The Darby Development Company, Inc. v. United States lawsuit is a landmark case for apartment owners, whose rights and livelihoods were profoundly impacted by the COVID eviction moratorium. Through their perseverance and legal advocacy, they have secured a significant victory and set the stage for a broader reckoning with the limits of government power and the protection of private property rights.
It began as a ripple—a health crisis that soon swelled into a tidal wave, reshaping the lives of millions. By early 2020, COVID had swept across the nation. In response, the federal government enacted unprecedented measures to protect public health, including a series of eviction moratoriums. For apartment owners, these orders would become the source of both anguish and a historic legal battle.
On September 4, 2020, the Centers for Disease Control and Prevention (CDC) issued an order halting residential evictions nationwide. The order applied to nearly all rental properties, preventing landlords from evicting residents for nonpayment of rent if certain conditions were met. The ban was extended several times lasting well into 2021. For apartment owners, this meant months of uncertainty, unpaid rent and mounting frustration.
Among those affected were the plaintiffs in Darby Development Company, Inc. v. United States—a group of rental property owners ranging from small “mom-and-pop” landlords (owners of 1 to 4 units, making up over 95 percent of U.S. landlords) to larger corporate owners. Their stories paint a vivid picture of the lockdown’s impact on the rental housing industry and the ease with which federal agencies were able to assume control of private assets.
Maria and Tom are a retired couple who owned a four-unit apartment building. For years, their rental income had supplemented their retirement savings. When the lockdowns hit, two of their residents lost their jobs and stopped paying rent. The eviction moratorium left Maria and Tom powerless to remove these residents or find new ones who could pay. Their savings dwindled as maintenance costs, property taxes, and mortgage payments continued unabated.
On a larger scale, corporate owners faced similar struggles. Darby Development Company, Inc., the lead plaintiff, is based in South Carolina and managed 1,219 apartments primarily in the Charleston market. The company’s executives watched as unpaid rent piled up, threatening their ability to pay staff, maintain properties, and keep the lights on. Across the country, rental property owners—both large and small—found themselves caught between a public health crisis and a financial precipice.
The legal battle begins
By July 2021, frustration had turned to action. The National Apartment Association, along with 38 original plaintiffs, filed suit in the U.S. Court of Federal Claims. Their argument was simple: the CDC’s eviction moratorium constituted a “taking” of private property for public use, requiring just compensation under the Fifth Amendment. The lawsuit was open to all rental housing providers who had been damaged, and the stakes were high—by the end of 2020, more than 10 million delinquent residents owed $57 billion in back rent, with another $17 billion accruing since then.
The plaintiffs’ complaint alleged that the CDC order had abrogated several constitutional rights: the right to access the courts, the freedom to contract, the right to demand compensation when property is taken by government action, and the limits of federal power. For apartment owners, the moratorium was not just a financial burden—it was an affront to their rights as property owners.
The federal government moved to dismiss the case, arguing that the CDC’s order was not a compensable taking because it was not authorized by Congress and had been struck down by the Supreme Court. The government also pointed to the billions of dollars in emergency rental assistance that had been appropriated to help landlords and residents. However, many apartment owners argued that these funds were slow to reach them and did not cover the full extent of their losses.
On May 17, 2022, the Court of Federal Claims granted the government’s motion and dismissed the complaint. The court ruled that the CDC’s moratorium did not constitute a taking because it was not an official act, and that the government could not be held liable for unauthorized actions. The decision was a blow to apartment owners, who felt that their losses had been dismissed by the very system designed to protect their rights.
The appeal: A glimmer of hope
Undeterred, the plaintiffs appealed to the U.S. Court of Appeals for the Federal Circuit. The case attracted significant attention, with amicus briefs filed by the National Association of Home Builders, National Association of Realtors, and the New Civil Liberties Alliance. These organizations argued that dismissing the takings claim would set a dangerous precedent, encouraging government overreach and undermining property rights.
On August 7, 2024, the Federal Circuit issued its opinion, reversing the dismissal and remanding the case for further proceedings. In a 2-1 decision, the court held that the plaintiffs had stated a claim for a physical taking under the Fifth Amendment. The majority opinion was authored by chief judge of the U.S. Supreme Court of Appeals for the Federal Circuit, Judge Sharon Prost, a George W. Bush appointee. It emphasized that the CDC’s action, while later found to be unlawful by the Supreme Court, was “authorized” for takings purposes because it was done within the normal scope of the agency’s duties and did not contravene any explicit congressional prohibition.
Judge Timothy Dyk, a Bill Clinton appointee, dissented, arguing that the majority’s decision was contrary to more than a century of Supreme Court precedent and could open the door to widespread compensation claims for unauthorized agency actions. Despite the dissent, the ruling was a significant victory for apartment owners, who now had a path to seek compensation for their losses.
Denial of rehearing and the road ahead
On June 6, 2025, the Federal Circuit denied the government’s petition for rehearing, leaving the panel’s decision intact. The case will now return to the Court of Federal Claims for further proceedings. The implications are far-reaching: If the plaintiffs prevail, the government could be forced to pay billions in compensation to landlords across the country.
For apartment owners, the ruling is more than just a legal victory—it is a validation of their struggle and a reminder of the importance of property rights. The case has also sparked a broader conversation about the balance between public health and private property, and the limits of government power in times of crisis.
The Darby Development Company, Inc. v. United States lawsuit has highlighted several key issues for apartment owners and the broader rental housing industry.
Financial strain: The eviction moratorium placed immense financial pressure on landlords, many of whom were already operating on thin margins. Unpaid rent, coupled with ongoing expenses, pushed some to the brink of bankruptcy.
Legal uncertainty: The shifting legal landscape created confusion and frustration for property owners who were unsure of their rights and responsibilities.
Policy implications: The case has raised important questions about the role of government in regulating landlord-resident relationships and the need for clear, consistent policies in times of crisis.
Setting precedent: The Federal Circuit’s decision could have lasting implications for future regulatory takings claims, potentially making it easier for property owners to seek compensation when government actions infringe on their rights.
The legal argument: Takings, authorization, and the right to exclude
At the heart of the Darby lawsuit is the concept of a “taking” under the Fifth Amendment. The plaintiffs argued that the CDC’s eviction moratorium constituted a physical taking because it deprived them of their right to exclude non-paying residents from their properties. The Federal Circuit agreed, holding that the moratorium was a “good faith implementation” of the governing law and therefore “authorized” for takings purposes, even if it was later found to be unlawful.
The court’s decision drew on recent Supreme Court precedent, including Cedar Point Nursery v. Hassid, which held that repealing the right to exclude constitutes a per se physical taking. The Federal Circuit rejected the government’s argument that the moratorium was merely a regulation of the landlord-resident relationship, emphasizing that the order was unprecedented in its scope and impact.
Judge Dyk’s dissent serves as a cautionary note for both property owners and the government. He warned that the majority’s decision could open the door to widespread compensation claims for agency actions later found to be unauthorized, undermining the traditional limits of takings liability. His dissent highlights the tension between protecting property rights and ensuring that government agencies can act decisively in times of crisis.
Ahead for apartment owners
As the Darby case returns to the Court of Federal Claims, apartment owners across the country are watching closely. The outcome could have profound implications for the rental housing industry and for the broader relationship between government and property owners. If the plaintiffs prevail, it will set a precedent for future regulatory takings claims and provide a measure of justice for those who suffered losses during the lockdowns.
For now, apartment owners continue to navigate the challenges of a post-pandemic world, hopeful that the legal system will recognize their rights and provide the compensation they deserve.
The Darby Development Company, Inc. v. United States lawsuit is more than just a legal case—it is a story of resilience, community, and the enduring importance of property rights. Through their struggle, apartment owners have shown that even in the face of unprecedented challenges, the principles of fairness and justice can prevail.
Key legal issues raised by Darby Development
Takings clause: Does the eviction moratorium constitute a compensable taking under the Fifth Amendment?
Authorization: Was the CDC’s action “authorized” for takings purposes, even if later found unlawful?
Right to exclude: Does the moratorium abrogate the fundamental property right to exclude non-paying residents?
