Auracle Homes, LLC v. Lamont, No. 3:20-cv-00829 (VAB)

• Court: United States District Courts. 2nd Circuit. United States District Court (Connecticut)
• Writing for the Court: Victor A. Bolden, United States District Judge
• Citation: 478 F.Supp.3d 199
• Decision Date: 07 August 2020
• Docket Number: No. 3:20-cv-00829 (VAB)
• Parties: AURACLE HOMES, LLC, et al., Plaintiffs, v. Ned LAMONT, Governor of Connecticut, Defendant.

478 F.Supp.3d 199

AURACLE HOMES, LLC, et al., Plaintiffs,
v.
Ned LAMONT, Governor of Connecticut, Defendant.

No. 3:20-cv-00829 (VAB)

United States District Court, D. Connecticut.

Signed August 7, 2020

478 F.Supp.3d 206

Cara Christine Pavalock, The Law Offices of Cara C. Pavalock, Bristol, CT, Craig C. Fishbein, Fishbein Law Firm, LLC, Wallingford, CT, Doug Dubitsky, North Windham, CT, for Plaintiffs.

Maria C. Rodriguez, Philip Miller, Office of the Attorney General, Hartford, CT, for Defendant.

RULING AND ORDER ON MOTION FOR EMERGENCY TEMPORARY RESTRAINING ORDER OR PRELIMINARY INJUNCTION

Victor A. Bolden, United States District Judge

Auracle Homes, LLC; Buckley Farms, LLC; Orange Capitol, LLC; 216 East Main Street Meriden, LLC; BD Property Holdings, LLC; Prime Management,

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LLC; and Haberfeld Enterprises, LLC (collectively "Plaintiffs") are residential landlords; and they have sued Ned Lamont, the Governor of the State of Connecticut ("Defendant") over several executive orders issued to address the novel coronavirus known as COVID-19¹ : specifically, certain sections of Executive Order Nos. 7G, 7X, and 7DD (collectively, the "Executive Orders").²

These Executive Orders seek to temporarily limit the ability of residential landlords to initiate eviction proceedings against tenants and allow tenants to apply security deposit funds to past due rents, provided the security deposit amount exceeds the value of one month's rent.

Plaintiffs seek a temporary restraining order or preliminary injunction, alleging that Governor Lamont's Executive Orders violate their rights under the U.S. Constitution's Equal Protection Clause, Contracts Clause, Due Process Clause, and Takings Clause; and they allege that the Executive Orders are ultra vires.

For the reasons that follow, their motion is DENIED .

I. BACKGROUND

A. Factual Findings Related to Connecticut's Response to COVID-19 and the Challenged Executive Orders

On July 22, 2020, the Court conducted a hearing on Plaintiffs’ motion for a preliminary injunction. As a result of the parties’ written submissions³ and oral arguments, the Court finds the following:

Connecticut General Statutes §§ 47a-1 through 47a-74 address landlord-tenant relations in Connecticut. In Connecticut, a lease can provide for the payment of money (or "rent") by the tenant to the landlord; absent a lease, a landlord and a tenant can also agree on a rent for a tenancy. Joint Stip. of Facts ¶¶ 3–4, ECF No. 33 (July 19, 2020) ("Joint Stip. Facts").

If the tenant fails to pay the rent, the landlord may terminate the tenancy and regain possession of the property by following established procedures. Id. ¶ 5. Under Connecticut General Statutes § 47a-15a, the landlord may serve a Notice to Quit Possession, which is followed by a summary process eviction action under Connecticut General Statutes § 47a-23 et seq. Id. ¶ 6. The landlord is subject to

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significant penalty for failing to follow the statutory eviction process to dispossess the tenant. Id. ¶ 7.

On March 10, 2020, under the statutory authority granted to him by Connecticut General Statutes §§ 19a-131a and 28-9, Governor Lamont issued a declaration of public health and civil preparedness emergencies, and proclaimed a state of emergency due to the COVID-19 outbreak in the United States and Connecticut. Id. ¶ 11. Among the powers of the Governor under section 28-9 is the power to "modify or suspend in whole or in part, by order as hereinafter provided, any statute ... whenever the Governor finds such statute ... is in conflict with the efficient and expeditious execution of civil preparedness functions or the protection of the public health." Conn. Gen. Stat. § 28-9(b)(1).

Since his declaration and proclamation, Governor Lamont has issued over sixty executive orders aimed at reducing the threat of COVID-19 to Connecticut.⁴ At issue here are Executive Orders 7G, 7X, and 7DDD. On March 19, 2020, Governor Lamont issued Executive Order 7G, which suspended non-critical court operations and associated requirements. Joint Stip. Facts ¶ 13. On March 20, 2020, Governor Lamont issued Executive Order 7H, which ordered all non-essential businesses to either close or work from home. Id. ¶ 14. As a result, Connecticut's unemployment rate increased significantly from 3.8% in February to 9.8% in June.⁵

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief and Economic Security act ("CARES"), which provided numerous forms of relief to affected industries and individuals. Joint Stip. Facts ¶ 15. The CARES Act also included protections for renters and homeowners, including a prohibition against new eviction cases filed by housing providers who participate in certain federal housing rental programs on the basis of nonpayment of rent. 15 U.S.C. §§ 9056 – 58. Under 15 U.S.C. § 9056(b), homeowners with a "federally backed mortgage loan" may seek a 180-day forbearance on their loan, with an additional 180-day extension at the homeowner's request. Section 9056(c) placed a sixty-day foreclosure moratorium on services of federally backed mortgage loans beginning on March 18, 2020. 15 U.S.C. § 9056(c). On June 17, 2020, the Federal Housing Administration extended this moratorium until August 31, 2020.⁶ Similar protections are available for multifamily borrowers. 15 U.S.C. § 9057(a) ("During

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the covered period, a multifamily borrower with a Federally backed multifamily mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency may request a forbearance under the terms set forth in this section.").

On March 31, 2020, Governor Lamont announced an agreement with over fifty Connecticut credit unions and banks to offer up to ninety days of mortgage-payment forbearance, with no late fees, new foreclosure sales, or evictions for ninety days. Press Release, Office of Gov'r Ned Lamont, Governor Lamont Announces Mortgage Payment Relief During COVID-19 Crisis (Mar. 31, 2020), https://portal.ct.gov/Office-of-the-Governor/News/Press-Releases/2020/03-2020/Governor-Lamont-Announces-Mortgage-Payment-Relief-During-COVID19-Crisis. This agreement with most banks and credit unions was recently extended to apply until July 30, 2020.⁷

On April 10, 2020, Governor Lamont issued Executive Order 7X,⁸ which included numerous protections for residential renters impacted by COVID-19 for the duration of the declared public health and civil preparedness emergencies. Joint Stip. Facts ¶ 16. As relevant to this case, Executive Order 7X included the following provisions:

• Connecticut General Statutes § 47a-23 is modified to additionally provide that neither landlords of residential dwelling units nor their legal representatives could deliver a notice to quit or serve/return a summary process action for nonpayment of rent for any reason before July 1, 2020, "except for serious nuisance as defined in section 47a-15 of the Connecticut General Statutes." Id. ¶ 16(a).

• Connecticut General Statutes § 47a-15a is modified to additionally provide an automatic sixty-day grace period for April rent, as well as a sixty-day grace period for May rent upon request. Id. ¶ 16(b)–(c).

• Renters who had paid a security deposit greater than one month's rent could apply the additional security deposit over one month's rent to any rent due for April, May, or June. Specifically, Connecticut General Statutes § 47a-21 is modified to additionally provide:

(m) Upon the written request of a tenant of a dwelling unit who is not enrolled in the security deposit guarantee program established by the Commissioner of Housing pursuant to Section 8-339 of the Connecticut General Statutes, who has paid a security deposit in an amount that exceeds one month's rent, and who provides written notice, including but not limited to in written electronic communication, that he or she has become fully or partially unemployed or otherwise sustained a significant loss in revenue or increase in expenses as a result of the COVID-19 pandemic, a landlord of such unit shall withdraw an amount of said deposit equal to the amount in excess of one month's rent from an escrow account and apply it toward

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the rent due in April, May, or June 2020. Notwithstanding subsection (h) of this section, an escrow agent may withdraw funds from an escrow account to comply with such a request. The amount withdrawn by the escrow agent and applied toward the rent due shall no longer be considered an amount of the security deposit for any purpose, including but not limited to the calculation of interest, assignment to successor, and the payment of security deposit and interest at the termination of a tenancy. Notwithstanding subsection (b) of this section, no landlord who has complied with such a request may demand the security deposit be restored to an amount that exceeds one month's rent earlier than the later of the end of the public health and civil preparedness emergency declared on March 10, 2020,

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