A judge has dismissed a federal lawsuit filed by a developer who said its real estate companies should have been compensated for losses they suffered from emergency shelters for renters approved in Los Angeles following the COVID-19 outbreak.
In his 15-page ruling, U.S. District Judge Dean Pregerson said the city’s ordinance prohibiting landlords from evicting tenants who couldn’t pay rent because of COVID-19 does not constitute an “adoption” of private property within the meaning of federal law.
Pregerson said the eviction ordinance, which was approved in 2020 and remains in effect, is only for a limited time and does not constitute a permanent dispossession of property that would have required the city to compensate landlords. The judge also noted that the law “undeniably promotes the common good.”
“It can hardly be disputed that without the protection of the moratorium, a significant number of tenants would have been evicted with COVID-related income losses, not only causing the damage typical of mass evictions, but also exacerbating the spread of COVID-19, for example Disadvantage of all,” Pregerson wrote.
GHP Management Corp., owned by real estate developer Geoffrey Palmer, filed a lawsuit against the city in August 2021, saying 12 apartment buildings it manages lost more than $20 million in rental income as a result of emergency tenant protection . GHP and other Palmer-owned companies said at the time they expected their losses to triple by the time the moratorium was lifted.
Palmer is known in LA for developing a number of mock Italianate complexes in and around downtown, including the Orsini, Piero and Medici. Several were built along freeways, particularly around the 101-110 intersection
The lawyers for GHP and the other plaintiffs did not respond to inquiries from The Times.
In his decision, Pregerson gave Palmer’s companies an opportunity to amend their lawsuit and refile it with more specific details of their economic losses. Nonetheless, tenant advocacy groups, including the Coalition for Economic Survival and Strategic Actions for Just Economy, hailed the ruling as a major victory.
“We are grateful that the court recognized this legal challenge for what it was: a false attempt to expose the moratorium on emergency evictions and set a dangerous precedent that could undermine the protections of other tenants,” said Rachel Steinback, Attorney for Los Angeles County Neighborhood Legal Services, which helped represent tenant advocacy.
A spokesman for City Atty. Mike Feuer said his boss was happy with the verdict but declined to comment further.
Council members have been meeting for the past few months to discuss when the city’s COVID-19 tenant protections, said to be among the strongest in the country, should be lifted – and what should take their place. With only a few weeks left in the Council’s legislature, a decision on this may not be made until January, when five new Council members have taken office.
Once the moratorium ends, tenants will have a full year to pay overdue rent. The ordinance prohibits landlords from charging interest or late fees on that money.
Eviction protections were first introduced as an emergency order by Mayor Eric Garcetti in March 2020 and were approved as an ordinance by the council weeks later.
In their lawsuit, GHP and the other companies argued that the moratorium indiscriminately shifted the financial burdens caused by the pandemic from tenants to property owners. They also said the ordinance violates the revenue clause set out in the 5th Amendment, which says private property may not be taken for public use without “just compensation.”
Pregerson said in his ruling that Palmer’s companies failed to demonstrate that their economic losses were significant enough to be considered income under the law.
Tenant advocacy groups say the city’s emergency response has staved off a wave of evictions and stopped families moving into overcrowded apartments or homeless shelters, allowing the coronavirus to spread.
“Governments have a duty to protect vulnerable residents in the midst of a global catastrophe,” said Ryan Kendall, prosecutor for the Legal Aid Foundation in Los Angeles. “The Constitution does not leave renters helpless in the face of an ongoing pandemic.”
GHP also has a separate lawsuit pending against Los Angeles County over its emergency rent protection. A decision has not yet been made in this case, said district spokesman Jesus Ruiz.