Commercial Landlord Can Go to Court to Challenge COVID-19 Eviction Moratorium

What Happened: Early in the COVID-19 pandemic, Los Angeles County imposed a temporary moratorium on residential and commercial evictions. A commercial landlord that had leased property to an auto repair tenant that was no longer paying rent due to COVID sued the county, claiming that the moratorium impaired his lease in violation of the Contracts Clause of the U.S. Constitution, which bans states, counties, municipalities, and other local governments from passing laws that impair “the Obligation of Contracts.”

The county responded by noting that under the terms of the moratorium, the ban on eviction applies only if a tenant gives the landlord written notice specifically listing the “extenuating circumstances” justifying its nonpayment of rent. Since the landlord didn’t ask for and the tenant didn’t provide the required “extenuating circumstances” notice, the landlord could have evicted the tenant and thus lacked legal standing to challenge the moratorium, the county argued. The California federal court agreed and dismissed the case.  

Ruling: The Ninth Circuit Court of Appeals reversed, holding that the landlord does have legal standing and allowing him to take his claim to trial.

Reasoning: Standing affects who can bring a lawsuit to challenge a particular law. To establish standing, a plaintiff must show:

• An actual injury—the plaintiff can’t just be generally unhappy with the law;
• A causal connection between his injury and the conduct complained of; and
• That his injury will “likely be redressed by a favorable decision.”

The landlord in this case checked all the boxes to challenge the moratorium under the Contracts Clause. He did suffer actual injury, the court reasoned, because the moratorium impaired his contract with the tenant by altering the remedies for nonpayment of rent that the parties had agreed to when they signed the lease. The moratorium directly limited the landlord’s eviction rights regardless of whether he would have actually won an eviction suit against the tenant while it was in effect. The court also cited rulings from other states, including a New York case called Melendez v. City of New York (2023 U.S. Dist. LEXIS 57050), finding that landlords do have standing to challenge COVID era eviction moratoria to the extent they invalidate a landlord’s bargained-for lease rights.

• Iten v. County of Los Angeles, No. 22-55480, United States Court of Appeals, Ninth Circuit, Aug. 30, 2023