A short one from the Ninth Circuit on a topic that we keep revisiting, whether the various eviction moratoria adopted and enforced by the feds and many states and local governments during Co-19.
We keep revisiting the topic because the courts keep getting it wrong.
And before we go on, a disclosure: this is one of ours, and our law firm and our colleague Jon Houghton rep the property owners.
This moratorium is from the State of Washington (yes, the same State of Washington whose moratorium was recently challenged unsuccessfully in the state courts). But this challenge is to the City of Seattle's moratorium, and is in federal court.
Thus, it was the Ninth Circuit considering the question of whether, by commandeering rental property as pandemic public housing, Washington was on the hook for just compensation. Requiring to house residents -- whatever the reason -- is a physical occupation taking, right?
Not to the Ninth Circuit (and most other courts that have considered the issue). Which in El Papel, LLC v. City of Seattle, No. 22-35656 (Oct. 26, 2023), rejected the owner/lessor's physical occupation takings claim.
Wait, you say, how is this not a physical occupation? After all, the leases which tenants sign onto all condition their right to occupy the premises on the timely payment of rent. Yes, the owner has conditionally transferred a right to occupy (and thus also transferred the right to exclude from the owner to the tenant), but the key word here is "conditionally." Pay rent on time and you can remain. Don't, and permission revoked, and the owner has the right to exclude.
Read the entire Ninth Circuit opinion (its unpublished, and thus short) for the reason why the panel rejected this reasoning. Yes, it is the Yee v. City of Escondido theory (mis)read yet again:
We likewise conclude that the district court did not err by granting summary judgment in favor of Seattle. We agree with Seattle that the Supreme Court’s decision in Yee v. City of Escondido, 503 U.S. 519 (1992), controls here and forecloses the Landlords’ per se physical-taking claim. The Landlords argue under Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021), that, as applied, Seattle’s eviction restrictions constituted a physical taking. While the Landlords make some compelling points, Cedar Point Nursery does not support their claim.Unlike in Cedar Point Nursery, where a state regulation required agricultural employers to grant entry onto their property to union organizers for up to three hours a day so that the organizers could solicit support for unionization, see 141 S. Ct. at 2069–70, Seattle’s eviction restrictions did not impose a physical occupation on the Landlords, see Yee, 503 U.S. at 527 (“The government effects a physical taking only where it requires the landowner to submit to the physical occupation of his land.”). Nor did Seattle’s restrictions compel the Landlords to use their property for a specific purpose. The Landlords here chose to use their property as residential rentals; the tenants’ occupancy was not imposed over the Landlords’ objection in the first instance. Cf. Yee, 503 U.S. at 528 (finding that the government had not “required any physical invasion of [the owners’] property” by the park owners’ existing tenants).Slip op. at 5-6.
Is the distinction that the Ninth Circuit relies on really a distinction? True enough, the moratorium didn't force open the metaphorical gate to El Papel's property like California in Cedar Point. The property owners here invited the tenants to occupy, and Seattle simply required the owners to keep the gate open and prohibited the owner from getting a trespasser out. Is that really the score, that once you invite someone in, you can be required to house them indefinitely?
When someone's property is pressed into public service and commandeered for pandemic housing, they can't be made to shoulder the cost by themselves, can they?
Something tells us this isn't the end of this issue, for not all courts misread Yee (see here and here, for example).
El Papel, LLC v. City of Seattle, No. 22-35656 (9th Cir. Oct. 26, 2023) (memo.)
