Non-resident Dare County property owners Joseph and Linda Blackburn of Richmond, Va. claim in the class-action complaint they filed May 15 against Dare County and the county’s six beach towns, including Southern Shores, that they “lost the fair market rental value and value of use of [their Dare County] property” during the 45 or more days that they were prohibited from accessing the Outer Banks because of the COVID-19 emergency.
These are the financial damages they claim: the loss of “fair market rental value” and the loss of use value. They are not claiming specific rental income losses.
If the Blackburns, who own a home in Frisco, or any “similarly situated individuals” in the class of plaintiffs—which has not yet been certified by the federal court—suffered any income loss, it was more likely due to the County’s two-month-long visitor ban, not the access restriction on non-resident property owners.
The Beacon has finally obtained, and perused, a copy of the complaint filed in the U.S. District Court for the Eastern District of North Carolina by the Blackburns’ attorney, Lloyd C. (“Clif”) Smith, Jr., of Pritchett & Burch, PLLC, of Windsor.
According to the complaint in Blackburn et al v. Dare County and the towns of Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head and Manteo, the plaintiffs allege that the County’s ban on non-resident property owners’ access between March 20 and May 4-8 constitutes:
“a temporary complete taking by regulation by the governmental units, which are the Defendants herein, of the Plaintiffs’ property rights as the Plaintiffs had no rights whatsoever to and in their real property in Dare County but were subjected to continual [sic] taxes and such utilities bills as may be required.” (Paragraph 17 of the complaint)
How do you quantify in dollars the value of “a temporary complete taking” of property?
The complaint suggests that you look at property taxes and utilities paid by the plaintiffs during the period of access denial.
In a Pritchard & Burch intake form titled, “New Client Questionnaire Dare County Temporary Taking,” which The Beacon also obtained, Mr. Smith seeks the amount potential plaintiffs paid in 2019 Dare County property taxes and their average monthly income for renting their properties, as well as their water and utility bill payments for March, April, and May.
The suggestion is that the value of what the Blackburns and “similarly situated individuals” lost when they could not access their properties would be the sum of a prorated amount of annual property tax, water and utility bills for the six weeks, plus such other damages as may be determined. (“Similarly situated” is a standard legal definition for plaintiffs in a class.)
Mr. Smith asserts in the complaint that the matter in controversy exceeds $5 million.
Dare County has insurance in the amount of $2 million, according to an informed Beacon source who requested anonymity because of potential personal consequences. The County also has a substantial reserve fund, the amount of which we will not cite without official Dare County corroboration.
The Blackburns’ lawsuit is what all attorneys recognize as a “1983” claim, which is brought pursuant to title 42 of the United States Code, chapter 21, section 1983. (The U.S. Code codifies all federal statutes.) Section 1983 is invoked in federal court for alleged violations of constitutional rights by States, including local governments and their officials.
The specific violation alleged here is a governmental taking of private property—albeit a temporary taking—without due process of law.
The Beacon has learned that personal-injury litigators, Corey Ann Finn and Stuart Wade H. (“Wade”) Yeoman, of the Louisville, Ky. firm of Finn & Yeoman, will be working with Pritchard & Burch on the case.
Litigators Christopher Geis and Brian F. Castro, who are in the Winston-Salem office of the national law firm of Womble Bond Dickinson, have entered appearances in the lawsuit on behalf of Dare County.
The case, no. 2:20-cv-00027, was assigned to U.S. District Court Judge Louise Wood Flanagan and referred to mediation on May 19.
According to Pritchard & Burch’s and Finn & Yeoman’s client retainer agreement, the attorneys are to be compensated for their services by the greater dollar amount of one of the following two methods, and we quote:
- “The attorneys will diligently seek reimbursement and apply to the court for an award of fees and costs to be paid by defendants, and attorneys will further seek such reimbursement of costs and attorneys’ fees by way of any settlement. Client understands that such an award of attorneys’ fees and costs may be dependent upon the contingencies of the settlement process, court approval, and various methods of calculation including hours expended, costs advanced, etc. and that the final amount is within the discretion of the court and/or the defendant for approval.” OR
- “Attorneys will be compensated on a contingent fee basis calculated as follows: “A maximum of thirty-three and one-third percent (33 1/3%) of the gross amount of the recovery made on behalf of the client by way of settlement, verdict, or other form of recovery.”
The retainer contract also specifies that any settlement, verdict, or judgment on behalf of the plaintiff class will first be reduced by “costs” that have been advanced by the plaintiffs’ attorneys and have not been paid by the defendant(s). These costs are not spelled out in the contract.
IN OTHER NEWS ABOUT LITIGATION STEMMING FROM THE COUNTY’S ACCESS PROHIBITIONS . . .
OBX Today reports today that a group of vacation-home renters “signed a retainer” yesterday with a Greenville law firm to represent them in a class-action lawsuit against Surf or Sound Realty of Hatteras Island for its failure to refund security deposits and other monies they paid for rentals that were canceled because of Dare County’s ban on visitor access during the COVID-19 emergency.
The group reportedly has hired the personal-injury firm of the Law Offices of James Scott Farrin of Greenville to help them obtain the refunds that Surf or Sound has withheld.
Surf or Sound’s refusal to return monies to the thwarted vacationers contravenes an opinion issued earlier this year by the N.C. Real Estate Commission, which said that vacation property owners must return funds to lessees who could not access their vacation homes.
Clif Smith, who is representing the non-resident property owners in the Blackburn lawsuit, is representing Surf or Sound Realty. According to OBX Today’s report, Mr. Smith contends that Dare County and the Outer Banks’ town governments should refund any monies advanced, not Surf or Sound and the homeowners it represents.
According to OBX Today, Surf or Sound originally told canceled vacation renters that they would be receiving refunds, but then it reversed its decision in May, offering to book later alternative vacation weeks instead.
The N.C. Real Estate Commission ruled March 19 that the N.C. Vacation Rental Act mandates the return of monies to visitors for vacations to be held in houses that cannot be “provided.” But we could not find a provision in the statute that requires a landlord to do more than provide “fit and habitable” premises.
N.C. Attorney General Josh Stein supported the Real Estate Commission’s ruling.
The Commission is an independent state agency that licenses and regulates N.C. real estate agents.
A court may give deference to an opinion by the N.C. Attorney General and/or the N.C. Real Estate Commission, but it is not bound by it.
ANN G. SJOERDSMA, 6/6/20