Heights Apartments, LLC v. Walz

Citation30 F.4th 720
Decision Date05 April 2022
Docket Number21-1278
Parties HEIGHTS APARTMENTS, LLC, Plaintiff - Appellant Walnut Trails, LLLP, Plaintiff v. Tim WALZ, in his individual and his official capacity as Governor of the State of Minnesota; Keith M. Ellison, in his individual and his official capacity as Attorney General of the State of Minnesota; John Doe Defendants - Appellees American Medical Association ; Home Line ; Housing Justice Center; Lawyers’ Committee for Civil Rights Under Law; Mid-Minnesota Legal Aid; Minnesota Assistance Council for Veterans; Minnesota Association of Community Health Centers; Minnesota Coalition for the Homeless; Minnesota Medical Association; Southern Minnesota Regional Legal Services ; Violence Free Minnesota ; Volunteer Lawyers Network, Amici on Behalf of Appellee(s)
CourtU.S. Court of Appeals — Eighth Circuit

Michael Kemp, Aaron Ferguson Law, Roseville, MN, for Plaintiff-Appellant.

Elizabeth Catherine Kramer, Solicitor General, Michael P. Goodwin, Assistant Attorney General, Attorney General's Office, Saint Paul, MN, for Defendants-Appellees.

Mark Robert Whitmore, Bassford & Remele, Minneapolis, MN, for Amicus on Behalf of Appellee(s) American Medical Association.

Lawrence Reed McDonough, Lawyers’ Committee for Civil Rights Under Law, Washington, DC, for Amici on Behalf of Appellee(s) Home Line, Housing Justice Center, Lawyers’ Committee for Civil Rights Under Law, Mid-Minnesota Legal Aid, Minnesota Assistance Council for Veterans, Minnesota Association of Community Health Centers, Minnesota Coalition for the Homeless, Minnesota Medical Association, Southern Minnesota Regional Legal Services, Violence Free Minnesota, Volunteer Lawyers Network.

Before GRUENDER, ERICKSON, and STRAS, Circuit Judges.

ERICKSON, Circuit Judge.

On March 23, 2020, Minnesota Governor Tim Walz signed an executive order mandating a statewide residential eviction moratorium. The purpose of the moratorium was to alleviate the displacement of families arising out of the COVID-19 pandemic and loss of employment due to widespread business closures. Governor Walz subsequently issued two additional executive orders amending and extending the residential eviction moratorium for an indeterminate time. Heights Apartments, LLC ("Heights"), a property owner of residential rental units in Minnesota, challenged the executive orders, raising claims under 42 U.S.C. § 1983 for violating rights protected under the Contract Clause, First Amendment, Fifth Amendment, and Fourteenth Amendment of the United States Constitution, and under Minnesota law.1 The district court granted Governor Walz's motion to dismiss and denied Heights’ motion for a preliminary injunction as moot.

While this case's controversy does not require a full exposition of the constitutional limits of a state's police powers during a national emergency like a pandemic, we find that Heights has sufficiently pleaded, at the dismissal stage of the proceedings, claims under the Contract Clause and Takings Clause. We reverse and remand for proceedings consistent with this opinion.

I. BACKGROUND

Shortly after Minnesota reported its first confirmed case of COVID-19 in March of 2020, Governor Walz declared an emergency and issued a number of executive orders intended to alleviate the pandemic's effect on Minnesotans.2 Salient to this case are Executive Orders 20-14,3 20-73,4 and 20-795 (collectively, the "EOs"), which placed a moratorium on residential evictions in an effort to "allow households to remain sheltered during the peacetime emergency" and threatened criminal sanctions on landlords who violated the terms.

EO 20-14, signed on March 23, 2020, mirrored, in part, an eviction moratorium established by the federal government. Under this EO, while not relieving tenants of their rental obligations, landlords in Minnesota could evict tenants only if they "seriously endanger[ed] the safety of other residents" or engaged in illicit activity, as described in Minn. Stat. § 504B.171, subd. 1. The EO requested, but did not mandate, that financial institutions refrain from foreclosing on landlords’ properties if their financial difficulties were related to the COVID-19 pandemic. The EO contained no end date and made willful violations a misdemeanor punishable by imprisonment or a fine. It further granted the Minnesota attorney general discretion to impose other penalties on landlords under Minn. Stat. § 8.31 for violations.

On June 5, 2020, Governor Walz signed EO 20-73, which clarified that EO 20-14 also allowed the eviction of tenants who "seriously endanger[ed] the safety of others on the premises" of the leased residential property, rather than just the safety of other tenants. Several weeks later, Governor Walz rescinded EOs 20-14 and 20-73, and implemented EO 20-79, which also did not relieve tenants of their rent obligations but continued to prohibit landlords from issuing notices of termination, nonrenewal, or eviction, even for tenants who materially violated a lease term (with limited exceptions, noted below) or failed to pay rent. Governor Walz again strongly urged, but did not require, financial institutions to refrain from foreclosing on landlords’ properties or imposing late fees when landlords were unable to meet their mortgage obligations because of the pandemic.

EO 20-79 did not apply to tenants who: (1) seriously endangered the safety of other residents; (2) engaged in illicit activity on the leased premises, as described in Minn. Stat. § 504B.171, subd. 1 ; (3) remained on the property after receiving a notice to vacate or of nonrenewal, but only when the landlord's family needed to move into the unit and would do so within seven days after the tenant vacated the property; or (4) materially violated the lease by seriously endangering the safety of others or significantly damaging property on the leased premises. In cases where the landlords could evict a residential tenant, they were required to give the tenant a seven-day notice of intent to file an eviction in order to "encourage resolutions without court involvement." EO 20-79 had no effective end date. Criminal sanctions for willful violations by landlords were retained.

Heights entered into a purchase contract for three residential rental properties in Minnesota prior to EO 20-14 and closed on those properties a few days after EO 20-14 went into effect. On September 24, 2020, Heights commenced this action against Governor Walz, in his official and individual capacities, Minnesota State Attorney General Keith Ellison, in his official and individual capacities, and various "John Doe" officials and private persons used to enforce the EOs (collectively, the "Walz Defendants"). Heights alleged the EOs unlawfully prevented it from excluding tenants who breached their leases, intruded on its ability to manage its private property, and interfered indefinitely with its collection of rents. Heights sought a declaration that the Walz Defendants violated the United States Constitution, a permanent injunction to prevent enforcement of current or future executive orders that violated the United States Constitution, compensatory damages, attorney's fees, and other fees permitted by law.

The Walz Defendants moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) and (b)(6) for lack of subject matter jurisdiction and for failure to state a claim. The district court granted the motion, concluding Governor Walz was entitled to sovereign immunity on the state law claim and that Heights otherwise failed to state a claim entitling it to relief. The district court dismissed the complaint without prejudice and denied Heights’ motion for a preliminary injunction as moot. Heights appeals.6

After the parties filed their briefs, the Minnesota Legislature voided Governor Walz's EOs and enacted a new eviction moratorium. See Act of June 29, 2021, 2021 Minn. Laws 1st Spec. Sess. Ch. 8, art. 5 (the "Eviction Law"). Under the Eviction Law, residential tenants in Minnesota enjoy protection from eviction for nonpayment of rent until June 1, 2022, so long as they have pending applications for rental assistance. Id. The Walz Defendants moved for partial dismissal of the appeal, asserting the Court lacked subject matter jurisdiction over the request for injunctive relief. Heights has opposed the request for dismissal.

II. DISCUSSION
1. Jurisdiction

Given Minnesota's new law and its replacement of the EOs, we first address the scope of our jurisdiction. Article III of the Constitution limits our consideration to cases and controversies existing throughout all stages of litigation. Kingdomware Techs., Inc. v. United States, 579 U.S. 162, 169, 136 S.Ct. 1969, 195 L.Ed.2d 334 (2016) ; see U.S. Const. art. III, § 2, cl. 1. We are unable to review Minnesota's Eviction Law because our jurisdiction extends only to live cases and controversies identified within the complaint, and we are without authority to give advisory opinions. See Carney v. Adams, 592 U.S. ––––, 141 S. Ct. 493, 498, 208 L.Ed.2d 305 (2020).

Heights’ challenges to the now-voided EOs are moot to the extent they seek to enjoin the EOs and declare them invalid because there is no longer a live controversy since the EOs have been superseded by statute. See N.Y. State Rifle & Pistol Ass'n, Inc. v. N.Y.C., 590 U.S. ––––, 140 S. Ct. 1525, 1526–27, 206 L.Ed.2d 798 (2020) (per curiam) (vacating and remanding after New York amended the challenged statute). Resolution of mootness, however, requires attention to a case's particular circumstances because "even if the government withdraws or modifies a COVID restriction in the course of litigation, that does not necessarily moot the case." Hawse v. Page, 7 F.4th 685, 692 (8th Cir. 2021) (quoting Tandon v. Newsom, 593 U.S. ––––, 141 S. Ct. 1294, 1297, 209 L.Ed.2d 355 (2021) (per curiam)). Because Heights has requested relief in the form of money damages, we have jurisdiction to consider the merits of its remaining...

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