Of Interest

Stay in compliance with the ever-expanding web of mortgage & consumer lending regulations

Recent Posts

Texas Court Strikes Down Federal Eviction Moratorium

BY: Consumer Finance Team

A&B ABstract: On February 25, 2021, Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas entered a declaratory judgment that the nationwide eviction moratorium ordered by the U.S. Centers for Disease Control and Prevention (“CDC”) in response to the COVID-19 pandemic is invalid under Article I of the U.S. Constitution.

The CARES ACT Moratorium

As we previously wrote, the CARES Act imposed a 120-day moratorium on certain residential evictions that elapsed on August 25, 2020.  With this date impending, on August 8, President Trump directed executive agencies to “take all lawful measures to prevent residential evictions and foreclosures resulting from financial hardships caused by COVID-19.” He also ordered the CDC and the Department of Health and Human Services (“HHS”) to consider whether any measures “temporarily halting residential evictions” are “reasonably necessary to prevent further spread of COVID-19” between states.

The CDC Emergency Order

In response, on September 4, the CDC issued an emergency order imposing a nationwide moratorium on certain residential evictions through December 31, 2020 (“CDC Order”).  In doing so, the CDC coordinated with HHS and the Department of Housing and Urban Development (“HUD”). The CDC Order prevents the eviction of any tenant who certifies that he or she: (1) is “using best efforts to obtain all governmental assistance for housing”; (2) earns no more than $99,000 per year in income; (3) cannot pay rent in full due to a substantial loss in income or extraordinary medical expenses; (4) is “using best efforts to make timely partial payments”; and (5) would likely become homeless, or be forced to live in a shared living setting, if evicted.

Significantly, the CDC Order does not provide any compensation for landlords or property owners who are prevented from evicting non-paying tenants, nor does it establish any hearing process for challenges to a tenant’s Declaration.  Conversely, the Order also does not exempt tenants from their legal obligation to pay outstanding rent they accumulate.  The CDC has since extended the moratorium to March 31, 2021.

The Constitutional Challenge

One individual landlord and six property management companies operating in Texas filed suit to challenge the constitutionality of the CDC order.  They claimed that it exceeds the federal government’s power to regulate “commerce” under Article I of the U.S. Constitution.  Given that this was a purely legal issue, the plaintiffs requested – and the Court agreed – that the matter should be decided on summary judgment briefing without need for discovery.

The Court’s Decision

In his decision, Judge Barker acknowledged that eviction moratoriums may be lawful as part of state laws managing eviction procedures generally and under states’ broad “police powers” to promote “the lives, health, morals, comfort and general welfare” of their citizens.  He contrasted such state-level actions to this federal moratorium, which he described as a significant expansion of federal power, stating (slip op. at 2):

The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium. It did not do so during the deadly Spanish Flu pandemic.  Nor did it invoke such a power during the exigencies of the Great Depression. The federal government has not claimed such a power at any point during our Nation’s history until last year.

The court also analyzed Congress’s power under the Commerce Clause to regulate interstate commerce, as well as other constitutional provisions, and concluded that the moratorium exceeds the federal government’s authority.  In large part, this is because Judge Barker determined that the decision to evict a tenant is not an “economic” act within Congress’s power to regulate.

Importantly, the court did not enter an injunction against enforcement of the moratorium, but left open that possibility if the federal government does not abide by the declaratory judgment.  In the meantime, the government has already announced that it will appeal the decision to the U.S. Court of Appeals for the Fifth Circuit.


This decision contrasts with those of other courts in Louisiana (Chambless Enters. v. Redfield) and Georgia (Brown v. Azar) that struck down other constitutional challenges to the CDC moratorium.  One might also argue that Judge Barker improperly disregarded several grounds cited in support of the CDC moratorium — for example, that a massive wave of evictions could drive up infections and further destabilize the economy.  Given the conflicting precedents, and the public health circumstances of the COVID-19 pandemic, there appears to be a reasonable likelihood that the decision will be struck down even by the relatively conservative Fifth Circuit.

Further, because Judge Barker did not issue an injunction, and because the declaratory judgment was limited to the plaintiffs, the decision does not extend nationwide.  As the Department of Justice noted in announcing its appeal, “[t]he decision . . . does not extend beyond the particular plaintiffs . . . and it does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.”  Absent a broad injunction, the decision has very limited effect.  Nonetheless, the ultimate outcome of Terkel v. CDC could have important implications for other courts considering the scope of government action in response to the COVID-19 pandemic, particularly if it is upheld on appeal or ultimately heard by the U.S. Supreme Court.   

Share to...