Federal Court Dismisses Lawsuit Challenging Minnesota Eviction Moratorium

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A&B ABstract: A federal district court dismissed a lawsuit filed by two landlords who sought to invalidate the Governor of Minnesota’s moratorium on evicting residential tenants for failure to pay rent during the pandemic.

 The Eviction Moratorium

In an Executive Order dated March 23, 2020, Minnesota Governor Timothy Walz suspended landlords’ ability to file eviction actions and prevented them from terminating residential leases except where a tenant took actions that “seriously endangered” other tenants or violated certain state criminal laws.  The Executive Order did not relieve tenants of their obligation to pay rent.  The moratorium was to stay in place until the statewide COVID-19 emergency declaration elapsed or the Executive Order was rescinded.

The Governor issued several later clarifications to the eviction moratorium, including Executive Order No. 20-79 on July 14, which is the version currently in effect.  It expanded certain tenant protections, and additionally permitted eviction of tenants who “significantly damage” rental property or overstay beyond a prior notice to vacate.  Landlords who violate the moratorium are subject to criminal fines and imprisonment of up to 90 days.

 The Lawsuit

Two companies that own rental properties in Minnesota, Heights Apartments and Walnut Trails, claimed to have “troublesome” tenants that they would seek to evict but for the moratorium.  They sued the Governor in federal district court in Minnesota, seeking to invalidate Executive Order No. 20-79 for several alleged violations of their constitutional rights.  The landlords also claimed that the moratorium was an unauthorized action under state law.  The complaint sought a preliminary injunction against enforcement of the moratorium, pending its invalidation.  The Governor filed a motion to dismiss.

 The Decision

On December 31, 2020, the court granted the Governor’s motion to dismiss and denied the landlord’s request for a preliminary injunction.  Much of the court’s opinion addresses – and rejects – standing, jurisdictional, and immunity arguments raised by the Governor.  On the merits, the court concluded that nothing in the moratorium interfered with the landlords’ ultimate right to collect rent pursuant to their lease agreements, and that the moratorium therefore did not “substantial impair” their contractual rights or infringe their constitutional rights.

As the court explained:

But the fundamental nature of a lease of a residential unit is that the landlord provides the tenant a place to live; the tenant, in turn, pays the landlord rent.  The landlord’s end of the contractual bargain is receiving rent payments.  Nothing in the [executive orders] interferes with that right, and each of the eviction moratoria clearly states that it does not affect a tenant’s obligation to pay rent.  And although, under the [executive orders], a landlord cannot enforce its contractual right to rent through an eviction proceeding, it can still sue tenants for rent owed.

The court found further that the executive orders advance an important state interest – preventing the spread of COVID-19 – and the court determined they “appropriately and reasonably advance that interest.”  The court also noted that the moratorium does not completely prohibit evictions, which the court believed would not reasonably advance the state’s interest in protecting public health.  For example, evictions may still be allowed if a tenant poses a risk to other residents or engages in dangerous criminal activity.  On these grounds, the court also made short order of the landlords’ First Amendment and Takings claims.

Takeaways

This decision is in line with others from across the country that have upheld statewide eviction moratoriums against legal challenges.  As a consequence, a large volume of eviction proceedings will likely be filed nationwide once the moratoriums expire, assuming tenants are unable to pay rent.  Real estate entities and landlords should prepare for a backlog of these cases, and for the potential that they will take longer to adjudicate as a result.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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