Alert February 18, 2014

Sixth Circuit Rules that PTFA Preempts Less Protective State Laws

The United States Court of Appeals for the Sixth Circuit reversed in part a district court’s order granting a motion to dismiss a complaint that included claims for wrongful eviction, denial of due process and outrageous infliction of emotional distress. The complaint cited defendant’s failure to comply with the Protecting Tenants at Foreclosure Act of 2009, which imposes certain requirements on successors in interest to foreclosed properties in order to protect tenants. Specifically, the PFTA requires successors in interest to foreclosed properties to provide bona fide tenants with 90 days’ notice to vacate and to allow them to occupy the premises until the end of their lease term unless certain conditions are met. In reversing in part the district court’s decision, the Court held that the PFTA does not create a private right of action, but does preempt state laws that provide less protection to tenants. The Court noted that “[t]he purpose of the PTFA could not be accomplished if it did not preempt state laws that set lower standards for successors in interest than the Act requires.” Thus, while tenants may not bring a federal cause of action for violations of the PTFA, they may use such violations to establish the elements of a state law cause of action. Although the defendant had complied with state law by obtaining a writ of possession in order to remove the tenants of a property after a foreclosure sale, they had not complied with the more protective PFTA requirements.