Real Estate Law Alert: District Court Rules that the Residential Eviction Moratorium will Survive – For Now

As we highlighted in an earlier alert, five landlord plaintiffs filed a lawsuit on May 6, 2021, Chrysafis et al. v. Marks et al., seeking a declaration that certain provisions of the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“CEEFPA”) are unconstitutional. They also sought injunctive relief barring its further implementation and enforcement.

By Memorandum and Order filed June 11, 2021, the United States District Court for the Eastern District of New York denied plaintiffs’ request for injunctive relief and, after consolidating their application for a preliminary injunction with a review of the merits of the case, dismissed the lawsuit on the ground that the plaintiffs had failed to demonstrate violations of their due process rights. As a result of this holding, CEEFPA–with its extended moratorium on residential evictions–is here to stay.

In its Memorandum, the Court held that while the plaintiffs could demonstrate a risk of irreparable injury from CEEFPA and its extended evictions moratorium (now in its 15th month), they had failed to demonstrate a likelihood of success on the merits of their constitutional claims so to warrant an injunction.

With regard to the irreparable injury element, the Court concluded that while the plaintiffs could technically be compensated by money damages, the state actor defendants are not subject to money judgments due to sovereign immunity principles and the plaintiffs’ tenants were not parties to the lawsuit and were unlikely to be able to pay the substantial arrears. Further, the Court held that in several instances, the extended moratorium had deprived landlords from selling or occupying their properties, which could well be viewed as irreparable harm.

As for the likelihood of success on the merits, however, the Court rejected plaintiffs’ claims of unconstitutionality and dismissed their case. The Court disagreed with plaintiffs’ argument that CEEFPA violated their due process rights, reasoning that because CEEFPA “governs the timing, format and litigation of eviction proceed[ing]s generally” as opposed to case-specific proceedings, it was a legislative action (as opposed to an adjudicative action) not subject to the traditional notice and hearing requirements of due process.

While the Court acknowledged that the legislature’s power to take such legislative action is not without constitutional limits, it held that CEEFPA is “reasonably related” to the ongoing COVID-19 pandemic and, specifically, the public health, safety, morals and general welfare, so as to warrant its continuation. The Court held that broad public policy decisions such as CEEFPA, in an effort to combat the ongoing pandemic, are best left to the legislature.

The Court also rejected plaintiffs’ three miscellaneous challenges. First, the Court disagreed with plaintiffs’ argument that the statutory language prescribing the hardship declaration form is impermissibly vague, holding that it is “plain language that persons of ordinary intelligence can understand.” Second, in response to plaintiffs’ contention that the extended moratorium violates their right to petition the courts for relief, the Court held that “mere delay” to filing a lawsuit does not violate one’s right to petition the courts, particularly where there are other available avenues for relief, including breach of contract and ejectment actions. Finally, the Court rejected plaintiffs’ argument that CEEFPA’s notice requirements directing them to provide their tenants with hardship declarations and information regarding legal services organizations are compelled speech violating their First Amendment rights. The Court likened the declarations to other examples of “commercial speech” such as warnings on cigarette packs and mandatory disclosures in mortgages or automobile purchase agreements, which have long been upheld and deemed rational.

Plaintiffs filed an immediate appeal from the Memorandum and Order to the United States Court of Appeals for the Second Circuit. They also filed a motion to expedite the appeal, which the Second Circuit granted.

We will continue to monitor the case and provide updates. If you have questions about this case or require guidance with respect to eviction proceedings, our real estate attorneys stand ready to assist.

Thank you to summer associate, Kyra E. Ganswith, for assisting with drafting this legal alert.

This communication is for informational purposes and is not intended as legal advice.