Winston Affordable Hous., LLC v. Roberts

374 N.C. 395

841 S.E.2d 267

WINSTON AFFORDABLE HOUSING, LLC d/b/a Winston Summit Apartments

v.Deborah ROBERTS

No. 267PA19

Supreme Court of North Carolina.

Filed May 1, 2020

Blanco, Tackabery & Matamoros, P.A., by Elliot A. Fus, Winston-Salem, and Chad A. Archer, Greensboro, for plaintiff-appellee.

Legal Aid of North Carolina, Inc., by Andrew Cogdell, Morganton, Liza A. Baron, Valene K. Franco, and Celia Pistolis, Raleigh, for defendant-appellant.

William D. Rowe, Jack Holtzman, Raleigh, and Carlene McNulty, for North Carolina Justice Center; Elizabeth Myerholtz and Lisa Grafstein, Raleigh, for Disability Rights North Carolina; and J.L. Pottenger Jr., for Yale Law School Housing Clinic; amici curiae.

EARLS, Justice.

Deborah Roberts is a longtime tenant of the Winston Summit Apartments, having lived there for more than twenty years. The complex is owned by Winston Affordable Housing, LLC (WAH). Winston Summit Apartments is a project-based Section 8 property. This means that the U.S. Department of Housing and Urban Development (HUD) provides money to the landlord, subsidizing the rents for units at the property and lowering the effective rent for low-income tenants like Ms. Roberts. WAH receives the subsidy payment directly from HUD pursuant to a Housing Assistance Payments (HAP) contract between HUD and WAH. The subsidy is tied to the unit—it is not a voucher that a tenant could take to a different apartment complex to receive a subsidized rental rate.

In late 2016, WAH sought to evict Roberts by terminating her lease for alleged breaches primarily relating to her conduct toward property management staff and conditions in and around her unit. Roberts did not leave. WAH’s property management company, Ambling Management Corp. (Ambling), filed a Complaint in Summary Ejectment on 5 January 2017, claiming that Roberts was a holdover tenant. On 9 January 2017, the property manager served Roberts with a ten-day notice to pay rent or quit, alleging that Roberts was in default under "the rental agreement dated 01/01/2007" in the amount of $547. Following a judgment in small claims court, WAH filed an amended complaint. Ultimately, the District Court in Forsyth County entered a judgment evicting Roberts and granting possession of the apartment in which she lived to WAH "based on nonpayment of rent for January 2017 and the first part of February 2017." In doing so, the trial court determined that WAH had waived its claims as to Roberts’s alleged lease breaches. The Court of Appeals affirmed, holding that the trial court’s findings of fact supported its conclusion that Roberts’s failure to pay rent entitled WAH to possession.

Winston Affordable Hous., L.L.C. v. Roberts , 828 S.E.2d 755, 2019 WL 2510879 (N.C. Ct. App. 2019).

We reverse the Court of Appeals and remand to the trial court for further findings of fact. First, we hold that the trial court’s findings do not support its determination that WAH had waived its right to terminate the lease based on the alleged breaches by Roberts. Second, we hold that terminating either a lease or a federal subsidy for a particular tenant in a federally-subsidized housing arrangement requires compliance with applicable federal law as incorporated in the terms of the lease. Third, we hold that the record does not contain sufficient findings to support the conclusion that WAH is entitled to possession on the basis of nonpayment of rent.

Background

Roberts is a sixty-two-year-old woman with cognitive disabilities. She has lived in her unit at the Winston Summit Apartments since 1997. Prior to the current dispute regarding her lease, she paid $139 per month in rent. Roberts receives a fixed income of $755 per month in addition to food stamps.

WAH alleged that Roberts violated her lease terms by:¹

(a) Harassing Ambling’s staff about various issues—including but not limited to management’s refusal to provide Tenant with a key to the mail room that would enable Tenant to access other tenants’ mail and packages—and making and threatening false claims against Plaintiffs.

(b) Spreading pest control powder in common areas and other tenants’ apartments, despite the objection of other tenants and despite Ambling’s repeated requests that Tenant cease this practice and not interfere with the professional extermination services arranged by Plaintiffs.

(c) Keeping her Premises in a cluttered, dirty and unsafe condition.

(d) Violating "no smoking" policies.

On 3 October 2016, Roberts received a letter with the subject heading "Notice of Termination of Lease." The letter notified Roberts that "Winston Summit ha[d] elected to terminate [her] lease" and stated that her lease would terminate at the end of the then-current term, which ended 31 December 2016. It alleged that Roberts’s "repeated lease violations" had "disrupted the livability of the property, adversely affected the health or safety of residents and staff, the peaceful enjoyment of other residents to the property, and interfered with the management of the property." The letter provided examples of the offending behavior. It then notified Roberts of when she would have to leave her unit and stated that she was "required to pay [her] full rental amount up to the day [she] move[d] out." The letter then stated: "You have the right to respond in writing or request a meeting within 10 days to dispute this proposed termination. You have the right to defend this action in court."

Roberts did not vacate her apartment by 31 December 2016. WAH’s evidence at trial indicated that, on 4 January 2017, the on-site property manager saw Roberts at the mailbox and asked Roberts to come in and sign a document. The document was a HUD form titled "Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures." In the section marked "Gross Rent Changes and Unit Transfers," the document listed "Tenant Rent" as $532. Roberts signed the document. At the same time, Roberts signed² a document titled "Lease Amendment" which read in part:

This is to notify you that on the basis of our recent review of your income and family composition, your monthly rent has been adjusted as follows:

Contract Rent	$532.00
Utility Allowance	$61.00
Assistance Payment	$0.00
Total Tenant Payment	$593.00
Tenant Rent	$532.00

The new rent is effective with the rent due for the month of 12/31/2016. This notification amends Paragraph 3 of your lease agreement, which sets forth the amount of rent you pay each month. All other provisions of your lease remain in full force and effect. The next scheduled recertification is 01/01/2017.

Both the Lease Amendment and the Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures were dated 4 January 2017.

On 5 January 2017, Ambling filed a summary ejectment action in Forsyth County Small Claims Court. Then, on 9 or 10 January 2017, Ambling delivered a document to Roberts titled "Ten-Day Notice to Pay Rent or Quit." The document alleged that Roberts owed $547 under her rental agreement and demanded that she pay the amount in ten days or surrender possession of her apartment. If she did not do so, the document stated that WAH would sue her.

On 7 February 2017, the magistrate in Small Claims Court entered judgment in the summary ejectment action in favor of Ambling. Roberts appealed to the District Court for a trial de novo on 14 February 2017. The Notice of Appeal form contained the following notice to the appealing party:

If you are a tenant appealing from a summary ejectment judgment entered against you and you wish to stay on the premises until the appeal is heard, you must SIGN A BOND that you will pay your rent as it becomes due into the Clerk’s office; you must PAY IN CASH the amount of rent in arrears as determined by the magistrate; and if the judgment was entered more than five (5) days before the next rental payment is due, you may also have to PAY IN CASH the prorated amount of rent due from the date the judgment was entered until the next rental payment is due. Ask the clerk for the bond form (AOC-CVM-304) to allow you to stay on the premises. If you have not signed this bond and paid the prorated amount of cash within ten (10) days after the judgment was entered, the landlord can ask to have the sheriff remove you from the premises even though the case is being appealed.

The magistrate did not assess any amount of rent in arrears to Roberts, but did determine that the rental rate was $532 per month. Consequently, Roberts began paying a monthly rent bond of $532 in mid-February.

On 6 April 2017, WAH filed an amended complaint which made two claims for relief.³ First, WAH alleged that it was entitled to a judgment for summary ejectment on the basis of (1) alleged lease violations occurring prior to 3 October 2016 and (2) failure to pay rent for January 2017 and part of February 2017. Second, WAH alleged that it was entitled to a monetary judgment reflecting the unpaid rents for January 2017 and part of February 2017. Roberts filed an answer and counterclaims on 7 June 2017. The answer included ten defenses and five counterclaims. Only one of Roberts’s counterclaims, that WAH’s termination of her rental subsidy constituted an unfair and deceptive trade practice (UDTP) in violation of N.C.G.S. § 75-1.1, survived to trial.

The competing claims were tried in October 2017. On 3 November 2017, the trial court entered judgment in favor of WAH, granting WAH possession of the apartment on the basis of nonpayment of rent and dismissing all other pending claims and counterclaims. The trial court made the following findings of fact:

1. Plaintiff is the owner of Winston Summit Apartments, 137 Columbine Drive, Winston-Salem, North Carolina, where defendant has been a longtime resident. As of 2016, defendant was leasing Unit 311 (the "Premises") from plaintiff pursuant to a Model Lease for Subsidized Programs (the "Lease") signed on November 2, 2010.

2. On October 3, 2016, plaintiff provided defendant with a Notice of Termination of

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