JVC ENTERPRISES, LLC, as successor by merger to GEOSAM CAPITAL US, LLC; CONCORD APARTMENTS, LLC; and THE VILLAS OF WINECOFF, LLC f/k/a THE VILLAS AT WINECOFF, LLC, Plaintiffs,
CITY OF CONCORD, Defendant.
in the Court of Appeals 18 September 2019.
by Plaintiffs and cross-appeal by Defendant from an order
entered on 10 October 2018 by Judge Joseph N. Crosswhite in
Cabarrus County, No. COA19-308 Superior Court.
Scarbrough & Scarbrough, PLLC, by James E. Scarbrough,
John F. Scarbrough, and Madeline J. Trilling, and Ferguson,
Hayes, Hawkins & DeMay, PLLC, by James R. DeMay, for
Hamilton Stephens Steele Martin, PLLC, by Keith J. Merritt,
Enterprises, LLC, Concord Apartments, LLC, and the Villas of
Winecoff, LLC, ("Plaintiffs") appeal the entry of
summary judgment in favor of the City of Concord (the
"City") and dismissing Plaintiffs' complaint.
The City cross-appeals a portion of the summary judgment
order, contending the trial court impermissibly ruled on the
constitutionality of a session law. After careful review, and
able argument on behalf of the parties, we reverse the trial
court's entry of summary judgment for the City and remand
for further proceedings.
FACTUAL & PROCEDURAL HISTORY
record below discloses the following:
2004, the City enacted an ordinance requiring developers of
residential subdivisions to pay water and wastewater capacity
fees as a prerequisite for development approval by the City.
The City assessed these fees at the pre-development stage,
and developers were required to pay them before a subdivision
plat would be accepted for recordation. The fees were
distinct from ordinary installation and meter fees, as they
were collected prior to the provision of water and sewer
service and were used to fund future improvements to the
City's water and sewer systems. Plaintiffs are all
developers who built residential subdivisions inside the City
prior to October of 2016. Each of the Plaintiffs paid the
capacity fees required by the City's ordinance prior to
August 2016, our Supreme Court decided Quality Built
Homes, Inc. v. Town of Carthage, 369 N.C. 15, 789 S.E.2d
454 (2016), and held that although cities could assess fees
for water and sewer services actually furnished under the
Public Enterprise Statutes, N.C. Gen. Stat. §§
160A-11 to -338 (2015), those enabling statutes
"fail[ed] to give [cities] the essential prospective
charging power necessary to assess impact fees."
Quality Built Homes, 369 N.C. at 22, 789 S.E.2d at
459. The City subsequently amended its capacity fee ordinance
in response to Quality Built Homes in October of
2016, changing the timing of the collection of the fees from
before the subdivision plat approval phase to before the
issuance of a zoning clearance permit.
2017, Plaintiffs brought suit against the City seeking, among
other things, a judgment declaring the fees ultra
vires and awarding damages in the amount of fees paid to
the City in connection with their developments. Three similar
caseswere also filed against the City, and all
parties filed a Joint Motion for Exceptional Case Designation
under Rule 2.1 of the General Rules of Practice for the
Superior and District Courts. That motion was granted in
City moved for partial summary judgement on 17 September 2018
on Plaintiffs' claim that the City lacked authority to
levy the fees. To support its motion, the City filed an
affidavit by the city clerk which included as exhibits five
session laws amending, revising, or consolidating the
City's charter between 1959 and 1986. The first such
session law authorized a now-defunct Board of Light and Water
Commissioners of the City of Concord (the "Board")
"[t]o fix and collect rates, fees and charges for the
use of and for the services and facilities furnished or
to be furnished in the form of electrical and water
service." 1959 N.C. Sess. Laws ch. 66, § 1
(emphasis added). Another session law attached to the
affidavit revised and consolidated the City's charter,
continued the existence of the Board and its powers, and
repealed 108 scattered private, public, and session laws that
previously composed the City's charter. 1977 N.C. Sess.
Laws ch. 744, §§ 1, 5-6 (hereinafter the "1977
Charter"). A third session law-the one on which the City
premised its motion for summary judgment-again consolidated
the City's charter, dissolved the Board, and provided
that "[a]ll powers and duties of said Board shall become
powers and duties of the City of Concord[, ]" 1985 N.C.
Sess. Laws. ch. 861 § 2 (1986) (hereinafter the
"1986 Act"); at the same time, that session law also
expressly repealed all but two sections of the 1977 Charter.
Id. at §§ 2, 6.
summary judgment hearing, the City argued that it was
authorized to assess the capacity fees because the session
laws: (1) authorized the Board to levy prospective water and
sewer fees; and (2) transferred those powers to the City in
the 1986 Act. Plaintiffs countered by arguing the 1986 Act:
(1) extinguished the Board; and (2) eliminated any power to
levy prospective fees allowed in the 1977 Charter by
repealing that charter. Plaintiffs further contended that the
"powers and duties of said Board" that the 1986 Act
transferred to the City were simply those powers that would
have otherwise resided in the Board consistent with the
general Public Enterprise Statutes. Plaintiffs relied on the
doctrine of constitutional avoidance, asserting that the
City's interpretation of the pertinent session laws ran
the risk of violating the North Carolina Constitution's
prohibition against local acts relating to health and
sanitation. See N.C. Const. art. II, §
trial court granted summary judgment in the City's favor
and dismissed all of Plaintiffs' claims with prejudice on
10 October 2018. In its order, the trial court construed the
1986 Act as transferring the Board's ability to levy
prospective fees to the City; it then interpreted two local
act decisions by our Supreme Court, Town of Boone v.
State, 369 N.C. 126, 794 S.E.2d 710 (2016), and City
of Asheville v. State, 369 N.C. 80, 794 S.E.2d 759
(2016), and concluded that the 1986 Act was constitutional.