Tenant’s Improper Eviction Action Denied
A federal appellate court has considered whether a tenant could bring a lawsuit against a lender who allegedly failed to follow the Protecting Tenants at Foreclosure Act of 2009 (“Act”) when it began eviction proceedings following its foreclosure.
The U.S. Bank National Association (“Bank”) obtained title to a property through a foreclosure. Karen Logan (“Tenant”) was a tenant of the former owner. Following its obtaining of title, the Bank served the Tenant with a three-day notice of lease termination and then filed an unlawful detainer action against the Tenant in California state court, seeking to evict her from the property.
The Tenant filed a motion to dismiss the lawsuit, claiming that the Bank had failed to follow the Act when it attempted to evict her. Among other things, the Act contains a provision that requires the holder of a federally-insured mortgage to provide tenants at least 90 days’ notice prior to terminating a lease following foreclosure. Subsequently, the Bank dismissed its unlawful detainer lawsuit.
The Tenant unsuccessfully tried to remove the state action to federal court, and so eventually filed her own lawsuit in federal court alleging that the Bank violated the Act when it failed to provide her the notice required by the Act. The federal court dismissed the Tenant’s lawsuit on the grounds that unlawful detainer actions are the type of matters that should be resolved by the state courts and also the Act does not contain a private right of action. The Tenant appealed.
The United States Court of Appeals for the Ninth Circuit affirmed the trial court. The court first looked at whether it should undertake a so-called “Younger Abstention” from deciding this case, as the trial court had. This is a judicially developed doctrine that holds federal courts should not resolve certain state law matters when a proceeding in state court is also pending because the matter is related to important state issues and the party has ability to raise the federal law issues during the state court litigation. The basis for this doctrine is to prevent federal courts from interfering with state courts’ ability to decide matters of importance to the state, such as the state’s criminal law.
The court determined that an unlawful detainer was not the type of matter requiring a “Younger Abstention” and so overruled the trial court on that point. The court stated that this type of lawsuit was a routine civil matter and did not involve or affect the state’s ability to enforce its own laws. Therefore, the Younger Abstention doctrine did not prevent the court from considering the Tenant’s lawsuit.
Next, the court considered whether the Tenant could bring a lawsuit to enforce the Bank’s alleged violations of the Act. Congress created the Act to protect tenants in foreclosed buildings during the housing crisis and the Act was part of other legislation directed at protecting consumers. The Act did not contain an explicit private right of action, or right to bring a lawsuit, and the so the court examined the legislative history of the Act to determine if Congress had intended for consumers to bring lawsuits to enforce provisions of the Act.
The court ruled that there was no private right of action implied in the Act and so the court affirmed the trial court’s dismissal of the lawsuit. First, the court found that Congress had included private rights of action in some of the other legislation enacted with the Act, and so not including this right in the Act led to the conclusion that Congress did not intend for consumers to bring lawsuits pursuant to the Act. Second, there was no other indication that Congress intended for consumers to bring lawsuits in the legislative record, even though the Act was designed to provide protections to tenants. Thus, the court affirmed the dismissal of the lawsuit on the grounds that consumers did not have a private right of action to bring a lawsuit to enforce the Act.
Logan v. U.S. Bank Nat. Ass'n, 722 F.3d 1163 (9th Cir. 2013).