Since our last update in Bulletin #2, the following states have issued additional policies and Orders:
Alabama: On April 3, 2020 Governor Kay Ivey signed a Proclamation suspending the enforcement of any judgment issued as a result of a foreclosure or eviction action. Nothing provided in the Proclamation should be construed as relieving any individual from their obligation to pay rent, make mortgage payments, or comply with any obligation under a mortgage or rental agreement.
Unless otherwise provided, the above-referenced suspension shall remain in effect for the duration of the Alabama Public Health Emergency.
California: Effective April 6, 2020, California’s Judicial Council approved eleven temporary Emergency Court Rules in response to the COVID-19 outbreak. Specifically, Emergency Court Rule No. 2 provides that until 90 days after the lift of the State of Emergency, all judicial foreclosures on mortgages, deeds, or trusts are stayed, and the court may take no action and issue no decision unless the court finds that action is required to further public health and safety. Further, the Rule No. 2 tolls any statute of limitation relating to the filing of such foreclosure action and extends the period of time in which a party may assert certain rights in response to a foreclosure, including exercising the right of redemption from a foreclosure sale.
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 on 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, including enjoining 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.
On April 6, 2020, Governor Polis issued Executive Order No. 2020-031 extending deadlines in foreclosure proceedings to April 30, 2020, which may waive interest that accrue as a result of delinquent tax payments.
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.
On March 31, 2020, Governor Ned Lamont announced that his administration has reached an agreement with over 50 credit unions and banks in the state to provide mortgage relief to residents who face hardship caused by the COVID-19 pandemic. 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; (3) for at least 90 days, participating financial institutions will waive or refund mortgage-related late fees and other charges; and (4) a 60-day suspension on the initiation of new foreclosure sales.
With respect to statute of limitation compliance, the Governor further issued Executive Order No. 7G tolling all statutory time requirements, statutes of limitation, or other limitations and deadlines relating to the commencement of court actions for the duration of the Connecticut State of Emergency.
Florida: On April 2, 2020, Governor Ron DeSantis signed Executive Order No. 20-94, which provides a 45-day suspension on all foreclosure and eviction actions in the state. Nothing provided in the Executive Order should be construed as relieving any individual from their obligation to make mortgage or rental payments.
Indiana: On March 23, 2020, the Indiana Supreme Court issued an Order tolling the state’s statutes of limitation, rules, and procedures that set time limits in trial proceedings and appellate matters. The Supreme Court subsequently extended the aforementioned tolling through May 4, 2020.
Iowa: Effective March 23, 2020, the Iowa Judicial Branch issued an Order tolling any statute of limitation, statute of repose, or similar deadline with respect to the commencement of any action until May 26, 2020.
Kansas: On April 2, 2020, the Supreme Court of Kansas filed Administrative Order 2020-PR-32, which tolls all statutes of limitations and statutory time standards or deadlines applying to the conduct or processing of judicial proceedings. This tolling shall remain in effect until further notice.
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.
On April 3, 2020, Governor Lawrence Hogan issued Executive Order No. 20-04-03-01, further restricts foreclosure and eviction actions. Specifically, the Executive Order precludes the filing of new foreclosure actions by suspending the operation and acceptance of the Notice of Intent to Foreclose Electronic System. The Executive Order further restricts eviction actions by enjoining courts from issuing any judgment of possession when the subject tenant can verifiably demonstrate a substantial loss of income. The Executive Order further prohibits the eviction of any tenant who has a suspected or confirmed diagnosis of COVID-19.
Additionally, the Executive Order authorizes the Commissioner of Financial Regulation to supersede certain lending limits of state-chartered banks and credit unions. Specifically, the Commissioner is authorized to suspend Sections 3-601 and 6-604 of the Financial Institutions Article of the Maryland Code to allow financial institutions to engage in transactions exceeding the limits of those Sections, if the Commissioner finds that doing so would not reasonably be expected to impair the safety or soundness of the financial institution.
The Executive Order shall remain in effect until the State of Emergency is terminated and the Catastrophic Health Emergency is rescinded.
Mississippi: On April 1, 2020, Governor Tate Reeves signed Executive Order No. 1466, which temporarily suspends the enforcement of foreclosure and eviction actions in the state until April 20, 2020. Nothing provided in the Executive Order should be construed as relieving any individual from their obligation to pay rent, make mortgage payment, or to comply with any other obligation that an individual may have under tenancy or mortgage.
Nevada: Effective April 1, 2020, Governor Steve Sisolak signed Emergency Directive 008 tolling any specific time limit set by state statute or regulation for the commencement of any legal action for the duration of, and for 30 days following, the Governor’s lift of the Nevada State of Emergency.
New Jersey: On March 27, 2020, the New Jersey Supreme Court issued an Omnibus Order in response to the COVID-19 pandemic. In part, the Order provides that the computation of time periods under any statute of limitations shall be tolled during the period of March 28 through April 26, 2020.
New York: On April 7, 2020, Chief Administrative Judge Lawrence Marks issued a Memorandum to all trial court justices and judges in the state. The Memorandum outlined ongoing court procedures and efforts to handle essential matters during the COVID-19 pandemic. The Memorandum further provides that the existing prohibition on the filing of new non-essential matters will continue; however, the court notes that it will begin to reopen the judiciary – albeit remotely – for non-essential pending matters beginning on April 13, 2020. Moving forward, judges will handle their case inventories and identify cases in which court conferences may be helpful to advance resolution. These conferences will be held remotely by telephonic or video capabilities.
North Carolina: On March 15, 2020, Chief Justice Cheri Beasley issued a Memorandum placing a temporary suspension on matters before the Clerks of Superior Court until April 17, 2020, which includes foreclosure and eviction actions.
On March 31, 2020, Governor Roy Cooper signed Executive Order No. 124 reinforcing the Chief Justice’s moratorium on foreclosure and eviction actions. Further, the Executive Order strongly encourages the Clerks of Superior Court and sheriffs to delay, until regular court operations resume, the issuance and execution of Writs of Possession for Real Property.
The Governor also strongly encourages all financial institutions and landlords to work with borrowers and tenants to implement payment plans to avoid foreclosures and evictions. Specifically, the Governor urges all licensed and regulated financial institutions to immediately take action to alleviate the adverse impact caused by COVID-19 on mortgage borrowers. These requested actions include, but are not limited to: (1) provide a forbearance of mortgage payments for at least 180 days; (2) refrain from reporting late payments to credit agencies for 180 days; (3) waive late payment fees for 90 days; and (4) suspend foreclosures for at least 90 days.
Oregon: On April 1, 2020, Governor Kate Brown issued Executive Order No. 20-13, which amends and supersedes previously issued Executive Order No. 20-11. The prevailing Executive Order prohibits landlords from commencing or continuing any eviction action as a result of a tenant’s 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: On April 1, 2020, the Supreme Court of Pennsylvania issued a Second Supplemental Order suspending all foreclosure, eviction, or other residential displacements based upon the failure to make a payment on rent, mortgage, or other similar obligation. Nothing provided in the Supreme Court’s Order enjoins a party from seeking a judgment of possession; however, any execution or enforcement of that judgment is stayed until April 30, 2020.
Under the Supreme Court’s Order, statutes of limitation are not tolled; however, in the event a Court of Common Pleas is unable to accommodate the commencement of a cause of action, the filing attorney may file a praecipe for a writ of summons in the Superior Court. The filing attorney shall submit a certification that the attorney was unable to file the praecipe in the appropriate Court of Common Pleas due to the closure of that court, and that in the attorney’s opinion, filing of the praecipe for a writ of summons is necessary to toll a statute of limitation that would otherwise expire during the judicial emergency.
Notably, the Supreme Court’s Order further authorizes President Judges of the Superior and Commonwealth Courts to implement their own judicial policies in response to the COVID-19 pandemic. President Judges are authorized to declare judicial emergencies in their judicial districts through May 31, 2020, or for part of that period, should they deem it appropriate. For instance, on April 2, 2020, the President Judge of Lehigh County issued an Order that mirrors the Supreme Court’s directive, with the exception that foreclosure and eviction judgments are stayed until May 1, 2020. In Montgomery County, a separate President Judge issued an Order extending judicial deadlines and tolling statute of limitations. On April 14, 2020, Montgomery County’s President Judge extended the deadlines and tolling directives to May 31, 2020.
Further information relating to President Judges’ individual orders may be provided upon request.
Texas: On April 6, 2020, the Supreme Court of Texas issued the Ninth Emergency Order in response to the COVID-19 pandemic, which supersedes the Fourth Emergency Order previously issued on March 19, 2020. The superseding Order extends the suspension on all eviction proceedings through April 30, 2020. Notably, the superseding Order does not prohibit new filings, however, the time in which a tenant shall respond or appear to a new filing may not occur until after May 7, 2020. The superseding Order further provides that a writ of possession may be issued, but the posting of writ of possession may not occur until after May 7, 2020. Additionally, while the Order remains in effect, the time period in which a landlord shall issue a writ of possession on a tenant is stayed.
Parallel with the previously issued directive, the superseding Order also provides an exception to the above-referenced eviction suspension when an application to a court reveals the tenant or guests pose an imminent threat of: (1) physical harm to the landlord or others; or (2) criminal activity.
Utah: On April 2, 2020, Governor Gary Herbert signed Executive Order No. 2020-13, which temporarily prohibits the enforcement of a residential eviction on any tenant who: (1) was current on rental payments as of March 31, 2020; and (2) has suffered a loss of income or employment as a result of COVID-19. Notably, the Executive Order does not prohibit the eviction of a tenant for reasons other than nonpayment.
Unless otherwise provided, the Executive Order shall remain in effect until May 15, 2020.
Appraisal Easing and Other Coronavirus Guidance from Federal Banking Agencies: In continuing their series of actions to accommodate institutional challenges from the coronavirus pandemic, the federal banking agencies have issued both an interagency statement and an interim final rule on appraisals and evaluations for real estate related financial transactions. The interagency statement spotlights the existing flexibilities in existing appraisal regulations that may be followed, provided that the result always is a credible analysis. Moreover, the agencies give assurance that examiners will not criticize the use of existing appraisals and evaluations for subsequent transactions during the COVID-19 emergency if consistent with safe and sound practices. The statement also takes note of recent guidance from Fannie Mae and Freddie Mac that offers temporary flexibility in appraisal standards for loans they purchase. Coordinately, the interim final rule temporarily amends the appraisal regulations to permit deferral of completion of required appraisals and evaluations for up to 120 days after closing. The deferrals apply to all residential and commercial real estate transactions, except for acquisition, development and construction.
Offering additional guidance to national banks and federal savings associations, and of potential value to all lenders, the OCC has recently issued extensive FAQs addressing a broad array of operational and compliance concerns arising from the pandemic.
In addition to the above-referenced federal and state enactments, there are interesting trends and class-action filings emerging in the wake of the COVID-19 pandemic. These notable types of filings include the following:
CARES Act: We are seeing a wave of cases filed by small businesses against banks where plaintiffs challenge the implementation and administration of the $349 billion Paycheck Protection Program (“PPP”), which is part of the $2.2 trillion CARES Act. More specifically, plaintiffs claim certain banks are limiting access to PPP by refusing to accept loan applications from certain businesses that did not have preexisting banking relationships, i.e., prioritizing certain applicants with existing accounts before plaintiffs with newer relationships thereby discriminating in violation of the CARES Act and other laws.
In a class action filed in early April, a Maryland federal judge recently denied plaintiffs a temporary restraining order on grounds the CARES Act and PPP do not preclude banks from using other criteria to determine whether or not to accept an application or in what order applications can be considered. The judge also found that plaintiffs cannot pursue a private right of action under the CARES Act. The judge’s position suggests a motion to dismiss could be an effective way to quickly resolve future litigation in other jurisdictions.
Employment Issues: We expect to see cases a wave of cases filed against employers for violations of wage and hour provisions of federal and state statutes, e.g., plaintiffs alleging their employers did not pay them for time worked prior to COVID-19 related closures.
Insurance: We expect to see cases filed against insurers for lost business income. For example, in El Novillo Restaurant d/b/a DJJ Restaurant, filed on April 9, 2020 in federal court in Florida, plaintiffs allege they were improperly denied business interruption coverage insurance in violation of plaintiffs’ insurance policies.
Membership Dues and Season Passes: Plaintiffs allege they are continuing to be charged membership dues and/or season passes despite COVID-19 related closures. Recently filed cases are against gyms, amusement parks, certain resorts and we expect to see an increasing variety of defendants. For example, in Rezai-Hariri filed on April 10, 2020 in federal court in California, plaintiffs allege Six Flags continued to impose monthly charges for season passes despite the closure of its theme parks due to COVID-19. In Ruiz, filed in federal court in California on April 13, 2020, plaintiffs make similar claims.
In Hunt filed on April 10, 2020 in federal court in California, plaintiffs contend Vail Resorts continued to charge customers for ski passes despite the closure of the mountain resorts due to COVID-19.
Personal Injury: We are seeing cases filed against certain cruise lines by former passengers who allege, among other things, that they were exposed to COVID-19 after those cruise lines failed to properly sanitize ships, made assurances about the safety of the cruise ships, and refused to reimburse passengers if they canceled their trips.
Refunds: We are seeing continued cases filed against educational institutions, tourism companies, ticketing platforms, cruise lines and airlines as plaintiffs seek full or pro-rated refunds. For example, with respect to airlines, plaintiffs contend they were offered travel vouchers instead of full refunds after flight cancelations due to the COVID-19 pandemic.
Also, in Church, filed on April 9, 2020, in federal court in Indiana against Purdue University and its Board of Trustees, plaintiffs contend they are entitled to a pro-rata refund for monies paid toward tuition, housing, meals and other fees after plaintiffs were sent home and Purdue cancelled live in-person classes due to COVID-19.
TCPA: On March 30, 2020, the American Bankers Association (“ABA”), among other banking associations, filed a petition requesting leave from the FCC to exempt certain unsolicited communications with consumers from the TCPA during the current COVID-19 pandemic. These calls and text messages fall into three categories: (1) communication about deferral, extension or other modification options with respect to mortgages or other loan payments; (2) informational communication about branch closures, reduced hours or service limitations, and other alternative banking options; and (3) communication warning of potential fraudulent activity related to the consumer’s account. In response the FCC has given parties 45 days or until May 21, 2020 to submit comments to the petition.
On April 10, 2020, the ABA filed a request for the FCC to issue interim relief or some other form of relief because “[c]onsumers need information about programs, relief, and resources offered by financial institutions now, not in two months.” The ABA’s request followed an April 8, 2020 stakeholder meeting to discuss the pending petition.
Violations of the Sherman Act: We are beginning to see cases filed against meal delivery services for charging restaurants high commission fees related to use of that platform, which fees, ultimately increase the costs of delivery orders to consumers.
Zoom: Beginning the end of March, we are seeing a wave of class actions filed against Zoom Video Communication, Inc., for claims including violations of applicable unfair competition and consumer privacy laws, false advertising and securities fraud. Generally, the litigation appears to arise out of alleged vulnerabilities with Zoom’s data privacy and security measures, including the unauthorized release of consumer’s personal information to third-party providers and the platform’s potential susceptibility to hackers. These issues have come to light following the increased use of Zoom during the COVID-19 pandemic.
Our Reed Smith Coronavirus team includes multidisciplinary lawyers from Asia, EME and the United States who stand ready to advise you on the issues above or others you may face related to COVID-19.
Client Alert 2020-244