State Supreme Court rules against compensation for businesses' COVID-related losses

·3 min read

Jun. 7—The state is not required to compensate businesses that lost money as a result of COVID-19 public health orders, according to a state State Supreme Court opinion issued Monday.

In a unanimous opinion, written by Justice C. Shannon Bacon, the court found the state orders "are a reasonable exercise of the police power to protect the public health" and directed district judges to follow its legal conclusions in resolving the cases.

"Occupancy limits and closure of certain categories of businesses, while certainly harsh in their economic effects, are directly tied to the reasonable purpose of limiting the public's exposure to the potentially life-threatening and communicable disease, and thus can be deemed 'reasonably necessary,' " the court concluded in the opinion published Monday.

Albuquerque attorney A. Blair Dunn — who represented all but one of the approximately 20 business owners who filed lawsuits seeking compensation — said he wasn't surprised by the ruling and intends to appeal.

"It's no great shock," he said. "The court itself has been engaging in judicial takings relative to evictions and consumer debt collections, so it doesn't surprise me at all the court that can't follow the constitution wouldn't require the [Gov. Michelle Lujan Grisham] to follow the constitution," he said.

According to Dunn's argument, the public health orders — which necessitated the closure or reduction in hours for some businesses — were tantamount to the taking of private property by the government.

The court found the Public Health Emergency Response Act — one of the statues used as the basis for the issuance of the public health orders — does provide compensation for the owners of "health care supplies, a health facility or any other property that is lawfully taken or appropriated" by the state during a public health emergency. But it rejected a broader of interpretation of the phrase "any other property" that would have extended beyond physical property directly taken by the state, Administrative Office of the Court spokesman Barry Massey wrote in a news release.

The court found the broader interpretation favored by the business owners "would lead to an absurdity: unlimited liability authorized by the Legislature."

A spokesman for the Governor's Office welcomed the ruling.

"We know the pain that businesses have felt over the last year-plus," Gov. Lujan Grisham spokesman Tripp Stelnicki wrote in an email Monday. "... The state's first priority over the course of the pandemic has been to save lives, and as a consequence of the economic impact of the pandemic we have worked our tails off to get a variety of business relief programs and a literal ton of relief money out the door."

Stelnicki pointed to state programs offering recovery grants and tax breaks and resources the state has made available for business owners who suffered losses as a result of the pandemic.

Hinkle Family Fun Center and Mauger Estates B&B in Albuquerque, and Eli's Bistro Inc., Elite Fitness & Tanning LLC and Cowboy Café in Roswell where among the businesses seeking compensation for losses related to state-ordered closures or hours and capacity reductions.

The Santa Fe Oxygen and Healing Bar and Apothecary Restaurant — two adjacent downtown businesses that share the same owner — were originally listed as parties to the case. Owner Kadimah Levanah filed a motion in state District Court seeking to dismiss her complaint in November, but the case hasn't been closed yet, because like the other cases, hers had been put on holding pending the state Supreme Court's ruling.

Dunn said he has 180 days to appeal the ruling.