Friday v. UNITED DOMINION REALTY TRUST

• Decision Date: 21 January 2003
• Docket Number: No. COA02-283.,COA02-283.
• Citation: 155 NC App. 671,575 S.E.2d 532
• Court: North Carolina Court of Appeals
• Parties: Rebecca M. FRIDAY, Plaintiff v. UNITED DOMINION REALTY TRUST, INC., t/a and d/b/a Northwinds Apartments, Defendant.

575 S.E.2d 532

155 NC App. 671

Rebecca M. FRIDAY, Plaintiff v. UNITED DOMINION REALTY TRUST, INC., t/a and d/b/a Northwinds Apartments, Defendant.

No. COA02-283.

Court of Appeals of North Carolina.

January 21, 2003.

Johnson, Younce, Moore & Moseley, L.L.P. by J. Sam Johnson, Jr., Greensboro, for plaintiff-appellee.

Smith Moore, L.L.P. by Stephen P. Millikin and Lisa M. Kaminski, Greensboro, for defendant-appellant.

CAMPBELL, Judge.

Northwinds Apartments ("Northwinds") appeals from an order awarding plaintiff, Rebecca Friday, ("Ms. Friday" or "tenant") treble damages and attorney's fees after a bench trial held 8 October 2001. On appeal, Northwinds contends that the trial court erred in five ways: I. By finding that Northwinds violated N.C. Gen.Stat. § 42-46; II. By finding that Northwinds violated the Unfair and Deceptive Trade Practices Act ("UDTPA"); III. By finding that Northwinds violated the North Carolina Debt Collection Act ("NCDCA"); IV. In its findings of fact relating to: the notices tenant received; tenant's appearance at the May 25, 2000 magistrate hearing; Northwinds' communications with Wind Lake Apartments; damages assessed for injury to reputation, mental suffering, humiliation, inconvenience and embarrassment; and damages assessed for tenant living with her sister; and V. By awarding plaintiff attorney's fees. We vacate the trial court's judgment and remand to the trial court for an assessment and award of damages consistent with this opinion.

Background Information

Ms. Friday began renting from Northwinds in August 1998. She signed a rental agreement that had the following terms: the rent is due on the first of each month; a $31 late charge will be applied if the rent is paid after the 5th day of the month; reasonable costs of collection will be charged to the tenant; no personal check will be accepted for late payments; an administrative fee of $75 will be added to court costs if legal papers are filed against tenant. Ms. Friday experienced no problems for the first year that she resided at Northwinds from August 1998 through August 1999. In September 1999, she moved into a larger apartment, which increased her monthly rent to $610. In late 1999, Northwinds increased its $75 administrative fee to $100 for new tenants. Since Ms. Friday had lived there for one year, this increase did not apply to her. In February 2000, however, a rental agent mistakenly applied this increase to Ms. Friday's lease. This then caused a $100 fee to be charged to Ms. Friday's account when Northwinds initiated ejectment actions against her in March 2000, May 2000, and July 2000.

Ms. Friday's rent was late multiple times between December 1999 and July 2000. She would eventually pay the rent and all the $30 late charges and administrative fees that applied. Although the lease stated that a $31 late fee would apply, Northwinds only charged Ms. Friday $30 each time, except for once in May 2000 when a magistrate judge entered a money judgment including a $31 late fee.

On 6 June 2000, a $30 late fee was charged to Ms. Friday. On 16 June 2000, a $1,425 payment was received by Northwinds from White Oak Missionary Baptist Church, causing Ms. Friday's account balance to be $0. She made no rent payment for July. On 13 July 2000, Northwinds filed a complaint against tenant for summary ejectment, including rent due. On 31 July 2000, judgment for possession and $45 in court costs was entered on behalf of Northwinds.

Between December 1999 and July 2000, Northwinds had sent a number of notices regarding overdue rent and other charges. Northwinds obtained three summary ejectment judgments against tenant, two for possession, which Northwinds did not enforce and one which included an award of money damages. Northwinds did not initiate any legal proceeding against Ms. Friday after 13 July 2000. On 5 August 2000, Ms. Friday submitted a personal check to Northwinds for $760. On 7 Aug 2000, Northwinds returned the check because it did not represent the total amount due on Ms. Friday's account. Ms. Friday testified that she vacated her apartment "[i]n August." In August 2000, Ms. Friday submitted an application and a $99 administrative fee to Wind Lake Apartments ("Wind Lake"). Upon Wind Lake's rejection of Ms. Friday's application for an apartment, she asked Northwinds what information it had given to Wind Lake. Northwinds said that the only information it gave to Wind Lake was that Ms. Friday had a delinquent balance on her account. On 18 September 2001, Ms. Friday filed a complaint against Northwinds, alleging violations of the UDTPA, violations of the NCDCA, abuse of process and slander. She requested treble and punitive damages. Northwinds answered and counterclaimed for unpaid rent for July and August.

After unsuccessful attempts to settle the case, the parties appeared for a non-jury trial on 8 October 2001. In a final judgment entered 20 November 2001, plaintiff was awarded treble damages in the amount of $26,679 and attorney's fees of $9,000. Since defendant assigns error to the findings of fact and conclusions of law in the final judgment, we will review the trial court's rulings under a non-jury trial standard of review. In light of our decision we need not consider defendant's post-trial motions.

Standard of Review

"The standard of review on appeal from a judgment entered after a non-jury trial is `whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment.'" Cartin v. Harrison, 151 N.C.App. 697, 567 S.E.2d 174 (2002), review denied, 356 N.C. 434, 572 S.E.2d 428 (2002) (quoting Sessler v. Marsh, 144 N.C.App. 623, 628, 551 S.E.2d 160, 163, disc. review denied, 354 N.C. 365, 556 S.E.2d 577 (2001)). We will consider the applicable findings and conclusions according to defendant's assignments of error.

Damages Awarded to Plaintiff

The trial court found as a fact that the following damages should be awarded to plaintiff:

[N]ine late fees assessed at $30, six being collected ($270); two administrative fees collected ($200); one administrative fee charged ($100); five months rent at $465 []($232[5]); injury to her reputation, and mental suffering, humiliation, inconvenience, and embarrassment ($6,000); total damages $8,893.

The trial court then ordered:

[T]hat [p]laintiff shall have and recover of the [d]efendant the full sum of $26,679.00, the Court having trebled damages found in the sum of $8,893.00, together with the costs of court as taxed by the Clerk, which costs shall include attorneys fees for plaintiff, in the further sum of $9,000.00, pursuant to GS 75-1.1 et seq.... The [p]laintiff shall not recover for abuse of process, for slander, nor for punitive damages, and those actions are dismissed.

After reviewing the record, we conclude that the evidence presented at trial does not support many of the findings of fact made by the trial court as contained in its final judgment. Further, we conclude that the trial court's conclusions are not in accordance with law with respect to certain statutes discussed below. For the reasons stated herein, we hold that the trial court erred in ordering certain damages and in trebling those damages.

I. N.C. Gen.Stat. § 42-46

Defendant first contends that the trial court erred in its finding that Northwinds violated N.C. Gen.Stat. § 42-46 by charging a late fee in excess of 5% of the rental cost by stating in its lease that a late fee of $31 will be charged and by charging an administrative fee of $75 as being a "type of `late charge,' which would exceed the 5% limitation in GS 42-46(a)." We disagree with respect to the lease provision for a $31 late fee. We agree with respect to the $75 administrative fee.

Late fee

N.C. Gen.Stat. § 42-46 provides:

(a) In all residential rental agreements in which a definite time for the payment of the rent is fixed, the parties may agree to a late fee not to exceed fifteen dollars ($15.00) or five percent (5%) of the rental payment, whichever is greater, to be charged by the lessor if any rental payment is five days or more late.

...

(c) Any provision of a residential rental agreement contrary to the provisions of this section is against the public policy of this State and therefore void and unenforceable.

N.C. Gen.Stat. § 42-46(a) and (c) (2001). Northwinds adopted a computer program that calculates a 5% late payment amount for each tenant. Northwinds' rental agents include a late payment charge in each tenant's lease agreement. In this case, the computer's calculation of 5% of plaintiff's $610 rent equaled $30.50. The rental agent dealing with Ms. Friday's account rounded the $30.50 charge up to $31.00. Thus, plaintiff's lease agreement stated: "A $31.00 late charge, together with all reasonable costs of collection, including legal fees, shall be payable with any rent not received on or before the fifth day of each calendar month." Despite this statement in the lease, Ms. Friday was never charged and never paid more than $30 for her late rent payment fees. On all the notices that Northwinds sent to Ms. Friday regarding her rent being overdue, the late fee was stated as $30.

We cannot, however, ignore the clear language of the statute that "any provision of a residential rental agreement contrary to the provisions of this section," which includes the provision that a late fee cannot exceed five percent of the rental payment, "is against the public policy of this State and therefore void and unenforceable." N.C. Gen.Stat. § 42-46(c) (2001). We hold that although Northwinds only charged and Ms. Friday only paid a $30 late fee each time her rent was late, the $31 late fee provision of the Northwinds lease agreement is contrary to the provisions of G.S. § 42-46(a) and therefore void and unenforceable as against North Carolina public policy. Thus, plaintiff's account status should reflect a credit of the amount paid, i.e., $30 for each...