California’s Judicial Council, headed by California Supreme Court Chief Justice Tani Cantil-Sakauye, has now adopted sweeping Emergency Rules. Among other things, they make it virtually impossible for landlords to evict tenants who fail to pay rent or otherwise breach their leases. They make it equally hard for mortgage holders to proceed with judicial foreclosures. The new rules will remain in effect until 90 days after Governor Newsom declares the state of emergency for COVID-19 over or until the Judicial Council changes the rules.

Here’s what businesses need to know:

Emergency Rule 1. Unlawful detainers

Effective April 6, 2020, a California court may no longer issue a summons – the legal document that allows an unlawful detainer to go forward – unless the court finds “in its discretion and on the record, that the action is necessary to protect public health and safety.” Likewise, a court may not enter a default or a default judgment in an unlawful detainer action where a defendant fails to appear unless the court finds (1) the unlawful detainer action was needed to protect public health and safety, and (2) the defendant failed to appear within the time provided by law. This, in turn, requires the court to consider other recent court orders excusing parties and their attorneys from personally appearing in court, shutting down normal court operations and continuing most trial and other civil hearing dates.

Emergency Rule 2. Judicial foreclosures — suspension of actions

Any action for foreclosure on a mortgage or deed of trust is likewise now halted, or “stayed,” until 90 days after the governor declares the state’s COVID-19 pandemic emergency is over, or until the Judicial Council issues a different rule. Again, the only exception is if the court finds a particular foreclosure action is needed “to further the public health and safety.”

Emergency Rule No. 9: Statutes of limitations stopped for civil lawsuits

All statutes of limitation applicable to civil (as opposed to criminal) lawsuits are “tolled” as of April 6, 2020. This means, as of April 6, literally the “clock stopped” for purposes of calculating these critical time constraints. Accordingly, plaintiffs now have more time to sue, and defendants have more time to raise new claims or “affirmative defenses.” The clock will not “start” until the current State declared emergency is over.

Emergency Rule No. 10: The time deadlines to bring civil lawsuits to trial are extended

Typically, litigants only have so much time to bring a case to trial once it has been filed, or after an order granting a new trial has issued. This new rule says, for civil lawsuits filed on or before April 6, 2020, all such deadlines are now extended six months.

Emergency Rule No. 11: Electronic depositions

Until the emergency is over, people are now required to appear remotely for depositions in civil lawsuits.  Practically speaking, this means lawyers asking questions, individuals answering them, other lawyers objecting and participating, and court reporters transcribing the proceedings, all may be miles apart and connected only by telephone or video conferencing technology. It also means lawyers will have to devise ways of sharing electronic versions of documents with deponents and their counsel to review during depositions … a difficult task in “document intensive” business cases.

More to think about

Constitutionally speaking, it is unclear how California’s courts, led by the Judicial Council, have the power to change rules and deadlines set by California’s Legislature … even in an emergency. Accordingly, it remains to be seen whether one or more lawsuits will be filed contesting the legality of these sweeping new judicial edicts. If such lawsuits are filed, it further remains to be seen who will rule on them, given it was the Chief Judge of California’s Supreme Court who approved and signed the emergency rules before they went into effect.

Although the avowed purpose of Emergency Rules 1 and 2 is to protect “public health and safety,” they undeniably serve to reallocate the economic cost of mass layoffs and economic disruption away from tenants onto the backs of landlords. This, too, raises constitutional concerns.

The long-term social and economic costs of Emergency Rules 9 and 10 will, without a doubt, include lawsuits with longer “shelf lives,” increased attorneys’ fees and litigation expenses, and overall delayed justice.  On the other hand, given the gridlock now being caused by mass court shutdowns, constitutionality aside, these measures may have been unavoidable.

Enterprise Counsel Group is a full-service business litigation, transactional and appellate law firm located in Irvine, California.  For more information, please visit www.ecg.law.

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