1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 HOWARD ITEN, ) Case No. CV 21-00486 DDP (JEMx) ) 12 Plaintiff, ) ) 13 v. ) ORDER GRANTING DEFENDANT’S MOTION ) TO DISMISS [15][16] 14 COUNTY OF LOS ANGELES, ) ) 15 Defendant. ) ___________________________ ) 16 17 Presently before the court is Defendant County of Los Angeles 18 (“the County”)’s Motion to Dismiss. Having considered the 19 submissions of the parties and heard oral argument, the court 20 grants the motion and adopts the following Order. 21 I. Background 22 Plaintiff Howard Iten is part-owner of a commercially zoned 23 property in the County of Los Angeles. (Complaint ¶ 8.) Beginning 24 in March 2020, the County imposed a moratorium on commercial tenant 25 evictions for nonpayment of rent related to the COVID-19 global 26 pandemic (“the Moratorium”).1 (Id. ¶ 18(I); Declaration of Kathryn 27 28 1 The term “tenant” excludes commercial tenants “that are 1 D. Valois, Ex. A.) The Moratorium prohibits the eviction of a 2 commercial tenant for nonpayment of rent or late fees “if the 3 Tenant demonstrates an inability to pay rent and/or such related 4 charges due to Financial Impacts related to COVID-19 . . . and the 5 Tenant has provided notice to the Landlord within seven (7) days 6 after the date that rent /and or such related charges were due, 7 unless extenuating circumstances exist, that the Tenant is unable 8 to pay.” (Moratorium § V(A)(1).) Commercial tenants with fewer 9 than ten employees may satisfy these notice requirements with a 10 self-certification. (Moratorium § V(B)(2).) Such tenants have 11 twelve months from the expiration of the Moratorium, currently 12 scheduled for September 30, 2021, to repay any unpaid rent. 13 (Moratorium § V(C)(2)(a).) The Moratorium also prohibits 14 harassment of tenants, including any attempt to evict a tenant 15 “based upon facts which the Landlord has no reasonable cause to 16 believe to be true or upon a legal theory which is untenable under 17 the facts known to the Landlord.”2 (Moratorium § VIII(I).) 18 Failure to comply with the Moratorium may result in civil 19 penalties, including fines of up to $5,000 per day, and is 20 punishable as a misdemeanor. (Moratorium § X(A),(B).) 21 Plaintiff has “had a number of issues” with his commercial 22 tenant over the past several years, including failure to pay rent 23 and unauthorized alterations to the property, resulting in building 24 code violations. (Compl. ¶ 23.) In April 2020, the tenant 25 informed Plaintiff that the tenant “is very adversely affected by 26 27 2 No Landlord is liable for harassment for pursuing eviction “unless and until the Tenant has obtained a favorable termination 28 of that action.” (Moratorium § VIII(I).) 1 Covid 19 and . . . will not be able to pay the rent.” (Id.) 2 Plaintiff’s tenant did not pay rent for the next several months. 3 (Id.) 4 The tenant’s lease expired at the end of August 2020. (Compl. 5 ¶ 24.) Notwithstanding the tenant’s nonpayment of rent and the 6 other “issues,” Plaintiff entered into a new, five-year lease with 7 the tenant, reasoning that so doing would increase the chances that 8 Plaintiff would recover past-due rent. (Id.) The new lease 9 requires the tenant to pay both base rent and $3,200 in past-due 10 rent every month. (Compl. ¶ 26.) Although the new lease went into 11 effect on September 1, 2020, the tenant has not made any rent 12 payments. (Compl. ¶ 28.) Sometime in October 2020, the tenant 13 conveyed to Plaintiff that “times are tough and [the tenant] will 14 not be able to pay the full amount on time.” (Id. ¶ 29.) 15 Plaintiff alleges that, but for the Moratorium, he would 16 immediately evict his tenant. (Compl. ¶ 31.) Plaintiff’s 17 Complaint brings a single cause of action, alleging that the 18 Moratorium’s ban on commercial evictions violates Plaintiff’s 19 rights under the Constitution’s Contracts Clause.3 The County now 20 moves to dismiss Plaintiff’s Complaint. 21 II. Legal Standard 22 A complaint will survive a motion to dismiss when it 23 “contain[s] sufficient factual matter, accepted as true, to state a 24 claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 25 556 U.S. 662, 678 (2009)(quoting Bell Atl. Corp. v. Twombly, 550 26 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a 27 3“ No State shall . . . pass any . . . Law impairing the 28 Obligation of Contracts . . . .” U.S. Const. art. I, § 10, cl. 1. 1 court must “accept as true all allegations of material fact and 2 must construe those facts in the light most favorable to the 3 plaintiff.” Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 4 Although a complaint need not include “detailed factual 5 allegations,” it must offer “more than an unadorned, 6 the-defendant-unlawfully-harmed-me accusation.” Iqbal,556 U.S. at 7 678. Conclusory allegations or allegations that are no more than a 8 statement of a legal conclusion “are not entitled to the assumption 9 of truth.” Id. at 679. In other words, a pleading that merely 10 offers “labels and conclusions,” a “formulaic recitation of the 11 elements,” or “naked assertions” will not be sufficient to state a 12 claim upon which relief can be granted. Id. at 678 (citations and 13 internal quotation marks omitted). 14 “When there are well-pleaded factual allegations, a court 15 should assume their veracity and then determine whether they 16 plausibly give rise to an entitlement of relief.” Iqbal,556 U.S. 17 at 679. Plaintiffs must allege “plausible grounds to infer” that 18 their claims rise “above the speculative level.” Twombly, 550 U.S. 19 at 555-56. “Determining whether a complaint states a plausible 20 claim for relief” is “a context-specific task that requires the 21 reviewing court to draw on its judicial experience and common 22 sense.” Iqbal, 556 U.S. at 679. 23 III. Discussion 24 The County contends that Plaintiff’s Complaint must be 25 dismissed because, under the facts alleged, the Moratorium did not 26 cause any injury to Plaintiff. (Motion at 19.) Although not 27 framed precisely as such, this argument presents a question of 28 1 standing.4 “Standing under Article III of the Constitution has 2 three basic elements: (1) an “injury in fact,” which is neither 3 conjectural nor hypothetical; (2) causation, such that a causal 4 connection between the alleged injury and offensive conduct is 5 established; and (3) redressability, or a likelihood that the 6 injury will be redressed by a favorable decision. Nat’l Fed’n of 7 the Blind of California v. Uber Techs., Inc., 103 F. Supp. 3d 1073, 8 1078 (N.D. Cal. 2015) (citing Lujan v. Defenders of Wildlife, 504 9 U.S. 555, 560–61 (1992)). If, as the County contends, the 10 Moratorium does not prevent Plaintiff from evicting his tenant, 11 then as a matter of course, the Moratorium cannot have caused 12 Plaintiff any injury. 13 The Moratorium only prohibits the eviction of a commercial 14 tenant if (1) “the Tenant demonstrates an inability to pay rent . . 15 . due to Financial Impacts related to COVID-19” and (2) “the Tenant 16 has provided notice to the Landlord within seven (7) days after the 17 date that rent [was] due,” unless (3) “extenuating circumstances 18 exist.” As alleged in the Complaint, Plaintiff’s tenant owed rent 19 under the current lease beginning on September 1, 2020. The tenant 20 did not, however, provide any notice to Plaintiff of inability to 21 pay until over a month later.
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1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 HOWARD ITEN, ) Case No. CV 21-00486 DDP (JEMx) ) 12 Plaintiff, ) ) 13 v. ) ORDER GRANTING DEFENDANT’S MOTION ) TO DISMISS [15][16] 14 COUNTY OF LOS ANGELES, ) ) 15 Defendant. ) ___________________________ ) 16 17 Presently before the court is Defendant County of Los Angeles 18 (“the County”)’s Motion to Dismiss. Having considered the 19 submissions of the parties and heard oral argument, the court 20 grants the motion and adopts the following Order. 21 I. Background 22 Plaintiff Howard Iten is part-owner of a commercially zoned 23 property in the County of Los Angeles. (Complaint ¶ 8.) Beginning 24 in March 2020, the County imposed a moratorium on commercial tenant 25 evictions for nonpayment of rent related to the COVID-19 global 26 pandemic (“the Moratorium”).1 (Id. ¶ 18(I); Declaration of Kathryn 27 28 1 The term “tenant” excludes commercial tenants “that are 1 D. Valois, Ex. A.) The Moratorium prohibits the eviction of a 2 commercial tenant for nonpayment of rent or late fees “if the 3 Tenant demonstrates an inability to pay rent and/or such related 4 charges due to Financial Impacts related to COVID-19 . . . and the 5 Tenant has provided notice to the Landlord within seven (7) days 6 after the date that rent /and or such related charges were due, 7 unless extenuating circumstances exist, that the Tenant is unable 8 to pay.” (Moratorium § V(A)(1).) Commercial tenants with fewer 9 than ten employees may satisfy these notice requirements with a 10 self-certification. (Moratorium § V(B)(2).) Such tenants have 11 twelve months from the expiration of the Moratorium, currently 12 scheduled for September 30, 2021, to repay any unpaid rent. 13 (Moratorium § V(C)(2)(a).) The Moratorium also prohibits 14 harassment of tenants, including any attempt to evict a tenant 15 “based upon facts which the Landlord has no reasonable cause to 16 believe to be true or upon a legal theory which is untenable under 17 the facts known to the Landlord.”2 (Moratorium § VIII(I).) 18 Failure to comply with the Moratorium may result in civil 19 penalties, including fines of up to $5,000 per day, and is 20 punishable as a misdemeanor. (Moratorium § X(A),(B).) 21 Plaintiff has “had a number of issues” with his commercial 22 tenant over the past several years, including failure to pay rent 23 and unauthorized alterations to the property, resulting in building 24 code violations. (Compl. ¶ 23.) In April 2020, the tenant 25 informed Plaintiff that the tenant “is very adversely affected by 26 27 2 No Landlord is liable for harassment for pursuing eviction “unless and until the Tenant has obtained a favorable termination 28 of that action.” (Moratorium § VIII(I).) 1 Covid 19 and . . . will not be able to pay the rent.” (Id.) 2 Plaintiff’s tenant did not pay rent for the next several months. 3 (Id.) 4 The tenant’s lease expired at the end of August 2020. (Compl. 5 ¶ 24.) Notwithstanding the tenant’s nonpayment of rent and the 6 other “issues,” Plaintiff entered into a new, five-year lease with 7 the tenant, reasoning that so doing would increase the chances that 8 Plaintiff would recover past-due rent. (Id.) The new lease 9 requires the tenant to pay both base rent and $3,200 in past-due 10 rent every month. (Compl. ¶ 26.) Although the new lease went into 11 effect on September 1, 2020, the tenant has not made any rent 12 payments. (Compl. ¶ 28.) Sometime in October 2020, the tenant 13 conveyed to Plaintiff that “times are tough and [the tenant] will 14 not be able to pay the full amount on time.” (Id. ¶ 29.) 15 Plaintiff alleges that, but for the Moratorium, he would 16 immediately evict his tenant. (Compl. ¶ 31.) Plaintiff’s 17 Complaint brings a single cause of action, alleging that the 18 Moratorium’s ban on commercial evictions violates Plaintiff’s 19 rights under the Constitution’s Contracts Clause.3 The County now 20 moves to dismiss Plaintiff’s Complaint. 21 II. Legal Standard 22 A complaint will survive a motion to dismiss when it 23 “contain[s] sufficient factual matter, accepted as true, to state a 24 claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 25 556 U.S. 662, 678 (2009)(quoting Bell Atl. Corp. v. Twombly, 550 26 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a 27 3“ No State shall . . . pass any . . . Law impairing the 28 Obligation of Contracts . . . .” U.S. Const. art. I, § 10, cl. 1. 1 court must “accept as true all allegations of material fact and 2 must construe those facts in the light most favorable to the 3 plaintiff.” Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 4 Although a complaint need not include “detailed factual 5 allegations,” it must offer “more than an unadorned, 6 the-defendant-unlawfully-harmed-me accusation.” Iqbal,556 U.S. at 7 678. Conclusory allegations or allegations that are no more than a 8 statement of a legal conclusion “are not entitled to the assumption 9 of truth.” Id. at 679. In other words, a pleading that merely 10 offers “labels and conclusions,” a “formulaic recitation of the 11 elements,” or “naked assertions” will not be sufficient to state a 12 claim upon which relief can be granted. Id. at 678 (citations and 13 internal quotation marks omitted). 14 “When there are well-pleaded factual allegations, a court 15 should assume their veracity and then determine whether they 16 plausibly give rise to an entitlement of relief.” Iqbal,556 U.S. 17 at 679. Plaintiffs must allege “plausible grounds to infer” that 18 their claims rise “above the speculative level.” Twombly, 550 U.S. 19 at 555-56. “Determining whether a complaint states a plausible 20 claim for relief” is “a context-specific task that requires the 21 reviewing court to draw on its judicial experience and common 22 sense.” Iqbal, 556 U.S. at 679. 23 III. Discussion 24 The County contends that Plaintiff’s Complaint must be 25 dismissed because, under the facts alleged, the Moratorium did not 26 cause any injury to Plaintiff. (Motion at 19.) Although not 27 framed precisely as such, this argument presents a question of 28 1 standing.4 “Standing under Article III of the Constitution has 2 three basic elements: (1) an “injury in fact,” which is neither 3 conjectural nor hypothetical; (2) causation, such that a causal 4 connection between the alleged injury and offensive conduct is 5 established; and (3) redressability, or a likelihood that the 6 injury will be redressed by a favorable decision. Nat’l Fed’n of 7 the Blind of California v. Uber Techs., Inc., 103 F. Supp. 3d 1073, 8 1078 (N.D. Cal. 2015) (citing Lujan v. Defenders of Wildlife, 504 9 U.S. 555, 560–61 (1992)). If, as the County contends, the 10 Moratorium does not prevent Plaintiff from evicting his tenant, 11 then as a matter of course, the Moratorium cannot have caused 12 Plaintiff any injury. 13 The Moratorium only prohibits the eviction of a commercial 14 tenant if (1) “the Tenant demonstrates an inability to pay rent . . 15 . due to Financial Impacts related to COVID-19” and (2) “the Tenant 16 has provided notice to the Landlord within seven (7) days after the 17 date that rent [was] due,” unless (3) “extenuating circumstances 18 exist.” As alleged in the Complaint, Plaintiff’s tenant owed rent 19 under the current lease beginning on September 1, 2020. The tenant 20 did not, however, provide any notice to Plaintiff of inability to 21 pay until over a month later. Furthermore, when the tenant finally 22 contacted Plaintiff’s property management company in October and 23 gave notice of inability to pay, the tenant stated only that “times 24 25 4 For reasons that are not clear to the court, the County relies upon Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 26 793 (9th Cir. 2012). The cited discussion, however, concerns consumers’ failure to allege their own reliance upon an allegedly 27 fraudulent advertising statement for purposes of a claim under California’s unfair competition law. The relevance of that 28 discussion to the matter at hand is not apparent. 1 are tough,” with no reference to COVID-19. Thus, the County 2 asserts, the tenant did not give timely or adequate notice of 3 COVID-related inability to pay rent, and therefore does not fall 4 under the Moratorium’s eviction protections. 5 Plaintiff contends that, notwithstanding the tenant’s failures 6 to comply with the Moratorium’s explicit conditions, this Court can 7 infer that (1) the tenant’s inability to pay is related to COVID 8 and (2) “extenuating circumstances” excuse the tenant’s lack of 9 timely notice, and thus the Moratorium does apply, preventing 10 Plaintiff from evicting his tenant. With respect to the tenant’s 11 inability to pay, construing the facts in the light most favorable 12 to the Plaintiff, the court agrees. Plaintiff alleges that the 13 tenant failed to make any rent payments between April and October 14 2020. The tenant unequivocally stated in April that his failure to 15 make rent was attributable to COVID-19. Although the tenant made 16 no similar representation with respect to its obligations under the 17 current lease, it is plausible that the COVID-related difficulties 18 that rendered it impossible for the tenant to pay rent in the 19 spring of 2020 similarly impacted the tenant’s ability to pay rent 20 in September 2020, particularly in light of the persistence of the 21 COVID-19 pandemic and the tenant’s eventual representation that 22 “times are tough.”5 23 24 5 As Plaintiff points out, and as discussed below, the Moratorium is also drafted in a way that requires landlords to err 25 on the side of caution, at peril of significant civil fines and possible criminal liability. Indeed, a broad reading of “related 26 to COVID-19” is consistent with the “well-accepted principle that remedial legislation . . . is to be given a liberal construction 27 consistent with [its] overriding purpose . . . .” United States v. Article of Drug . . . Bacto-Unidisk . . ., 394 U.S. 784, 798 28 (1969). 1 There appears to be no dispute that the tenant’s notice of his 2 inability to pay rent was not timely. Nevertheless, the Moratorium 3 may still apply to preclude Plaintiff from evicting the tenant if 4 the tenant’s untimely notice resulted from “extenuating 5 circumstances.” The court agrees with Plaintiff that a broad 6 reading of “extenuating circumstances” is consistent with the 7 “well-accepted principle that remedial legislation . . . is to be 8 given a liberal construction consistent with [its] overriding 9 purpose . . . .” United States v. Article of Drug . . . 10 Bacto-Unidisk . . ., 394 U.S. 784, 798 (1969). Plaintiff is also 11 correct in noting that the Moratorium is drafted in a way that 12 requires landlords to err on the side of caution, at peril of 13 significant civil fines and possible criminal liability. But here, 14 Plaintiff does not ask that this Court liberally construe 15 “extenuating circumstances” to encompass a particular factual 16 scenario, or that the court infer from some other fact about the 17 tenant that the tenant was unable to give timely notice. Rather, 18 Plaintiff would have this court assume the existence of some other, 19 unpleaded fact that might qualify as an “extenuating circumstance.” 20 This, the court cannot do. “The court is bound to give plaintiff 21 the benefit of every reasonable inference to be drawn from the 22 ‘well-pleaded’ allegations of the complaint. Thus, the plaintiff 23 need not necessarily plead a particular fact if that fact is a 24 reasonable inference from facts properly alleged. Nevertheless, it 25 is inappropriate to assume that the plaintiff can prove facts which 26 it has not alleged . . . .” Keen v. Am. Home Mortg. Servicing, 27 Inc., 664 F. Supp. 2d 1086, 1092 (E.D. Cal. 2009) (internal 28 quotation marks and citations omitted) (citing Associated Gen. 1 Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 2 U.S. 519, 526 (1983); Retail Clerks Int’l Ass’n v. Schermerhorn, 3 373 U.S. 746, 753 n. 6 (1963). The fact that the tenant failed to 4 pay rent because “times are tough” cannot support an inference that 5 some extenuating circumstance prevented the tenant from providing 6 landlord with the timely notice the Moratorium requires. 7 Because, under the facts alleged, Plaintiff’s tenant does not 8 appear to qualify for the Moratorium’s protections, Plaintiff has 9 not adequately alleged that the Moratorium caused him any injury. 10 Accordingly, Plaintiff’s complaint must be dismissed for lack of 11 standing.6 12 IV. Conclusion 13 For the reasons stated above, the County’s Motion to Dismiss 14 is GRANTED. Plaintiff’s Complaint is DISMISSED, with leave to 15 amend. Any amended complaint shall be filed within fourteen days 16 of the date of this Order. 17 18 19 IT IS SO ORDERED. 20 21 22 Dated: SEPTEMBER 15, 2021 DEAN D. PREGERSON 23 United States District Judge 24 25 26 27 6 Having concluded that Plaintiff lacks standing, the court need not address the County’s argument under Jacobson v. 28 Commonwealth of Massachusetts, 197 U.S. 11 (1905).