Thursday, July 18, 2013

PTFA - no private right of action - 9th Cir.

In a case of first appellate impression, the Ninth Circuit issued a decision in Logan v. U.S. Bank, No. 10-55671, on July 16th.  NHLP, joined by many HJN members, had filed an amicus brief in the case in support of the tenant's claim to an implied right under PTFA.

Affirming the dismissal of a complaint seeking damages and injunctive relief against a bank that filed an unlawful detainer action against the tenant in foreclosed property, the Ninth Circuit panel held that there is no private right of action under the Protecting Tenants at Foreclosure Act (PTFA) of 2009.

The court also held that, despite the bank’s voluntary dismissal of the unlawful detainer action, the appeal was not moot because the bank did not show that it was absolutely clear that the allegedly wrongful eviction could not reasonably be expected to recur.

Agreeing with the Third Circuit, the court also held that, contrary to the ruling of the District Court, abstention under Younger v. Harris, 401 U.S. 37 (1971), from the exercise of jurisdiction over the claim for injunctive relief was not warranted, because the state eviction action did not implicate important state interests. The decision emphasized that the mere involvement of traditionally state-oriented subject matter is not enough to show the implication of important state interests. Rather, Younger abstention also requires involvement of a state’s direct interest in the enforcement of its laws, or a question regarding the operation of the state judicial system itself. Since this was simply a “garden-variety” civil dispute between two private parties, neither concern was implicated.

The main holding was that the tenant did not have an implied right of action to affirmatively enforce the PTFA. In the court's view, the PTFA does not, either explicitly or by implication, evince a congressional intent to create a private right of action. This conclusion was based upon the language and structure of the statute, especially its focus on the obligations of the “successor in interest” as the regulated party, rather than on the rights of the tenant as beneficiary. Under the court's view, this weighed against a finding of “especial” benefit and an implied right. (This is surprising, in light of the fact that, despite the directives focused on the regulated party, tenants are the only beneficiaries of PTFA's notice and continued occupancy provisions.) Any significance of the title of the PTFA was dismissed as being insufficient to “control the plain meaning of [the] statute.” The panel also justified its conclusion by pointing to Congress' inclusion of an express right of action in another section of the overall Helping Families Save Their Homes Act (of which PTFA was one title), which had amended to Truth in Lending Act's notice requirements and its express right of action. For the court, this was evidence that Congress did not intend a private right of action for the PTFA. Finally, the court pointed to Senator Kerry’s statements emphasizing compliance by landlords and lenders as evidence of an intent to focus only the regulated party, finding nothing to support a right or remedy for tenants, as well as to Congress' silence on the right of action issue, in the face of a few adverse trial court opinions, when amending the PTFA in 2010. 

The court has thus relegated tenants to asserting PTFA as a defense in state court eviction proceedings, with any of the deficiencies of that trial and appellate process. (Indeed, Ms. Logan's pro se state court demurrer (motion to dismiss) in the eviction action had been overruled by the state court.)