Here's another coronavirus-related complaint asserting a taking.
But unlike other, recently-filed complaints (see here, here, here, here, here, here and here), this one doesn't object to shut down orders. Instead, it challenges two measures undertaken by local authorities related to the owner/tenant relationship.
To deal with the pandemic, Union City, New Jersey adopted two ordinances. First, for units already subject to the city's rent control ordinance, it froze rents retroactive to March 1, 2020. Second, it froze all evictions. These, according to the Complaint, are takings. Here are the allegations:
78. Plaintiff repeats and realleges the previous allegations as if fully set forth herein.
79. By adoption of the Freeze Ordinance, Plaintiff and its members have been deprived of their vested contractual and property rights without due process of law or adequate compensation in violation of the United States and New Jersey Constitutions.
80. Union City’s action is a taking of property (contract rights, reasonable expectations) through an impermissible regulation (Freeze Ordinance) without compensation, and Union City must demonstrate that the enactment serves a legitimate state interest in order to be sustained.
81. Plaintiff’s contractual right to obtain rents from its tenants and to serve notice of permissible rent increases pursuant to the requirements of local rent control ordinances is a contractual and property right held by Plaintiff and its members.
82. The Freeze Ordinance revokes this right without providing compensation to
Plaintiff. The Freeze Ordinance includes no mechanism to compensate the Plaintiff’s rent increase revenue lost during its applicability.
83. The Freeze Ordinance substantially and improperly impairs the value of the rental properties and interferes with Plaintiff’s investment-backed and contractual expectations without providing just compensation. Plaintiff and its members, through adoption of the Freeze Ordinance, have been substantially deprived of the beneficial use of their property without just compensation.
As a result of these action [sic], Plaintiff and its members have been irreparably harmed and have suffered damage.
Complaint at 14-15.
The plaintiff asks the court to enjoin the ordinances and issue declaratory rulings. Although a request for just compensation is not included in the prayer, it does ask for "compensatory damages" under a New Jersey statute.
What makes this complaint different (maybe better?) than the others we've seen is that it identifies a particular property right that is being taken (since the rent freeze is retroactive, the right to collect rent is -- depending on New Jersey law, we assume -- a vested right that "cannot be taken away by government regulation" as our favorite case Kaiser Aetna tells us). As we wrote in our draft article evaluating emergency takings situations ("Evaluating Emergency Takings: Flattening The Economic Curve"), we think the more viable cases will be those, like here, where an emergency regulation reaches back before the emergency to affect already-existing rights.
More here, from the local paper.
So we shall follow this one closely. Stay tuned.
Verified Complaint for Temporary and Permanent Injunctive Relief and in Lieu of Prerogative Writ, Union City Prop. Housing Initiative v. City of Union City, No. HUD-L-001772-20 (May 11, 2020)
