EPCON HOMESTEAD, LLC, Plaintiff - Appellant, v. TOWN OF CHAPEL HILL, Defendant - Appellee.
No. 21-1713
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
March 20, 2023
PUBLISHED
Before GREGORY, Chief Judge, THACKER, and RUSHING, Circuit Judges.
Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. N. Carlton Tilley, Jr., Senior District Judge. (1:20-cv-00245-NCT-JLW)
Argued: December 9, 2022 Decided: March 20, 2023
Affirmed by published opinion. Chief Judge Gregory wrote the opinion, in which Judge Thacker joined, and Judge Rushing wrote a separate opinion concurring in the judgment.
ARGUED: Jeffrey Lawrence Roether, MORNINGSTAR LAW GROUP, Durham, North Carolina, for Appellant. Dan M. Hartzog, Jr., HARTZOG LAW GROUP LLP, Raleigh, North Carolina, for Appellee. ON BRIEF: William J. Brian, Jr., MORNINGSTAR LAW GROUP, Durham, North Carolina, for Appellant. Katherine M. Barber-Jones, HARTZOG LAW GROUP LLP, Raleigh, North Carolina, for Appellee.
GREGORY,
This case presents a narrow question: For plaintiffs challenging the constitutionality of a land-use condition, when does their Section 1983 claim accrue? Under Fourth Circuit precedent, a cause of action for a constitutional tort normally vests when the plaintiff knows or has reason to know of the injury. But Epcon Homestead, LLC (“Epcon“) believes its case warrants a departure from that standard.
The Town of Chapel Hill, North Carolina (the “Town“) requires housing developers seeking a special use permit to set aside a portion of their developments for low-income residents or pay a fee in lieu of that condition. In 2015, Epcon initiated its purchase of property subject to the fee-in-lieu. Epcon paid the requisite fee installments, commenced the development project, and sold each parcel. After Epcon satisfied its final fee installment in March 2019, it brought this lawsuit under a state cause of action to recover the whole sum it had paid to the Town and alleged federal takings and due process violations.
The district court never reached those claims, however, because it determined that Epcon waited too long to pursue them. Given that at least four years had passed between when it first learned of the special use permit condition and when Epcon filed its complaint, the district court dismissed the case under North Carolina‘s three-year statute of limitations for personal injury claims. Epcon promptly appealed, asking this Court to hold that the statute of limitations on Epcon‘s federal claims began instead when it paid the fee installments. For the reasons to follow, we decline Epcon‘s invitation and affirm the district court‘s ruling.
I.
A.
The Town adopted Section 3.10 of its Land Use Management Ordinance (“LUMO“) in 2010 “to create and preserve affordable housing opportunities for its residents” and “to provide a structure for cooperative participation by the public and private sectors in the production of affordable housing.” LUMO § 3.10; J.A. 87. This “inclusionary zoning” provision requires developers to dedicate a certain percentage of their proposed construction projects to affordable housing units. Id. § 3.10.2(a). As an alternative, the Town Council retains the discretion to approve, among other things, the payment of a fee in lieu of the set-aside. Id. § 3.10.3(d)(4); J.A. 91. The inclusionary zoning provision applies to any new residential development project that will construct at least five single-family dwellings within the Town‘s jurisdiction. Id. § 3.10.1(a).
The Courtyards of Homestead is a housing development located in the Town comprising sixty-three single-family housing units, bringing it within the inclusionary zoning provision‘s ambit. In October 2014, before Epcon acquired the property, Epcon‘s “affiliates”1 received a special use permit for the Courtyards of Homestead. Rather than abiding by the set-aside requirement, the affiliates agreed to pay the Town a $803,250 fee-in-lieu over several installments. The fee-in-lieu was a condition of the special use permit, without which the project could not be completed. Only after the installments were paid would the Town issue the certificates of occupancy for each development unit.
Following those negotiations, Epcon purchased the property “through several transactions” beginning in 2015. Epcon
B.
Once Epcon met its obligations under the special use permit and sold the sixty-three Courtyards of Homestead lots, it filed a civil complaint on October 24, 2019 in North Carolina state court. It initially brought claims under North Carolina statutory and common law to recover the $803,250 it had paid the Town, as well as the reimbursement of attorneys’ fees. Epcon then filed an amended complaint adding new claims under state and federal law. It claimed that the Town Council‘s special use permit condition was ultra vires under North Carolina law and violated the state constitution. Epcon also invoked
The district court dismissed the lawsuit because it concluded that the statute of limitations had run on the federal causes of action. Applying a three-year statute of limitations, the court first determined that a
II.
We review the grant of a motion to dismiss a complaint for failure to state a claim under
A.
There is no dispute that the applicable statute of limitations for Epcon‘s federal claim is three years. Because
Instead, the parties disagree about when the clock on Epcon‘s
in-lieu condition, then the statute of limitations period was over by the time it filed this lawsuit. However, Epcon challenges this theory. Epcon argues that the statute of limitations did not begin to run until it started making payments because the gravamen of its claim is that those payments commenced the intrusion on its constitutional rights.
“Although courts look to state law for the length of the limitations period, the time at which a
As the Supreme Court has recognized, though, the limitations period on common-law torts may not always begin on the date that a plaintiff knows or has reason to know of his or her injury. Wallace, 549 U.S. at 388. Determining when a plaintiff can obtain relief requires identification of “the specific constitutional right alleged to have been infringed.” McDonough, 139 S. Ct. at 2155 (internal quotations and citations omitted). As such, the Court observed in Wallace that the “standard rule” does not always control the start of the limitations period for a
When this Court has considered
Then, in Halle Development, Inc. v. Anne Arundel County, a developer conveyed land to the county to be used for school facilities, pursuant to an ordinance that entitled developers who made such conveyances to negotiate for land development fee credits. 121 F. App‘x 504, 505 (4th Cir. 2005) (unpublished). But the county did not give the developer credits in exchange for the land conveyance. Id. When the developer brought a takings claim a decade after the conveyance, this Court held that the statute of limitations had run. Id. at 505–06. We determined that when the developer negotiated the deal, it “knew or should have known of this alleged injury when [it] received notice that the County did not intend to provide impact fee credits in exchange for the [] Parcel.” Id. at 507.
The upshot of these decisions is that there is no “distinctive rule” in the Takings Clause context to apply for determining when the limitations period for a
Here, Epcon alleges that it suffered an injury under
B.
1.
Resisting this conclusion, Epcon maintains that it “suffered no taking or deprivation of any property interest until it was compelled to pay the challenged fees to the Town beginning in 2017 as a condition of the Town issuing certificates of occupancy for the Project.” Opening Br. at 10. It emphasizes that “[a]t any time prior to that date, Epcon could have sold the Property, requested a rezoning of the Property to pursue a non-residential use, [or] redesigned the Project in a way that did not implicate the Ordinance‘s requirements.” Id. Thus, given that “Epcon does not allege a regulatory taking” and instead “alleges an unlawful exaction that could not occur unless and until Epcon changed the use of the property,” it argues that the claim did not accrue when the special use permit was issued. Reply Br. at 6.
The distinction Epcon attempts to draw between exactions and regulatory takings proves little more than that the government need not physically appropriate property to enact a taking. Once the government conditions the grant of a land-use permit on the surrender of a landowner‘s right to just compensation, a Takings Clause claim becomes cognizable. See Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 606 (2013) (stating that the principles of takings case law “do not change depending on whether the government approves a permit on the condition that the applicant turn over property or denies a permit because the applicant refuses to do so“); accord Knick v. Twp. of Scott, 139 S. Ct. 2162, 2177 (2019) (noting that a taking “is complete at the time of the taking“); Pakdel v. City & Cnty. of San Francisco, Cal., 141 S. Ct. 2226, 2230 (2021) (holding that a taking is final when “there [is] no question . . . about how the ‘regulations at issue apply to the particular land in question‘“) (quoting Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 739 (1997)). The fact that the special use permit did not require and simply permitted Epcon to develop the land for the use described in the application (subject to the condition at issue) is hardly noteworthy—permitting a particular use is an essential feature of any permit. Thus, when Epcon learned of the special use permit condition on its recently acquired land, its takings claim became actionable.
2.
Likewise, Epcon‘s argument that each payment constituted a “continuing wrong” that tolled the statute of limitations is unpersuasive. State rules on tolling apply when a state statute of limitations is borrowed in a federal question case. See Wade v. Danek Med., Inc., 182 F.3d 281, 289 (4th Cir. 1999). In North Carolina, the “continuing wrong doctrine” extends the limitations period until “the violative act ceases.” Williams v. Blue Cross Blue Shield of N.C., 581 S.E.2d 415, 423 (N.C. 2003). In other words, “the applicable limitations period starts anew in the event that an allegedly unlawful act is repeated.” Quality Built Homes, Inc. v. Town of Carthage, 813 S.E.2d 218, 226 (N.C. 2018). Epcon argues that Quality Built Homes, compels the Court to apply the continuing wrong doctrine here. We disagree.
In Quality Built Homes, the North Carolina Supreme Court considered whether the Town of Carthage had the authority to enact and enforce portions of a water impact fee collection ordinance. Id. at 221. Thus, “[t]he essence of plaintiffs’ claim against the Town [was] that the Town ha[d] exacted unlawful impact fee payments from them.” Id. at 227. Even though “the [p]laintiffs, in [that] case, who [were] in the business of developing property, knew at the moment the Ordinances were passed, that they would be subject to the Ordinances’ requirement of the payment of water and sewer impact fees,” id. at 222, the court rejected the town‘s argument that the continuing wrong doctrine did not apply because the “plaintiffs did not sustain any direct injury at the time that the challenged impact fee ordinances were adopted[,]” id. at 227. As a result, “since plaintiffs’ injury occurred when plaintiffs made the required impact fee payments to the Town,” the court concluded that “Quality Built Homes’ claims against the Town accrued” each time it paid an impact fee. Id.
In relying on Quality Built Homes, Epcon conflates the nature of its state and federal law claims.4 While the essence of Epcon‘s state return-of-fees claim is arguably the
unlawful fee payments exacted, its
IV.
Because Epcon bought the property subject to the special use condition more than three years before it finally filed this lawsuit, its federal claims are barred by the statute of limitations. Accordingly, we affirm the district court‘s dismissal of those claims. Having disposed of Epcon‘s federal claims, we also affirm the district court‘s decision to decline supplemental jurisdiction over Epcon‘s state-law claims.
AFFIRMED
RUSHING, Circuit Judge, concurring in the judgment:
Epcon‘s
Epcon complains that the Town allegedly imposed an unconstitutional condition on its special use permit. See Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 607 (2013). Applying the standard rule, Epcon‘s takings claim and related substantive due process claim accrued by 2015, when Epcon first purchased land subject to that permit condition. See id. (unconstitutional conditions do not “take property” but rather “impermissibly burden the right not to have property taken without just compensation“); see also id. at 613 (“[T]he monetary obligation burden[s] [the plaintiff‘s] ownership of a specific parcel of land.“).
† In the analogous common-law context of trespass, a claim accrued “at ‘the time [the trespass] was committed, and not from the time when the full extent of the injury was ascertained.‘” Smith, 31 F.4th at 887 (quoting H.G. Wood, A Treatise on the Limitation of Actions at Law and in Equity 422 (John M. Gould ed., 3d ed. 1901)); see Robert Brauneis, The First Constitutional Tort: The Remedial Revolution in Nineteenth-Century State Just Compensation Law, 52 Vand. L. Rev. 57, 63, 67–71 (1999) (explaining the history of takings claims being asserted as trespass actions).
The continuing-wrong doctrine does not help Epcon. As an initial matter, the doctrine appears to be one of accrual, not tolling, so federal law controls. See, e.g., Quality Built Homes Inc. v. Town of Carthage, 813 S.E.2d 218, 226 (N.C. 2018) (explaining that “the ‘continuing wrong’ doctrine” determines when a claim “accrued” because it “does nothing more than provide that the applicable limitations period starts anew in the event that an allegedly unlawful act is repeated“). Under federal law, “[a] continuing violation is occasioned by continual unlawful acts, not continual ill effects from an original violation.” Nat‘l Advert. Co., 947 F.2d at 1166 (internal quotation marks omitted). Thus, if the alleged constitutional violation occurs “in a series of separate acts and if the same alleged violation was committed at the time of each act, then the limitations period begins anew with each violation . . . .” Id. at 1167 (internal quotation marks omitted). Epcon‘s federal claims allege the Town imposed an unconstitutional condition on its permit—a single act. Epcon‘s payments pursuant to that permit were not repeated constitutional violations but rather continual ill effects of the original violation alleged. I therefore concur in the Court‘s judgment affirming the district court‘s dismissal of Epcon‘s federal claims.