From May to Must: Supreme Court of North Carolina Holds PHAs Must Meet the Discretion Requirement Before Eviction

A public housing agency (“PHA”) is obligated to protect residents from the dangers of illegal drugs. Federal law requires PHAs to include lease provisions that grant them power to evict tenants who sell or use such drugs on or off premises. This power is expansive: the U.S. Supreme Court confirmed that PHAs may even evict tenants who did not know household members, guests, or individuals under their control were using or dealing drugs. However, while federal law grants PHAs this power to evict offending residents, it does not require them to do so. HUD has long counseled PHAs to consider all circumstances relevant to a particular case before choosing the “nuclear option” of eviction.

A recent decision of the Supreme Court of North Carolina clarifies one important dimension of a PHA’s power to evict: federal law not only authorizes a PHA to use discretion, it requires it to do so before attempting to evict a resident. In the Supreme Court of North Carolina’s recent case Eastern Carolina Regional Housing Authority v. Sherbreda Lofton (N.C. 2016), the court considered a situation in which a PHA attempted to eject a tenant who, while she was sleeping, had “a person under her control” in her apartment babysitting her child and packaging marijuana for sale. Police at the scene found no evidence that the tenant knew about or participated in the packaging of the drugs. Nevertheless, the PHA pursued the tenant’s eviction, and seemed to take the position that it was required to evict the resident if she met the criteria for having a person under her control engaged in drug-related criminal activity. The tenant, however, won in district court, successfully preventing the PHA’s summary ejectment efforts.

The PHA appealed its case to the North Carolina Court of Appeals. The Court of Appeals upheld the district court’s ruling, arguing that North Carolina law required PHAs not to summarily eject a tenant under circumstances that are “unconscionable.” The court explained that an “unconscionable” eviction would be one where a court found the action “excessive, unreasonable” or “shockingly unfair or unjust.” In this case, the court believed that the PHA acted “unconscionably” because the tenant had not been accused of criminal conduct, had never been the subject of complaints by her neighbors in the complex, and was unemployed with three small children under her care on the date that the PHA initiated ejectment proceedings. This ruling was viewed by many PHAs as having created additional barriers for them to evict tenants whose actions endangered the safety of other residents in the community.

Thereafter, the PHA appealed to the Supreme Court of North Carolina. The Supreme Court held that North Carolina law does not subject PHAs to an “unconscionability” analysis in summary ejectment proceedings. But while PHAs are not required to consider whether evicting a tenant would be “unconscionable,” they are obligated to exercise discretion before pursuing summary ejectment. The court noted that, in this case, the PHA was entirely justified under federal law in seeking to evict Ms. Lofton. However, witnesses for the PHA testified at trial that, before pursuing the resident’s summary ejectment, they did not consider anything other than whether she met the criteria for having a person under her control who engaged in drug-related criminal activity. They also testified that they did not know they had the power to consider mitigating factors before attempting to eject a tenant.

Based on this testimony, the Supreme Court upheld the trial court’s decision to deny the PHA’s request to evict the tenant. The court argued that while federal law empowers PHAs to evict such tenants, it does not require them to do so. Accordingly, the court held that PHAs must exercise discretion before evicting a tenant. The court reminded PHAs that federal law treats them as providers of housing of last resort and that HUD regulations counsel compassion, responsibility, and common sense in any decision to evict a tenant.

To a certain extent, the Supreme Court of North Carolina’s Lofton decision tells PHAs nothing new: PHAs have long held expansive powers to evict offending tenants and have long exercised discretion when determining how to use this power. At bottom, the court’s decision means simply that PHAs must not use their power to evict blindly, without at least considering whether eviction is warranted in each individual case. In many cases, this exercise of discretion requires PHAs to consider all the circumstances of an incident or pattern of offending behavior, such as whether the tenant knew about the misconduct or had any real control over it. PHAs should also consider the effects that eviction will have on a tenant’s dependent family members. Once the PHA considers these matters, however, they continue to have the power to evict a resident if they deem it necessary to protect the housing community.

The Lofton decision has one obvious consequence for the future of PHAs’ eviction efforts. After Lofton, a PHA pursuing a resident’s eviction must be prepared to prove to a court that it considered discretionary factors before initiating summary ejectment proceedings. We think PHAs should consult with competent legal counsel before taking any such action. The attorneys of The Banks Law Firm are prepared to help ensure that PHAs make decisions best capable of surviving any future legal challenge and avoiding the associated expenses.

For additional information about this or related matters, please contact Ted Edwards at tedwards@bankslawfirm.com or Howard Rhodes at hrhodes@bankslawfirm.com.