A federal judge has dismissed billionaire developer Geoff Palmer’s lawsuit that challenged Los Angeles’ COVID-19 emergency eviction moratorium, the Los Angeles Times reported.
The moratorium, which is still in effect, prohibits landlords from evicting tenants due to COVID-related nonpayment of rent, among other things.
Landlords are also prohibited from charging interest or late fees on COVID-related missed rent. The moratorium further allows tenants who have missed rent payments one-year to pay back rent.
Palmer’s company, GHP Management, and 13 LLCs that own buildings in the city filed a lawsuit in August 2021 against the city alleging that the moratorium constitutes an uncompensated taking of private property in violation of the Fifth Amendment’s Takings Clause of the U.S. Constitution, as well as the California Constitution’s Takings Clause.
GHP claimed that the moratorium cost the 12 apartment buildings it manages in the city $20 million in lost rental income.
The suit also claimed the moratorium “arbitrarily shift[ed] the financial burden” of tenants onto property owners. Because of the moratorium, the suit alleged lenders have refused to refinance loans on properties owned by Palmer’s companies. The lawsuit sought only monetary damages and did not seek to invalidate or enjoin the enforcement of the moratorium.
Still, U.S. District Judge Dean Pregerson said the moratorium – which is still in effect – was not permanent, but instead was enacted for a limited period of time and, therefore, did not constitute a taking.
In addition, the companies failed to show their economic losses were significant enough to be considered a taking under the law, Pregerson wrote.
“Not every diminution in property value caused by a government regulation rises to the level of an unconstitutional taking,” Pregerson wrote. “Similarly, ‘the mere loss of some income because of regulation does not itself establish a taking.’ …
“Plaintiffs’ allegation that their tenants are $20 million in arrears is presented in a vacuum, and cannot alone demonstrate a significant economic impact, notwithstanding Plaintiffs’ vague and conclusory allegation that “the economic impact of the Eviction Moratorium is severe and ruinous.”
Pregerson also said the measure was for the common good and not interference that arose from a physical governmental invasion.
“There can be little dispute that, absent the moratorium’s protections, significant numbers of tenants with COVID-related loss of income would have been evicted, resulting not only in the harms typical of mass displacements, but exacerbating the spread of COVID-19 as well, to the detriment of all,” Pregerson wrote.
Tenant advocacy groups hailed the ruling as a significant victory in protecting the city’s most vulnerable populations, the LA Times reported.
Still, Pregerson’s dismissal left open the possibility for Palmer and his companies to amend their complaint within 21 days with new evidence to support their claims.
Palmer, whose companies have thousands of rental units in Los Angeles, is best known for his Italian Renaissance-inspired apartment complexes along the Harbor Freeway.
— Ted Glanzer