Landlord class action argues state unfairly imposed burdens to help tenants

A proposed class of landlords is suing the governor and Judicial Council chair for unfairly burdening them with rent payment delays while helping tenants and others with their COVID-19 emergency orders.

The lawsuit was filed last week by Douglas C. Michie of Michie Law in Ventura, who argued the state interfered with rental contracts, and has taken private property to address public needs without providing fair compensation.

He is representing his ex-wife, Oksana Michie, who owns three properties in San Luis Obispo County. The lawsuit claims Oksana has been shouldering property tax, mortgage payments, maintenance and other related expenses with no source of income for several weeks, the lawsuit states.

"All class members, like Oksana, recognize the exigent nature of the extant public health emergency," the complaint states. "Nevertheless, they question why mom & pop rental owners are asked to bear the cost for the measures that the governor and chair have determined are necessary to support public health." Oksana Michie v. Newsom, Tani G. Cantil-Sakauye, 2:20-CV-04213 (C.D. Cal., filed May 8, 2020).

Representatives of Gov. Gavin Newsom could not be reached for comment Wednesday.

Blaine Corren, spokesperson for the judicial council said he couldn't issue a comment on behalf of the chief justice pending litigation.

Michie said in an interview Wednesday he hopes to take this fight all the way to the U.S. Supreme Court, as it would warn landlords about potential minefields in laws governing real estate ownership and use of property.

"If a state government can step into any rental contract and impair it at whim, there's no real security in it," Michie said. It would ruin the real estate market and discourage people from investing if they knew at any time the government could prohibit them from collecting lawful rent, he said.

The challenge stems from Newsom's emergency order issued in March, extending by 60 days the time a tenant has to answer an eviction notice.

The Judicial Council last month halted the issuing of summons in unlawful detainer actions until 90 days after the state emergency is lifted, which likely adds a year to an already lengthy and costly process to bring eviction cases to court, Michie said.

"It's highly unfair for them to select this one segment of society of landlords and make them bear the cost of the recession we're in," he said. Michie said he believes the right solution would be for the government to subsidize the tenants' rent payments.

San Luis Obispo County's emergency order suspending evictions expires May 31 but the rent payment moratorium is longer under state prohibitions.

Matthew L. Brinton, founding partner of the Brinton Law Firm, who represents tenants, said he doubted the case would gain much traction, pointing to recent lower court rulings affirming civil authorities' broad discretion in emergency situations.

"The same ways people are challenging closures over beaches, businesses, salons, most of these cases haven't managed to get very far, and it's the same here," Brinton said. "But I do understand the abstract the losses landowners are taking but the state never said tenants get to live rent-free. They have to pay it back sooner or later."

Brinton has been advising his clients to pay rent if they are able to. Those facing pandemic-related hardship should alert landlords and negotiate a written payment schedule, he said.

Daniel M. Bornstein, founding partner of Bornstein Law represents property owners and agreed Michie's case likely won't get anywhere, but noted Newsom's order is problematic in the way he forced a group of people to shoulder the burdens of delay to help others. The Judicial Council didn't cancel eviction actions, he added, just delayed them.

Bornstein said he is advising clients to compromise, to book the debt and direct the tenant to find third-party providers of subsidies. It probably would've been best for state officials to create funds for people to tap into, he said.