United States District Court, E.D. North Carolina, Southern Division
HELEN C. CASHWELL Trustee, BRAD R. JOHNSON, ELCI WIJAYANINGSIH, and RUSSELL W. KINCAIDE, Plaintiffs,
TOWN OF OAK ISLAND, NORTH CAROLINA; DAVID KELLY in his individual capacity; DAVID HATTEN in his individual capacity; KATIE COLEMAN in her individual capacity, Defendants.
W. Flanagan, United States District Judge.
matter is before the court on defendants' motion to
dismiss for lack of subject matter jurisdiction and failure
to state a claim, pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6) (DE 22). Also before the
court is defendants' motion to strike a portion of
plaintiffs' response in opposition to the motion to
dismiss (DE 36). The issues raised have been fully briefed,
and in this posture are ripe for ruling. For the reasons that
follow, defendants' motion to dismiss is granted for
reasons of comity, and defendants' motion to strike is
denied as moot.
OF THE CASE
case concerns the constitutionality of a municipality
collecting revenue from undeveloped property owners within a
sewer treatment district authorized by state law. Plaintiffs,
proceeding pro se, commenced this action on June 20, 2018,
alleging violation of their rights under the Fifth and
Fourteenth Amendments to the United States Constitution. In
their complaint, plaintiffs seek compensatory and punitive
damages, as well as declaratory and injunctive relief.
Defendants filed the instant motion to dismiss on October 19,
2018, asserting this action is barred by the Tax Injunction
Act (“TIA”), 28 U.S.C. § 1341, as well as
principles of comity.
initially responded in opposition only to defendants'
jurisdictional arguments, and moved to stay briefing on
defendants' 12(b)(6) motion. The court denied
plaintiffs' motion, but allowed plaintiffs leave to
respond to the remaining part of defendants' motion.
Plaintiffs followed with a supplemental brief totaling 61
pages, together with a “memorandum of clearly
established law” presenting another 49 pages of legal
arguments. Defendants moved to strike the filing in
opposition for exceeding the page limit for memoranda allowed
by Local Civil Rule 7.1(f).
facts in the complaint may be summarized as follows. Plaintiffs
are local undeveloped property owners within the jurisdiction
of defendant Town of Oak Island (“Town”).
(See Compl. ¶¶ 2-6). In 2006, the
North Carolina General Assembly granted defendant Town
authority to create a fee-supported sewer treatment district.
(Id. ¶ 14); Act of July 13, 2004, S.L. 2004-96,
2004 N.C. Sess. Laws 117 (allowing the Town of Holden Beach
to impose a sewer treatment district charge); Act of June 30,
2006, S.L. 2006-54, 2006 N.C. Sess. Laws 85 (authorizing
defendant Town to impose a sewer treatment charge on the same
terms as the Town of Holden Beach). The enabling law allows
defendant Town to “impose annual fees for the
availability of sewer service within the district”
(“charge”), which are to be “on the
property tax bill for each parcel of property lying within
the municipal limits on which the fee is imposed.” 2004
N.C. Sess. Laws at 117; 2006 N.C. Sess.
85. The charge may not exceed the cost of providing sewer
services, and “shall be imposed on owners of each
dwelling unit or parcel of property that could or does
benefit from the availability of sewage treatment.”
2004 N.C. Sess. Laws at 117; 2006 N.C. Sess. Laws at 85. The
charge is “to be used only to pay the debt service for
the sewer system.” 2004 N.C. Sess. Laws at 118; 2006
Laws at 85. The law further requires defendant Town to
“administer the fund to provide for the payment of said
sewer services provided by the county.” 2004 N.C. Sess.
Laws at 118; 2006 N.C. Sess. Laws at 85.
25, 2009, defendant Town adopted a resolution establishing a
sewer treatment district and levied a charge of $146.15 for
property tax year 2009 upon all property owners. (Compl.
¶ 15). At the same time, defendant Town also approved a
refund of the 2009 sewer treatment district charges to
developed parcel owners, but not undeveloped parcel owners.
(Id.). Following discussion and approval of the
resolution, defendant Town's mayor made the following
statement summarizing the rationale behind the measure:
Let [me] make this clear for the people watching on TV. The
annual fees imposed on parcels of property within the
district in the amount of $146.15 per parcel-everybody's
gonna get it. The collection fees will be applied to debt
service for the Town Wastewater Project; a credit will be
applied to users of the Town system. So if you're buying
water now, you're buying any kind of utility now,
you're gonna get a credit for the amount that we're
billing. This is so the parcels of property that don't
have anything on it can help pay their share which
they're not doing now. So don't let anybody tell you
that you're getting billed $146.15 and that's the way
it is. You're gonna get a credit for it. So let's
make that clear.
(Town Counsel Meeting (DE 11-2) at 4-6). Thereafter,
defendant Town proceeded to adopt similar annual resolutions.
Each year from 2015 to 2017,  defendant Town approved annual
sewer treatment district charges of $803.82, then credited
that amount back to developed parcel owners but not
undeveloped parcel owners. (Compl. ¶¶ 16-17;
see 2016 Johnson Developed Property (DE 11-4) at 2;
2016 Johnson Undeveloped Property (DE 11-5) at 2).
charges billed to plaintiffs were for the “availability
of sewer treatment service within the district.”
(Compl. ¶ 20). Plaintiffs contend that sewer treatment
service was not “available” to their undeveloped
properties because, in order to access sewer service,
defendant Town must approve a sewer hookup application and
certain development fees must be paid to develop and
establish a connection to the sewer system. (Id.;
see Town Fee Schedule (DE 11-3) at 1-2). On
September 18, 2017, plaintiff Brad Johnson
(“Johnson”) served a demand letter upon defendant
Town, requesting individually and on behalf of those
similarly situated a refund of charges paid by undeveloped
property owners. (Compl. ¶ 21; Demand Letter (DE 11-6)