Tommy Davis Construction Inc. v. Cape Fear Public Utility Authority et al

Filing 51

ORDER granting 20 Motion for Summary Judgment and denying 31 Motion for Summary Judgment: Plaintiff is awarded $34,268.96, together with pre-judgment interest at the rate of 6% per annum on that amount from July 13, 2006, until the d ate judgment is entered hereon. Upon entry of judgment, interest shall continue to accrue at the federal, post-judgment rate until the judgment is satisfied. The clerk is directed to enter judgment accordingly and to close this case. Signed by Senior Judge Malcolm J. Howard on 7/7/2014. (Lee, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO.: 7:13-CV-2-H

TOMMY DAVIS CONSTRUCTION
INC.,
Plaintiff,

v.

ORDER

CAPE FEAR PUBLIC UTILITY
AUTHORITY and NEW HANOVER
COUNTY,
Defendants.

This matter is before the court on parties'
for

summary judgment

have been filed.

[DE #20,

#31].

cross-motions

The appropriate responses

This matter is ripe for adjudication.
PROCEDURAL HISTORY

Plaintiff brought suit in the Superior Court of New Hanover
County,

North Carolina,

federal

constitutional claims

process,

on December 2,

2011,

alleging state and

for ultra vires,

substantive due

Plaintiff amended his complaint

and equal protection.

to include defendant New Hanover County on December 4, 2012.

On

January

to

remove

3,
to

2013,
this

defendant
court

based

New

Hanover

upon

the

County
federal

petitioned

constitutional

claims of substantive due process and equal protection.

On

September

judgment,

to

which

plaintiff replied.

plaintiff

2013,

2 6'

defendants

moved

responded

On September 30,

2013,

in

summary

opposition

and

defendants moved for

summary judgment, to which plaintiff responded.
2013,

for

On November 20,

the parties jointly moved to stay the pending motions for

summary
This

judgment

motion

reached.

was

to

allow

allowed,

time
but

for
no

settlement
settlement

negotiations.
was

ultimately

The stay upon the instant motions was lifted by order

on January 14, 2014.
STATEMENT OF FACTS

Plaintiff is a North Carolina corporation in the business
of

building

subdivision
consisting
homes.

residential
Becker

of

Woods

is

at

the
for

located

outside the

developed

Plaintiff

lots

twenty-nine

Becker Woods

Hanover County,

homes.

in

Cape

("Becker

single-family
the

Woods") ,

residential

southern part

incorporated areas

the

of New

of the City of

Wilmington.
Defendant Cape Fear Public Utility Authority ("CFPUA")

is a

water and sewer authority that provides services in New Hanover
County.

It was created in 2007 by consolidating county and city

governments'

independent water and sewer systems.

While CFPUA

is authorized to provide services throughout all of New Hanover
County,

portions of the county are served by private water and

2

Becker Woods is

sewer companies or wells and septic systems.

and always has been serviced by the private provider Aqua North
Carolina

Inc.

provider

of

("Aqua
water

NC") .

and

Aqua

was

and

is

services

sewer

NC

the

only

in

the

subdivisions

surrounding Becker Woods.
Defendant
maintained

New

New

Hanover

Hanover

County
County

("the
Water

County")
and

( "NHCWSD")

before CFPUA came
sewer

the

Sewer

into existence.

water

and

County.
The

services

NHCWSD' s

County

properties

in

service area

enacted
within

various

NHCWSD's

ordinances

District

areas

of

Becker Woods

applicable

jurisdiction.

and

NHCWSD provided

unincorporated

included the

created

One

such

the

area.

to

those

ordinance

created a "facility fee" 1 for residential units due at the time
of building permit application.
Plaintiff began development of Becker Woods
part

of

this

process,

plaintiff

Building Permit Applications.
a

building

which

permit,

contained

the

charges

New

issued

impact

Engineering

fees

for

property pursuant to the County Ordinances.
disputed
properties

these
were

impact
to

be

fees,

Hanover

As

County

At the time plaintiff applied for

County
for

submitted

in 2004.

arguing

connected

1

to

This was also known as an "impact fee"
the ordinance.
3

each

Sheets,

applicable

Plaintiff initially

that
the

Fee

the
Aqua

Becker
NC

Woods

wastewater

in other versions of

However,

system.

plaintiff

eventually

paid

the

impact

fees,

received its building permits, and developed Becker Woods.
NHCWSD and its successor, CFPUA,
by

plaintiff

and

infrastructure

other

with

used the impact fees paid

developers

the

goal

of

to

expand

providing

its

wastewater

expanded

coverage in the unincorporated areas of the County.
CFPUA have

been

planning

to

provide

services

which include Becker Woods, since 1976.

to

service

NHCWSD and
those

areas,

CFPUA has yet to expand

sewer service to Becker Woods.
COURT'S DISCUSSION
I.

Standard of Review

Summary judgment is appropriate pursuant to Rule 56 of the
Federal

Rules

material

fact

of

Civil

exists

Procedure

and

the

judgment as a matter of law.
477

u.s. 242, 247

bears

the

initial

(1986).
burden

when

moving

no

genuine

party

Anderson v.

is

issue

of

entitled

to

Liberty Lobby,

Inc.,

The party seeking summary judgment
of

demonstrating

genuine issue of material fact.

the

Celotex Corp.

absence

v.

Catrett,

of

a

477

u.s. 317, 325 (1986).
Once the moving party has met
party

may

not

rest

on

the

its burden,

allegations

or

the non-moving
denials

in

its

pleading, Anderson, 477 U.S. at 248, but "must come forward with
'specific

facts

showing

that

there

4

is

a

genuine

issue

for

trial.'"
Corp.,

Matsushita

475 U.S.

Summary

Supp.

574, 587

judgment

disputed

factual

123,

Elec.

is

(1986)

not

a

issues.

125

Indus.

Co.,

v.

Zenith

Radio

(quoting Fed. R. Civ. P. 56(e)).

vehicle

for

Faircloth v.

(E.D.N.C.

Ltd.

1993) .

the

court

United

Instead,

to

resolve

States,
a

837

trial

F.

court

reviewing a claim at the summary judgment stage should determine
whether a genuine issue exists for trial.

Anderson, 477 U.S. at

249.
In

making

inferences
favorable
Inc . ,

3 69

this

drawn
to

from

the

U. S .

determination,
the

the

underlying

non-moving party.
6 54 ,

6 55

(19 6 2 )

court

facts

in

must
the

view

light most

United States v.

(per

curiam) .

the

Only

Diebold,
disputes

between the parties over facts that might affect the outcome of
the

case

Anderson,

properly
477 U.S.

preclude

the

at 247-48.

entry

of

summary

judgment.

The evidence must also be such

that a reasonable jury could return a verdict for the non-moving
party.

Id.

at

248.

Accordingly,

the court must examine "both

the materiality and the genuineness of the alleged fact issues"
in ruling on this motion.
II.

Faircloth, 837 F. Supp. at 125.

Analysis
Plaintiff claims that the assessment of impact fees was not

a reasonable exercise of defendants'
act beyond their statutory authority.

5

powers, but an ultra vires
"An act by a private or

municipal
purposes

corporation
or

powers

corporation

by

ordinances."
(N.C.
172,

198 6) ;
17 5

see

(N.C.

government

expressly

its

Rowe

ultra

is

or

if

also

and

Franklin

County,

Craig v.

and possess

only

is

349
of

beyond

conferred

the

upon

the

statutes

relevant

County

(" [Counties]

it

impliedly

charter

v.

2002)

vires

S.E.2d

Chatham,

65,

and
68-69

565

S. E. 2d

are instrumentalities of state

those

powers

the

General

Assembly

has conferred upon them.").
Impact
capital
local

fees
upon

fee

require
the

government

a

issuance

then uses

and

sewer

and

sewer

boards

the

of

a

North

power

to

to

pay

building

the proceeds

infrastructure.

rates,

developer

"establish,

substantial

permit,

of the

Carolina

a

fees

grants

system,

furnished

for water

county water

revise

and

collect

The
services

or

to

be

furnished

by

any

sanitary

sewer

water system or sanitary sewer and water system of the

district."

N.C. Gen. Stat. § 162A-88.
statutory

'to be

authorization

furnished'

for

fees

assessing

is not limited to the

County,

Stat.

§

398

S.E.2d 475,

162A-88).

However,

6

485

(N.C.

1990)

"for

financing

maintenance and improvements of existing customers."

Gen.

the

fees or other charges and penalties for the use of or the

services

Harnett

and

of

McNeill v.

(quoting N.C.

"such fees will not be upheld

if

they

are

Homebuilders

unreasonable."

Ass'n

v.

City

of

Charlotte, 442 S.E.2d 45, 51 (N.C. 1994).
A.

Statute of Limitations

As an initial matter,
limitations

applies

plaintiff's

claims

limitations

or

to

the parties dispute which statute of

this

are

ultra

vires

untimely

laches.

North

due

claim

to

and

the

Carolina

whether

statute

enumerates

statutes of limitations for different types of claims,

of

several
finally

listing a catchall time of ten years for any non-listed claims.
N.C. Gen. Stat.
(statute

of

§

1-56.

See also N.C. Gen. Stat.
for

limitations

§§

a

a

claim based

upon

1-52, 1-53
statute

is

three years, and for contracts it is two years).
North Carolina courts have held that ultra vires claims for
charging

fees

without

statutory

statute of limitations.
S.E.2d 404,
(N.C.
Durham,
review

419-20

2011);

see

630 S.E.2d 200,
denied,

Amward Homes,

(N.C.
also

633

authority

Ct.

App.

208

S.E.2d

(N.C.
678

Ct. App.

claim for a county's ultra vires acts
claim).

Thus,

ten-year
698

aff'd 716 S.E.2d 849

Owners

(N.C.

a

Inc. v. Town of Cary,

2010),

Durham Land

have

2006)

Ass'n

v.

2006),

County

writ denied,

(recognizing

is not a

of

that

contract-based

the shorter statutes of limitations do not apply

in this case.

7

Plaintiff filed his claim well within the ten-year statute
of

limitations.

doctrine

of

defendants

Nonetheless,

laches

should block his

also

assert

However,

claim.

the

"equity

will not bar relief on the ground of laches except upon special
facts

demanding

S.E.2d

256

exceptional

(1969),

and

relief,"

defendants

Howell
have

of

Alexander,

165

demonstrated

not

claim

v.

the

necessity of such exceptional relief.
B.

As

Ultra Vires

to

plaintiff's

underlying

ultra

vires,

the

parties dispute centers upon whether the impact fee charged upon
issuance
services

of

the

"to

building

be

permit

furnished,"

for

as

Becker

Woods

authorized

by

was

for

statute. 2

Defendants rely heavily on McNeill for the assertion that they
could charge developers

in areas within their

jurisdiction for

services to be furnished when water and sewer service is not yet
available.

McNeill, 398 S.E.2d at 485.

In McNeill,

the county and sewer district defendants were

sued by plaintiff property owners seeking to avoid the county's
ordinance

requiring connection to

398 S.E.2d at 477.

the

sewer

system.

McNeill,

The county held a public hearing concerning

2

The parties also disagree about whether there were valid
ordinances to allow defendants to charge the impact fee in this
case.
The court need not reach this question because to the
extent any "general, special or local laws" are inconsistent
with N.C. Gen. Stat. § 162A-88, they are inapplicable pursuant
to N.C. Gen. Stat. § 162A-89.
8

financing

the

proposed

sewer

system

on

March

15

1982,

in

response to a finding of unsanitary conditions requiring such a
system.

The county raised local funds,

in part,

by charging a

fee to landowners before the sewer system was constructed.
system

was

then

constructed,

and

completed

by

1984,

additional user fees and connection charges were assessed.
Regarding
built,
Gen.

the

early

fee

imposed

before

the

sewer

The
when
Id.

system was

the court found that the fee was valid pursuant to N.C.

Stat.

§

162A-88 as a fee for a service "to be furnished,"

where indeed the sewer system was completed for the landowners
within two years of payment.
In

stark

contrast

to

Id. at 485.
McNeill,

defendants

in

the

instant

matter have been developing "plans" to provide water and sewer
services to the
includes

southern portion of New Hanover County,

Becker Woods,

since

197 6.

As

plaintiff points

which
out,

these plans are at best vague, and some plans even indicate that
water and sewer services will not need to be provided by the
government because service is already available through Aqua NC.
(See Pl.'s Ex.
taken

concrete

16 at 7, Ex. 15 at C00386.)
steps

to

services to Becker Woods.

actually

provide

Defendants have not
water

and

sewer

As of the time of filing the instant

motions, Aqua NC continued to provide services to Becker Woods,
eight years after plaintiff paid the impact fees,

9

and Aqua NC

intends

to

continue

to

provide

those

services.

unaware of any plan by any other entity,

Aqua

NC

is

including defendants,

to ever provide water and sewer services to Becker Woods or any
other areas in southern New Hanover County that are serviced by
Aqua NC.

(Pl.'s Ex. 23, Roberts Aff.)

Because no clear steps have been taken over the past decade
since Becker Woods was first permitted for defendants to provide
water and sewer services, the assessment of impact fees was not
a reasonable exercise of defendants' powers, but an ultra vires
act beyond their statutory authority.

See Rowe,

349 S.E.2d at

68-69.
C.

Remedy

The appropriate remedy for an ultra vires fee charge is to
refund the fees.
(citing

Smith

S.E.2d

874,

Chapel
883

entitled to a
Additionally,
cases,

Durham Land Owners Ass'n,
Baptist

(N.C.

full

1999)

City

of

517

plaintiffs

"that

Durham,

are

illegally collected fees")).

pre-judgment interest is appropriate to assess in

proprietary function.

where a municipality is engaged in a

Id. at 208.

interest rate is 6% per annum.
Plaintiff
of

v.

(holding

refund of the

such as this one,

issuance

Church

630 S.E.2d at 207

paid defendants

its

The applicable pre-judgment

N.C. Gen. Stat.
$34,268.96

building permit

10

for

in

§

153A-324.

impact

Becker Woods,

fees
thus

upon
it

is

entitled to a refund of that amount. 3
on July 13,

2006,

thus prejudgment

The last payment was made
interest shall accrue

from

that date to the date of entry of this order.
CONCLUSION

For the

foregoing

reasons,

plaintiff's motion for

summary

judgment is GRANTED [DE #20], and defendants' motion for summary
judgment is DENIED

[DE #31].

Plaintiff is awarded $34,268.96,

together with pre-judgment interest at the rate of 6% per annum
on that amount from July 13,
entered hereon.

satisfied.

until the date

judgment is

Upon entry of judgment, interest shall continue

to accrue at the federal,
is

2006,

The

post-judgment rate until the judgment

clerk

is

accordingly and to close this case.

3

directed

to

enter

judgment

4

In the amended complaint the total amount of fees alleged was
$34,236.06.
However, the total of $34,308.96 was alleged on
summary judgment to be the correct amount.
The court's
examination of the underlying documentation of fees is that the
fees total to a cost of $40 less than what plaintiff alleges on
summary judgment.
(Pl.'s Ex.
6.)
$1,529.55 + $1,341.90 +
$1,374.98 + $1,529.55 + $1,366.20 + $1,383.08 + $1,383.75 +
$1,532.25 + $1,593.00 + $1,518.75 + $1,383.75 + $36.45 + $36.45
+ $1,532.25 + $1,532.25 + $1,383.75 + $1,417.50 + $1,383.75 +
$1,552.50 + $1,417.50 + $1,559.80 + $1,552.50 + $1,620.00 +
$1,687.50 + $1,620.00 = $34,268.96.
Defendants do not contest
the amount of fees paid by plaintiff, as evidenced by New
Hanover County Fee Sheets attached to plaintiff's motion.
4
Plaintiff also indicated in its motion for summary judgment
that it seeks attorney's fees and costs.
Costs may be sought by
application in accordance with the local rules after entry of
judgment.
Local Civ. R. 54.1. Attorney's fees may be sought by
motion in accordance with Rule 54 (d) of the Federal Rules of
Civil Procedure.
11

'("if

This~

day of July 2014.

~

Senior United States District Judge

At Greenville, NC
#33

12