Eviction Moratoria: Welcome to the Hotel Minnesota – You can Check-out any Time you Like, but you can Never Leave!

Don Henley and Glenn Frey may have said it best. . .

A recent United States Court of Appeals decision from the Eighth Circuit touched on a topic I discussed in September of 2021: the national residential eviction moratorium. In that blog, I argued that successful challenges to the Centers for Disease Control’s moratorium should be based on the argument that the moratorium exceeded the power Congress granted the CDC.

In August 2021, in a short opinion the Supreme Court of the United States may have cracked the door open to challenging moratoria as illegal takings of property rights in Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S.___, 141 S. Ct.2485, 210 L.Ed.2d 856 (2021) (per curium). Please refer to my blog for a complete review of Alabama Realtors. (Here’s a link to that blog). That case wasn’t really a takings case. And the Supreme Court did what I thought it would do – decided that the CDC’s eviction moratorium exceeded authority delegated to it by Congress.

In a tidbit to takings wonks, Alabama Realtors noted that preventing landlords from evicting tenants who breach their leased intruded on one of the most fundamental rights of property ownership: the right to exclude others from property.  Enticingly, the Supreme Court cited Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 435 (1982), perhaps signaling its willingness to consider straight-up takings claims challenging eviction moratoria. The rationale for requiring compensation for moratoria is that takings clauses safeguard against private property rights being taken for a public use without compensation because it is fundamentally unfair to force a landowner “alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”  Armstrong v. United States, 364 US 40, 49 (1960). Eviction moratoria can deprive landlords of the right to exclude others from property, a key part of private property ownership.

Shortly before Alabama Realtors, the Supreme Court decided Cedar Point Nursery v. Hassid, 594 U.S. ___, 141 S. Ct. 2063, 210 L.Ed.2d 369 (2021). It’s good to read these cases together. Hassid ruled that a law allowing union organizers to enter private property for union organizing purposes deprived the owner of the right to exclude others from its property. The law therefore amounted to a per se categorical taking of private property.

After Hassid and Alabama Realtors, takings junkies anxiously awaited to see if a court was willing to open the door wider. Heights Apartments, LLC v. Walz, 30 F.4th 720 (8th Cir. 2022), to my knowledge, is the first such case. (Here’s a link to the case). In Walz,  the owner of residential apartment units pleaded claims under the federal Contract Clause and Takings Clause because of Governor Walz’s executive order mandating a statewide residential eviction moratorium. The Governor moved to dismiss the complaint for failure to state a cause of action, arguing that he was entitled to sovereign immunity and that the property owner had otherwise failed to state a claim entitling it to relief.

The interesting thing about Walz was the standard of review the Eighth Circuit used to analyze the constitutional claims. Here’s where Walz gets geeky. One justification for state and federal eviction moratoria is to decrease the spread of COVID – far better for infected people to have a place to stay, even if they aren’t able to make rental payments, than to be put out on the streets or in shelters where they could further spread the disease. Since 1905, courts reviewed public health measures, like vaccine mandates designed to stem the spread of infectious diseases, under a highly deferential standard of review found in Jacobson v. Massachusetts, 197 U.S. 11 (1905) which upheld a state law requiring smallpox vaccinations. Under this deferential standard, had the judges applied it, the Governor might have won.

Walz, however, acknowledged a dispute over the proper standard of review regarding the owner’s constitutional challenges. The owner asked the appellate court to apply a strict standard of review. And the Supreme Court earlier had applied a strict standard in reviewing New York’s and California’s restrictions on the size of church gatherings. Those cases raised due process challenges brought by religious institutions.

The Eight Circuit concluded that, while Jacobson’s deferential standard of review might have made sense during the early stages of the COVID pandemic when little was known about the virus, in dealing with the New York and California restrictions the Supreme Court had since offered guidance to lower courts. According to Walz,  as the public health crisis evolved time was available “for more reasoned and less immediate decision-making by public health officials.” Walz then adopted a strict standard of review.

I have to take the learned judges to task. Courts aren’t particularly good at making science-based policy decisions in the midst of an on-going pandemic, particularly one involving a fast-spreading virus, worldwide in breadth, and capable of mutation. Appellate courts are even more removed from the fact-finding role than trial courts. Walz was short on facts to back up its scientific opinion about how to slow the spread of COVID.

More importantly, the Eighth Circuit gave short shrift of Yee v. City of Escondido, 503 U.S. 519 (1992), in which the Supreme Court upheld a municipal ordinance which restricted rent increases and was cited by the Governor as authority for the eviction moratorium. But not so fast. . .Citing to Hassid, the judges ruled that the Governor’s executive order authorized a physical invasion of private property because it prevented landlords from excluding nonpaying tenants from rental units. I have no qualms about the court’s distinction of the facts in Yee.

Because of the way the judges distinguished Yee, it will be interesting to see if the case has wider implications beyond eviction moratoria. Walz leaves intact rent control ordinances. But in the words of Messrs. Henley and Frey, I have to wonder how much longer the mirrors will be on the ceiling and the pink champagne will be on ice?

Jay Small practices in the areas of eminent domain, condemnation, property rights, inverse condemnation, and land use law. If you have any questions about how government regulations can affect your property, contact him at (407) 425-9044, by email at [email protected], or follow him on LinkedIn

This blog and these materials are not intended to provide legal advice. They do not represent the legal opinions of the firm, nor should they be regarded as the legal positions of any client of the law firm of Mateer Harbert, P.A. They are provided for general informational purposes only. These materials should not be used as a substitute for the advice of qualified legal counsel.

Share and Enjoy !