HSTPA Survives Federal Constitutional Attack

Two groups of Westchester landlords and real estate organizations brought separate actions against the state, the DHCR, and various state officials. The complaint focused the HSTPA's tenant friendly amendments to the rent stabilization law. Those amendments eliminated luxury decontrol, limited vacancy increases, increased the percentage of tenants necessary for a co-operative conversion, reduced the ability of landlords to recoup expenditures made for major capital improvements, and prohibited a landlord from recovering more than one apartment for personal use. In the two companion cases before Judge Karas, landlords contended that the amendments worked a physical taking and a regulatory taking, violated substantive due process, and impaired their contracts with tenants.

The court started by holding that sovereign immunity barred damage claims against the state, state agencies, and state officials. The court held that in the absence of a waiver by the state, the taking clause did not override the Eleventh Amendment, insulating the state from damage claims based on an alleged taking. But the court held, citing Ex Parte Young, 209 U.S. 123, that sovereign immunity did not bar claims against state officials for prospective relief from constitutional violations. As a result, the court turned to the merits of the landlord claims against those officials.