Owner Can’t Evict Residents Because It Wants to Raise Rent

Facts: Morton LLC, a residential property owner subject to the Los Angeles Rent Stabilization Ordinance (LARSO), served notices of eviction on residents because it wanted to raise the rent on units on its housing property.

Though LARSO clearly prohibits evicting tenants specifically for that purpose, Morton claimed that HUD regulations were the governing law for this case, not LARSO. Under the HUD rules, Morton contended, it had the right to evict a government-assisted tenant during the lease term for “good cause” grounds, which could include the owner's desire to lease the unit at a higher rent. In other words, Morton contended that the HUD federal regulations took precedence over the local Los Angeles rules.

The residents of the site vehemently disagreed with Morton's attempt to terminate their leases. After trying to deal with the matter without resorting to litigation, the residents as a group sued Morton in federal district court and sought an immediate decision from the court that would ultimately prevent the owner from evicting them from the site. The federal district court sided with the residents. Morton appealed.

Decision: The appellate court upheld the ruling of the federal district court in favor of the residents.

Reasoning: The appellate court stated that the goals of the HUD regulation and LARSO are the same—to increase the availability and affordability of housing. The court then pointed out that the HUD regulations on “good cause” did not take precedence over the LARSO rules and regulations on eviction.

The appellate court noted that Morton had argued that HUD's goal in defining “good cause” was to encourage owner participation in the Section 8 program, which the owner claimed was not an objective found in LARSO. However, the appellate court rejected this argument, noting that HUD and Congress have deemed owner participation an important means to the ultimate end of providing housing, but not a goal in itself.

Therefore, the court ruled, while HUD may have listed examples in its regulations of “good cause” that were delineated in order to protect owners in general, it also specifically stated that good cause is determined in local landlord-tenant courts, not by HUD rules and regulations.

Congress and HUD intended to provide assisted tenants with more protections than unassisted tenants, not fewer, the court concluded. Thus, the court explained, federal lawmakers and regulators refused to allow state and local law to supplant wholly federal termination standards. However, the court reasoned, by enacting the federal good cause requirement, Congress desired to maintain a uniform federal floor below which protections for tenants could not drop, not a ceiling above which they could not rise.

Importantly, the court noted, Congress and HUD never explicitly rejected the application of more protective local standards to assisted tenants, and, in certain cases, expressly allowed for it. The court pointed out that in recently published HUD guidance—Notice PIH 2009-18 (HA), State and Local Law Applicability to Lease Terminations in the Housing Choice Voucher (HCV) Program—there was considerable support for the position that federal good cause provisions do not “trump” local laws and regulations. Those regulations state that while good cause may include a business or economic reason when there is no state or local law prohibiting termination of tenancy for such cause, in other circumstances, it may not include a business or economic reason.

In conclusion, the court ruled, these HUD regulations do not “preempt” applicable state or local laws that restrict or prohibit the termination of tenancy. The eviction notices are invalid for failure to comply with LARSO. LARSO is not preempted by HUD's good cause regulation, because HUD did not intend to preempt local eviction controls when it enacted its rules, and LARSO does not pose any obstacle to the accomplishment of HUD's objectives.

• Deborah Barrientos v. Morton LLC, October 2009