HAPCO, Plaintiff, v. CITY OF PHILADEPHIA and THE HONORABLE JAMES KENNEY, Defendants, and TENANT UNION REPRESENTATIVE NETWORK AND PHILADELPHIA UNEMPLOYMENT PROJECT, Defendant-Intervenors.
CIVIL ACTION NO. 20-3300
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
August 27,
Rufe, J.
MEMORANDUM OPINION
Plaintiff HAPCO, a 501(c)(4) corporation that is an association of Philadelphia residential investment and rental property owners and managers, seeks to preliminarily enjoin Defendants City of Philadelphia and the Honorable James Kenney from implementing or enforcing several temporary emergency bills passed by the Philadelphia City Council in response to the COVID-19 pandemic. After considering the parties’ briefing and after a hearing, for the following reasons, HAPCO‘s motion will be denied.
I. BACKGROUND
The world is in the midst of an unprecedented public health crisis. The deadliest pandemic in over a century has swept across the globe and has upended the lives of the American people in previously unimaginable ways. Over 5.7 million Americans have contracted the novel coronavirus, COVID-19, and, tragically, more than
Because “COVID-19 spreads mainly among people who are in close contact,” and social distancing “is the best way to reduce the spread,”3 government officials have imposed severe measures to counter the disease. On March 6, 2020, Governor Wolf issued a Proclamation of Disaster Emergency.4 On March 13, 2020, the Governor closed schools across the Commonwealth.5 On March 17, 2020, recognizing that “COVID-19 is easily transmitted, especially in group settings, including by people with no symptoms or mild symptoms,” Mayor James Kenney and the City of Philadelphia Commissioner of Public Health issued a joint order prohibiting the “operation of non-essential businesses in Philadelphia.”6 On March 23, 2020, Governor Wolf issued an Order For Individuals to Stay at Home which required Philadelphians, among others, to “stay at home except as needed to access, support, or provide life sustaining business, emergency, or government services.”7
On May 7, 2020, recognizing that “the movement and/or displacement of individuals residing in Pennsylvania from their homes or residences during the current stage of the disaster emergency constitutes a public health danger to the Commonwealth in the form of unnecessary movement that increases the risk of community spread of COVID-19,” Governor Wolf imposed a 60-day moratorium on both evictions and foreclosures.8 As the Governor‘s order explained, evictions are particularly harmful during the COVID-19 pandemic. Although limited contact with others has been recognized as necessary to counter the pandemic, this is often impossible for people who are evicted. “When a person is unable to find housing to rent on their own, they often ‘double-up’ by moving in with family or friends.”9 Dr. Michael
The public health danger that evictions pose during the COVID-19 pandemic is particularly pronounced in Philadelphia. Even before the COVID-19 emergency began, Philadelphia was “facing an eviction crisis.”11 Philadelphia has a poverty rate of 24.5%,12 and renters account for approximately 46% of all households in Philadelphia.13 Over 51% of Philadelphia renters pay more than 30% of their income on rent and 30.5% of renters pay more than 50% of their income on rent.14 In 2017, over 24,000 eviction filings were recorded, and illegal evictions also occur on a regular basis.15 As the Mayor‘s Taskforce on Eviction Prevention summarized in its 2018 report and recommendation:
Research shows that eviction is not only a symptom of poverty, but also a root cause. It disproportionately affects women of color with children, and results in great economic burdens on both landlords and tenants. It breaks up communities, hurts prospects for future employment and housing, and increases the need for homeless services. In short, eviction negatively affects everyone involved in the process.16
The pandemic has only exacerbated this crisis. The measures taken to slow the spread of the virus have disrupted the global economy and left millions of Americans jobless. In Pennsylvania alone, during the current crisis, over two million people have filed for unemployment.17
Against this backdrop, and upon finding that “[t]he number of Philadelphians struggling to pay rent has undoubtedly increased since the onset of the COVID-19 pandemic,” the Philadelphia City Council considered and enacted five separate bills temporarily amending
Bill No. 200294 authorizes Philadelphia‘s Fair Housing Commission to establish a “residential eviction diversion program,” to run through December 31, 2020.20 The program, which is not yet in effect, would require renters who have experienced a COVID-19 financial hardship to participate in a mediation process with their landlords, designed to help resolve issues before they lead to formal evictions.21 A housing counselor would engage with the tenant to “educate and discuss available resources” before the tenant and landlord are joined by a designated mediator in a “conciliation conference.”22 Once the program is implemented, the bill provides that “no landlord shall take steps in furtherance of recovering possession of a residential property occupied by a tenant who has suffered a COVID-19 financial hardship” without participating in a conciliation conference.23 There are a few exceptions recognized under the Act: if eviction is necessary to “cease or prevent an imminent threat of harm by the person being evicted, including physical harm or harassment,” or if the landlord has provided the affected tenant with notice of their rights and attempted to schedule a conciliation conference, but the program is unable to offer a date within thirty days.24
Bill No. 200295 enacts both a blanket residential eviction moratorium and an eviction moratorium for small businesses (defined as any business that employs fewer than 100 total employees) that provide their landlord with a certification of hardship.25 Both moratoria expire August 31, 2020 (the end of the COVID-19 emergency
Bill No. 200302 makes it temporarily unlawful for landlords to charge or accept late fees on rent, interest on back rent, or similar charges as a result of delinquent payment of rent for residential tenants who have experienced a COVID-19 financial hardship.27 Residential tenants may establish a rebuttable presumption that they have suffered a COVID-19 financial hardship by submitting a certification of hardship to their landlord. This provision is effective from March 1, 2020 (the beginning of the retroactive emergency period as defined in the Act) through May 31, 2020.28 Any such fees or similar charges that have been submitted by a tenant since March 1, 2020, must be credited against future rent or any other financial obligations.29
Bill No. 200305 allows renters who have suffered a COVID-19 financial hardship and who failed to timely pay rent between March 1, 2020 and August 31, 2020, to pay back rent over a nine-month period, beginning August 31, 2020, without being evicted for nonpayment.30 To qualify, renters must provide a certification of hardship as well as “[d]ocumentary evidence of the loss of income or increases in expenses the tenant has incurred during the retroactive emergency period or the COVID-19 emergency period as a result of such tenant‘s COVID-19 financial hardship . . .”31 These tenants are considered to be in full compliance with their payment obligations and can only be evicted if they fail to pay the amount of rent normally due after the conclusion of the COVID-19 emergency period or if they are four or more months behind on the payments owed under the hardship repayment agreement.32 The bill also requires landlords to provide advance notice to tenants of their rights before seeking to evict them.33 If the landlord and tenant have not already entered into a hardship repayment agreement, the landlord must provide the tenant with written notice of the right to a repayment agreement at least 30 days before initiating eviction proceedings.
In sum, the EHPA provides that: 1) through August 31, 2020, landlords cannot evict residential tenants and cannot evict small businesses that can provide a certification of hardship due to COVID-19;34 2) landlords must allow tenants who did not timely pay rent between March 1 and August 31, and who can prove that they suffered a COVID-19 financial hardship, to pay past due rent on a set plan through May 31, 2021; 3) through December 31,
Five days after Mayor Kenney signed the Act, on July 6, 2020, Plaintiff HAPCO initiated this action and filed a motion for temporary restraining order. On July 8, 2020, the Tenant Union Representative Network and the Philadelphia Unemployment Project filed a motion to intervene as defendants, which was granted as unopposed.36 The Court held a video hearing on July 9, 2020.37 At the hearing, Plaintiff explained that Governor Wolf was likely to extend the statewide eviction moratorium and that its motion for a temporary restraining order would be mooted by such an action. The next day, after the Governor extended the statewide eviction and foreclosure moratoria until August 31, 2020, the Court dismissed HAPCO‘s motion for a temporary restraining order as moot.38
On July 16, 2020, Plaintiff filed an Amended Complaint and a Motion for a Preliminary Injunction. After the parties fully briefed the motion, the Court held a hearing on August 19, 2020.39 Having considered the parties’ arguments in their papers and at the hearing, the Court will deny HAPCO‘s motion.
II. LEGAL STANDARD
“[A]n injunction is ‘an extraordinary remedy, which should be granted only in limited circumstances.”40 “The moving party must establish four factors to get a preliminary injunction: (1) the likelihood that the plaintiff will prevail on the merits at final hearing; (2) the extent to which the plaintiff is being irreparably harmed by the conduct complained of; (3) the extent to which the defendant will suffer irreparable harm if the preliminary injunction is issued; and (4) that the public interest weighs in favor of granting the injunction.”41 “[A] movant for preliminary equitable relief must meet the threshold for the first two ‘most critical’ factors: it must demonstrate that it can win on the merits (which requires a showing significantly better than negligible but not necessarily more likely than not) and that it is more likely than not to suffer irreparable harm in the absence of preliminary relief.”42 “If these gateway factors are met, a
III. DISCUSSION
A. Likelihood of Success on the Merits
1. Contracts Clause44
Plaintiff argues that the EHPA violates the Contracts Clause because it “compel[s landlords] to enter into contractual arrangements [the City has] devised, give up rights [landlords] had negotiated in pre-existing leases, and surrender their right to seek redress in a court of law.”45
“The Contract Clause provides that no State shall pass any law ‘impairing the Obligation of Contracts.‘”46 “The Clause is not, however, the Draconian provision that its words might seem to imply.”47 “The Contract Clause ‘does not prevent the State from exercising such powers as are vested in it for the promotion of the common weal, or are necessary for the general good of the public,’ even though contracts previously entered into may be affected.”48 “Thus, the Contract Clause ‘does not trump the police power of a state to protect the general
The “leading case in the modern era of Contract Clause interpretation,”50 Home Building & Loan Assn. v. Blaisdell, 290 U.S. 398 (1934), is strikingly similar to the instant case. During the Great Depression, states “attempted to address the ever-growing number of foreclosures and the effect they had on the grim residential real estate situation.”52 In 1933, Minnesota passed the Mortgage Moratorium Law, which “was a temporary measure” that extended by 30 days the redemption period for mortgages which were to expire within 30 days of the Act and also allowed for further judicial extension of the time for redemption.53 The Blaisdells, owners of a lot in Minneapolis that had been foreclosed upon and sold to Home Building & Loan Association, applied to the state court for an order extending the period of redemption. “The court found that the time to redeem would expire on May 2, 1933, under the laws of the state as they were in effect when the mortgage was made and when it was foreclosed.”54 However, in accordance with the Act, the court extended the period of redemption until May 1, 1935.55 The Minnesota Supreme Court affirmed.
The Association then appealed to the United States Supreme Court asserting that the Minnesota law violated the Contracts Clause because the legislature interfered with its contractual right to take possession of the foreclosed home on May 2, 1933. The Supreme Court rejected this argument, holding that “[a]lthough the legislation conflicted directly with lenders’ contractual foreclosure rights,” and “despite the Contract Clause, the States retain residual authority to enact laws ‘to safeguard the vital interests of [their] people.‘”56 The Court found five factors significant:
First, the state legislature had declared in the Act itself that an emergency need for the protection of homeowners existed. Second, the state law was enacted to protect a basic societal interest, not a favored group. Third, the relief was appropriately tailored to the emergency that it was designed to meet. Fourth, the imposed conditions were reasonable. And, finally, the legislation was limited to the duration of the emergency.57
Later Supreme Court cases developed a two-part test.58 “The threshold issue is whether the state law has ‘operated as a substantial impairment of a contractual relationship.‘”59 If it has, then the court
a. Substantial Impairment
To determine if the state law operates as a substantial impairment, courts consider the “extent to which the law undermines the contractual bargain, interferes with a party‘s reasonable expectations, and prevents the party from safeguarding or reinstating his rights.”61 “An important factor in determining the substantiality of any contractual impairment is whether the parties were operating in a regulated industry.”62 “When a party enters an industry that is regulated in a particular manner, it is entering subject to further legislation in the area, and changes in the regulation that may affect its contractual relationships are foreseeable.”63
HAPCO argues that its members entered into lease agreement for the purpose of ensuring prompt payment of rent and, in the case of default, to ensure the ability to repossess the property. Accordingly, Plaintiff asserts that the EHPA constitutes a substantial impairment because of the temporary provisions that prohibit landlords from charging or accepting late fees from some tenants, that limit the bases for evictions until August 31, 2020, that require landlords to enter into hardship repayment agreements with some of their tenants, and that require landlords to participate in an eviction diversion program before seeking to reclaim possession of property from certain tenants who fail to pay rent.64
Of course, when landlords entered into leases before the EHPA was passed, they did not expect that these specific regulations would be enacted in response to a global pandemic. However, residential leases have been heavily regulated for many years.65 Pennsylvania‘s Landlord-Tenant Act of 1951 imposes requirements regarding the amount of security deposits,66 the deadline for returning security deposits,67 and interest on security deposits.68 The law also regulates how much notice landlords must give before terminating
In addition, both state and federal laws govern various aspects of the landlord-tenant relationship. Landlords must disclose all known information on lead-based paint in their dwellings;71 Civil rights laws prohibit landlords from engaging in discriminatory rental practices;72 and Pennsylvania‘s Rent Withholding Act “authorizes rent withholding where a local health department certifies a dwelling as unfit for human habitation.”73
On the municipal level, the Philadelphia Fair Housing Ordinance prohibits numerous unfair rental practices by landlords against tenants.74 Landlords cannot terminate a lease in retaliation for an incident of domestic violence or sexual assault in which a tenant was the victim, for the filing of a complaint alleging a violation, for a violation having been found against the premises, or for a tenant for joining a lawful organization or exercising a legal right. Regardless of the lease term, at the request of a tenant who is the victim of domestic violence or sexual assault, a landlord is required to terminate a lease without penalty provided certain conditions are met. Landlords are also required to notify tenants of rent increases within specified time periods. Landlords leasing a residential property for a term of less than one year can only terminate the lease if they have good cause and provide notice 30 days before filing for an eviction. For these, and other violations, the Philadelphia Fair Housing Commission has the power to hold a hearing and issue penalties.
Against this heavily-regulated backdrop,75 “it is doubtful that any impairment of a contractual relationship has occurred” as a result of the EHPA.76 But even if parts of the EHPA impair existing contracts, the impairment is only a “[m]inimal alteration of contractual obligations.”77 As in Blaisdell, where, in response to an emergency, the legislature was permitted to minimally interfere with the expectations of the purchasers of properties at foreclosure sales by extending the time that borrowers could redeem the property, here, the eviction moratorium, the rent repayment plan, and the eviction diversion program “merely postpone[] the date on which landlords may commence” eviction proceedings and collect full rent from their tenants.78 Because “a reasonable modification of statutes governing contract remedies is much less likely to upset expectations than a law adjusting the express terms of an agreement,”79 the Court cannot conclude that HAPCO has a likelihood of success on the merits on its claim that a delay of a few months constitutes a substantial
b. Significant and Legitimate Purpose
Even if the EHPA constituted a substantial impairment, the Act is a reasonable way to advance a significant and legitimate public purpose. “A legitimate public purpose is one aimed at remedying a broad and general social or economic problem; it need not be addressed to an emergency or temporary situation.”82 The legislative findings of the EHPA expressly report that the COVID-19 pandemic has created a housing emergency in the City of Philadelphia and that the Act is necessary to address the emergency.83 The City has also identified the need to protect public health by ensuring that city residents can remain at home during the pandemic as a significant and legitimate purpose of the Act.84
Nonetheless, because the Act only seeks to protect renters, Plaintiff quotes the Supreme Court‘s decision in Allied Structural Steel Co. v. Spannaus for the proposition that “this law can hardly be characterized . . . as one enacted to protect a broad societal interest rather than a narrow class.”85 However, the Spannaus Court specifically cited Blaisdell, in which Minnesota passed a law protecting homeowners from foreclosure at the expense of mortgagees, as a situation where the state law was enacted to protect a broad societal interest.86
Moreover, in Spannaus, the challenged state law “was enacted when a division
c. Appropriate and Reasonable
Furthermore, the Act is an appropriate and reasonable way to advance the City‘s purpose. Where, as here, the contract is between private parties, courts “generally defer to legislative judgment . . . [w]ith respect to reasonableness and necessity.”90 Plaintiff asserts that, in light of the continuing obligation for landlords to pay their mortgages and property taxes, the City could have considered more “moderate course[s]” such as “reduc[ing] the eviction moratorium, allow[ing] for the gradual payment of late fees and interest, . . . ma[king] direct payments to renters consistent with the federal government‘s mandate under the Coronavirus Aid, Relief, and Economic Recovery Act . . . [or] provid[ing] landlords with property tax relief for the same period that tenants received rent relief under the Act.”91 Plaintiff also argues that even though the City defined the “COVID-19 emergency period”
“The Contract Clause, however, ‘does not require courts . . . to sit as superlegislatures, choosing among various options proposed by plaintiffs.‘”93 The City has determined that there is a “housing emergency in the City of Philadelphia” and that the challenged bills “are necessary to ensure residents are able to remain in their homes, and small businesses are able to stay in business.”94 Considering the deference owed to this legislative judgment, the Court cannot conclude that the City‘s methods of alleviating the emergency were inappropriate or unreasonable.95 The challenged Act undoubtedly helps residents remain in their homes and, especially considering the COVID-19 pandemic during which it is critical that people have the space to remain socially distant from each other, it is reasonable and appropriate for the City to “protect[] the mental and physical health of citizens who could suffer greatly by evictions.”96 It was also not unreasonable for City Council to determine that, after the havoc that COVID-19 has wreaked on the economy, renters would need protections that extended past the emergency period.
In sum, as in Blaisdell, where temporary measures enacted in response to emergency conditions to allow people to remain in their homes under certain conditions was upheld in response to a Contracts Clause challenge, HAPCO‘s Contracts Clause challenge to the City‘s temporary legislation, enacted in response the COVID-19 pandemic and designed to allow residents to remain in their homes,
2. Due Process
Plaintiff argues that the EHPA violates Plaintiff‘s substantive due process rights under the federal and Pennsylvania Constitutions.98 The Supreme Court, however, has explained that “[t]he day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.”99 “For protection against abuses by legislatures the people must resort to the polls, not to the courts.”100 Therefore, “[t]he Due Process Clause of the Fourteenth Amendment generally does not prohibit retrospective civil legislation, unless the consequences are particularly ‘harsh and oppressive.‘”101 “Generally speaking, state laws need only be rational and non-arbitrary in order to satisfy the right to substantive due process.”102
In support of its Motion for a Preliminary Injunction, Plaintiff argued that the EHPA‘s provisions that bar landlords from repossessing their property until August 31, 2020, that extend protections past the defined emergency period, and that force landlords into hardship repayment agreements and eviction diversion programs violate its due process rights because “even if there was a legitimate reason for these restrictions, the Act is by no mean ‘rationally related’ to the City‘s objective.”103 However, because
First, even though Plaintiff argues that “[i]t defies logic that eliminating contractually bargained-for (and statutory) rights to interest and late fees bears any rational relation to prohibiting evictions, especially because the eviction moratorium already does that,” it is not irrational for the City to assume that the fear of accumulating interest and late fees would cause many tenants who are experiencing a COVID-19 financial hardship to self-evict and not take advantage of the Act‘s protections.106
Second, Plaintiff argues that the restriction in Bill No. 200305—which sets up the hardship repayment program—making it unlawful for landlords to take “any steps in furtherance of recovering possession of a residential premises” is unrelated to the City‘s interests because the City‘s purpose for the Act only supports halting the actual eviction, not the process leading up to the eviction.107 However, as “[o]ver half (54%) of all legal evictions are the result of a default judgment entered against a tenant,” it is not irrational to completely pause the eviction process to ensure that tenants take advantage of the Act and do not self-evict upon the initiation of the eviction proceedings.108
Third, Plaintiff argues that the Act violates the
Finally, Plaintiff argues that the Act is not “rationally related to preventing the spread of COVID-19” because “the Act provides relief to tenants who were struggling to meet their rent obligations as far back as March 1, 2020—before the coronavirus ravaged the United States and before any declaration of emergency in Philadelphia or Pennsylvania.”110 On March 6,
3. Takings Clause
Plaintiff argues that the EHPA violates the Takings Clauses of the federal and Pennsylvania Constitutions. However, whether Plaintiff‘s claim has a likelihood of success on the merits is irrelevant at this stage; the Supreme Court in Knick v. Township of Scott, Pennsylvania recently explained that although “[a] property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it” “[g]overnments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional. As long as just compensation remedies are available—as they have been for nearly 150 years—injunctive relief will be foreclosed.”112 Therefore, Plaintiff‘s motion for injunctive relief based on a violation of the
4. Preemption
Plaintiff asserts that the EHPA is preempted by the
Second, Plaintiff argues that Article V of the Landlord-Tenant Act, which provides the process for summary eviction proceedings, preempts the EHPA‘s limitations on evictions. This argument is foreclosed by the Pennsylvania Supreme Court‘s decision in Warren v. City of Philadelphia.119 In 1955, Philadelphia passed a rent control ordinance that sought “to regulate and control housing accommodations and evictions by establishing maximum rents and prohibiting evictions except on certain grounds.”120 Among others, an association of property owners in Philadelphia filed suit seeking an injunction on the purported basis that the ordinance was invalid because it conflicted with the Landlord-Tenant Act. The Pennsylvania Supreme Court rejected this argument and explained that
As in Warren, the EHPA fits squarely within the City of Philadelphia‘s power. Pursuant to the EHPA, until August 31, 2020, landlords temporarily lack the right to evict certain tenants unless there is imminent harm; until May 31, 2020, landlords do not have the right to evict tenants who are on a hardship repayment plan and who meet their obligations under the plan; and, until December 31, 2020, if the City sets up an eviction diversion program, landlords would not have the right to evict certain tenants unless they participate in the program. Accordingly, the EHPA does not conflict with the eviction procedures set forth in the Landlord-Tenant Act because it only regulates when landlords have the right to evict. For the same reason, Plaintiff‘s argument that the EHPA “bars landlords from demanding rent during the emergency period and for an additional nine months after the fact” even though the Landlord-Tenant Act allows a landlord to repossess land “upon the failure of the tenant, upon demand, to satisfy any rent reserved and due”123 is foreclosed—Warren expressly held that Landlord-Tenant Act does not provide the “substantive law as to when [a landlord] has a right to evict.”124 Therefore, HAPCO has not shown a likelihood of success on the merits of its claim that the eviction-related provisions of the EHPA are preempted.
B. HAPCO‘s Irreparable Harm
“In order to demonstrate irreparable harm the plaintiff must demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial. The preliminary injunction must be the only way of protecting the plaintiff from harm.”125 “The requisite feared injury or harm must be irreparable—not merely serious or substantial, and it must be of a peculiar nature, so that compensation in money cannot atone for it.”126 “Thus, a litigant seeking injunctive relief must ‘articulate and adduce proof of actual or imminent harm which cannot otherwise be compensated by money damages . . . to sustain its substantial burden of showing irreparable harm.‘”127 The preliminary injunction standard requires the
HAPCO provides two theories of irreparable harm: that the violation of constitutional rights satisfies the requirement of showing irreparable harm and that landlords will also face “irreparable harm if properties are foreclosed upon and landlords are saddled with the resulting effects on their livelihood and creditworthiness.”129 However, even assuming that a violation of the constitutional rights at issue can constitute irreparable harm,130 as explained above, HAPCO has failed to demonstrate that its members are suffering from a constitutional harm.131
Moreover, although it is true that the foreclosure of property can constitute irreparable harm because property is unique,132 HAPCO has failed to show that its members are more likely than not to suffer such irreparable harm.133 HAPCO relies exclusively on the Declaration of Victor Pinckney, a HAPCO member, which states that “HAPCO members rely on rental payments to pay mortgages, property taxes and other expenses for their properties.”134 According to HAPCO,
However, Pinckney‘s Declaration is insufficient to show irreparable harm. First, HAPCO has not shown that all of its members will be irreparably harmed. In Adams v. Freedom Forge Corp., the Third Circuit reviewed a District Court‘s decision granting a preliminary injunction to approximately 136 former employees (and their spouses) of Freedom Forge Corporation who asserted that “Freedom Forge induced them into early retirement with oral assurances that their health insurance benefits would continue essentially unmodified until death, without informing them that it actually retained the power to amend or eliminate the benefits program altogether.”136 The Court of Appeals explained that “in the absence of a foundation from which one could infer that all (or virtually all) members of a group are irreparably harmed, we do not believe that a court can enter a mass preliminary injunction.”137 Therefore, the Third Circuit reversed the District Court because:
[T]here was insufficient evidence from which the District Court could infer that all the plaintiff-retirees and their spouses (in whose favor the injunction ran) were in such financial straits that they would be forced to choose between medical care and other necessities. In order to obtain a preliminary injunction that would apply to each one of them, the plaintiffs would have had to present affidavits or other evidence from which one could at least infer that each of them was so threatened. Instead, the plaintiffs only presented evidence from which a court could infer that some of them were threatened with harm.138
Here, Pinckney‘s Declaration fails to establish a foundation for which the Court could infer that the nearly 1,900 HAPCO members are all in the same situation. After all, the financial situation of HAPCO‘s members assuredly varies and, as explained below, many landlords are protected from foreclosure by different government programs.139
Second, even accepting Pinckney‘s assertion that all of HAPCO‘s members rely on rental payments to pay the expenses on their properties, the Court cannot credit HAPCO‘s “obvious result” because
Third, a close inspection of HAPCO‘s “obvious result” reveals that it is not so obvious. The EHPA‘s eviction moratorium concludes August 31, 2020, which is the same date that the Governor‘s eviction moratorium is set to conclude and, in any event, the Philadelphia Municipal Court has announced that it will not hear new eviction filings until November 16, 2020.142
Likewise, because mediation is already part of the eviction process, and the EHPA‘s eviction diversion program would only cause a short delay in obtaining an eviction, this provision will not cause irreparable harm.143 Thus, even accepting that HAPCO‘s members rely on rental payments to pay their mortgages, HAPCO is left with the speculation that the EHPA‘s temporary restrictions on collecting late fees and interest (which are small and inconsistent sums of money), and its temporary requirement for landlords to participate in a hardship repayment plan with those tenants who can provide documentation of a COVID-19 financial hardship (which provides landlords with all back rent), will lead to all of its members facing foreclosures.144
Moreover, HAPCO‘s speculation cannot support an injunction given the evidence of a myriad of programs currently protecting landlords from foreclosure.145 Governor Wolf has issued an executive order staying the filing of all new mortgage foreclosures through August 31, 2020146 and many
Numerous other programs protect landlords. In May, the COVID-19 Emergency Rental Assistance Program provided rental payments to Philadelphia landlords for 4,000 households.152 The CARES Rent Relief Program, which is set to pay $28.45 million in rental assistance directly to Philadelphia landlords, went into effect in June.153 The Landlord Working Capital Loan Program allows Philadelphia landlords who own 15 or fewer residential rental units to obtain low interest loans of up to $10,000 with no payment due for the first six months.154 The COVID-19 Working Capital Access Program provided landlords with interest free loans of
In sum, Pinckney‘s Declaration is insufficient to make any inferences about all 1,900 HAPCO members, the Court cannot accept HAPCO‘s speculation that the obvious result of a landlord‘s inability to immediately collect all payments owed under the lease will lead to foreclosure, and the evidence in the record demonstrates the fallacy of HAPCO‘s speculation. Therefore, because HAPCO has failed to show that its members are more likely than not to suffer from foreclosures as a result of the EHPA, it has failed to meet its burden of showing that it faces irreparable harm.160
IV. CONCLUSION
Based on the current record, and considering all of the relevant circumstances, HAPCO has not shown that the extraordinary remedy of a preliminary injunction is warranted. An order will be entered.