Darby Dev. Co. v. United States
| Docket Number | 21-1621L |
| Decision Date | 17 May 2022 |
| Parties | DARBY DEVELOPMENT COMPANY, INC., ET AL., Plaintiffs, v. UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
CDC Eviction Moratorium: Fifth Amendment Takings & Illegal Exaction
Creighton R. Magicl, Dorsey & Whitney LLP, Washington D.C., and Shawn J. Larsen-Bright, Dorsey & Whitney LLP. Seattle, Washington, for plaintiffs. With them on the briefs was John McDermott, John McDermott, PLLC. Arlington Virginia.
Nalhcmael B. Yale, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for defendant. With him on the briefs were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, Martin F. Hockey, Jr., Deputy Director, L. Misha Preheim, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., and Mark PaceUa and Matthew P. Rand, Trial Attorneys, Natural Resources Section, Environmental & Natural Resources Division, U.S. Department of Justice, Washington, D.C.
Contemporaneous with the publication of this decision, the United States reached the once unimaginable and grim milestone of one million deaths due to Coronavirus disease 2019 (COV1D-19). During the past three years, the executive and legislative branches of our government (federal and state) as well as the American people in cities and towns across this Nation have engaged in critical debates on the best ways to combat the deadly pandemic as well as address the crippling financial fallout impacting the United States and global economies. Passionate policy debates range from vaccines to mask mandates, social distancing to curfews, shuttering businesses to virtual learning, and emergency financial assistance to states and local municipalities, businesses, and individuals.
Throughout this extraordinary time, the judiciary continues to serve the critical role of ensuring that policy decisions, once reached, are in accord with the United States Constitution and federal and state law. Indeed, the true tests of an enduring democracy and an independent judiciary come not in times of peace, tranquility, and good health, but in times of war, unrest, and disease.
At the heart of this case are the decisions of the executive and legislative branches of the federal government to institute and extend nationwide residential eviction moratoria to combat the spread of COVID-19. These measures aimed to prevent homelessness and cohabitation by necessity by allowing people to remain and isolate or quarantine in their homes, particularly those infected or infectious and members of vulnerable populations at increased risk of contracting the deadly virus. Designated as temporary measures, iterations of the residential eviction moratoria remained in effect for seventeen months (from March 27, 2020 to August 26, 2021). Driven largely by a series of extensions issued by the Centers for Disease Control and Prevention (CDC), the nationwide residential eviction moratorium was ultimately voided by the judiciary upon the ground that the CDC lacked the requisite legal authority to take such drastic action.
In this case, more specifically, thirty-eight landlords and rental property owners (of properties ranging from single-family homes to 3, 000+ unit apartment complexes located throughout the country) filed suit in this Court asserting that the nationwide residential eviction moratorium effected either a compensable taking or an illegal exaction under the Fifth Amendment. The plaintiffs aver that the government forced them to continue housing non-rent-paying tenants rather than replace them with rent-paying tenants and subjected them to significant fines and imprisonment if they pursued otherwise lawful evictions. Plaintiffs maintain that they alone should not have been forced to shoulder this burden for the benefit of the Nation. Accordingly, this Court is now called upon to assess not as a matter of public policy or equity, but as a matter of law, whether plaintiffs are entitled to any relief under the Constitution.
Before the Court is defendant's motion to dismiss plaintiffs' First Amended Complaint for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted under Rules 12(b)(1) or 12(b)(6), respectively, of the Rules of the United State Court of Federal Claims (RCFC). For the reasons set forth below, the Court GRANTS defendant's motion to dismiss for failure to state a claim upon which relief can be granted.
In March 2020, Congress passed, and the President signed into law, the Corona virus Aid, Relief, and Economic Security Act (CARES Act), a $2.2 trillion economic stimulus bill designed to mitigate the devastating financial impacts of the COVID-19 pandemic across the United States and throughout the global economy. See Pub. L. No. 116-136, 134 Stat. 281 (2020). Among the myriad relief provisions, Section 4024 of the CARES Act imposed a 120-day moratorium (from March 27 through July 24, 2020) on judicial eviction proceedings for residential rental units receiving federal assistance or financed through federally backed mortgage loans.[1] Id. at § 4024(b)(1) (Temporary Moratorium on Eviction Filings). Congress did not renew the statutory eviction moratorium, which expired by its own terms on July 24, 2020.
Two weeks later, on August 8, 2020, the President issued an Executive Order titled Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners. See Exec. Order No. 13, 945, 85 Fed.Reg. 49, 935 (Aug. 14, 2020). Relevant here, Section 3(a) directed the Secretary of Health and Human Services (HHS) and the CDC Director to "consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession." Id. at 49, 936. In response, on September 4, 2020, the CDC issued an order titled Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19 (CDC Order). 85 Fed.Reg. 55, 292 (Sept. 4, 2020).
Citing Section 361 of the Public Health Service Act, codified at 42 U.S.C. § 264(a), the CDC declared a nationwide moratorium on all residential evictions within jurisdictions not already covered by similar moratorium adopted by states and local municipalities.[2] 85 Fed.Reg. at 55, 292, 55, 297. The CDC Order differed from the CARES Act residential eviction moratorium in three material respects. First, the agency's eviction moratorium applied to all residential properties nationwide without regard to whether the properties received federal program benefits or were financed through federally backed mortgage loans. Compare id. at 55, 292 to 55, 297 with CARES Act § 4024. Second, the CDC Order provided for the imposition of criminal penalties (i.e., fines and imprisonment) for violations of the eviction moratorium.[3] Compare 85 Fed.Reg. at 55, 296 with CARES Act § 4024. Third, unlike the CARES Act eviction moratorium, the CDC Order did not prohibit landlords from assessing "fees, penalties, or interest" for the nonpayment of rent. Compare 85 Fed.Reg. at 55, 292, 55, 294 with CARES Act § 4024. Neither the statutory nor the regulatory residential eviction moratorium waived or otherwise excused the nonpayment of rent; instead, they focused on temporarily halting the forcible eviction of tenants unable to make timely rent payments due to the pandemic-induced financial crisis.[4] See 85 Fed.Reg. at 55, 292, 55, 294, 55, 296; CARES Act § 4024(b)-(c).
To invoke the protections of the CDC Order, tenants were required to certify under penalty of perjury that they: (1) attempted to secure available government assistance; (2) met specified household income caps[5]; (3) were unable to pay their rent in full due to a significant loss of household income, unemployment or underemployment, or extraordinary out-of-pocket medical expenses; (4) continued paying as much rent as they could reasonably afford; and (5) would be homeless or be forced to cohabitate with others if evicted because they have no other available housing options. 85 Fed.Reg. at 55, 293, 55, 297. The CDC Order was initially intended to be in effect from September 4 through December 31, 2020. Id. at 55, 292, 55, 297.
On December 27, 2020, four days prior to the expiration of the CDC Order, Congress extended the residential eviction moratorium through January 31, 2021, as part of the Consolidated Appropriations Act, 2021. See Pub. L. 116-260, § 502, 134 Stat. 2078-79 (2021). In Section 502, titled "Extension of Eviction Moratorium," Congress stated in full:
The order issued by the Centers for Disease Control and Prevention under section 361 of the Public Health Service Act (42 U.S.C. 264), entitled "Temporary Halt in Residential Eviction To Prevent the Further Spread of COVID-19" (85 Fed.Reg. 55292 (September 4, 2020)[)] is extended through January 31, 2021, notwithstanding the effective dates specified in such Order.
Id. In Section 501, Congress contemporaneously appropriated $25 billion in emergency rental assistance for landlords whose tenants defaulted on rent payments during the COVID-19 pandemic. Id. § 501(a)(1) (Emergency Rental Assistance). Congress did not further extend the CDC Order. However, on March 10, 2021, in Section 3201 of the American Rescue Plan Act of 2021, Congress appropriated an additional $21.55 billion in emergency rental assistance. Pub. L. 117-2, § 3201, 135 Stat. 4 (2021).
On January 29, 2021, prior to the expiration of the 31-day congressional extension, the CDC issued a supplemental order extending its regulatory residential...
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