Two more rent law challenges tossed, landlords rest hopes on appeal

Third lawsuit awaiting arguments in Second Circuit

New York /
Sep.September 16, 2021 05:29 PM
Two more rent law challenges tossed, landlords rest hopes on appeal

CHIP executive director Jay Martin (right) and RSA president Joseph Strasburg (LinkedIn)

A federal judge dismissed two more challenges to the 2019 rent law, one brought by city landlord G-Max Management, another by owner group Building and Realty Institute of Westchester.

Out of five suits filed over the past two years targeting the New York state law, the decision this week leaves just one on the docket: a case appealed by the Rent Stabilization Association and Community Housing Improvement Program, both city landlord groups.

Tenant lawyers say this week’s dismissals are writing on the wall for the final suit. The landlord groups, however, believe they have found an angle that gives them a fighting chance.

“The claims in all five of the cases are pretty close to identical,” said Edward Josephson, attorney at Legal Aid Society, which intervened on the tenants’ side in the suits thrown out this week. Josephson said those shared arguments don’t bode well for landlords’ final suit.

Notably, the dismissed suits argued that the rent law is unconstitutional because it allows a physical and regulatory taking of private property by the government — a violation of the Fifth Amendment — and because the law deprives owners of substantive due process, a violation of the 14th.

Judge Kenneth Karas, a nominee of President George W. Bush, found that both arguments were nullified by another amendment, the 11th, which prevents federal courts from hearing certain suits made against states.

Citing a precedent that found the 11th Amendment barred a plaintiff’s “due process and regulatory takings claims against the State,” the judge wrote, “the court agrees with this line of authority and therefore rejects BRI and G-Max Plaintiff’s position.”

What differentiates the suits is their scope. Where the dismissed case “singled out the 2019 amendments to the rent-stabilization law,” Josephson said RSA and CHIP apply the same arguments to a deeper history of rent regulation.

The specificity of the dismissed cases contributed to their dismissal, Josephson said. The 2019 law essentially brought rent-stabilization back to its early-1990s state, before the advent of luxury and vacancy decontrol and large rent hikes to pay for improvements.

“Since landlords agreed it was constitutional in 1993 and [the 2019 law] just put it back where it was, that argument didn’t make any sense and the judge rejected it,” said Josephson.

RSA and CHIP are betting that their suit, which focuses on “systemic issues that existed prior to 2019,” will have a better shot, a spokesperson for the plaintiffs said.

Moreover, landlords never put much faith in the lower courts to side with them. Their strategy from the outset was to get rent control before the conservative-dominated Supreme Court, which they believe will take a dim view of not just the 2019 law but the very concept of rent regulation.

“We always anticipated the appeals process would lead to success for our case,” the spokesperson said in a statement.

Legal Aid sees another dismissal as inevitable.

“It just shows that now, three different judges appointed by three different presidents have reached the exact same conclusion,” Josephson said, referring to decisions by Judge Edgardo Ramos and Judge Eric Kominee that found the government has the right to regulate rent.

“We cannot run a city where delivery people and nurses and teachers can’t afford a place to live,” said Josephson. “The precedent says that property owners are subject to the obligations of civilized society and the plaintiffs here are just trying to cast aside all those obligations.”

The suit is awaiting a date for oral arguments, which are expected to begin this year.





    Related Articles

    arrow_forward_ios
    Nestio's Caren Maio (Credit: Emily Assiran)
    “Like TurboTax”: Nestio launches online leasing
    “Like TurboTax”: Nestio launches online leasing
    (Credit: iStock)
    What you need to know about landlords’ challenge to New York’s rent law
    What you need to know about landlords’ challenge to New York’s rent law
    Among Brooklyn's priciest spots is DUMBO; pictured is the neighborhood's Main Street Park (Credit: iStock)
    Why fewer Brooklyn and Queens tenants are moving
    Why fewer Brooklyn and Queens tenants are moving
    Real estate powers Blackstone’s best quarter ever
    Real estate powers Blackstone’s best quarter ever
    Real estate powers Blackstone’s best quarter ever
    Single-family rentals are increasingly seen as a more realistic alternative to ownership, given the hot housing market and income inequality. (iStock)
    Single-family rentals soaring in hot housing market
    Single-family rentals soaring in hot housing market
    Terreno Realty CEO W. Blake Baird and an aerial of the property (Google Maps)
    Terreno Realty pays $44M for NJ industrial site
    Terreno Realty pays $44M for NJ industrial site
    Madison Realty Capital Co-Founders Josh Zegen and Brian Shatz with a rendering of the River North development (Madison Realty Capital, FXCollaborative)
    Madison Realty’s altered plans for SI complex approved
    Madison Realty’s altered plans for SI complex approved
    Pandemic forces mom-and-pop landlord to sell out
    Pandemic forces mom-and-pop landlord to sell out
    Pandemic forces mom-and-pop landlord to sell out
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...