Arizona: On March 24, 2020, Governor Douglas Ducey signed Executive Order No. 2020-14 placing a 120 day suspension on the enforcement of all eviction judgments when one of the following circumstances exist: (1) the tenant is required to be quarantined based upon a COVID-19 diagnosis; (2) a licensed medical professional orders the tenant to self-quarantine as a result of demonstrated symptoms of COVID-19; (3) the tenant suffers from a health condition placing the tenant at greater risk for COVID-19; or (4) the tenant experiences financial difficulties resulting from COVID-19. The Executive Order places the burden upon the tenant to notify and provide documentation to the landlord of any of the above-referenced circumstances. The Executive Order further states that nothing provided within should be construed as relieving any party of their responsibility to pay rent or otherwise comply with an obligation arising under the tenancy.
In addition to the Executive Order, on March 30, 2020, the Governor further announced a cooperative agreement with the state’s banks to protect residents from foreclosure. Under the agreement, financial institutions will suspend foreclosures for at least 60 days, with the potential to extend this time period for the duration of the State of Emergency. Additionally, the Governor’s announcement provided that many of these banks are working with state agencies to formulate payment deferrals on certain consumer loans.
California: On March 16, 2020, Governor Gavin Newsom signed Executive Order No. 28-20 suspending any state law preempting or otherwise limiting a local government from exercising its restrictions on foreclosure actions.
On March 25, 2020, the Governor also announced that major financial institutions will provide relief to homeowners suffering financially as a result of the COVID-19 outbreak. In addition to a 60 day moratorium on foreclosures, California homeowners may also be eligible for mortgage assistance, including: (1) a 90-day grace period on mortgage payments; (2) no negative reporting to credit agencies resulting from the relief; and (3) relief from late fees and charges. The Governor’s announcement has received support from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo, and nearly 200 state-chartered banks, credit unions, and servicers.
On March 27, 2020, the Governor further promulgated Executive Order No. 37-20, which provides eviction protections to tenants financially impacted by the COVID-19 outbreak. The Executive Order provides that for any tenant who notifies a landlord of a financial hardship resulting from COVID-19 and retains verifiable documentation of such hardship, that tenant shall be provided with a 60-day extension to file a responsive pleading with respect to any eviction action while the Executive Order remains in effect. The Executive Order further provides that no writ may be enforced to evict a tenant, who satisfies the aforementioned requirements, from a residence or dwelling.
The protections under Executive Order No. 37-20 shall remain in effect until May 31, 2020.
Colorado: By Executive Order No. 2020-012, Governor Jared Polis temporarily placed a limitation on foreclosure and eviction actions in the state. The Executive Order directs several state agencies to work with property owners and landlords to avoid the execution of eviction proceedings until April 30, 2020.
The Executive Order directs the Divisions of Banking and Financial Services to work with state-chartered financial institutions to implement remedial policies, including the deferment of borrower payments for 90 days, to suppress the threat of residential and commercial foreclosure. The Executive Order also provides a 30 day suspension on certain foreclosure procedures, which enjoins a mortgagee’s ability to enforce a foreclosure judgment.
Governor Polis further released three million dollars to provide short-term rental and mortgage assistance to low-income households impacted by the COVID-19 pandemic. These funds shall remain available to borrowers and tenants for six-months.
Connecticut: On March 19, 2020, the Connecticut Supreme Court issued a notice suspending all foreclosure sales originally scheduled to occur between the months of March and May. These sales are rescheduled to June 6, 2020. The notice further provides that no appointed Committee is to begin working on the sale of a foreclosed property (i.e., place foreclosure signs on properties, etc.) prior to May 1, 2020. Moreover, the judgment in any foreclosure action in which the Court has set a “law day” to run on any date between the months of March and May is amended with the first law day now set for June 2, 2020.
Delaware: On March 24, 2020, Governor Carney approved the Sixth Modification of the Declaration of State of Emergency, which issues a moratorium on all eviction and foreclosure actions in the state during the duration of the State of Emergency. Specifically, the Modification provides that all deadlines relating to eviction actions filed prior to the State of Emergency will be extended until a date no sooner than the 31st day following the termination of the State of Emergency. For all evictions that were subject to a final judgment possession issued prior to the State of Emergency, no writ of possession may be executed before the 7th day following the termination of the State of Emergency. Notably, however, this suspension does not apply to eviction actions based on a claim that continued tenancy threatens to cause irreparable harm to person or property.
The Sixth Modification further provides that no residential foreclosure action may be commenced with respect to residential dwellings containing one to four families. For any ongoing foreclosure action commenced before the State of Emergency, all deadlines shall be extended until a date no sooner than the 31st day following the termination of the State of Emergency. Moreover, no sheriff’s sale, ejectment, or writ of possession shall occur until a date no sooner than the 31st day following the termination of the State of Emergency.
The Sixth Modification further prohibits the imposition of late fees or accrued interest on borrowers and tenants during the State of Emergency.
District of Columbia: On March 13, 2020, courts in the District of Columbia issued an advisory suspending all foreclosure and eviction proceedings. Until further notice, this advisory will remain in effect.
Indiana: Effective March 19, 2020, Governor Eric Holcomb issued Executive Order No. 20-06 placing a moratorium on eviction and foreclosure actions in the state. The Executive Order pertains to all foreclosure actions regardless of whether the borrower’s default is related to the COVID-19 pandemic. Nothing in the Executive Order shall be construed to relieve borrowers from their responsibility to make mortgage payments or any other obligation under the mortgage. The Executive Order further mandates that the Indiana Department of Financial Institutions and the Indiana Housing & Community Development Authority shall immediately engage in discussions with mortgage lenders to identify methods and means by which to relieve citizens from the threat of residential foreclosure.
Unless extended, the protections issued by this Executive Order shall remain in effect until the expiration of the Indiana State of Emergency.
Iowa: On March 22, 2020, Governor Kimberly Reynolds signed a Proclamation of Disaster Emergency temporarily suspending evictions under the Iowa Uniform Residential Landlord and Tenant Act, Manufactured Home Communities, or Mobile Home Parks Residential Landlord and Tenant Act. However, this suspension does not include eviction actions based upon allegations that the tenant has, by way of force, intimidation, fraud, or stealth, entered upon the possession of another in real property or any other emergency circumstances allowed by law. Further, the Proclamation placed a moratorium on all foreclosure actions in the state. The Proclamation directs the Iowa Division of Banking and the Iowa Division of Credit Unions to immediately engage in discussions with mortgage lenders to identify any tools, means, or methods that may relieve homeowners from the threat of foreclosure.
Unless provided otherwise, the suspension of foreclosure and eviction proceedings shall remain in effect until April 16, 2020.
Kansas: On March 23, 2020, Governor Laura Kelly signed Executive Order No. 20-10, which supersedes previously issued Executive Order No. 20-06. The superseding order temporarily enjoins any mortgagee or landlord from foreclosing on a residential property or evicting when the default is caused by a financial hardship resulting from the COVID-19 outbreak. The Executive Order does not relieve any borrower or tenant from meeting their mortgage or rental obligations.
Notably, the Executive Order does not prevent: (1) the continuance of foreclosure or eviction actions that were initiated prior to March 23, 2020; or (2) the initiation of foreclosure or eviction actions resulting from a reason other than a financial hardship from the COVID-19 pandemic. The Executive Order further encourages mortgagors and landlords to engage in discussions with borrowers and tenants to try to implement payment plans or other agreements to allow a borrower or tenant to address any default caused by a financial hardship from COVID-19.
Unless otherwise rescinded, the superseding Executive Order shall remain in effect until May 1, 2020 or until the State of Disaster Emergency is lifted, whichever is earlier.
Kentucky: By Executive Order No. 2020-257, dated March 25, 2020, Governor Andy Beshear suspended all evictions within the state. During this time, law enforcement officers are directed to cease the enforcement of orders of eviction for residential properties. The Executive Order’s suspension of evictions will remain in effect for the duration of the State of Emergency.
Maryland: On March 18, 2020, the Court of Appeals of Maryland promulgated an Administrative Order indefinitely suspending all pending foreclosures of residential properties in the state. The Order further provides that any newly initiated foreclosure action will similarly be stayed upon filing.
Minnesota: Effective March 25, 2020, Governor Tim Walz signed Executive Order No. 20-14 placing a suspension on all eviction proceedings in the state. The Executive Order provides that while this suspension is in effect, no landlord shall be permitted to terminate a residential lease, except where the tenant endangers the safety of other residents or otherwise engages in illegal conduct.
Additionally, the Executive Order requests all financial institutions to implement an immediate moratorium on all pending and future foreclosure actions as a result of a borrower being financially impacted by the pandemic. The Governor further urges financial institutions to withhold the imposition of fees or other penalties as they relate to late payments from borrowers impacted by COVID-19.
The Executive Order will remain in effect for the duration of the Minnesota State of Emergency.
Nebraska: On March 25, 2020, Governor Pete Ricketts signed Executive Order No. 20-07, which suspends all eviction trials in the state. The Executive Order prohibits landlords from terminating a rental agreement for unpaid rent accruing on or after March 13, 2020 when a tenant can demonstrate a substantial loss of income or missed work as a result of COVID-19. The Executive Order further enjoins the eviction of any tenant who has a suspected or confirmed diagnosis of COVID-19. Nothing in the Executive Order shall be construed as relieving any party of their obligation to pay rent under the tenancy.
Unless otherwise extended, the Executive Order shall expire on May 31, 2020.
Nevada: On March 29, 2020, Governor Steve Sisolak signed Emergency Directive No. 008 expressly prohibiting the initiation and enforcement of any foreclosure or eviction actions in the state. The Emergency Directive permits the eventual continuation of foreclosure and eviction actions predating the March 12, 2020 Declaration of Emergency; however, these actions are currently stayed until the Declaration of Emergency is lifted.
Notably, the Governor’s suspension does not include current foreclosure or eviction actions that stem from threats by a tenant or resident to public health or safety, criminal activity, or significant damage to the property. Importantly, however, any positive testing or exposure to the virus that causes COVID-19 cannot serve as a basis for establishing that a tenant or resident seriously endangers the safety of others.
Upon the expiration of the Declaration of Emergency, the Governor encourages borrowers, lenders, tenants, and landlords to negotiate plans or other agreements allow borrowers and tenants to cure any default or missed payments resulting from a financial hardship resulting from the COVID-19 pandemic.
Unless extended, this Emergency Directive shall remain in effect for the duration of Nevada’s Declaration of Emergency.
New Jersey: On March 19, 2020, Governor Philip Murphy issued Executive Order No. 106, which suspends the removal of any individual as a result of an eviction or foreclosure action. The Executive Order will remain in effect, at the very least, for the duration of the New Jersey State of Emergency, and may continue for an additional two-months following the lift of the State of Emergency. The Executive Order, however, does not preclude the commencement or continuation of eviction and foreclosure actions. Rather, the Executive Order only stays the enforcement of all judgments for possession, warrants of removal, and writs of possession. Significantly, the Executive Order carves out an exception, which provides that a party may seek relief from a court to enforce a judgment for foreclosure when necessary in the interest of justice.
Notwithstanding the moratorium on foreclosure and eviction judgments, as set forth in Executive Order No. 106, Governor Philip Murphy also announced on March 28, 2020 that major financial institutions agreed to provide mortgage forbearance and financial protections to citizens facing economic hardship as a result of COVID-19. In addition to the temporary suspension on foreclosures, this relief will come in the form of: (1) a 90 day grace period on mortgage payments; (2) no negative credit reporting for borrowers taking advantage of COVID-19 related relief; and (3) for at least 90 days, these 40+ financial institutions will waive or refund mortgage related fees and penalties.
On March 27, 2020, the New Jersey Supreme Court issued an Order which, among other things, suspended all jury trials and ordered that all motions filed after March 1, 2020 in the Office of Foreclosure would not be considered until further notice.
New York: By Executive Order No. 202.8, dated March 20, 2020, Governor Andrew Cuomo issued a 90-day suspension on all residential eviction and foreclosure actions in New York. On March 21, 2020, the Governor subsequently issued Executive Order No. 202.9 stating that it would be considered an unsafe and unsound business practice for entities under the jurisdiction of the Department of Financial Services to deny a forbearance on mortgage payments. The Orders also address suspending late fees and adverse credit reporting. In real time, the State Courts have been issuing orders halting all filings except for certain emergency matters.
North Carolina: On March 15, 2020, Chief Justice Cheri Beasley issued a Memorandum placing a temporary 30-day suspension on matters before the Clerks of Superior Court, which include foreclosure actions.
Oregon: On March 22, 2020, Governor Kate Brown issued Executive Order No. 20-11 prohibiting the enforcement of any notice or order terminating a tenancy as a result of a residential eviction for nonpayment of rent. Notably, the Executive Order does not enjoin the enforcement of evictions for reasons other than nonpayment of rent.
Unless otherwise extended or terminated, the protections issued by this Executive Order shall remain in effect for 90 days.
Pennsylvania: Effective immediately, the Pennsylvania Supreme Court issued an Order suspending all evictions, ejectments, or other residential displacements based upon the failure to make a payment on a loan, rent or other similar obligation. Nothing provided in the Supreme Court’s Order enjoins a party from seeking an order of possession; however, any execution or enforcement of that order is stayed until April 3, 2020.
South Carolina: On March 18, 2020, Chief Justice Donald Beatty signed an Order superseding the previously issued Statewide Evictions Order dated March 17, 2020. The prevailing Order places a moratorium on all eviction actions until May 1, 2020 and a suspension on all foreclosure actions until further notice. The Order expressly provides that the courts shall not accept filings or proceed in any manner with respect to the aforementioned actions.
Notably, the Order provides a case-by-case exception with respect to evictions that involve essential services and/or harm to person or property.
Texas: On March 19, 2020, the Supreme Court of Texas issued an Order placing a temporary halt on all eviction proceedings and their enforcements until April 19, 2020. The Order carves out an exception when an application to a court reveals the tenant or its guests pose an imminent threat of: (1) physical harm to the landlord or others; or (2) criminal activity.
Washington: On March 18, 2020, Governor Jay Inslee issued Executive Order No. 20-19, which temporarily suspends all residential evictions based upon the failure to provide payment of rent. Significantly, however, nothing in the Executive Order shall be construed to prohibit the eviction of a tenant for other reasons, including, but not limited to waste, nuisance, or commission of a crime on the premises.
Unless otherwise provided, the Executive Order shall remain in effect until April 17, 2020.
Wisconsin: On March 27, 2020, Governor Tony Evers signed Emergency Order No. 15 temporarily suspending foreclosure and eviction actions in the state. The Executive Order enjoins mortgagees from commencing a civil action to foreclose or proceed with a foreclosure action judgment. The Executive Order prohibits sheriffs from conducting sheriff sales, act on any order of foreclosure, or execute any writ of assistance related to a foreclosure.
The Executive Order also prohibits landlords from serving a notice to terminate a tenancy or commencing a civil action for eviction unless the landlord submits an affidavit stating that: (1) the eviction is not based on a failure to pay and (2) failure to proceed with the eviction will result in an imminent threat of serious physical harm to another person.
Nothing in the Executive Order is construed to relieve any individual of their obligation to make their mortgage payments, pay their rent, or fulfill any other obligation arising under the mortgage or tenancy agreement. Unless otherwise ordered, this Executive Order shall remain in effect for 60 days.
****
In addition to the above-referenced federal and state enactments, numerous class-action filings have emerged in wake of the COVID-19 pandemic. These notable types of filings we are seeing include the following:
Gym Closures: Plaintiffs allege gym operators are continuing to charge membership dues despite COVID-19 related gym closures.
False Advertising, Unfair Competition and Negligent Misrepresentation: Plaintiffs contend certain hand-sanitizer manufacturers and distributors are making false claims that their products can prevent or reduce infections and viruses.
Insurance: We expect to see cases filed against insurers for lost business coverage income as businesses continue to be affected by COVID-19. For example, in Billy Goat Tavern I, Inc. filed on March 31, 2020 in federal court in Illinois, plaintiffs allege that Society Insurance denied them insurance coverage for lost business income due to COVID-19 and Illinois’s responsive Executive Orders, which violated Society’s coverage form and insurance policy.
Paid Sick Leave: We expect to see cases filed across industries addressing paid sick leave and/or medical benefits. For example, in a recent case, plaintiffs allege a ride sharing platform failed to provide paid sick leave during the COVID-19 pandemic in violation of state labor laws.
Refunds: We expect to see an evolution of cases filed against educational institutions and tourism companies as plaintiffs seek full or pro-rated refunds in lieu of travel vouchers or future discounts. For example, filed on March 27, 2020, in federal court in Arizona, in Rosenkrantz, plaintiffs who paid for room and board for the spring 2020 semester at University of Arizona, Arizona State University, and Northern Arizona University contend they are entitled to a prorated full refund for housing costs and not discounted future housing costs after the schools moved classes on-line and closed on-campus housing due to COVID-19.
In Grabovsky, filed on March 17, 2020, in federal court in California, plaintiffs claim EF Institute for Cultural Exchange, Inc., a study-abroad program, offered travel vouchers instead of a full refund following trip cancelations due to COVID-19.
Securities: We expect plaintiffs’ firms to file actions addressing investor losses in the wake of the COVID-19 pandemic. For example, plaintiffs allege certain companies provided false information in their securities filings by, among other allegations, projecting a positive outlook despite COVID-19, which artificially inflated share prices and resulted in investor losses.
In another example, filed on March 12, 2020, in federal Court in Pennsylvania, McDermid is a securities class action filed against Inovio Pharmaceuticals, Inc. Plaintiffs allege Inovio falsely claimed it was developing a COVID-19 vaccine and could begin human trials in April 2020, which artificially inflated Inovio’s share prices and resulted in significant investor losses.
We will continue to monitor developments and report.
Client Alert 2020-192