2 Detroit landlords sue in federal court over eviction moratorium

Two Detroit landlords filed a lawsuit Sunday against 36th District Court in Detroit and the court's chief judge for putting a halt to evictions until Oct. 3.

JPA Holdings LLC and Sandeep Gosal filed a lawsuit against the court and Chief Judge William McConico for the evictions ban in the city, calling the move unconstitutional and the "taking of private property."

"This action is brought to address the taking of private property by the (judge and 36th District Court) without just compensation," the lawsuit claimed. The landlords are seeking class-action status.

Taura Brown of Detroit protesting eviction from her home in Detroit's 'Tiny Town in April. A rally took place in front of the Detroit Police Department headquarters, demanding that police stop involvement in evictions.

The first federal moratorium on evictions was issued under the Trump administration in 2020 in an effort to stem the spread of Covid-19. The moratorium since has been extended five times.

The current ban against evictions was issued Aug. 3, under a Centers for Disease Control and Prevention order and lasts until Oct. 3.

McConico announced Aug. 4 that he would start scheduling hearings for landlords but reversed himself the same day after the CDCissued an advisement of an extension of the evictions moratorium.

Michigan is among the states that have had "substantial" and "severe" rates of tranmission of the virus, including the delta strain.

The landlords argue in the lawsuit that "the District Court has also commenced to administratively adjourning all hearings pertaining to Orders of Eviction until after October 3, 2021, thereby prohibiting any Orders of Eviction from being entered, regardless of whether a tenant has sought protection under the CDC order, and regardless of whether a tenant qualifies for protection under the CDC order."

The landlords claim that the halted evictions amount to "a compensable taking of plaintiffs’ property and property rights without just compensation in violation of the Fifth Amendment of the United States Constitution."

"Specifically, the directive to ban all evictions constitutes a physical taking because it has effected a government authorized physical invasion, occupation, or appropriation of plaintiffs’ private property, for the government itself or for third parties." 

Gosal, according to the lawsuit, sought to remove tenants from a property he owns in the 16800 block of Lenore. He first went to 36th District Court in March 2020 seeking to evict his tenants.

"He was not seeking money, he just wanted his property back," the lawsuit said. 

Gosal has had his hearing adjourned several times and now must wait for the moratorium to be lifted to resolve the matter, the lawsuit said.

JPA Holdings, which has property in the 7400 block of Dolphin Street,  obtained a judgment of possession against the occupants on Feb. 19, 2020, just prior to pandemic in Michigan.

After more than a year, the 36th District Court entered an Order of Eviction allowing JPA to take back the Dolphin Street propert on July 28, 2021, but a week later, on Aug. 4, the court prohibited officers from executing orders of eviction.

JPA owners said the court's orders will result in JPA having to wait longer "to take back its property and either sell it or put a new occupant in the home that actually pays rent."

The suit claims "... as a practical matter, a property owner has little ability to collect past due rent from a tenant with little money, or a tenant that simply moves out at the end of the moratorium, after occuping the property for months, free of charge.

The result, the plaintiffs say, "is to keep a property owner from re-leasing the property to a new tenant, or from even selling the property as no reasonable person would purchase a property with occupants that are not obligated to pay rent."

McConico and officials at 36th District Court initially announced that evictions would go forward because the city's COVID-19 transmission rate was not high enough to meet the CDC's requirement of substantial and high levels under terms of the eviction moratorium.

But hours later, 36th District Court officials reversed course, with CDC data for Aug. 4 showing the seven-day case average in Wayne County had pushed Michigan's largest county from moderate spread to substantial. The CDC uses four categories, low, moderate, substantial and high to measure transmission in counties.

McConico called the lawsuit's claims baseless. "We will vigorously defend the court and myself," said McConico on Sunday.

The judge added that emergency writs for termination of tenancy for illegal reasons such as threatening a landlord and destruction of property still are being executed during the pandemic.

"36th District Court has always followed whatever moratorium has been established" by the federal government and Michigan, such as those for non-payment of rents when the tenant is protected under CDC or state compliance, McConico said.

Of Michigan's 83 counties, 38 are now considered to have high transmission rates and 33 have substantial as of Saturday, which qualifies them for inclusion in the eviction ban. Washtenaw, Wayne and Macomb counties have substantial rates, and Oakland and Livingston counties have high  transmission rates.

U.S. Rep. Rashida Tlaib, D-Detroit told The Detroit News last week that billions of dollars have been earmarked for tenants to get federal funds for rental assistance.

The Michigan State Housing and Development Authority is administering $622 million through the COVID Emergency Rental Assistance program, or CERA. So far, about $110 million has been distributed to households.

Officials said $404 million needs to be committed in the next two months. The state's 32,000 outstanding applications represent $200 million in requests, Bach said. That's still $94 million short of the 65% threshold.

The program covers up to 15 months of back rent along with utility assistance and an internet stipend for those who qualify. Applicants must earn below 80% of the area median income, which for a two-person household in Detroit is $50,240 a year, and claim a COVID-19-related hardship.

Housing activist Ted Phillips, executive director  of the United Community Housing Coalition, said Sunday that the lawsuit goes "above and beyond" what activists would expect landlords to do in the midst of a pandemic.

Phillips called the lawsuit harmful. He said federal funds are getting into landlords hands and that the average payment of back rent is $8,000.

"It is getting better," said Phillips. "A lot of them are getting paid."