563 F.Supp.3d 428
D. Md.2021Background
- Plaintiffs are private housing providers with rental properties in Baltimore City, Howard County, and Salisbury who challenged local emergency ordinances enacted in May–June 2020 that barred rent increases and late fees during Maryland’s COVID-19 state of emergency.
- The local Acts also prohibited advance notice of forthcoming rent increases during the emergency and required landlords to notify tenants to disregard rent increases agreed to become effective on or after March 5, 2020.
- Plaintiffs sued raising federal and state constitutional and common‑law claims (takings, vested‑rights/retroactivity, due process, equal protection, Contracts Clause, tortious interference, preemption, and a declaratory judgment).
- The parties submitted expedited cross‑motions for summary judgment on liability only; the City of Salisbury later rescinded its ordinance but the court treated the legal issues uniformly.
- The court issued a mixed ruling: it rejected Plaintiffs’ federal takings, due process, equal protection, Contracts Clause and tort claims, but held that the local Acts retroactively abrogated vested contractual rent rights under Maryland law (granting relief on the vested‑rights count).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Takings (Counts 1–2) | Acts confiscate contractual rent increases and effect a per se Loretto‑type or, alternatively, a compensable regulatory taking under Penn Central | Acts do not physically appropriate property; at most a regulation subject to Penn Central and are justified public programs | Court: Not a Loretto per se taking; under Penn Central plaintiffs fail—economic impact not catastrophic, investment expectations only slightly weigh for plaintiffs, and character of action favors government. Takings claims denied. |
| Vested Property Rights / Retroactivity (Count 3) | Acts operate retroactively and abrogate vested contractual rights to agreed future rent | Acts are prospective, altering only future payments and do not impair vested rights | Court: Acts operate retroactively as to pre‑existing agreed increases and abrogate vested contractual rent rights under Maryland law. Plaintiffs prevail on Count 3. |
| Substantive Due Process (Counts 4–5) | Acts lack rational relation to police power and are arbitrary/overbroad | Acts are rationally related to legitimate public‑health/economic objectives during pandemic | Court: Plaintiffs’ due process claim fails (duplicative of other claims and, in any event, Acts survive rational‑basis review). Claims denied. |
| Equal Protection (Counts 6–7) | Classification is irrelevant/overbroad and unrelated to stated goals | Classification (housing providers) rationally advances pandemic housing‑stability goals | Court: Rational‑basis review applies and is satisfied; equal protection claims denied. |
| Contracts Clause (Count 8) | Acts substantially impair private lease bargains (undo agreed rent increases) | Government acted to address public emergency; impairment is reasonable and furthers significant public purpose | Court: Acts substantially impaired contracts but are a reasonable, appropriately tailored exercise of police power to address a significant public purpose; Contracts Clause claim denied. |
| Tort / Intentional Interference (Count 9) | Ordinances intentionally interfere with contracts; constitutional violations mean immunity inapplicable | Local governments immune for governmental functions (legislation) absent waiver | Court: Municipal immunity bars tort claim; Count 9 dismissed. |
| Preemption (Count 10) | Md. Code §8‑208(d) (late‑fee ceiling) preempts local regulation of late fees | §8‑208 limits late fees but contemplates local supplementary regulation; no field preemption | Court: No conflict or implied preemption; local ordinances not preempted. |
| Declaratory Judgment (Count 11) | Request seeks declaration of rights under Acts | Declaratory relief is remedial and duplicative of substantive rulings | Court: Declaratory relief duplicative; parties’ motions denied as to Count 11 (remedy stage only). |
Key Cases Cited
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (permanent physical occupation is a categorical taking)
- Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (regulatory deprivation of all economically beneficial use is a categorical taking)
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) (multi‑factor balancing test for regulatory takings)
- Brown v. Legal Foundation of Washington, 538 U.S. 216 (2003) (distinguishing appropriation of interest from regulatory takings and comparing to Loretto)
- Muskin v. State Dept. of Assessments & Taxation, 422 Md. 544 (2011) (Maryland rule forbidding retrospective abrogation of vested rights)
- Sveen v. Melin, 138 S. Ct. 1815 (2018) (Contracts Clause framework for substantial‑impairment analysis)
- Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983) (Contracts Clause: state must have significant, legitimate public purpose and reasonable means)
- Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211 (1986) (regulations arising from public programs reallocating economic burdens do not necessarily constitute takings)