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.)

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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

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