Putting the “Fare” in Unfair and Deceptive Trade Practices; How a Forcible Self-Help Eviction Could Lead to Treble Damages and Attorneys’ Fees.
If you scan the categories of posts on this blog, then you probably know that N.C. Gen. Stat. § 75-1.1 covers a broad range of behaviors. One uncommon action that can fall within the auspice of section 75-1.1 is a forcible self-help eviction, an important point to be aware of during the COVID-19 pandemic. Forcible self-help evictions have been found to be actionable under section 75-1.1 in the residential and commercial contexts.
A recent decision from the United States District Court for the Middle District of North Carolina reaffirmed this point when it denied summary judgment on a section 75-1.1 claim arising out of a forcible self-help eviction of a commercial tenant.
Lola Salamah and Amro Elsayed moved to Winston-Salem in 2012 to operate a gas station and convenience store. They organized a business (Almy, LLC) and signed contracts with defendants to operate a Family Fare convenience store franchise. Donald Pilcher, a business consultant for defendants, acted as the day-to-day liaison for Family Fare.
In September 2015, Salamah and Pilcher discovered that an employee was stealing lottery tickets from the store; in total, over $22,000 worth. In the scenario of employee theft, Family Fare’s typical practice was to require the franchisee to repay the full amount of the loss by the end of the month.
Here, though, Pilcher told Salamah to fire the thief, mark the stolen tickets as sold, and repay the stolen amount in monthly increments. Salamah followed Pilcher’s advice and did not report the theft to anyone else at Family Fare. After three years, Salamah still had $10,000 left to pay.
At that point, in 2018, Salamah reached out to executives at Family Fare to ask for assistance. But when the executives learned about the theft, they terminated the franchise agreement and the lease for the store.
The Forcibly Unfair Eviction
The same day as the termination, Pilcher entered the store, confiscated the key to the safe, pushed a worker out of the way to get control of the cash register, and called Salamah to ask her to come to the store. He also called the police. When the police arrived, Salamah told them she thought that Pilcher needed a court order to force her to leave. The police officer said that he was not evicting anyone and was just there to keep the peace. While the officer was present, Pilcher summoned a locksmith and changed the locks.
Plaintiffs’ Ensuing Discrimination Suit
When Salamah and Elsayed filed suit, the centerpiece of their case was Pilcher’s alleged animus against Arab Americans. They alleged other examples of Pilcher behaving in a hostile and discriminatory manner towards employees of Arab descent. They also raised wage-and-hour claims, and two claims under state law: wrongful eviction and violation of section 75-1.1.
The Wage-and-Hour and Discrimination Claims Fared Poorly
The lion’s share of the summary judgment decision addressed the wage-and-hour and discrimination claims. Although plaintiffs were employees of Almy, they asserted that there was a joint employment relationship between defendants and Almy. The Court analyzed this question in depth but ultimately held that no such relationship existed and, thus, defendants were entitled to summary judgment on the wage-and-hour claim.
This finding carried over to the discrimination claims; if defendants were not plaintiffs’ employer, then they could not be liable under Title VII either.
Finally, the Court held that plaintiffs failed to meet their burden on the claim that the franchise agreement was terminated because of prejudice against Arab Americans, and awarded summary judgment to defendants on that claim as well.
But Wait! A Forcible Self-Help Eviction Is Unfair
Our readers are no doubt familiar with earlier decisions from the North Carolina Supreme Court holding that a practice is unfair if “it is unethical or unscrupulous” or if “it offends established public policy.”
Here, the court examined whether the evidence surrounding the self-help eviction qualified under those rubrics. The court noted that Pilcher locked plaintiffs out of the store on the day that the franchise agreement was terminated, despite plaintiffs’ objections. It also noted that Pilcher pushed a worker at the store to take possession of the cash register.
The court held that this type of conduct violates North Carolina’s long-standing public policy against forcible self-help evictions. In her decision, Judge Biggs noted that all of the dangers of such an eviction were present here: tempers flared, the police were summoned, and a (minor) physical altercation occurred. On top of that, the Winston-Salem police had to spend hours at the store monitoring the situation to prevent it from escalating further.
Taking all of this into account, the court denied defendants’ motion for summary judgment on the section 75-1.1 claim.
Don’t Take the Law into Your Own Hands
In the COVID-19 era, when businesses and landlords are both struggling, this case is a reminder that taking the law into your own hands is never a good idea. In addition to the obvious risk of breaching the peace, a landlord performing a forcible self-help eviction in North Carolina could find itself on the hook for treble damages and attorneys’ fees.
Each case is different, but availing oneself of the judicial process for evictions will avoid the risk that the tenant could later claim that a self-help eviction was a breach of the peace, and bring its own claim for violation of section 75-1.1.
Author: Jamie Weiss