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Law360 (June 29, 2020, 4:39 PM EDT) -- A Manhattan federal judge on Monday rejected a bid by landlords to quash New York Gov. Andrew Cuomo's limits on evictions during the COVID-19 crisis, finding the restrictions do not violate landlords' rights under federal law and that the court has no jurisdiction over state law questions they may raise.
U.S. District Judge Colleen McMahon's decision awards summary judgment to the governor and dismisses a May complaint brought by three apartment building owners in Westchester County: Elmsford Apartment Associates LLC, 36 Apartment Associates LLC and 66 Apartment Associates JV.
The decision leaves in place orders by the Democratic governor, the latest dated May 7, providing Empire State tenants and mortgage holders with relief from eviction for nonpayment in many cases. The current order is set to expire Aug. 20. Cuomo has not indicated if it will be extended.
The landlords claim in their May suit that the orders give "carte blanche to tenants to withhold rent without immediate repercussion" and that Cuomo bypassed the state legislature.
Judge McMahon noted in her ruling that "it may be the case that governor has overstepped his authority," but held that she "lacks the jurisdiction necessary to reach the merits of the state law questions raised in plaintiffs' papers."
For the landlords' allegations concerning federal law, the judge found that the governor's orders were on firm ground.
"The Supreme Court has ruled that a state does not commit a physical taking when it restricts the circumstances in which tenants may be evicted," Judge McMahon wrote, rejecting an allegation that the orders violate Fifth Amendment prohibitions on the public taking of private property without compensation.
"Nothing in the order diminishes the tenant's ultimate responsibility to pay the entire amount of rent due and owing under the lease," the judge wrote.
Nor, according to the ruling, do the orders substantially impair the landlords' right to enforce contracts — including leases with security deposits. In so ruling she rejected the landlords' argument that their rights under the contracts clause in Article 1 of the U.S. Constitution were being infringed by guidance that allows tenants to apply security deposits to any missed rent payments provided they later make up the difference.
"The whole scheme is no different than what actually happens in the real world, where tenants routinely forfeit their security deposit by allowing it to 'cover the last month's rent' on a lease. And I again emphasize that nothing in the order diminishes the tenant's rental obligation by even a nickel," she wrote.
More generally, the judge noted that the coronavirus outbreak has left some 25,000 New Yorkers dead and many more facing "extraordinary financial hardships," and has led to shelter-in-place orders and other countermeasures designed to slow an "exponential wave of infections."
"On August 20, this court is sure that plaintiffs and others similarly situated will exercise their rights to commence eviction proceedings to make up for lost time," she wrote.
Counsel for the landlords, Mark Guterman, said his clients are considering an appeal in the Second Circuit. He also said his clients intend to renew their claims alleging Cuomo bypassed the state legislature in state court after Judge McMahon declined to exercise jurisdiction.
"The governor has no right ... to write laws — and that's what he's done," Guterman said. "It's my client's intent to challenge that in New York State court."
The state attorney general's office, which represents the governor, had no comment.
The landlords are represented by Mark Guterman of Lehrman Lehrman & Guterman LLP.
Cuomo is represented by Matthew Conrad from the Office of the New York State Attorney General.
The case is Elmsford Apartment Associates et al. v. Cuomo, case number 1:20-cv-04062, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Craig Clough. Editing by Alanna Weissman.
Update: This story has been updated with attorney comment.
For a reprint of this article, please contact reprints@law360.com.
