US must face claims over pandemic ban on residential evictions

By Mike Scarcella

June 6 (Reuters) - A U.S. federal appeals court ruled Friday that the United States must face potentially billions of dollars in legal claims over a temporary ban on residential evictions during the COVID pandemic that affected millions of landlords.

The Washington, D.C.-based U.S. Court of Appeals for the Federal Circuit in a 7-3 decision rejected the government's bid to overturn a decision by a panel of judges last year that refused to dismiss claims from landlords seeking compensation over the eviction moratorium.

The U.S. Centers for Disease Control and Prevention in September 2020 issued a nationwide order halting residential evictions after the expiration of an earlier 120-day directive by Congress.

The agency's order, which lasted about a year, focused on combating the spread of the coronavirus.

The court ruling on Friday could spur the United States to ask the U.S. Supreme Court to intervene. Damages have been estimated at tens of billions of dollars, as rental property owners were blocked from evicting people who were not paying rent.

The Justice Department and a lawyer for the plaintiffs did not immediately respond to requests for comment.

Residential rental property owners sued over the CDC moratorium in Federal Claims court, seeking compensation under the U.S. Constitution’s 5th Amendment “takings” clause. They argued the government had taken their property for public use.

The moratorium was in place until August 2021, when the U.S. Supreme Court ended the Biden administration policy.

A Federal Circuit divided panel last August reinstated the claims against the United States, and the Justice Department then asked the full appeals court to take up the dispute.

In a filing in January, the government said the panel decision “upends over a century of precedent” and said the decision will have “significant consequences in this case and others.”

Lawyers for the property owners urged the full appeals court not to disturb the panel’s earlier decision. The government “merely wants another bite at the apple with the hope of a different outcome,” the lawyers said.

The National Association of Realtors, which was not a party to the lawsuit, in a statement called the appeals court's Friday order "another important win for property rights.

"Property owners deserve the opportunity to be heard and to seek fair compensation when government action effectively deprives them of use and income from their property," said Shannon McGahn, the realtor group's chief advocacy officer.

The case is Darby Development Company Inc et al v. United States, U.S. Court of Appeals for the Federal Circuit, No. 2022-1929.

For plaintiffs: Creighton Magid of Dorsey & Whitney

For defendant: Nathanael Yale of the Justice Department

Read more:

U.S. Supreme Court ends CDC's pandemic residential eviction moratorium