Tuesday, October 13, 2009
Court Upholds Injunction Barring Eviction of Section 8 Tenants
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has upheld an injunction preventing a landlord from evicting 22 low-income tenants of a local apartment complex in order to raise the rent on their units.
In a decision Friday, the panel concluded that a U.S. Department of Housing and Urban Development regulation permitting evictions of tenants for “good cause”—which includes a landlord’s desire to raise rents to market level—did not preempt a Los Angeles eviction control ordinance and affirmed an award of attorney fees in favor of the tenants.
The tenants, residents of the Morton Gardens apartment complex, were all recipients of rental assistance from the federal government through what is known as “the section 8 program,” created by the United States Housing Act.
Section 8 participants must sign a lease and pay a portion of their income toward rent, but the remainder of the rent charge is paid by a public housing authority pursuant to a housing assistance payment contract between that agency and the landlord.
In March 2006 the landlord served the tenants with a notice informing them of the apartment complex’s intention to “remove the Subject Premises from the Federally Assisted Section 8 Housing Program” and to rent its units at “market rents.”
After receiving complaints from the tenants, the Housing Authority for the City of Los Angeles and Los Angeles Housing Department informed Morton LLP that its housing assistance payment contract could only be terminated without the tenants’ consent upon lawful eviction under state and local law.
The Los Angeles Rent Stabilization Ordinance restricts possible grounds for eviction to 13 enumerated reasons, including violation of material terms of the lease, damage to property or criminal activity.
Expiration of the lease term or the desire to raise rent to market levels with a new tenant are not permissible grounds for eviction under the ordinance, which specifically applies to rental units for which rental assistance is paid pursuant to the section 8 program.
Morton later issued eviction notices based on 24 C.F.R. § 982.310(d)(1)(iv), which allows a landlord to terminate a rental agreement for “good cause” which “may include, but is not limited to…[a] business or economic reason…such as sale of the property, renovation of the unit, or desire to lease the unit at a higher rental.”
The tenants then filed suit in the U.S. District Court for the Central District of California seeking a declaratory judgment that their eviction violated federal law and the local ordinance , as well as a permanent injunction barring their unlawful eviction.
Chief District Judge Audrey B. Collins found that the local ordinance and the HUD regulation were in actual conflict, but that HUD’s definition of “good cause,” insofar as it includes the desire to raise the rent, exceeded HUD’s statutory authority.
She granted summary judgment in favor of the tenants, entered a permanent injunction barring Morton from evicting the tenants, denied Morton’s motion for reconsideration and awarded the tenants attorney’s fees.
Writing for the appellate court, Judge Kim McLane Wardlaw said Collins had reached the proper result, but the panel affirmed the judgment on different grounds.
Wardlaw explained that the local eviction control ordinance was not preempted by the HUD regulation because the laws were not in conflict and that the local law prevented the landlord from evicting the tenants in order to increase rents.
She reasoned that the HUD regulation “does not grant a right to terminate a tenancy based on a desire to increase rents” which the local ordinance could purport to take away, but “merely create[ed] a floor of protection, which local laws may enhance.”
The jurist also noted that conflict preemption arguments against the municipal ordinance had failed in two prior federal cases—Topa Equities, Ltd. v. City of L.A., (2003) 342 F.3d 1065 and Independence Park Apartments v. United States, (2006) 449 F.3d 1235—and that HUD’s most recent publication acknowledged that terminating a tenancy for a business or economic reason such as a desire to lease the unit at a higher rental would not constitute “good cause” if state or local law would prohibit such conduct.
Wardlaw further concluded that the tenants were entitled to recover $180,000 in attorney fees pursuant to a fee provision in their lease agreements.
“Tenants’ lease contracts are not collateral to the litigation because they incorporate and define the rights and obligations of Tenants and Morton, the applicability of relevant federal and state law, and the role of federal and state actors,” she said. “Thus, Tenants’ action for a declaratory judgment regarding their right to remain in their apartments is properly considered an action ‘on a contract.’ ”
Judges Diarmuid F. O’Scannlain and Pamela Ann Rymer joined Wardlaw in her decision.
Michael E. Soloff of Munger, Tolles & Olson LLP, together with A. Christian Abasto from the Legal Aid Foundation of Los Angeles and James R. Grow from the National Housing Law Project represented the tenants while Chris J. Evans of Kimball, Tirey & St. John LLP represented Morton.
The case is Barrientos v. 1801-1825 Morton LLC, 07-56697
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