A North Carolina Superior Court Judge has approved a settlement valued at more than $7 million dollars ($3,750,000.00 in cash and $3,279,343.55 in debt waiver) for claims under state unfair debt collection statutes filed on behalf of tenants of Southwood Realty Company, a North Carolina property management company.
The class action, initially filed in Cumberland County Superior Court on September 1, 2018, alleged that Southwood Realty Company violated the Residential Rental Agreements Act, N.C.G.S. § 42-46 by charging and collecting various fees in connection with filing eviction actions.
The Plaintiff, Angela Stewart, was represented by attorneys Edward H. Maginnis and Karl S. Gwaltney with Maginnis Law, PLLC and Scott Harris and Patrick Wallace at Whitfield Bryson LLP.
The eviction-related fees in question included a complaint-filing fee, sheriff service fee, and an attorneys’ fee that the Plaintiff contended were prohibited by North Carolina law. Southwood Realty Company strongly disagreed with Plaintiff’s interpretation and contended throughout the litigation that it was entitled to assess and collect the eviction fees.
The Plaintiff also alleged that the charging of the eviction-related fees violated the North Carolina Debt Collection Act, N.C.G.S. § 75-50 et seq. which prohibits debt collectors from making unlawful threats or misrepresenting amounts due.
Recognizing that the payment of hundreds of dollars of unexpected fees can result in tenants falling behind on their rent, attorneys for the Plaintiff negotiated the release and waiver of more than $3.2 million in rental payments and other amounts owed by tenants of Southwood Realty Company.
Similarly, tenants who were evicted from Southwood Realty Company could request a “set-aside and dismissal.” This set-aside and dismissal allowed class members to have eviction judgments removed from their rental record. This is an important component of the settlement because tenants are oftentimes excluded from renting apartments if they have even a single prior eviction judgment.
Shortly before filing this lawsuit, various landlord industry groups lobbied the North Carolina General Assembly to change the law and allow these fees to be assessed and collected.
The Honorable Allen Baddour was the Superior Court Judge presiding over this case because it was designated as exceptional pursuant to North Carolina General Rule of Practice, Rule 2.1. The class includes thousands of tenants who were charged eviction-related expenses and potentially subjected to improper collection attempts between 2014 and 2018. No class members objected to the settlement.
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