The North Carolina Supreme Court announced its decision on August 19, 2016 in the Eastern Carolina Regional Housing Authority v. Lofton case. This case was appealed by the Housing Authority from the earlier (2014) Court of Appeals decision entered in favor of the public housing tenant, Ms. Sherbreda Lofton. View the case in this link. Eastern Carolina Regional Housing Authority v. Lofton decision NC Supreme Court 8.19.16 32PA15-1.
The highlight of this decision is that the Court of Appeals went too far in requiring or permitting an unconscionability standard or equitable defense in summary ejectment proceedings.
The Supreme Court said that “unconscionability is not a consideration in summary ejectment proceedings. To prevail in a summary ejectment proceeding under North Carolina law, a landlord must establish by a preponderance of the evidence that a tenant breached the lease.”
And, because this case involves more than a private landlord-tenant relationship, the Supreme Court said that “when the government is the landlord, certain duties arise under applicable law.” In this case, the Supreme Court affirmed the outcome of the Court of Appeals and the trial court decisions ruling against the Housing Authority, “namely that summary ejectment was inappropriate in this case” but “we do so for a different reason. We hold that plaintiff [the Housing Authority] failed to exercise its discretion as required by federal law before pursuing defendant’s eviction.”
The Supreme Court reviewed the federal law and the U.S. Supreme Court’s Rucker decision of 2002, HUD regulations and post-Rucker HUD guidance, emphasizing “the importance of housing officials exercising discretion before pursuing these ‘no-fault’ evictions.”
So, with this decision, Housing Authorities don’t have to prove that their decisions to evict in cases involving drug-related crimes are “not unconscionable” as the Court of Appeals would have required.
But, we do have an affirmation that what has been considered a “one-strike” or “no-fault” eviction rule, if a public housing tenant or her guests have committed drug-related crimes, is NOT the rule of law in North Carolina. With this decision, the North Carolina Supreme Court has ruled that such evictions or summary ejectments must be done only after the Housing Authority exercises its discretion whether an eviction, based upon the actions of third parties, is appropriate in the circumstances — an exercise of discretion in such cases “guided by compassion and common sense.”
The Supreme Court said: “Discretion ‘involve[s] an exercise of judgment and choice, not an implementation of a hard-and-fast rule exercisable at one’s own will or judgment.’”
Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina. Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana and New York. For assistance in affordable housing, HUD financing, commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Steven Carr at scarr@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com and Sarah Goodin at sgoodin@ellingercarr.com.
