A judge has tossed out a federal lawsuit filed by a developer who said his real estate companies should have been compensated for losses they incurred as a result of emergency tenant protections approved in Los Angeles following the outbreak of COVID-19.
In his 15-page ruling, U.S. District Judge Dean Pregerson said the city’s ordinance, which barred landlords from removing tenants who were unable to pay rent because of COVID-19, did not constitute a “taking” of private property as defined by federal law.
Pregerson said the eviction ordinance, which was approved in 2020 and remains in effect, covers only a limited period of time and does not constitute a permanent taking of property, which would have required the city to compensate landlords. The judge also found that the law “indisputably promotes the common good.”
“There can be little dispute that, absent the moratorium’s protections, significant numbers of tenants with COVID-related loss of income would have been evicted, resulting not only in the harms typical of mass displacements, but exacerbating the spread of COVID-19 as well, to the detriment of all,” Pregerson wrote.
GHP Management Corp., owned by real estate developer Geoffrey Palmer, filed its lawsuit against the city in August 2021, saying that 12 apartment buildings that it manages had experienced more than $20 million in lost rental income as a result of the emergency tenant protections. At the time, GHP and other companies owned by Palmer said they expected their losses to triple by the time the moratorium is repealed.
Palmer is known in L.A. for developing a number of faux-Italianate complexes in and around downtown, including the Orsini, Piero and Medici. Several have been constructed along freeways, particularly around the 101-110 interchange
Attorneys for GHP and the other plaintiffs did not respond to inquiries from The Times.
In his ruling, Pregerson gave Palmer’s companies the opportunity to amend their lawsuit and refile it with more specifics on their economic losses. Nevertheless, tenant advocacy groups, including the Coalition for Economic Survival and Strategic Actions for Just Economy, hailed the ruling as a major victory.
“We are grateful that the court saw this legal challenge for what it was: a spurious attempt to unravel the emergency eviction moratorium and set dangerous legal precedent that could undermine other tenant protections,” said Rachel Steinback, an attorney for Neighborhood Legal Services of Los Angeles County, which helped represent the tenant advocacy groups.
A spokesman for City Atty. Mike Feuer said his boss is pleased with the ruling but declined to comment further.
Council members have been meeting in recent months to discuss when the city’s COVID-19 tenant protections, considered some of the strongest in the nation, should be lifted — and what should be put in their place. With only a few weeks left in the council’s legislative year, a decision on that might not take place until January, when five new council members will have taken office.
Once the moratorium ends, tenants will have a full year to pay past-due rent. The ordinance bars landlords from charging interest or late fees on that money.
In their lawsuit, GHP and the other companies argued that the moratorium arbitrarily shifted the financial burden caused by the pandemic from renters to property owners. They also said the ordinance violated the takings clause established in the 5th Amendment, which says private property shall not be taken for public use without “just compensation.”
Pregerson, in his ruling, said Palmer’s companies failed to show that their economic losses were significant enough to be considered a taking under the law.
Tenant advocacy groups say the city’s emergency tenant protections prevented a wave of evictions and kept families from moving into overcrowded housing or homeless shelters, allowing the coronavirus to spread.
“Governments have a duty to protect vulnerable residents in the midst of a global catastrophe,” said Ryan Kendall, staff attorney with the Legal Aid Foundation of Los Angeles. “The Constitution does not leave tenants helpless in the face of an ongoing pandemic.”
GHP also has a separate lawsuit pending against Los Angeles County over its emergency tenant protections. A ruling has not been issued in that case, county spokesman Jesus Ruiz said.