IN THE SUPREME COURT OF NORTH CAROLINA No. 32 P A1 5 Filed 19 August 2016 EASTERN CAROLINA REGIONAL HOUSING AUTHORITY

v. SHERBREDA LOFTON

On discretionary review pursu ant to N.C.G.S. § 7A

- 31 of a unanimous decision of the Court of Appeals, ___ N.C. App. ___, 7 6 7 S.E.2d 6 3 (20 1 4 ), affirming a n order and judgment ent ered on 29 August 201 3 by Judge Davi d B. Brantley in District Court, Wayne County

. Heard in the Supreme Court on 16 November 2015

. Ward and Smith, P.A., by Michael J

. Parrish and E. Bradley Evans, for plaintiff

- appellant

. Robinson, Bradshaw & Hinson, P.A., by John R. Wester, Thomas Holderness, and Erik Randall Zimmerman, pro hac vice; an d Legal Aid of North Carolina, Inc., by John Keller, Theodore O. Fillette, III, Peter Gilbert, and Andrew Cogdell, for defendant

- appellee

. Brownlee Law Firm, PLLC, by William K. Brownlee, for Apartment Association of North Carolina, amicus curiae. John R. Rittelmeyer and Yasmin Farahi for Disability Rights North Carolina, amicus curiae. Francis Law Firm, PLLC, by Charles T. Francis and Ruth Sheehan, for Housing Authority of the City of Raleigh, amicus curiae.

NEWBY, Justice.E. C AROLINA R EG ’ L H OUS
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- In this case we consider whether public housing authorities must exercise discretion when pursuing evictions that are not otherwise mandated by federal law

. Recognizing that public housing is the housing of last resort, C ongress intended public housing authorities to exercise dis cret ion in certain eviction proceedings , such
as t he lease violation at issue here arising from the actions of a third party

. T he trial
court ’s findings establish that p laintiff failed to exercise its discretion before pursuing defendant’s eviction . Acco rdingly, plaintiff has not established its right to summary ejectment. Nonetheless, b ecause the Court of Appeals erred by imposing an unconscionability analysis , we modify and affirm the decision of that court

. Defendant is a tenant in Brookside Manor, which is owned and operated by plaintiff , a federally subsi di zed housing authority

. The tenancy is governed by a signed lease that contai n s various provisions required by federal law. 1 Relevant here, the lease prohibits “[a]ny drug

- relat ed criminal activity on or off the premises ” and provides that plaintiff “may terminate

. . . the Lease and the tenancy ” for any such activity “ by Tenant, any of Tenant’s household members, any guest of Tenant, or another person under Tenant’s control.” 2 Plaintiff’s “Resident Handbook” and

1 The operation and management of public housing authorities, including lease terms and procedures, are governed by the United States Housing Act of 193 7 , Pub. L. No. 75

- 412 , 50 Stat. 888 (codified as amended in scattered sections of 42 U.S.C. ) , and its regulations, see 24 C.F.R. §§ 966 .1 to 966.57 (2016).

2 The l ease defines a “ guest ” as “a person temporarily staying in the unit with the consent of Tenant or other member of the household with authority to consent on behalf of Tenant.” The l ease defines a “ person unde r T enant’s control ” as “a person not sta y ing as a guest in the dwelli ng unit, but [ one who] is or was present on the premises at the time of the activity in question becaus e of an invitation from Tenant .”E. C AROLINA R EG ’ L H OUS
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- “Admission and Continued Occupancy Policy , ” both incorporated into the lease , restate the same , characterizing “ [ d ] rug - related criminal activity engaged in on or off the premise s by a t enant, member of the tenant’s household or guest , and any such activity engaged in on the premises by any other person under the tenant’s control, [a]s grounds to terminate tenancy. ” Defendant often asked Cor y Smith to baby

- sit her children while she worked at night. On 26 April 201 3, Smith arrived at defendant’s apartment to watch the children while defendant slept before work and later while she worked

. While defendant slept , law enforcement entered the apartment and arrested Smith for outstanding child support warrants. Officers searched Smith incident to his arrest and found four small bags of marijuana in his pocket. Defendant consented to a search of her apartment, d uring which officers discovered a partially prepared “ marijuana blunt ” in plain sight, marijuana in pla in sight on the kitchen counter , plastic bags for packaging marijuana for sale , and fourteen more bags of marijuana behind a pan on the kitchen counter. Smith admitted that the marijuana belonged to him , and he was charged with felony possession with inte nt to sell and deliver a controlled substance. Defendant was not charged. On 22 May 2013, plaintiff notified defendant in writing that she had breached the lease because of the drug

- related activity that had occurred in her apartment by Smith, a person u nder her control

. P laintiff stated it had terminated defendant’sE. C AROLINA R EG ’ L H OUS
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- lease and ordered her to vacate her apartment

. When d efendant failed to comply , plaintiff sought summar y ejectment. Following a hearing, the magistrate entered judgment for plaintiff , entitling plaintiff to take possession. 3 Upon appeal to t he District Court, Wayne County , for a trial de novo , defendant admitted that Smith placed marijuana in various places in the apartment, that Smith was under her control, and that her lease made her “responsible for the conduct of her guests or persons under her control.” Plaintiff’s manager testified that she believed any drug

- related criminal activity required eviction. In its order the trial
court noted defendant’s acknowledgement that “drug

- related criminal activity” occurred in her apartment and th at such activity would “authorize P laintiff to evict her from her apartment” despite “her lack of knowledge of ” the criminal a ctivity. Nonetheless, t he trial court found in part :

8. P laintiff did not produce evidence that it considered any mitigating factors or used any discretion in making its decision to terminate Defendant’s lease. The only decision Plaintiff considered was whether Defendant met the criteria for having a person und er her control who engaged in drug

- related criminal activity.
9. I t did not appear that Plaintiff, through its two witness es , understood that it even had the authority or

3 In the initial complaint, plaintiff appears to have elected to pursue defendant’s eviction under N.C.G.S. § 42

- 63 ( 201 5 ) , which allows for eviction as a result of certain criminal activity

. Nonetheless , the complaint also describe d the specific lease terms violated by defendant

. On 8 July 2013, the parties stipulated to amend the complaint “ as though Plaintiff had selected the additional ground for eviction ‘the defendant breached the condition of the lease described below for which re

- entry is specified

. ’ ” Thereafter, both parties proceed ed solely under the lease violation theory

. Thus, a ny argument pursuant to the statutory provision is not before this Court.E. C AROLINA R EG ’ L H OUS
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- duty to consider other factors other than whether Defendant met the criteria for lease termination. The trial court denied plaintiff’s request to evict defendant , concluding that federal law required plaintiff to exercise disc retion in making its decision

. Plaintiff appealed the trial court ’s order to the Court of Appeals

. T he Court of Appeals affirmed the decision of the trial court on a different basis , c oncluding that plaintiff must prove that evicting defendant was not unconscionable under North Carolina law

. E. Carolina Reg’l Hous. Auth. v. Lofton , ___ N.C. App. ___, 767 S.E.2d 63 (2014 )

. We allowed plaintiff’s petition for discretionary review

. Contrary to the Court of Appeals ’ decision, the equitable defense of unconscionability is not a consideration in summary ejectment proceedings. To prevail in a summary ejectment proceeding un der North Carolina law , a landlord must establish by a preponderance of the evidence that a tenant breached the lease

. See N.C.G.S. § § 42

- 26(a)(2 ),

- 30 (2015 ) ; see also Du rham Hosiery Mill Ltd. P ’s hip v. Morris , 217 N.C. App. 590 , 59 3 , 720 S.E.2d 426 , 42 8 (2011 ) ( “ A tenant may be removed in a summary ejectm ent action when the tenant has ‘ done or omitted any act by which, according to the stipulations of h is lease, his estate has ceased

. ’ ” ( quoting N.C.G.S. § 42

- 26(a)(2 ) (2009) ); id. at 595

- 96, 720 S.E.2d at 429 ( rejecting as “clearly dicta ” the language in Morris v. Austraw , 269 N.C. 218, 223, 152 S.E.2d 155 , 159 (1967), perceived as requiring an unconscionability analysis ).E. C AROLINA R EG ’ L H OUS
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- If the lease at issue related to a private landlord

– tenant relationship, our analysis would end here

. When the government is the landlord, however, certain duties arise under applicable law. F ederal statutes and regulations govern federally subsidized public housing and require public hou sing authorities to incorporate certain provisions into their lease s . In its role as the final forum for review of government housing decisions, the C ourt is not to second

- guess or replace plaintiff’s discretionary decision s but to ensure procedural and substantive compliance with the federal statutory fram e work

. See Charlotte Hous. Auth. v. Patterson , 120 N.C. App. 552, 555, 464 S.E.2d 68, 71 (1995) ( “In federally subsidized housing cases, the court decides whether applicable rules and regulations have been followed, and whether termination of the lease is permissible.” (citation omitted ) )

. “ A trial court’s findings of fact are binding on appeal if supported by competent evidence

. ” Durham Hosiery , 217 N.C. App. at 592, 720 S.E.2d at 427 (citation omitt ed)

. T he trial court found that plaintiff, believing Smith’s d r u g - related activity m andated defendant’s eviction , did not exercise discretion . Thus, the sole remaining question is whether under federal law plaintiff was required to exercise some degree of discretion in its eviction decision

. F ederally subsidized public housing is a safety net designed to provide homes
to those least able to a fford other housing options. Like everyone else , individuals who live in federally subsidized housi ng are entitled to be free from “any criminal activity that threatens the health, safety, or right to peaceful enjoyment of the premises.” 42 U.S.C. § 1437 d( l ) ( 6 ) ( 2012); s ee also N .C. Const. art. I, § 1 ( “ We hold itE. C AROLINA R EG ’ L H OUS
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- to be self

- evident that all persons are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness. ” ) ; The Declaration of Independence para. 2 (U.S. 17 76) ( “ We hold these truths to be self

evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. ” )

. Recognizing the devastating effect o f illegal drugs in public housing, Congress adopted the Public Housing Drug Elimination Act of 1988 , Pub. L. No. 100

- 690, § 5122, 102 Stat. 4181, 4301 (codified as amended at 42 U.S.C. § 11901 (2012)). The Act require s lease s to include language granting public housing authorities broad discretion to terminate leases to ensure that the housing is “ decent, sa fe, and free from illegal drugs

. ” 42 U.S.C. § 11901(1). Under federal law, public housing lease s must “allow the agency .

. . to terminate the tenancy , ” id. § 13662(a) (2012 ) , for any household member “who .

. . is illegally using a controlled substance , ” id. § 13662(a)(1), or whose drug abuse “interfere[s] with the health, safety, or right to peaceful enjoyment of the premises by other residents ,” id. § 13662(a)(2)

. The l ease must prohibit not only household members from engaging in drug

- re lated activity but also forbid a ny guest or person under a tenant’s control from engaging in such activity. Id. § 1437d( l)(6) (“Each public housing agen cy shall utilize leases which

. . . provide that

. . . any drug

- related criminal activity on or off such premises, engaged in by a public housing tenant, anyE. C AROLINA R EG ’ L H OUS
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- member of the tenant’s household, or any guest or other person under the tenant’s control, shall be cause f or termin ation of tenancy [

. ] ” ) ; 24 C

. F

. R . § 966.4(f)(12)(i) , (ii) (20 1 6 ); Public Housing Lease and Grievance Procedures, 56 Fed. Reg. 51 , 560, 51 , 567 ( Oct. 11, 1991)

. Violation of these provisions “shall be cause for termination of tenancy” as determined b y the local public housing authority in its discretion . 42 U.S.C. § 1437d( l )(6 ); s ee 24 C.F.R. § 966 .4 ( l )(5)( vi i) (B) (When terminating a tenancy for drug

- related criminal activity, the housing authority “ may consider all circumstance s relevant to a particular case

. ”)

. In the seminal case interpreting public housing law , Department of Housing & Urban Development v. Rucker , 535 U.S. 125, 122 S. Ct. 1230, 152 L. Ed. 2d 258 (2002),
some tenant s questioned the extent of agency officials ’ authority to evi ct residents from public housing

. T he Supreme Court of the United States held that a housing authority could evict a tenant and her family as a result of a guest’s illegal activity even when the tenant was unaware of the activity and had no reason to suspect it

. Id. at 13 6, 122 S. Ct. at 123 6 , 152 L. Ed. 2d at 270 ; s ee also i d. at 131, 122 S. Ct. at 1234, 152 L. Ed. 2d at 267 ( “ [T] he plain language of § 1437d( l)(6) requires leases that grant public housing authorities the discretion to terminate tenancy without regard to the tenant’ s knowledge of the drug

- related criminal acti vity.” )

. The decision in Rucker , however, emphasizes the importance of housing officials exercising discretion before pursu ing these “no

- fault” evictions. Id

. at 134

- 36, 122 S. Ct. at 1235

- 36, 152 L. Ed. 2d at 268

- 70. In particular ,E. C AROLINA R EG ’ L H OUS
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- [t]he statute does not require the eviction of any tenant who violated the lease provision. Instead, it entrusts that decision to the local public housing authorities, who are i n the best position to take account of, among other things, the degree to which the housing project suffers from
“ rampant drug

- related or violent crime , ” “ the seri o usness of the offending action,” and “ the extent to which the leaseholder has

. . . taken al l reasonable steps to prevent or mitigate the offending action .” [A] local housing authority may sometimes evict a tenant who had no knowledge of the drug

- related activity. Id. at 133

- 34 , 122 S. Ct. at 1235 , 152 L. Ed. 2d at 268 (first alteration in original ) ( quoting 42 U.S.C. § 11901(2) (1994 & Supp. V) and Screening and Eviction for Drug Abuse and Other Criminal Activity, 66 Fed. Reg. 28,776, 28, 803 (May 24, 2001))

. Congress thus “afford[ed] local public housing authorities the discretion to condu ct

no - fault evicti ons for drug

- related crime,” id. at 135 , 122 S. Ct. at 1236 , 152 L. Ed. 2d
at 269 (citation omitted) , by “requir[ing ] lease terms that give local public housing authorities the di scretion to terminate the lease, ” i d. at 13 6, 122 S. Ct . at 1236 , 152 L. Ed. 2d at 270. See also id. at 130, 122 S. Ct . at 1233 , 152 L. Ed. 2d at 266 ( holding that 42 U.S.C. § 1437d( l )(6) “unambiguously require s lease terms that vest local public housing authorities with the discretion to evict tenants for th e drug

- related activity of

. . . guests ”). In sum, w hile a public housing authority may conduct no fault evictions, it must exercise discretion in doing so

. Shortly after the decision in Rucker , the federal Department of Housing and Urban Development (HU D) described the discretion given to public housing authorities to seek no - fault evictions based upon the actions of third parties

. WhileE. C AROLINA R EG ’ L H OUS
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- characterizing the power as “a strong tool , ” HUD emphasized that no

- fault evictions “should be applied r esponsibly.” Letter from Mel Martinez, Sec’y, U.S. Dep’t of Hous. & Urban Dev., to Pub. Hous. Dirs. (Apr . 16 , 2002 ) . Moreover, HUD directed that enforcement of the clause be “left to the discretion of each public housing agency

. . . to be guided by comp assion and common sense , ” with eviction as “the last option explored.” Id. Shortly thereafter , HUD reiterated that Rucker “made it clear both that the lease provision gives PHAs [Public Housing Authorities] such authority and that PHAs are not required t o evict an entire household

— or, for that matter,
anyone
— every time a violation of the lease clause occurs.” Letter from Michael M. Liu, Assistant Sec’y, U.S. Dep’t of Hous. & Urban Dev., to Pub. Hous. Dirs. (June 6, 2002)

. Instead, HUD explained, “PHAs a re in the best position to determine what lease enforcement policy will most appropriately serve the statutory interest of protecting the welfare of the entire tenant population.” Id. Accordingly, HUD “urge[d] ” PHAs, when making an ultimate decision, “to consider a wide range of factors” and to “balance them against the competing policy interests that support the eviction of the entire household.” Id. ; s ee also 24 C.F.R. § 966.4( l )(5)(vii)(B). Discretion “involve[s] an exercise of judgment and choice, not an implementation of a ha r d

- and

- fast rule exercisable at one’s own will or judgment. ” Discretion ary , Black’s Law Dictionary (10th ed. 2014). Here t he trial court concluded that plaintiff failed to exercise its discretion before seeking defendant’s e viction . The trial court found that plaintiff was unaware of its responsibility to exercise discretion ;E. C AROLINA R EG ’ L H OUS
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- therefore, p laintiff only considered whether the facts permitted eviction , thereby omitt ing the critical step of determining whether eviction should oc cur in this case

. N either the federal statutory framework nor plaintiff’s lease or policies compel eviction ; they only delineate the grounds or cause for eviction. Though the decision to evict lies in plaintiff’s discretion, which courts will not second

- guess, plaintiff does not exercise discretion when it is unaware it has a choice

. See Hous. Auth. of Covington v. Turner , 295 S.W.3d 123, 129 (Ky. Ct. App. 2009) (Moore, J., concurring) (“[D] iscretion must be exercised, rather than a blind application of the law because 42 U.S.C. § 1437d( l )(6) does not require evictions. ”)

. While we affirm the outcome of the Court of Appeals’ decision, namely that summary ejectment was inappropriate in this case, we do so for a different reason

. W e hold that plaintiff failed to exercise its discretion as required by federal law before pursuing defendant’s eviction

. Accordingly, we modify and affirm the decision of that
court.

MODIFIED AND AFFIRMED

. Justice ERVIN did not participate in the conside ration or decision of this case.