BASS v. WEINSTEIN MANAGEMENT CO., INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

TIFFANY BASS and PAULA )

WIGGINS, on behalf of themselves )

and all others similarly situated, )

)

Plaintiffs, )

)

v. ) 1:20-CV-916

)

WEINSTEIN MANAGEMENT CO., )

INC. and WMCi CHARLOTTE XIII, )

LLC d/b/a BEXLEY VILLAGE AT )

CONCORD MILLS, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Catherine C. Eagles, District Judge.

By statute, North Carolina regulates the fees and expenses a landlord can charge a

residential tenant who falls behind on rent, allowing some and prohibiting others. This

case concerns whether tenants can recover damages from landlords who charged them

eviction-related expenses that at the time were not authorized by statute when the General

Assembly thereafter amended the statute to authorize landlords to charge those expenses

and explicitly made the amendments retroactive. The defendants’ motion for judgment

on the pleadings will be granted.

1. BACKGROUND AND FACTS

The expenses at issue here are the filing fee a landlord must pay the court to

initiate a summary ejectment proceeding, the fee the landlord must pay the sheriff to

serve the summary ejectment complaint on the tenant, and the attorney’s fee the landlord

pays to counsel it retains to handle the summary ejectment proceeding. The Court will

refer to the filing fee and service fee as “summary ejectment expenses” and the attorney’s

fee as such.

According to the complaint, on June 13, 2018, the defendants here assessed

summary ejectment expenses and attorney’s fees against the plaintiffs, who had fallen

behind on their rent. Doc. 18 at ¶ 51; Doc. 18-7 at 2. Though this was allowed under the

lease, Doc. 48-2 at 3, the statute did not authorize landlords to impose the summary

ejectment expenses. See, e.g., Suarez v. Camden Prop. Tr., 818 F. App’x 204, 211–12

(4th Cir. 2020) (persuasively finding that under the pre-2018 amendment version of § 42-

46, the landlord “was not authorized to charge” the tenant the filing fee or the service fee,

and that a reasonable attorney’s fee could be assessed only if authorized by a separate

provision of North Carolina law, such as N.C. Gen. Stat. § 6-21.2). 1

The next day, the General Assembly passed a law amending § 42-46, effective

June 25, 2018, to add a subsection explicitly authorizing landlords to charge tenants for

summary ejectment expenses and a reasonable attorney’s fee. N.C. Gen. Stat. § 42-46(i)

(2018).2 But these changes were not retroactive. See, e.g., Suarez., 818 F. App’x at 210.

1 Suarez is an unpublished opinion and thus not binding precedent, but its reasoning is

persuasive.

2 The bill added subsection (i), entitled “Out-of-Pocket Expenses,” which provided:

[i]n addition to the late fees . . . and the administrative fees . . . , a landlord is also

permitted to charge and recover from a tenant the following actual out-of-pocket

expenses:

(1) Filing fees charged by the court.

In 2021, several months after this lawsuit was filed in 2020, the legislature again

amended § 42-46. In this amendment, the General Assembly added language

characterizing the authorized eviction expenses and attorney’s fee as “administrative

fees” and stating explicitly that “[t]his Part is effective when it becomes law and is

intended to apply retroactively to all pending controversies as of that date.” Doc. 48-1 at

3–4; 2021 N.C. Sess. Laws 2021-71 (S.B. 644) § 1.2.

2. DISCUSSION

At the time they charged the plaintiffs for eviction fees, the defendants did not

have statutory authority to do so under the then-applicable version of § 42-46. The

question is whether the General Assembly’s action in 2021 did away with the plaintiffs’

causes of action. The plaintiffs say that retroactive application of the 2018 and 2021

amendments to their claims would interfere with their vested rights and would be

unconstitutional. The defendants say that the legislature can take away a statutory cause

of action any time before final judgment.3

(2) Costs for service of process pursuant to G.S. 1A-1, Rule 4 of the North Carolina

Rules of Civil Procedure and G.S. 42-29.

(3) Reasonable attorneys' fees actually incurred, pursuant to a written lease, not to

exceed fifteen percent (15%) of the amount owed by the tenant, or fifteen

percent (15%) of the monthly rent stated in the lease if the eviction is based on

a default other than the nonpayment of rent.

3 The plaintiffs have two pending claims: one for assessing fees in violation of § 42-46, Doc.

18 at ¶¶ 79–84, and another for violation of the North Carolina Debt Collection Act. Doc. 18 ¶¶

85–104. The Debt Collection Act claim is based on the statutory violation of § 42-46, and the

parties have not distinguished between these two claims for purposes of the pending motion.

In Dyer v. Ellington, the plaintiff sued the town commissioners for failing to

publicly disclose the amount of taxes collected and spent during the year, as required by

statute. 126 N.C. 941, 36 S.E. 177 (1900). The plaintiff sued to recover a penalty from

the commissioners for this failure, as authorized in the statute. While the case was

pending, the legislature passed a law releasing the commissioners from any penalties for

not complying with the statute. The North Carolina Supreme Court held that the

plaintiff’s cause of action was “destroyed” before he obtained a vested right and that the

case should be dismissed. Id. at 941, 36 S.E. at 178; accord In re Incorporation of Indian

Hills, Jackson Cnty., 280 N.C. 659, 663, 186 S.E.2d 909, 911 (1972) (“[I]f a statute is

unconditionally repealed without a saving clause in favor of pending suits, all pending

proceedings thereunder are terminated, and if final relief has not been granted before the

repeal goes into effect, it may not afterwards.”).

This case is the same. Just as in Dyer, the cause of action was created by statute

and the remedy was created by statute. Just as in Dyer, the plaintiffs filed suit before the

statute was amended but had not obtained a judgment. On these facts, Dyer controls and

the plaintiffs’ claims must be dismissed.

The plaintiffs rely on Osborn v. Leach, 135 N.C. 628, 47 S.E. 811 (1904), and its

progeny. As explained in a later Supreme Court case:

In Osborn v. Leach, 135 N.C. 628, 47 S.E. 811 (1904), the question was

whether our “London Libel Law,” now codified as General Statutes 99–1 and

99–2, violated the “open courts” provision of our Constitution. G.S. 99–1 to

–2 (1979). This law abolished the right of a libeled plaintiff to recover

punitive damages from “a newspaper or periodical” if these entities

published a timely retraction and if the libel was published in good faith. The

Court in Osborn concluded that the legislature could constitutionally abolish

the common law right to recover punitive damages under these

circumstances. The court stressed, however, the proposition that the statute

still permitted the recovery of “actual damages.” It interpreted these

damages to be all ordinary, compensatory damages, including actual

pecuniary loss, damages for pain, mental suffering, inconvenience, and for

injury to reputation. The Court, in dictum, stated that had the legislation

abolished plaintiff’s right to recover these kinds of compensatory damages it

would have considered the act in violation of the “open courts” provision.

Id. at 639–40, 47 S.E. at 815.

Lamb v. Wedgewood S. Corp., 308 N.C. 419, 443, 302 S.E.2d 868, 882 (1983).4 Since

Osborn, the Supreme Court has twice acknowledged that the statement about the

unconstitutionality of abolishing a plaintiff’s right to recover compensatory damages was

dicta, id.; Comm. to Elect Dan Forest v. Emps. Pol. Action Comm., 376 N.C. 558, 604,

853 S.E.2d 698, 731 (2021), and in any event, this case concerns statutory rights, not

common law rights.

The plaintiffs also contend that their rights in their cause of action were vested. It

is undisputed that no matter how clear the legislature’s intent as to retroactivity, a statute

cannot be given retroactive application if to do so would violate constitutional rights. See

e.g., Fogleman v. D & J Equip. Rental, Inc., 111 N.C. App. 228, 233, 431 S.E.2d 849,

852 (1993) (refusing retroactive application of an amended statute where it “deprived

appellants of vested rights and, thus, was unconstitutionally retroactive”). “‘Vested’

4 The Court in Lamb, which upheld a six-year statute of repose as constitutional, said that

“we do not have to decide whether the legislature could constitutionally abolish all tort claims

against builders and designers arising out of improvements they built or designed. We refrain

from holding. . . that the legislature may constitutionally abolish altogether a common law cause

of action. Neither do we mean to say that it cannot. The question is not before us.” Id. at 443–

44, 302 S.E.2d at 882.

rights may not be retroactively impaired by statute.” Gardner v. Gardner, 300 N.C. 715,

719, 268 S.E.2d 468, 471 (1980). But that exception does not apply here.

Unless judgment has already been entered, see, e.g., Dunham v. Anders, 128 NC

207, 38 S.E. 832 (1901), “generally speaking, a right created solely by the statute may be

taken away by its repeal or by new legislation.” Pinkham v. Unborn Child. of Jather

Pinkham, 227 N.C. 72, 78, 40 S.E.2d 690, 694 (1946). As the court in Pinkham

acknowledged, there is an exception if the statutory rights may “be regarded as

contractual.” Id. But here the contract itself authorized the landlord to collect the

eviction expenses and attorney’s fees, so the contract is consistent with the 2021

amendment.

The Court appreciates the policy reasons leading courts to apply a presumption

against retroactive application of legislation. See, e.g., McKiver v. Murphy-Brown, LLC,

980 F.3d 937, 955, 958 (4th Cir. 2020); Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164,

176 (4th Cir. 2010). They are sound. But there is no absolute prohibition on

retroactivity, and, as the court in McKiver recognized, statutes must be given retroactive

construction when “the words used are so clear, strong and imperative that no other

meaning can be annexed to them.” McKiver, 980 F.3d at 955 (cleaned up). That is the

case here.

The defendants’ motion for judgment on the pleadings will be granted.

It is ORDERED that:

1. The defendants’ motion for judgment on the pleadings, Doc. 47, is

GRANTED.

2. The defendants’ motion to stay proceedings, Doc. 49, and the plaintiffs’

motion to compel, Doc. 44, are DENIED as moot.

3. Judgment will be entered separately.

This the 8th day of September, 2021.

UNITED STATES DISTRICF JUDGE —