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Phillips v. Orange County Health Dep't

Court of Appeals of North Carolina

November 18, 2014

ROBERT M. PHILLIPS, SR., THOMAS E. OSBORNE, and wife KAREN L. OSBORNE, Plaintiffs
v.
ORANGE COUNTY HEALTH DEPARTMENT, Defendant

Heard in the Court of Appeals 4 June 2014.

Page 812

[Copyrighted Material Omitted]

Page 813

Appeal by defendant from order entered 11 June 2013 by Judge George B. Collins in Orange County Superior Court, No. 12 CVS 1848.

Hoof Hughes Law, PLLC, by James H. Hughes, for plaintiff-appellees.

Orange County Attorney's Office, by Annette M. Moore, Jennifer Galassi, and John L. Roberts, for defendant-appellant.

CALABRIA, Judge. Judges BRYANT and GEER concur.

OPINION

Page 814

CALABRIA, Judge.

The Orange County Health Department (" defendant" ) appeals from an order granting summary judgment and declaratory judgment in favor of Robert M. Phillips, Sr. (" Phillips" ), Thomas E. Osborne (" Osborne" ), and Karen L. Osborne (collectively, " plaintiffs" ). The trial court found (1) that defendant had no authority to inspect and charge fees for inspecting plaintiffs' wastewater systems; and (2) that defendant is statutorily preempted from regulating any wastewater treatment systems permitted by the North Carolina Department of Environment and Natural Resources (" NCDENR" ) under rules adopted by the North Carolina Environmental Management Commission (" EMC" ) pursuant to Article 21, Chapter 143 of the General Statutes of North Carolina. The court also awarded plaintiffs attorneys' fees. We affirm.

I. Background

Plaintiffs own properties in Orange County, North Carolina that failed perk tests, which determine whether land is suitable to percolate wastewater. Since the properties were determined to be unsuitable for traditional septic tank systems for wastewater disposal, plaintiffs' properties utilize " spray irrigation" wastewater systems designed to discharge effluent directly to the land surface (" spray irrigation system" ). NCDENR is the agency that designed a method of advancing its statutory purpose of administering a complete program of water and air conservation, by issuing permits for property owners utilizing spray irrigation systems in North Carolina. See N.C. Gen. Stat. § § 143-211(c); -215.1(a4) (2013).

On 18 April 1997 and 14 February 2005, plaintiffs obtained permits from NCDENR allowing them to use spray irrigation systems on their properties. The conditions of the permits were that the systems would be periodically inspected by NCDENR, and that plaintiffs would be billed and be responsible for paying NCDENR an " administering and compliance fee." Plaintiffs executed operation and maintenance agreements with NCDENR, indicating that they would maintain their spray irrigation systems in compliance with the permitted conditions.

Prior to the events of the instant case, Phillips received a notice of late inspection fees from defendant. When Phillips inquired into the matter, questioning defendant's authority to inspect and charge fees, defendant indicated that the Orange County Board of Health had approved a program " whereby all non-discharge systems permitted by the State . . . would be inspected on a periodic basis[,]" and that Phillips' spray irrigation system was subject to inspection.

Defendant subsequently attempted to inspect plaintiffs' spray irrigation systems. Osborne objected to an inspection of his spray irrigation system because the State of North Carolina had recently inspected it. Despite Osborne's objection in December 2011, defendant again attempted to inspect his spray irrigation system in January 2012. After being deterred by a locked gate, defendant sent Osborne an incomplete inspection report and invoice, along with a request that he contact defendant to schedule an inspection appointment. On 15 March 2012, defendant received an inspection payment from Osborne, along with a letter indicating that " [p]ayment is made under protest and believe [sic] to be fraudulent."

Defendant encountered similar resistance from Phillips in its efforts to inspect his spray irrigation system. In July 2012, Phillips contacted defendant, indicating that he did not want his system inspected, and that he did not want any of defendant's employees on his property without his permission. Phillips and defendant subsequently corresponded regarding defendant's authority to

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inspect Phillips's spray irrigation system and charge fees for such inspections. In August 2012, defendant informed Phillips of a proposed date to inspect his spray irrigation system. Phillips indicated that he was unavailable on the proposed date and referred the matter to his attorney. However, Phillips stated that while he was amenable to the inspection being conducted while he was present, he refused to pay the accompanying fee.

On 16 November 2012, defendant sent letters to plaintiffs, requesting permission to enter plaintiffs' properties to inspect the spray irrigation systems and informing them that defendant would seek administrative inspection warrants if permission was not granted. Plaintiffs' counsel advised defendant of plaintiffs' position that defendant had no legal authority to conduct the requested inspections. Counsel further requested that defendant notify him should it seek administrative inspection warrants, so that he could object to the warrants at that time. Plaintiffs' counsel also noted that plaintiffs were amenable to supervised inspections, but that they would not pay fees for the inspections. On 28 November 2012, defendant sought and obtained administrative inspection warrants to complete inspections of both plaintiffs' spray irrigation systems. Defendant executed the warrants on 29 November 2012, and sent invoices to plaintiffs for inspection costs.

On 14 December 2012, plaintiffs filed a complaint seeking a declaratory judgment in Orange County Superior Court. Plaintiffs alleged, inter alia, that since plaintiffs' spray irrigation systems were permitted by NCDENR under rules adopted by the EMC, defendant had no right to inspect, or charge fees for inspecting, plaintiffs' systems. Plaintiffs sought to enjoin defendant from (1) conducting further inspections of plaintiffs' systems; or (2) taking any action to collect inspection fees for plaintiffs' systems. Plaintiffs also sought to recover attorneys' fees from defendant, and to have defendant refund the inspection fees it had collected.

On 22 January 2013, defendant filed an answer, a motion to dismiss, and a motion for judgment on the pleadings. Plaintiffs filed a motion for summary judgment on 16 April 2013. After a hearing, the trial court entered an order finding that defendant was preempted by statute from regulating plaintiffs' type of wastewater treatment system and enjoining defendant from taking any action to collect fees from inspections that had already been conducted on plaintiffs' spray irrigation systems. The trial court also ordered defendant to refund Osborne's inspection fee, which he had paid under protest. Defendant appeals.

Defendant raises several issues on appeal, including (1) that the trial court lacked subject matter jurisdiction; (2) that the trial court erred in declaring that defendant was statutorily preempted from regulating wastewater systems permitted by NCDENR under rules promulgated by the EMC and had no right to inspect or collect fees for inspecting plaintiffs' wastewater systems; (3) that the trial court erred by granting summary judgment in favor of plaintiffs; (4) that the trial court erred by failing to grant defendant's motion to dismiss or its motion for judgment on the pleadings; and (5) that the trial court erred by awarding plaintiffs costs and attorneys' fees.

II. Subject Matter Jurisdiction

We first address defendant's jurisdictional claims. Specifically, defendant contends that the trial court lacked subject matter jurisdiction because (1) defendant is not the real party in interest; (2) necessary parties were not joined; (3) there was no justiciable claim; (4) plaintiffs' complaint was defective as a result of failing to allege a waiver of sovereign or ...


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