IN THE SUPREME COURT OF NORTH CAROLINA

No. 32PA15

Filed 19 August 2016

EASTERN CAROLINA REGIONAL HOUSING AUTHORITY

v.

SHERBREDA LOFTON

On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision 

of the Court of Appeals, ___ N.C. App. ___, 767 S.E.2d 63 (2014), affirming an order 

and judgment entered on 29 August 2013 by Judge David 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; and 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. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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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, Congress intended 

public housing authorities to exercise discretion in certain eviction proceedings, such 

as the lease violation at issue here arising from the actions of a third party. The trial 

court’s findings establish that plaintiff failed to exercise its discretion before pursuing 

defendant’s eviction. Accordingly, plaintiff has not established its right to summary 

ejectment. Nonetheless, because 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 subsidized housing authority. The tenancy is governed by a 

signed lease that contains various provisions required by federal law.1 Relevant here, 

the lease prohibits “[a]ny drug-related 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 1937, 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 lease 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 lease defines a “person under Tenant’s control” as “a person not staying as a 

guest in the dwelling unit, but [one who] is or was present on the premises at the time of the 

activity in question because of an invitation from Tenant.”
E. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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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 premises by a tenant, 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 Cory Smith to baby-sit her children while she worked 

at night. On 26 April 2013, 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, during which officers 

discovered a partially prepared “marijuana blunt” in plain sight, marijuana in plain 

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 intent 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 under her control. Plaintiff stated it had terminated defendant’s
E. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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lease and ordered her to vacate her apartment. When defendant failed to comply, 

plaintiff sought summary ejectment. Following a hearing, the magistrate entered 

judgment for plaintiff, entitling plaintiff to take possession.3

Upon appeal to the 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 that such activity would “authorize Plaintiff to evict 

her from her apartment” despite “her lack of knowledge of” the criminal activity. 

Nonetheless, the trial court found in part:

8. Plaintiff 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 under her control who 

engaged in drug-related criminal activity. 

9. It did not appear that Plaintiff, through its 

two witnesses, 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 (2015), which allows for eviction as a result of certain 

criminal activity. Nonetheless, the complaint also described 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 

proceeded solely under the lease violation theory. Thus, any argument pursuant to the

statutory provision is not before this Court. 
E. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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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 discretion in making its decision. Plaintiff appealed 

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

The Court of Appeals affirmed the decision of the trial court on a different 

basis, concluding 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 under 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 Durham Hosiery Mill Ltd. P’ship v. 

Morris, 217 N.C. App. 590, 593, 720 S.E.2d 426, 428 (2011) (“A tenant may be 

removed in a summary ejectment action when the tenant has ‘done or omitted any 

act by which, according to the stipulations of his 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). 
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Opinion of the Court

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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. Federal statutes and regulations govern federally 

subsidized public housing and require public housing authorities to incorporate

certain provisions into their leases. In its role as the final forum for review of

government housing decisions, the Court is not to second-guess or replace plaintiff’s 

discretionary decisions but to ensure procedural and substantive compliance with the 

federal statutory framework. 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 omitted). The trial court found that 

plaintiff, believing Smith’s drug-related activity mandated 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.

 Federally subsidized public housing is a safety net designed to provide homes 

to those least able to afford other housing options. Like everyone else, individuals 

who live in federally subsidized housing 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. § 1437d(l)(6) (2012); see also N.C. Const. art. I, § 1 (“We hold it 
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Opinion of the Court

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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. 1776) (“We hold these truths to be selfevident, 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 of 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 requires leases to include language granting public housing authorities broad 

discretion to terminate leases to ensure that the housing is “decent, safe, and free 

from illegal drugs.” 42 U.S.C. § 11901(1).

Under federal law, public housing leases 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 lease must prohibit not only household 

members from engaging in drug-related activity but also forbid any guest or person 

under a tenant’s control from engaging in such activity. Id. § 1437d(l)(6) (“Each 

public housing agency shall utilize leases which . . . provide that . . . any drug-related 

criminal activity on or off such premises, engaged in by a public housing tenant, any 
E. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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member of the tenant’s household, or any guest or other person under the tenant’s 

control, shall be cause for termination of tenancy[.]”); 24 C.F.R. § 966.4(f)(12)(i), (ii)

(2016); 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 by the local public housing authority in its discretion. 42 

U.S.C. § 1437d(l)(6); see 24 C.F.R. § 966.4(l)(5)(vii)(B) (When terminating a tenancy 

for drug-related criminal activity, the housing authority “may consider all 

circumstances 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 tenants questioned the extent of agency officials’ authority to evict residents

from public housing. The 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 136, 122 S. Ct. at 1236, 152 L. Ed. 2d at 270; see also id. 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 activity.”). 

The decision in Rucker, however, emphasizes the importance of housing 

officials exercising discretion before pursuing these “no-fault” evictions. Id. at 134-

36, 122 S. Ct. at 1235-36, 152 L. Ed. 2d at 268-70. In particular, 
E. CAROLINA REG’L HOUS. AUTH. V. LOFTON

Opinion of the Court

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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 in 

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 seriousness 

of the offending action,” and “the extent to which the 

leaseholder has . . . taken all 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 conduct 

no-fault evictions 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 discretion to terminate the lease,” id. at 136, 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 requires lease terms that vest local 

public housing authorities with the discretion to evict tenants for the drug-related 

activity of . . . guests”). In sum, while a public housing authority may conduct nofault evictions, it must exercise discretion in doing so. 

Shortly after the decision in Rucker, the federal Department of Housing and 

Urban Development (HUD) described the discretion given to public housing 

authorities to seek no-fault evictions based upon the actions of third parties. While
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Opinion of the Court

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characterizing the power as “a strong tool,” HUD emphasized that no-fault evictions 

“should be applied responsibly.” 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 compassion 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 to 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 are 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.; see 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 hard-and-fast rule exercisable at one’s own will or judgment.” 

Discretionary, Black’s Law Dictionary (10th ed. 2014). Here the trial court concluded

that plaintiff failed to exercise its discretion before seeking defendant’s eviction. The 

trial court found that plaintiff was unaware of its responsibility to exercise discretion; 
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Opinion of the Court

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therefore, plaintiff only considered whether the facts permitted eviction, thereby

omitting the critical step of determining whether eviction should occur in this case. 

Neither 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. 

We 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 consideration or decision of this case.