Wallace v. Greystar Real Estate Partners, LLC
| Decision Date | 24 February 2022 |
| Docket Number | 1:18CV501 |
| Citation | 587 F.Supp.3d 344 |
| Parties | Katrina WALLACE, on behalf of herself and other similarly situated, Plaintiff, v. GREYSTAR REAL ESTATE PARTNERS, LLC, et al., Defendants. |
| Court | U.S. District Court — Middle District of North Carolina |
Edward H. Maginnis, Karl S. Gwaltney, Maginnis Law, PLLC, Scott C. Harris, Patrick M. Wallace, Milberg Coleman Bryson Phillips Grossman, PLLC, Raleigh, NC, for Plaintiff.
Reid Calwell Adams, Jr., Rudolf A. Garcia-Gallont, Jonathan Reid Reich, Womble Bond Dickinson (US) LLP, Winston-Salem, NC, for Defendants Greystar Real Estate Partners, LLC, Greystar Management Services, L.P., Greystar RS National, Inc., Greystar RS SE, LLC, Grep Southeast, LLC.
Before the Court is a Motion for Judgment on the Pleadings pursuant to Rule 12(c) filed by Defendants, (ECF No. 161). Plaintiff alleges that her landlords charged her "Eviction Fees" in February 2018 in violation of North Carolina's Residential Rental Agreements Act, N.C. Gen. Stat. § 42-46, and other laws. (ECF No. 32.) Defendants argue that Section 42-46, as amended in June 2021, explicitly allows the charged fees and thus Plaintiff has failed to state a claim. (ECF No. 162 at 4 (citing 2021 N.C. Sess. Laws 71 §§ 1.1–1.2).) For the reasons stated herein, Defendants’ motion will be granted in part and denied in part.
Plaintiff leased an apartment from Defendants from April 23, 2017, until June 21, 2018. (ECF No. 32 ¶ 55.) After Plaintiff missed her February 2018 rental payment, Defendants charged Plaintiff a late fee and a $201 eviction "filing fee" (hereinafter "Eviction Fees") and filed for summary ejectment in state court. (Id. ¶¶ 63–64, 72, 79; ECF Nos. 32-5 at 3; 32-8; 32-10 at 2.) Plaintiff immediately paid the Eviction Fees, late fee, and outstanding rent, and Defendants voluntarily dismissed their ejectment action. (ECF Nos. 32-5 at 3; 32-10 at 1.)
Plaintiff subsequently filed this action in state court on behalf of herself and those similarly situated, alleging that Defendants’ Eviction Fees were unlawful and seeking monetary and declaratory relief. (See ECF No. 1-1.) Defendants, on June 13, 2018, removed to this Court, (ECF No. 1); and on August 24, 2018, Plaintiff filed an Amended Complaint, (ECF No. 32), which alleges that the threat and collection of Eviction Fees violated the North Carolina Residential Rental Agreements Act ("RRAA"), N.C. Gen. Stat. § 42-46, the North Carolina Debt Collection Act ("DCA"), § 75-50, et seq. , and the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), § 75-1, et seq. (Id. ¶¶ 98–129.)2
On June 14, 2018, one day after Defendants removed this case from state court, the General Assembly amended Section 42-46 (the "2018 Amendment") to expressly permit a landlord to charge a tenant for filing fees, costs of service, and reasonable attorneys’ fees "not to exceed fifteen percent (15%) of the amount owed by the tenant...." 2018 N.C. Sess. Laws 50 § 1.1(b) (codified at N.C. Gen. Stat. § 42-46(i) – (j) ). The 2018 Amendment became law on June 25, 2018. Id.
Following the 2018 Amendment, Defendants moved to dismiss Plaintiff's claims, arguing that the 2018 Amendment clarified that the Eviction Fees were permitted in February 2018. (ECF Nos. 38; 39; 40; 41; 49; 50.) This Court disagreed and denied Defendants’ motion. Wallace v. Greystar Real Est. Partners, LLC , No. 1:18CV501, 2019 WL 4305849, at *9–10 (M.D.N.C. Sept. 11, 2019). First, this Court found that Defendants "failed to show that N.C. Gen. Stat. § 42-46, as it existed in February 2018, would have allowed Defendants to charge the Eviction Fees on February 16, 2018." Id. at *9. Second, this Court found that, "[b]ecause the 2018 Amendment altered the rights of landlords in pursuing summary ejectment actions, it should only be applied prospectively" and therefore did not govern Plaintiff's claims. Id. at *10.
On June 23, 2021, the General Assembly again amended Section 42-46, and the amendment became law on July 2, 2021, ("2021 Amendment"). 2021 N.C. Sess. Laws 71 §§ 1.1–1.2 (codified at N.C. Gen. Stat. § 42-46 ). Like the 2018 Amendment, the 2021 Amendment expressly permits a landlord to charge a tenant for filing fees, costs of service, and reasonable attorneys’ fees. 2021 N.C. Sess. Laws 71 § 1.1. Unlike the 2018 Amendment, however, the 2021 Amendment provides that it "is intended to apply retroactively to all pending controversies as of that date." § 1.2.
Defendant now moves for judgment on the pleadings, arguing that in light of the 2021 Amendment, Plaintiff has failed to state a claim upon which relief can be granted. (ECF Nos. 161; 162.)
A court applies the same standard to a Rule 12(c) motion for judgment on the pleadings as to a Rule 12(b)(6) motion to dismiss. Occupy Columbia v. Haley , 738 F.3d 107, 115–16 (4th Cir. 2013). The court assumes the truth of all factual allegations in the complaint, draws all reasonable inferences in favor of the plaintiff, and asks whether the complaint plausibly states a claim for relief. Id. In other words, the plaintiff must plead facts that "allow[ ] the court to draw the reasonable inference that the defendant is liable" and demonstrate "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). When evaluating a Rule 12(c) motion, a court may consider only the pleadings, any exhibits thereto that are essential to the allegations, and matters of public record susceptible to judicial notice. See Massey v. Ojaniit , 759 F.3d 343, 347–48 (4th Cir. 2014) ; Philips v. Pitt Cnty. Mem'l Hosp. , 572 F.3d 176, 180 (4th Cir. 2009) ().
Plaintiff counters Defendant's motion by arguing that the 2021 Amendment cannot be retroactively applied to this case consistent with the North Carolina Constitution. (ECF No. 168 at 6.)
North Carolina courts, however, "will avoid constitutional questions, even if properly presented, where a case may be resolved on other grounds."
Anderson v. Assimos , 356 N.qC. 415, 572 S.E.2d 101, 102 (2002). Thus, the Court will first consider whether the 2021 Amendment (1) clarifies, rather than alters, N.C. Gen. Stat. § 42-46, or (2) can be construed to apply only prospectively. After answering both questions in the negative, the Court will turn to (3) the constitutionality of the 2021 Amendment's retroactive application.
An amendment that "does not change the substance of the law but instead gives further insight into the way in which the legislature intended the law to apply from its original enactment" applies "to all cases pending before the courts when the amendment is adopted, regardless of whether the underlying claim arose before or after the effective date of the amendment." Ray v. N.C. Dep't of Transp. , 366 N.C. 1, 727 S.E.2d 675, 681 (2012). An amendment that "clarifies," rather than "alters," a statute may be retroactively applied without constitutional concern. Id. An amendment that alters a statute, on the other hand, may only be retroactively applied if retroactive application is consistent with the North Carolina Constitution. See Lester Bros. v. Pope Realty & Ins. Co. , 250 N.C. 565, 109 S.E.2d 263, 266 (1959).
Determining whether an amendment clarifies or alters a statute "requires a careful comparison of the original and amended statutes." Ray , 727 S.E.2d at 682 (quoting Ferrell v. Dep't of Transp. , 334 N.C. 650, 435 S.E.2d 309, 315 (1993) ). An amendment is more likely to be clarifying if the original statute "fail[ed] expressly to address a particular point but addresses it after the amendment." Id. (internal quotations omitted). On the other hand, an amendment that " ‘change[s] the substance’ of the original law" alters, rather than clarifies, the law. Id . at 682–83 (quoting Childers v. Parker's, Inc. , 274 N.C. 256, 162 S.E.2d 481, 483 (1968) ).
It is the job of the judiciary to determine whether an amendment is clarifying or altering. Id. at 681. "That the legislature saw itself as clarifying the scope of the statute ... is not irrelevant" to this determination, but neither is it conclusive. Bryant v. United States , 768 F.3d 1378, 1385 (11th Cir. 2014) (applying North Carolina law). "Even the action of the legislature in amending a statute so as to make it directly applicable to a particular case is not a conclusive admission that [the statute] did not originally cover such a case." Childers , 162 S.E.2d at 484 (internal quotations omitted). An amendment that creates a new "substantively distinct exception" to the existing statute "from whole cloth" alters that statute, even when the amendment explicitly provides that the intent of the legislature was to clarify, rather than alter, the statute. Bryant , 768 F.3d at 1385.
Here, the 2021 Amendment states that it is "intended to be clarifying of the General Assembly's intent under previous amendments to this statute." 2021 N.C. Sess. Laws 71 § 1.2. This legislative intent weighs in favor of finding that the amendment is merely clarifying and has retroactive effect. However, as this Court determined in its prior Order, the unamended version of N.C. Gen. Stat. § 42-46 was "clear and unambiguous." Wallace , 2019 WL 4305849, at *9. The statute explicitly provided that "[i]t is contrary to public policy for a landlord to put in a lease or claim any fee for filing a complaint for summary ejectment and/or money owed other than the ones expressly authorized." Id. at *8 (quoting § 42-46(h)(3) ). As this Court reasoned, " ‘any fee’ means ‘any fee.’ " Id. at *9. Thus, by authorizing landlords to collect out-of-pocket expenses and litigation costs in the 2018 and 2021 Amendments, the General Assembly "creat[ed] new...
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