Aug 28 2020

Apartment companies and other landlords could face a wave of class action lawsuits in North Carolina thanks to a recent appeals court decision. In June, a three-judge panel of the Fourth Circuit Court of Appeals issued an unpublished opinion finding that, prior to June 25, 2018, North Carolina landlords were prohibited from charging tenants filing fees and service fees in connection with residential landlords (Suarez v. Camden, case 19-1367). Last July, the Fourth Circuit denied requests to publish the decision and denied a request by the defendant, Camden Property Trust, and the Apartment Association of North Carolina to rehear the case en banc (before the entire court). Therefore, the unpublished opinion is likely the final word for now (unless or until a new panel of the Fourth Circuit considers the issue).

Background of Evictions Fees

At least 17 class actions challenging eviction fee charges in North Carolina were filed since 2016. These cases argue that North Carolina’s Residential Rental Agreements Act (N.C.G.S. Section 42-46) prohibited landlords from charging filing fees, service of process fees, and attorneys’ fees (collectively “Eviction Fees”) when it listed certain allowable fees and prohibited the charging of “other fees.” The General Assembly amended the law in 2018 to expressly allow landlords to charge these fees, but landlords still face potential exposure for charges imposed before the amendment became effective in June 2018.  At least five class actions have settled, and settlement is possible in several others.  

Reported Settlements to Date1 

Landlord Payment per Collection Letter Payment for those who paid Eviction Fees Total Settlement Amount
Mid-America $25. Max $75 $800 $1,100,000
NRP Group $50. Max $150 $1,225 $425,000
Southwind Realty $50. Max $150 $175 per charge $3,750,000
Grubb Management $50. Max $150 Up to $600 $475,000
Bridge Property Mgmt $50. Max $150. $605 $510,000

Next Wave

In light of the 4th Circuit opinion in Suarez, plaintiffs’ counsel have indicated they plan to file a new wave of class actions against North Carolina landlords, most of which routinely passed on filing and service fees to tenants being evicted. The new class actions come at a time when many landlords are already facing significant financial pressure as a result of the pandemic and eviction moratoriums.

Our Experience

Womble Bond Dickinson has represented property managers and landlords in seven of the class action lawsuits filed in state and federal court regarding eviction fees, more than any other firm in the North Carolina. Attorneys Cal Adams, Mark Henriques, Matthew TilleyJonathan Reich, Mike Ingersoll, and Rolf Garcia-Gallont have spearheaded this effort. The firm also represented the Apartment Association of North Carolina in connection with the Suarez appeal.  

 

These are cases which have received preliminary or final approval from the Court.  Only key monetary provisions are summarized here.  The full details of each settlement are available online.