STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE F { ISEQIOR

COURT DIVISION
COUNTY OF NEW HANOVER FILE 19-CVS-4028

DAVID SCHROEDER and PEGGY

SCHROEDER,

Plaintiffs,

CITY OF WILMINGTON and CITY

OF WILMINGTON BOARD OF
ADJUSTMENT,
Defendants.

ORDER ENTERING FINAL JUDGMENT AND GRANTING

PLAINTIFFS' MOTION TO DISSOLVE STAY

THIS MATTER came before the undersigned Superior Court Judge in and for the County of
New Hanover on the 7th day of September 2022 on Plaintiffs' Motion for Entry of Final
Judgment and to Dissolve Stay. Plaintiffs were represented by Ari Bargil of the Institute for
Justice in Arlington, Virginia.] Mr. Bargil was joined by local counsel, John Branch, with the
office of Nelson Mullins, LLP of the Wake County Bar. Defendant was represented by Robert
Hagemann with the office of Poyner Spruill, LLC ofthe Wake County Bar. The Court having
reviewed the motion and having heard the arguments of counsel finds the following:

1. This matter involved a challenge to the City of Wilmington's ordinances restricting

shortterm rental properties.

2. On 14 September 2020, this Court heard argument on the Defendant's Motion for Summary
Judgment.

3. On 15 September 2020, this Court entered judgment in favor of Plaintiffs, holding that
"[t]he provisions of Wilmington City Code 18-331 are preempted by N.C. Gen. Stat. SS
160A-424(c) and N.C. Gen. Stat. 160D-1207(c) and are therefore invalid." Thus, this
Court ordered, "Wilmington City Code 18-331 is declared void and unenforceable."

I
Mr. Bargil is a Florida-barred attorney practicing in the Institute for Justice's Miami office. He is admitted to
practice pro hac vice in this case.
 A TRUE copy
CLERK OF SUPERIOR COURT
NEW HANOVE COUNT(
BY: Qatncia Cherigo
Deputy Clerk of Superior Court
4. On 17 September 2020, this Court entered an order granting Defendant's Motion to Stay
in this matter, thereby determining that "the Court's September 1 5, 2020 order granting
summary judgment in favor of Plaintiffs is stayed as to all parties other than the Plaintiffs
until this matter is fully resolved on appeal."

5. Upon the request of the parties, on 15 October 2020, this Court re-entered summary
judgment in favor of Plaintiffs in the form of a "final judgment." The final judgment again
declared that "Wilmington City Code 18-331 is declared void and unenforceable." This
Court, however, left the City's stay intact, expressly stating that the final judgment in favor
of Plaintiffs remained "stayed as to all parties other than Plaintiffs until this matter is fully
resolved on appeal."

6. On 10 November 2020, the Defendant timely filed its Notice of Appeal.

7. On 18 November 2020, the Plaintiffs timely filed their Notice of Cross-Appeal.

8. Both appeals were fully briefed, and on 17 November 2021, oral argument was held before
the North Carolina Court of Appeals.

9. On 5 April 2022, the Court of Appeals issued its decision. The Court of Appeals concluded
that it "affirm[ed] the trial court's judgment in part, reverse[d] the portion of the judgment
declaring the entirety of [Wilmington City Code 18-331] invalid, and remand[ed] for entry
of a judgment consistent with [its] holdings. Plaintiffs' cross-appeal [wa]s dismissed as
moot."

This Court, having fully apprised itself of the Court of Appeals decision, IT IS THEREFORE
ORDERED, ADJUDGED AND DECREED that, pursuant to and in light of the rationale as
articulated by the Court of Appeals, Wilmington's registration requirements for rentals, and
those provisions of the ordinance inseparable from them, are prohibited by state statute and
therefore invalid. Those invalid provisions are: (1) The general requirement established under
18-331 that owners of short-term rental properties must "register" with the City of Wilmington;
(2) the cap and distance requirements and their predicate registration provisions, i.e., the entirety of Secs.
18-331.2 and 18-331.4; (3) the proof of shared parking or parking space rental and the submission of all
shared parking agreements to the city attorney for approval prior to registration, as found in Sec. 18-331.5;
(4) the registration termination provisions, [e, the entirety of Secs. 18-331 .8.9 and .13; (5) the requirement
that a registration number be posted in a short-term rental, as found in Sec. 18-331.14(d); (6) Sec. 18-
331.7's limited application to "registered" uses only; and (7) the amortization of short-term rentals without
a registration, i.e., the entirety of Sec. ] 8-33 1 .17. These provisions, as declared by the Court of Appeals,
are invalid and therefore remain void and unenforceable.
IT IS FURTHER ORDERED that, pursuant to and in light of the rationale as articulated by the
Court of Appeals, the following provisions of the Wilmington City Code 18-331 are not
preempted by Section 160D-1207(c) as such provisions "do[) not require registration to be
enforceable": (1) the restriction of whole-house lodging to certain zoning districts, i.e., the
entirety of Sec. 18-331. l ; (2) the requirement that there be at least one off-street parking space
per bedroom, whether on-site or off-site through shared parking or parking space rental
agreements, i.e., the

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remaining portions of Sec. 18-331.5 not held preempted above; (3) the prohibition against variances by
the board of adjustment in Sec. 18-331.6; (4) requirements that shoft-term operators comply with all
applicable laws, disallow events and large gatherings, maintain adequate insurance, keep adequate
records, ensure refuse is appropriately stored and collected, refrain from preparing and serving food, and
prohibit cooking in individual bedrooms i.e., the entirety of Secs. 18-331.10-.12. and .15-.16; (5) the
requirement that certain information unrelated to registration be posted in the rental, i.e., Secs.
and (e); and (6) any provisions of the Ordinance not otherwise held preempted above.

IT IS FURTHER ORDERED that the Plaintiffs' Motion to Dissolve stay is hereby GRANTED. The terms
of this Order constitute final judgment in this matter and, as a result of the dissolution of the Defendant's
stay, shall have general applicability. Accordingly, the offending provisions ofthe

Defendant's ordinance, as identified by the Court of Appeals and incorporated herein, are void and
unenforceable.

This the I day of September 2022.

Hon. Ph Ilis M. Gorham,

Superior Court Judge Presiding
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STATE OF NORTH CAROLINA COURT OF JUSTICE

COURT DIVISION
COUNTY OF NEW HANOVER

DAVID SCHROEDER and PEGGY

SCHROEDER,

Plaintiffs,

CITY OF WILMINGTON and

CITY OF WILMINGTON BOARD OF
ADJUSTMENT,
Defendants.

ORDER GRANTING PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND

COSTS

THIS MATTER came before the undersigned Superior Court Judge in and for the County of
New Hanover on the 7th day of September 2022 on Plaintiffs' Motion for Attorneys' Fees and
Costs. Plaintiffs were represented by Ari Bargil of the Institute for Justice in Arlington,
Virginia. I Mr. Bargil was joined by local counsel, John Branch, with the office of Nelson
Mullins, LLP of the Wake County Bar. Defendant was represented by Robert Hagemann with
the office of Poyner Spruill, LLC of the Wake County Bar.

The Court having reviewed the motion and having heard the arguments of counsel, makes the
following findings:

1. The City of Wilmington is a party to this proceeding.

2. In this proceeding, the Plaintiffs challenged an ordinance enacted by the City of

Wilmington to regulate short-term rentals through a registration and lottery system. The
Plaintiffs alleged that the ordinance was preempted by state statute. On summary
judgment, the Plaintiffs prevailed.
 3. On appeal of this Court's ruling granting summary judgment in favor of Plaintiffs, the
North Carolina Court of Appeals held that "Wilmington's registration requirements for
rentals, and those provisions of the ordinance inseparable from them, are prohibited by

I
Mr. Bargil is a Florida-barred attorney practicing in the Institute for Justice's Miami office. Fb*mitted to

CLERK OF SUPERIOR COURT

NEW HANOVER COUNTY
BY'. (Patricia % Chengo
Deputy Clerk of Supeiior Court
state statute and therefore invalid[.]" Schroeder v. City of Wilmington, 2022-
NCCOA210, VI.
4. In explaining its finding, the North Carolina Court of Appeals held that state statute
prohibiting the ordinance enacted by Wilmington and challenged by Plaintiffs was "in no
way ambiguous," and therefore the City's "Ordinance [was] prohibited by the statute's
straightforward language to the extent it requires Plaintiffs 'to register rental property with
the city.' " Id. 1123 (quoting N.C. Gen. Stat. 160A-424(c) (2017)).
5. As such, the North Carolina Court of Appeals found that the ordinance, enacted by
Defendant City of Wilmington and challenged by Plaintiffs, violated an unambiguous
statute getting limits on the City of Wilmington's authority by requiring registration of
short-term rental properties.

6. Under North Carolina law, reasonable attorneys' fees are therefore appropriate here. Per
state statute:

In any action in which a city or county is a party, upon a finding that the
city or county violated a statute or case law setting forth unambiguous
limits on its authority, the court shall award reasonable attorneys' fees and
costs to the party who successfully challenged the city's or county's
action. . . . For purposes of this section, "unambiguous" means that the
limits of authority are not reasonably susceptible to multiple
constructions.

N.C. Gen. Stat. 6-21.7,

7. The Court finds that the elements of N.C. Gen. Stat. S 6-21.7 are satisfied here.
Specifically, the City of Wilmington is a party to this action; the City violated a statute
"setting forth unambiguous limits on its authority" because the statute was "not reasonably
susceptible to multiple constructions"; and Plaintiffs "successfully challenged the city's . .
. action."
8. The Court finds that Plaintiffs prevailed in both the trial court and at the Court of Appeals.
In doing so, Plaintiffs have secured virtually all of the relief desired when this lawsuit was
initiated. Additionally, Plaintiffs success has impacts beyond Plaintiffs themselves: The
offensive provisions of Defendant's ordinance are unenforceable against all Wilmington
 properties while other municipal entities in North Carolina are also prohibited from
crafting such regulations.

9. Plaintiffs submitted affidavits appending detailed records describing the time expended
for their work in this case. Additionally, Plaintiffs submitted an affidavit from Alex Dale,
a local practitioner who testified that the fees sought by Plaintiffs—both in terms of their
hourly rate and total amount sought—are reasonable in light of the experience and
expertise of Plaintiffs' counsel, the needs of this case, and are consistent with market rates.

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10. Accordingly, the Court finds that the attorneys' fees sought by Plaintiffs through the
Motion—$304,564.20, or approximately 80% of the amount of attorneys' fees of which
Plaintiffs submitted evidence—is reasonable in light of the work perforned and success
obtained and are consistent with market rates.

11. The Court also finds that the total costs sought by Plaintiffs—$2,055.26—are reasonable.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Plaintiffs are entitled to

attorney fees and costs, pursuant to N.C.G.S. 6-21.7. Therefore, the Court awards attorneys' fees
in the amount of $304,564.20 and costs in the amount of $2,055.26 to the Plaintiffs.

IT IS FURTHER ORDERED that payment in the amount of $3 06,619.46 is to be made payable

to counsel for Plaintiffs no later than sixty (60) days from the date of this Order.

This the day of September 2022.

Hon. PI Ilis M. Gorham,

Superior Court Judge Presiding
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