Landlords sue over Ducey's anti-eviction order, saying it's unconstitutional

PHOENIX — Landlords and mobile home park owners from around the state are asking the Arizona Supreme Court to void an executive order by Gov. Doug Ducey blocking evictions of tenants who do not pay their rent.

Their lawsuit claims the governor lacks the constitutional authority to tell constables around the state not to process eviction orders, even those issued legally by judges. It also contends that Ducey’s directive is violating the property rights of landowners as well as their right to enter into contracts.

In seeking review, the lawsuit acknowledges that the governor can exercise certain powers in a public health emergency. But attorney Kory Langhofer, who prepared the legal filing, said Ducey, in unilaterally barring landlords from enforcing the terms of lawful lease agreements, created “an indefinite economic welfare and redistribution program, rather than a public health measure to contain the COVID-19 contagion.”

Langhofer also told the justices that if the governor’s order goes unchallenged, “then there is virtually no personal or commercial transaction or conduct that would lie outside his grasp.”

The lawsuit asks the high court not just to rule that Ducey’s order exceeds his constitutional authority, but to specifically direct constables and justices of the peace to carry out their duties to evict tenants once there is a finding they are not paying their rent.

In previously defending the order, the Governor’s Office has argued that nothing in it eliminates the legal duty of tenants to make up the missed rent once the emergency ends. But Langhofer said eviction generally is a landlord’s only effective remedy when someone doesn’t pay.

And he called the end-of-emergency obligation to pay little more than “parchment promises” by tenants, who probably can’t pay anyway, making the requirement to come current on rent “an illusory means of redress” for landlords.

When the governor issued the original order in March, there was a promise that the state would provide financial assistance to renters, said Courtney Gilstrap LeVinus, president of the Arizona Multihousing Association, one of the groups that sued. So she said her members decided not to challenge the order.

But to date, less than $2 million has gone out, which is nowhere near enough, she said.

“Had those funds been deployed, we may not have needed to file,” Gilstap LeVinus said. “There are plenty of resources out there. No one should be evicted.”

Complicating matters, Ducey last month extended the no-eviction order through the end of October.

He did add a provision that requires tenants to certify to landlords by Aug. 22 they have applied for rental assistance from one of the state, county, city or private organizations that provide it. But there is no requirement they actually have received the money by then.

Ducey also set aside $5 million in grants for landlords, though aides to the governor said these were designed mainly to help those with one or just a few properties and not for owners of apartment complexes.

Gilstrap LeVinus said that will hardly be enough to compensate landlords for lost revenues.

Legal issues aside, she said it’s not fair to put the burden of the financial problems caused by the pandemic largely on the backs of landlords.

“When the pandemic hit, the state didn’t mandate that grocery stores and restaurants give away free food or that gas stations give away free fuel,” Gilstrap LeVinus said. “Yet in this case, they’re asking rental housing owners to provide free housing.”

And she pointed out that, by the end of October, landlords could have been without rent — and without ability to evict non-paying tenants — for 221 days.

“There is no industry that can continue to provide goods and services for 221-odd days and be expected to survive,” she said.

How much is owed is unclear.

She said the only data comes from a national organization that says more than 20% of renters had not paid their August rent as of the sixth day of the month. And that looks solely at information from major landlords.

Economist Elliott Pollack, in a study done for the Arizona Multihousing Association, figures that if just 1% of the more than 919,000 Arizona households that rent did not make payments over a seven-month period, that means a loss of more than $67.7 million. Take that figure to 15%, he said, and the foregone revenues top $1 billion.

Pollack said there also is a ripple effect as landlords cannot pay their employees, contractors and suppliers.

But the heart of the issue — and the only one for the Supreme Court to decide — is whether Ducey’s action is legal.

Langhofer told the justices that the statutory provisions the governor is using for all of his executive orders allow him to exercise police powers, specifically to “alleviate actual and threatened damage due to the emergency,” and to facilitate the supply of equipment and services “to provide for the health and safety of the citizens of the affected area.”

He acknowledged the law does allow the governor to “commandeer and utilize any property.” And that, Langhofer said, could be interpreted to include a moratorium on evictions as a means to ensure that people have housing.

But he said that exists only in a “state of war emergency” — and only if the governor makes provisions for compensating the owners of the property.

Langhofer said that Ducey, in issuing his executive order, acknowledged that it had little to do with protecting public health but was “primarily an economic relief measure.” Langhofer pointed out that tenants seeking relief need not show they are infected with COVID-19 or even that they are in a high-risk category, but only that they provide documentation of “ongoing financial hardship.”

Beyond that, Langhofer pointed to the lack of any link between the order and the state’s coronavirus infection rate or any other public health metrics.

“The expansive temporary scope of Executive Order 2020-49 implicitly confirms that it aspires to address long-lasting repercussions of the current economic recession, not contain the spread of the disease,” he wrote.

Langhofer also raises the question of whether it was unconstitutional for the Legislature to provide the governor with what could be considered unlimited emergency powers.