Elmsford Apartment Assocs., LLC v. Cuomo

Decision Date29 June 2020
Docket Number20-cv-4062 (CM)
Citation469 F.Supp.3d 148
Parties ELMSFORD APARTMENT ASSOCIATES, LLC, 36 Apartment Assocaites, LLC, and 66 Apartment Associates, J.V., Plaintiffs, v. Andrew CUOMO, as Governor of the State of New York, Defendant.
CourtU.S. District Court — Southern District of New York

Mark A. Guterman, Lehrman, Lehrman & Guterman, LLP, White Plains, NY, for Plaintiffs.

Matthew Lawrence Conrad, New York State Office of the Attorney General, New York, NY, for Defendant.


McMahon, C.J.

The world is navigating the deadliest pandemic in over a century. Presently, the United States has suffered more than any other country, reporting over two million cases of the novel coronavirus known as COVID-19, and over one hundred and twenty thousand deaths as a result.1 Among the fifty states, New York has experienced the highest number of cases, with nearly four hundred thousand cases and twenty-five thousand dead.2

The New York State Legislature and the Governor, Defendant Andrew Cuomo, have worked together to respond to this evolving crisis and its effects on the health, safety, and economic wellbeing of New Yorkers. At issue here is the Governor's Executive Order 202.28, "Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency," issued May 7, 2020 (the "Order" or "EO 202.28"), which, inter alia , temporarily permits tenants to apply their security deposit funds to rents due and owing – provided the tenants replenish those funds at a later date – and temporarily prohibits landlords from initiating eviction proceedings against tenants who are facing financial hardship due to the pandemic.

Three residential landlords – Plaintiffs Elmsford Apartment Associates, LLC; 36 Apartment Associates, LLC; and 66 Apartment Associates, J.V. ("Plaintiffs") – ask this Court to enjoin EO 202.28 on the grounds that the Order violates their rights under the United States Constitution's Contracts Clause, Takings Clause, Due Process Clause and Petition Clause.3 While the Plaintiffs initially sought only a temporary restraining order and preliminary injunction, the parties agreed that Plaintiffs’ challenge turns entirely on legal issues that required no discovery and could be resolved on cross-motions for summary judgment. After an expedited briefing schedule, the Court heard oral argument via telephone conference on June 24, 2020.

For the following reasons, Plaintiffsmotion for summary judgment is denied, and Defendant's motion for summary judgment dismissing this action is granted.

A. New York's response to COVID-19

On March 2, 2020, in response to the first reported cases of COVID-19 in New York state, the legislature passed Senate Bill S7919, which afforded Governor Cuomo the power to suspend statutes or regulations, and issue necessary accompanying directives, in the event of an epidemic or other disease outbreak. See SB S7919; N.Y. Exec. Law Art. 2-B § 29-a. Specifically, Governor Cuomo may respond to the current pandemic by:

"temporarily suspend[ing] any statute, local law, ordinance, or order, rules or regulations, or parts thereof, or any agency during a state disaster emergency, if compliance with such provisions would prevent, hinder, or delay action necessary to cope with the disaster or if necessary to assist or aid in coping with such disaster."

N.Y. Exec. Law Art. 2-B § 29-a. Any such suspensions must be "in the interest of the health or welfare of the public," "reasonably necessary to aid the disaster effort," and must "provide for the minimum deviation" from pre-suspension legal requirements "consistent with the goals of the disaster action deemed necessary." Id. Suspensions are only authorized for period of 30 days, although Section 29 of the amended Executive Law allows the Governor to "extend the suspension[s] for additional periods not to exceed thirty days each." Id.

To reduce the spread of COVID-19, government officials around the world ordered all "non-essential" businesses closed, and instructed their constituents to shelter in place, so that medical professionals and other first responders could try to stem the exponential wave of infections that reached catastrophic levels in mid-March. By mid-March, New York State was rapidly becoming the epicenter of this unprecedented public health crisis. Governor Cuomo declared a statewide emergency on March 6. (EO 202.) On March 20, he ordered all non-essential businesses either to close or to require their employees to work from home. (EO 202.8.) The initial orders also prohibited public gatherings not related to essential work.

These indefinite disruptions to everyday life had a number of second-order economic effects. Tens of millions of Americans filed for unemployment in the weeks following the stay-at-home orders, as bars, restaurants, shops, and live entertainment venues were forced to close.4 As a result of these shutdowns, more and more households were forced to eat into their financial resources as they waited out the emergency. Many are still waiting as New York continues to gradually reopen sectors of the economy.

On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act provided numerous forms of relief to affected industries and industries, including a prohibition against new eviction cases filed by housing providers who participate in certain federal housing rental programs on the basis of non-payment of rent. See 15 U.S.C. § 9058.

Which brings us to the order that is the subject of this lawsuit.

B. The Order Under Review

On March 20, 2020, in response to this emergency. Governor Cuomo issued EO 202.8 (the "First Moratorium") – the first of several orders designed to prohibit the eviction or foreclosure of either residential or commercial tenants for a period of 90 days. As he did when initially declaring a state of emergency, Governor Cuomo said the measures included in EO 202.8 were justified in light of "travel-related cases and community contact transmission of COVID-19" which were "documented in New York State and expected to ... continue," and because allowing landlords to continue evictions and foreclosures "would prevent, hinder, or delay action necessary to cope with the disaster emergency."

Governor Cuomo later issued the challenged Order, EO 202.28, on May 7, 2020. (See Executive Order 202.28, "Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency," available at https://www.governor.ny.gov/news/no-20228-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency.) The Order contains two sections that, while suspending the operation of certain state laws, have the effect of modifying existing relationships between landlords and their tenants.

i. Security Deposit Provisions

The Order suspends Sections 7-103, 7-107 and 7-108 of the General Obligations Law, dealing with the rights and obligations of lessors and lessees with respect to security deposits, for thirty days. Security deposits are deposits of rent – most commonly, one month's rent – to provide the landlord with security for the making of repairs to damage caused by the tenant once the tenant vacates the premises. By law, the landlord must place the security deposit into an interest bearing account for the benefit of the tenant (who retains legal title to the funds). The tenant is entitled to the return of the security deposit, with interest, at the conclusion of the lease, unless the landlord needs to use the funds to make repairs in order to re-lease the premises. All this is governed by the cited sections of the General Obligations Law.

The Order temporarily suspends the operation of the usual procedures governing the use of security deposits in order to permit tenants to apply their security deposit funds to rental payments:

Landlords and tenants or licensees of residential properties may, upon the consent of the tenant or licensee, enter into a written agreement by which the security deposit and any interest accrued thereof, shall be used to pay rent that is in arrears or will become due. If the amount of the deposit represents less than a full month rent payment, this consent does not constitute a waiver of the remaining rent due and owing for that month. Execution in counterpart by email will constitute sufficient execution for consent;
Landlords shall provide such relief to tenants or licensees who so request it that are eligible for unemployment insurance or benefits under state or federal law or are otherwise facing financial hardship due to the COVID-19 pandemic;
It shall be at the tenant or licensee's option to enter into such an agreement and landlords shall not harass, threaten or engage in any harmful act to compel such agreement;
Any security deposit used as a payment of rent shall be replenished by the tenant or licensee, to be paid at the rate of 1/12 the amount used as rent per month. The payments to replenish the security deposit shall become due and owing no less than 90 days from the date of the usage of the security deposit as rent. The tenant or licensee may, at their sole option, retain insurance that provides relief for the landlord in lieu of the monthly security deposit replenishment, which the landlord, must accept such insurance as replenishment.

Even if the landlord does not want the tenant to use his security deposit to cover a month's rent, the tenant may invoke these new procedures and the landlord must allow it to do so.

ii. Eviction Moratorium

The order also suspends the landlord's ability to commence eviction proceedings for nonpayment of rent pursuant to Article 7 of the Real Property Actions and Proceedings Law, ("RPAPL") and Article 7 of the Real Property Law ("RPL"). (See Pl. Br. at 2-3.) That law (to which reference is made in many standard leases) provides that, after following certain procedures, the...

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