Amward Homes Inc v. Town Of Cary

• Decision Date: 03 August 2010
• Docket Number: No. COA09-923.,COA09-923.
• Citation: 698 S.E.2d 404
• Court: North Carolina Court of Appeals
• Parties: AMWARD HOMES, INC., Ange Construction Company, Bluepoint Homes, Inc., Homescape Building Company, Impact Design-Build, Inc., John Leggett and Company, Poythress Construction Company, Inc., Poythress Homes, Inc., Wardson Construction, Inc., WHG, Inc. d/b/a Timberline Builders, and Zeigler & Company, Plaintiffs,v.TOWN OF CARY, a body politic and corporate, Defendant.Tradition at Stonewater I, LP, Plaintiff-Intervenor,v.Town of Cary, a body politic and corporate, Defendant to claim of Plaintiff-Intervenor.

698 S.E.2d 404

AMWARD HOMES, INC., Ange Construction Company, Bluepoint Homes, Inc., Homescape Building Company, Impact Design-Build, Inc., John Leggett and Company, Poythress Construction Company, Inc., Poythress Homes, Inc., Wardson Construction, Inc., WHG, Inc. d/b/a Timberline Builders, and Zeigler & Company, Plaintiffs,

v.TOWN OF CARY, a body politic and corporate, Defendant.

Tradition at Stonewater I, LP, Plaintiff-Intervenor,

v.Town of Cary, a body politic and corporate, Defendant to claim of Plaintiff-Intervenor.

No. COA09-923.

Court of Appeals of North Carolina.

Aug. 3, 2010.

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Appeal by defendant from orders entered 5 March 2009, 1 April 2009, and 2 April 2009 by Judge Carl R. Fox in Wake County Superior Court. Heard in the Court of Appeals 9 February 2010.

K & L Gates, LLP, by William J. Brian, Jr., and Nathaniel C. Parker, Research Triangle Park, for plaintiff appellees.

The Brough Law Firm, Chapel Hill, by Michael B. Brough; and Womble Carlyle Sandridge & Rice, PLLC, Raleigh, by Burley B. Mitchell, Jr., John C. Cooke, and Michael T. Henry, for defendant appellant.

J. Michael Carpenter and Stam Danchi & Donaldson, PLLC, Apex, by Paul Stam, for Amicus Curiae Home Builders Association of Raleigh-Wake County and the North Carolina Home Builders Association.

HUNTER, JR., ROBERT N., Judge.

In 2003, Jerry Turner & Associates, the developer of a proposed subdivision called Cameron Pond, submitted a subdivision proposal to the Town of Cary. The proposal sought permission from the Town to subdivide a 143-acre tract of land into 417 dwelling units. The Town of Cary approved the subdivision proposal, which contained a condition providing that no building permit would be issued within Cameron Pond unless building applicants paid a fee, pursuant to a set schedule, for the funding of schools in the Town of Cary. Under the proposal's terms, the developer of Cameron Pond would receive the benefit of the subdivided property, while the home builders seeking building permits would be required to pay the fees. No fees were required to be paid by the developer. According to the language of the condition, the fees paid by the builders satisfied the requirements of one of the Town's ordinances.

The builders in Cameron Pond-Amward Homes, Inc., Ange Construction Company, Bluepoint Homes, Inc., Homescape Building Company, Impact Design-Build, Inc., John Leggett and Company, Poythress Construction Company, Inc., Poythress Homes, Inc., Wardson Construction, Inc., WHG, Inc. d/b/a Timberline Builders, and Zeigler & Company (collectively “plaintiffs”)-paid the fees under the condition for approximately four years before filing this action to recover the fees. The amount is around $600,000 as of the filing of this appeal. The trial court granted plaintiffs' motion for summary judgment and found that (1) the Town of Cary had violated plaintiffs' due process and equal protection rights under the United States and North Carolina Constitutions, and (2) the condition and ordinance requiring the fees were void and ultra vires. The Town has filed this appeal.

After careful review, we hold: (1) the Town of Cary engaged in ultra vires acts by accepting the fees pursuant to the condition and the subdivision ordinance, (2) plaintiffs' causes of action are not barred by the statute of limitations, (3) plaintiffs are not estopped from bringing their claims against the Town, (4) the Town of Cary violated plaintiffs' rights to due process and equal protection under the North Carolina and United States Constitutions, and (5) the trial court did not abuse its discretion in awarding plaintiffs attorneys' fees and costs. Accordingly, we affirm the trial court's orders.

BACKGROUND

On 22 July 1999, the Town of Cary enacted an “Adequate Public School Facilities” ordinance (the “APSFO”) for the following stated purpose: “The purpose of this part is to ensure that, to the maximum extent practical, new residential developments will be approved by the Town of Cary only when it can reasonably be expected that adequate public school facilities will be available to accommodate such new developments.” Under the APSFO as first adopted, developers could gain zoning approval for a new planned unit development (“PUD”) by satisfying one of two requirements: (1) obtain a Certificate of Adequate Educational Facilities (“CAEF”) from Wake County Public Schools certifying that adequate school facilities were available to accommodate residents of new homes, or (2) qualify for an exemption from the APSFO by either building in a low population density area or constructing an affordable housing project.

At the time the APSFO was first enacted, Cary's Town Council was aware that they did “not control the provision of public school facilities,” because the authority to build, fund, and manage schools fell within the exclusive province of the Wake County Public School System (“WCPSS”) and the Wake County Board of Commissioners (“WCBC”). In an effort to shore up their authority to enforce the APSFO, members of Cary's Town Council attempted to enter into a Memorandum of Understanding between the Town, WCPSS, and WCBC. The school board for WCPSS approved the memorandum, but the WCBC declined to adopt it. The resulting agreement between WCPSS and the Town of Cary was outlined in a non-binding memorandum of understanding whereby the Town and WCPSS agreed to “work cooperatively” to meet certain target percentages for school enrollment capacity over a five-year period. In order to achieve these target percentages, the parties agreed to these provisions in the memorandum of understanding:

Adequate Public Facilities Ordinance (APFO). The Town will adopt an ordinance to limit the approval of major residential developments within the Town's jurisdiction to those that can be adequately served with existing or proposed school facilities.

Establishment of Procedure to Issue Certificates of Adequate Education Facilities (CAEF's). The School System will establish an administrative review process to receive and take action upon applications for ... [CAEF's] submitted by developers who are required by the Town's [APSFO] to have such certificates before obtaining subdivision or site plan approval from the Town.

The School System will issue a CAEF for a proposed development if it concludes that, given the number of school age children projected to reside in that development, and considering all of the factors listed below, the number of students projected to attend the Wake County elementary, middle, and high schools that serve the corresponding attendance districts where the development site is located will not exceed the standards specified in paragraph 1 above.

(Underlining added.) The memorandum listed a set of factors to be considered by WCPSS in making its determination to grant a CAEF, including current student population in the area of the proposed development, future and ongoing school construction, funding for school construction projects, increases in enrollment, Cary's population growth, changes in district boundaries, and any other factor deemed relevant by WCPSS.

Neither the memorandum of understanding nor the APSFO granted the Town of Cary the authority to charge fees to developers or builders as part of the subdivision application process for the purpose of funding schools.

On 16 November 2001, the Town of Cary approved a PUD application for a subdivision called “Cary Park.” The developers of Cary Park sought permission to develop 484 acres within Cary's town limits into 2,744 residential dwelling units. As part of the approved proposal, Cary Park agreed to build an elementary school for $5,500,000.00. With respect to Cary's APSFO, the agreement contained an acknowledgment provision where the parties agreed that Cary Park's payment for the school satisfied the APSFO, even though the APSFO at this time did not allow the Town to grant an exception on such grounds.

(c) It is acknowledged and agreed that the performance of its obligations under this Paragraph 1(a) [construction of the school] by [Cary Park] shall satisfy all requirements of ... Cary Park with respect to the Town's Adequate Public Facilities Ordinance for Schools.

On 10 October 2002, Cary's Town Council approved a development plan submitted by Jerry Turner & Associates (“Amberly”). Instead of paying for a school to comply with the APSFO like Cary Park, Amberly agreed to pay a fee directly to the Town of Cary with every building permit issued for units to be built in the development. The fee schedule, as reflected in the Town Council's meeting minutes, provided:

Amberly's Proposal for Compliance with Cary's APF for Schools

                -------
                |             |One bedroom                                      |$ 500 per    |
                |             |                                                 |dwelling     |
                |-------------|-|-------------|
                |Two bedroom  |$1,000 per dwelling                              |             |
                |-------------|-|-------------|
                |Three bedroom|$2,000 per dwelling                              |             |
                |-------------|-|-------------|
                |Four bedroom |$3,000 per dwelling                              |             |
                |-------------|-|-------------|
                |Over four    |$1,000 per bedroom over four, in addition to the |             |
                |bedrooms     |four-bedroom amount                              |             |
                -------
                

This schedule was proposed by Amberly after the Planning and Zoning Board meeting but prior to the meeting of Cary's Town Council. According to the proposal, the fees were to be paid directly to the Town of Cary for school development. Between September 2002 and January 2003, Cary's Town Council approved the same payment fee schedule under the APSFO for subdivisions named “Stonewater,” “Village at the Park,” and “Riggsbee Farm.” Other proposals for developments, in particular the proposals for subdivisions “Glenkirk” and “Huggins...