HUD "Good Cause" Regulation Allowing Landlord To Evict Section 8 Tenants To Raise Apartment Rent Does Not Preempt City Eviction Control Ordinance Which Prohibits Evicting Tenants To Raise Rents

November 24, 2009 | Bulletin No. 927717.2

In Barrientos v. 1801-1825 Morton LLC, (--- F.3d ----, C.A.9 (Cal.), October 09, 2009), the Ninth Circuit Court of Appeals affirmed a district court ruling in favor of a group of U.S. Department of Housing and Urban Development (“HUD”) Section 8 tenants who were evicted in order for the landlord to raise rents, finding that a city eviction control ordinance prohibited eviction for that purpose.

Facts

The plaintiffs were twenty-two low-income tenants residing in Morton Gardens, a Los Angeles apartment complex managed by 1801-1825 Morton L.L.C. ("Morton"). Morton Gardens was subject to the Los Angeles Rent Stabilization Ordinance ("LARSO"), which provides that landlords may evict tenants only for certain reasons, such as material violations of the lease and criminal activity. Expiration of the lease and the landlord's desire to raise rents are not permissible grounds for eviction under the ordinance.

Sixteen of the tenants received enhanced voucher subsidies under the HUD Section 8 program, and the remaining six tenants rented their apartments with standard Section 8 housing vouchers. Under both voucher programs, the tenants paid a portion of the rent based on their incomes, and HUD paid the difference between the tenant payment and the fair market rent for the apartment unit.

A HUD regulation permits landlords to terminate Section 8 assisted tenancies for "good cause," including a business or economic reason for termination of the tenancy such as a desire to rent the unit at a higher rate. Morton issued eviction notices to each tenant which cited the landlord's desire to lease the unit at a higher rent as the grounds for termination.

The tenants filed an action to stop the evictions, alleging that the evictions violated federal law and LARSO. Morton argued that the evictions were expressly permitted by the HUD regulation, which preempted LARSO's restrictions on tenant evictions. The trial court granted a summary judgment enjoining Morton from evicting the tenants, finding that while the HUD regulation and LARSO were in conflict, the HUD regulation exceeded the statutory authority granted to HUD.

Decision

The Ninth Circuit affirmed the district court's ruling on different grounds, holding that LARSO is not preempted by the HUD Section 8 eviction regulation, because LARSO does not actually conflict with the federal regulation. The Court noted that the goals of HUD and LARSO were essentially the same, i.e., to increase the availability and affordability of housing. The Court found that the HUD regulation was validly adopted but does not grant to landlords a right to evict tenants, only creating a floor of protection which local laws may enhance.

The Court reviewed the long legislative history of HUD's "good cause" provision and found that Congress and HUD never explicitly rejected the application of more protective local standards to assisted tenants, and in certain cases expressly allowed for it. The Court found that prior LARSO decisions also rejected alleged conflicts between LARSO and other federal housing requirements, finding that federal housing laws were intended to be superimposed upon and interdependent with local housing laws. The federal government argued the lack of conflict in its own brief to the Court, stating that it had never interpreted the HUD regulation to prohibit state and local governments from providing tenants additional protection from eviction. The Court found that the government had never made any guarantees about the effect of local laws on the profitability of apartments, and had never provided landlords any protections against such laws.

Questions

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Jon E. Goetz | 805.786.4302