Landlords can pursue takings suit stemming from COVID-19 eviction moratorium, Federal Circuit rules
Landlords may pursue a lawsuit alleging that the federal government violated the Fifth Amendment’s takings clause when it imposed a moratorium on evictions, according to a federal appeals court. (Image from Shutterstock)
Landlords may pursue a lawsuit alleging that the federal government violated the Fifth Amendment’s takings clause when it imposed a moratorium on evictions, according to a federal appeals court.
In a 2-1 decision Aug. 7, the U.S. Court of Appeals for the Federal Circuit reinstated the suit filed by owners of residential rental properties who sought compensation for losses stemming from the moratorium.
The Federal Circuit decision “could well end up setting an important takings precedent,” according to Ilya Somin, a professor at the George Mason University Antonin Scalia Law School, who wrote about the case at the Volokh Conspiracy.
InverseCondemnation.com also covered the decision.
The U.S. Centers for Disease Control & Prevention had imposed the moratorium to fight the spread of COVID-19. It prevented evictions stemming from an inability to pay rent because of economic hardship.
The U.S. Supreme Court blocked the eviction moratorium in August 2021. The CDC did not have statutory authority to impose a nationwide moratorium under a law authorizing measures, such as pest control to fight disease, the Supreme Court said.
There was no takings claim in the Supreme Court case.
The property owners who sued under the takings clause had alleged that they were entitled to just compensation because the moratorium amounted to a physical taking of their rental properties for public use.
The federal government had argued that a takings claim can’t stem from government actions that were unauthorized. The government also asserted that the moratorium didn’t amount to a physical taking of property because it merely regulated the landlord tenant relationship.
The Federal Circuit ruled against the government on both issues.
According to the appeals court, an action that is unlawful can still be considered authorized if it was done within the scope of a government agent’s duties, meaning that it stemmed from a good faith implementation of a congressional act.
On the second issue, the appeals court said the moratorium qualifies as a physical taking. The appeals court cited a 2021 Supreme Court decision, Cedar Point Nursery v. Hassid.
That decision held that a California regulation allowing union organizers to access private property of employers is a physical taking requiring just compensation.
The Federal Circuit case is Darby Development Co. v. United States.
