Decided: December 1, 2015
The Fourth Circuit affirmed the ruling of the district court.
Plaintiff, Tommy Davis Construction, Inc. (“Davis Construction”), while developing a residential subdivision named Becker Woods, arranged to have Aqua NC provide water and sewer services to each lot in the subdivision. In February 2005, Davis Construction applied for building permits from the County for Becker Woods. The County informed Davis Construction that it would be required to pay “impact fees” to the Water and Sewer District, even though the County would not be providing water and sewer services to Becker Woods. Therefore, Davis Construction was required to pay fees to both Aqua NC and the County’s Water and Sewer District. Davis Construction objected repeatedly, but eventually paid the fees. Between March 2005 and July 2006, Davis Construction paid $34,268.96 in impact fees to build houses on 23 lots. In 2007, the County created Cape Fear Public Utility Authority (“Authority”), which assumed all the rights and liabilities of the Water and Sewer District and began operating the public water and sewer system in the region. During this period, the Authority and the County changed the prior impact fee policy, and as a result, when Davis Construction applied for another lot in Becker Woods, the County did not collect an impact fee. Davis Construction subsequently requested a refund for his previous impact fees, but the Authority denied the request. As a result, Davis Construction commenced this action, seeking a refund of the impact fees it paid to the Water and Sewer District in 2005 and 2006, plus interest and attorney’s fees.
The district court, on the parties’ cross-motion for summary judgment, ruled in favor of Davis Construction, holding that the Defendants’ collection of impact fees from Davis Construction for the Becker Wood property was “an ultra vires act beyond their statutory authority.” The court ordered Defendants to pay plaintiffs $34,268.96 with interest, plus attonrey’s fees of $20,000.
On appeal, the Court first addressed the Defendants’ argument that the district court erred in refusing to dismiss Davis Construction’s claims as untimely. The Court found that while the federal due process claims were time barred, Davis Construction’s state claims were timely filed. The Court concluded that N.C. Gen. Stat. § 1-56, which provides a 10-year statute of limitations, applied to Davis Construction’s state-law claims, and were therefore filed well within the limitations period.
The Court next addressed whether the district court erred in concluding that Defendants’ collection of impact fees from Davis Construction was ultra vires. The district court concluded that the Defendants’ failed to show that they would be able to furnish water and sewer services, per the requirements of N.C. Gen. Stat. §162A-88, to Becker Woods within any meaningful time in the future. The Court agreed with the district court’s reasoning and concluded that the Defendants exceeded their statutory authority by requiring Davis Construction to pay the impact fees. Further, the Court held that the district court had authority to award attorney’s fees to Davis Construction.
Accordingly, the Court affirmed the district court’s judgment and its award of attorney’s fees.
Meredith Weisler