Auth. , 959 F.3d 54 (2d. Cir. 2020) (quoting Buffalo Teachers Fed'n v. Tobe , 464 F.3d 362, 368 (2d. Cir. 2006))).

[57] Id., at *12-15.

[58] To prevail on a procedural due process claim, a claimant must identify a property right and then show that the "state has deprived him of that right" and that "the deprivation was effected without due process." Id., at *15.

[59] Id.

[60] Id.

[61] Id., at *16.

[62] The New York District Court rejected the landlords' attempt to cite ACA International as legal support for their claim because the New York moratorium is far narrower than the regulation cited in that case. Id., at *17.

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