BILL CLARK HOMES OF RALEIGH, LLC, Plaintiff, v. TOWN OF FUQUAY-VARINA, Defendant.
No. COA21-79
IN THE COURT OF APPEALS OF NORTH CAROLINA
Filed 21 December 2021
2021-NCCOA-688
Wake County, No. 19 CVS 11428
Appeal by plaintiff from order entered 9 October 2020 by Judge Vince Rozier in Wake County Superior Court. Heard in the Court of Appeals 19 October 2021.
Ward and Smith, P.A., by Christopher S. Edwards, Ryal W. Tayloe, and Jordan M. Spanner, for plaintiff-appellant.
Hartzog Law Group LLP, by Dan M. Hartzog, Jr., and Katherine Barber-Jones, for defendant-appellee.
Plaintiff Bill Clark Homes of Raleigh, LLC, appeals from the trial court‘s order granting Defendant Town of Fuquay-Varina‘s motion to dismiss. After careful review, we reverse and remand for further proceedings.
I. Background
Plaintiff is a North Carolina limited liability company that develops and builds planned communities in the Raleigh area. On 7 October 2014, Plaintiff entered into a development and infrastructure agreement (“the Agreement“) with the Town, permitting Plaintiff to build a residential subdivision (“Sunset Glen“) containing 46 single-family homes. The Agreement principally concerned the Town‘s extension of municipal water and sewer services to Sunset Glen. To facilitate municipal water and sewer service at Sunset Glen, Plaintiff agreed that it would build water and sewer lines within the development to the Town‘s specifications in exchange for the Town expanding its water and sewer systems by building a water line to Sunset Glen and building a sewage pumping station on site. Plaintiff also agreed that it would “pay all applicable development fees, including capacity fees, recreation unit fees and other applicable fees as prescribed by the Town‘s Code of Ordinances and Annual Budget Ordinance and Fee Schedule.”
On 4 February 2016, the Town sent Plaintiff an invoice for $241,500, labeled “WATER & SEWER CONNECTION/INSPECTION FEES,” which was due prior to approval of the final plat of the subdivision. Of that amount, $195,000 was for “CAPACITY FEES” (“the Fees“): a water-capacity fee of $1,500 per unit and a sewer-capacity fee of $2,750 per unit, which were its usual and standard fees. Plaintiff paid the invoice balance in full by check dated 1 September 2016.
On 16 August 2016, our Supreme Court filed its opinion in Quality Built Homes Inc. v. Town of Carthage (Quality Built Homes I), 369 N.C. 15, 789 S.E.2d 454 (2016). In Quality Built Homes I, the Court “consider[ed] whether the Town of Carthage exceeded its municipal authority under the Public Enterprise Statutes, [
Recognizing that municipalities are “creations of the legislature” and thus “have only those powers delegated to them by the General Assembly[,]” our Supreme Court determined that “[w]hen Carthage adopted the ordinances at issue here, it exercised power that it had not been granted.” Id. The crux of the issue in Quality Built Homes I was Carthage‘s argument that the imposition of “impact fees” fell “squarely within its ‘authority to charge “fees” or “charges” ’ under [
On 20 August 2019, Plaintiff filed suit against the Town, seeking a declaratory judgment that the Fees were unlawful and demanding a refund. In its complaint, Plaintiff asserted that the Town charged the Fees pursuant to § 5-1016 (“the Ordinance“) of the Town‘s Code of Ordinances. Plaintiff further alleged:
14. Town Ordinance § 5-1016 required Plaintiff to pay said Capacity Fees before the Town would approve the final plat of the subdivision, i.e., before the Town would approve the development of Sunset Glen.
15. Pursuant to Town Ordinance § 5-1016, the Town used some of the Capacity Fees it collected “to build capital reserve funds for future investment in water and sewer collection, distribution and treatment facilities.”
16. Pursuant to Town Ordinance § 5-1016, the Town used some of the Capacity Fees it collected to fund future expansion of its water and sewer system.
Plaintiff then summarized our Supreme Court‘s holding in Quality Built Homes I before alleging:
21. Pursuant to Town Ordinance § 5-1016, the Town charged Capacity Fees for water and sewer services “to be furnished.”
22. Pursuant to Town Ordinance § 5-1016, the Town charged such Fees at the time of final subdivision plat approval.
23. The Capacity Fees collected by the [T]own from Plaintiff on or about September 1, 2016, were unauthorized by legislative act or statute, were ultra vires, and are unlawful.
Plaintiff maintained that the Agreement was unenforceable under Quality Built Homes I “to the extent [that] it required Plaintiff to pay Capacity Fees in connection with the development of Sunset Glen[.]”
On 4 November 2019, the Town filed a motion to dismiss pursuant to
The Town has met its obligations under the . . . Agreement, and Plaintiff accepted said benefits of the . . . Agreement, and cannot now challenge the terms of the [A]greement. To the extent Plaintiff contends that the Town did not meet its obligations under the . . . Agreement, [Plaintiff‘s] exclusive remedy lies in a claim for breach of contract[.]
On 22 September 2020, the Town‘s motion to dismiss came on for hearing in Wake County Superior Court before the Honorable Vince Rozier. On 9 October 2020, the trial court entered its order granting the Town‘s motion and dismissing Plaintiff‘s complaint with prejudice. Plaintiff timely filed notice of appeal.
II. Discussion
Plaintiff argues that the trial court erred by granting the Town‘s motion to dismiss. We agree.
A. Standard of Review
We review de novo a trial court‘s order on a motion to dismiss for failure to state a claim pursuant to
B. Capacity Fees
On appeal, Plaintiff argues that the trial court erred in granting the Town‘s motion to dismiss because it “incorrectly adopted the Town‘s argument that the statute governing development agreements,
For the purposes of this appeal, we need not determine the merits of Plaintiff‘s claim; our task is to ascertain whether the trial court‘s dismissal of Plaintiff‘s complaint pursuant to
Assuming, as we must on review of a motion to dismiss, that the Town assessed fees for services “to be furnished,” Quality Built Homes I supports Plaintiff‘s claim that the fees were unlawful. The Ordinance plainly provides for the payment prior to plat approval of capacity fees “to build capital reserve funds for future investment in water and sewer collection, distribution and treatment facilities.” As the Town conceded at oral argument, a portion of the Ordinance is unlawful under Quality Built Homes I. Nevertheless, the Town maintains that although the Fees were standard and not negotiated, the Fees are lawful because they were not assessed pursuant to the Public Enterprise Statutes, but rather as part of the parties’ bargained-for exchange, as memorialized in the Agreement. However, liberally construing Plaintiff‘s complaint, for the purpose of our review, we must accept as true Plaintiff‘s allegation that the Town assessed the Fees pursuant to the Ordinance. Accordingly, the complaint on its face finds support in Quality Built Homes I.
Similarly, we cannot conclude that the complaint, on its face, lacks sufficient facts to state a claim for relief or contains any facts that necessarily defeat Plaintiff‘s claims. Plaintiff alleged that the Town assessed the Fees for future services pursuant to the Ordinance, and that under Quality Built Homes I, such assessment is impermissible. Although the Town contends that the Fees were not assessed for future services, when pressed at oral argument for record evidence supporting that contention, the Town asserted that the Agreement—which Plaintiff attached as an exhibit to its complaint—represents the bargained-for exchange between the parties and does not indicate that the Fees were assessed for future services. Indeed, in its appellate brief, the Town argues that the Agreement “concerns only provision
However, construing the complaint liberally and taking the allegations therein as true, we conclude that the Agreement‘s terms do not rise to the level of “some fact disclosed in the complaint [that] necessarily defeats . . . [P]laintiff‘s claim.” Id. (citation omitted). The Agreement does not indicate whether the Fees were, in fact, assessed for past, current, or future services. Such evidence would presumably be the subject of discovery on remand.
C. Statute of Limitations
On appeal, the Town presents an alternative argument that this action is time-barred by
While the Town disagrees with Plaintiff‘s allegation that the Fees were unlawful capacity fees, the Town maintains that even assuming, arguendo, that Plaintiff is correct, “Plaintiff‘s claim is time-barred because it was brought more than one year after the regulation was applied to Plaintiff.” The Town asserts that former
However, in Quality Built Homes II, our Supreme Court considered, inter alia, whether the plaintiffs’ claims against the Town of Carthage—first addressed in Quality Built Homes I—were time-barred “by the one-, two-, three-, or ten-year statute[s] of limitations[,]” and if so, which one applied. 371 N.C. at 61, 813 S.E.2d at 220. Our Supreme Court noted that “the essence of [Quality Built Homes I] was that the Town had acted unlawfully by assessing a water and sewer impact fee not authorized” by the Public Enterprise Statutes, and concluded that “the claim recognized in [Quality Built Homes I] was, when viewed realistically, one resting upon an alleged statutory violation that resulted in the exaction of an unlawful payment which [the] plaintiffs had an inherent right to recoup.” Id. at 73, 813 S.E.2d at 228. Accordingly, our Supreme Court concluded that
Although the Town of Carthage “asserted that a number of shorter limitations periods” should have governed, our Supreme Court disagreed. Of particular relevance here, our Supreme Court reasoned that it was “unable to conclude that the one-year statute[s] of limitations set out in
Notwithstanding the Town‘s arguments on appeal, we are unable to distinguish the nature of the claim in Quality Built Homes I from the claims that Plaintiff raises here. As in that case, “the essence” of Plaintiff‘s claims is “that the Town . . . acted unlawfully by assessing a water and sewer impact fee not authorized” by the Public Enterprise Statutes. Id. at 73, 813 S.E.2d at 228. These claims are thus “resting upon an alleged statutory violation that resulted in the exaction of an unlawful payment which [Plaintiff] ha[s] an inherent right to recoup.” Id. We conclude that the reasoning of Quality Built Homes II applies with equal force to the case before us, and the Town‘s argument in the alternative is overruled.
III. Conclusion
After careful review of Plaintiff‘s complaint, we cannot say that “no law supports . . . [P]laintiff‘s claim[,]” nor that the complaint
Accordingly, the trial court‘s order is reversed and this case is remanded for further proceedings. We offer no opinion on the validity of Plaintiff‘s claim at this stage of the litigation, and we anticipate that the development through discovery of a more fulsome record will provide the trial court with the evidence required to determine whether Plaintiff‘s claims have merit.
REVERSED AND REMANDED.
Judges INMAN and COLLINS concur.