D.R. Horton, Inc. v. City of Charlotte

• Decision Date: 25 October 2019
• Docket Number: CIVIL ACTION NO. 3:19-CV-015-KDB-DCK
• Court: U.S. District Court — Western District of North Carolina
• Parties: D.R. HORTON, INC., TRUE HOMES, LLC, CALATLANTIC GROUP, INC., STANDARD PACIFIC OF THE CAROLINAS, LLC, WEEKLEY HOMES, LLC, SHEA BUILDERS, LLC, D.R. HORTON-REGENT, LLC, LENNAR CAROLINAS, LLC, SHEA HOMES, LLC, M/I HOMES OF CHARLOTTE, LLC, Plaintiffs, v. CITY OF CHARLOTTE, Defendant.

D.R. HORTON, INC., TRUE HOMES, LLC, CALATLANTIC GROUP, INC.,STANDARD PACIFIC OF THE CAROLINAS, LLC, WEEKLEY HOMES, LLC,SHEA BUILDERS, LLC, D.R. HORTON-REGENT, LLC, LENNAR CAROLINAS, LLC,SHEA HOMES, LLC, M/I HOMES OF CHARLOTTE, LLC, Plaintiffs, v. CITY OF CHARLOTTE, Defendant.

CIVIL ACTION NO. 3:19-CV-015-KDB-DCK

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION

October 25, 2019

MEMORANDUM AND RECOMMENDATION

THIS MATTER IS BEFORE THE COURT on "Defendants' Motion For Judgment On The Pleadings" (Document No. 21). This motion has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. §636(b), and is now ripe for disposition. Having carefully considered the arguments, the record, and the applicable authority, the undersigned will respectfully recommend that the motion be denied.

I. BACKGROUND

Plaintiffs initiated this action with the filing of a "Class Action Complaint" (Document No. 1) against the City of Charlotte and Charlotte Water f/k/a Charlotte-Mecklenburg Utility Department ("Defendants") on January 11, 2019. Plaintiffs' "First Amended Class Action Complaint" (Document No. 15) (the "Amended Complaint") was then filed on February 4, 2019. Plaintiffs contend that Defendants violated their "substantive due process rights by adopting, assessing, and collecting the unlawful and ultra vires water and wastewater capacity fees as a mandatory condition to Defendants' furnishing future water and wastewater service to Plaintiffs' real properties." (Document No. 15, p. 2). Plaintiffs are residential homebuilders who filed "this class action on behalf of themselves and all similarly situated entities and individuals who were charged and paid Defendants' unlawful capacity fees from three (3) years prior to the commencement of this action through June 30, 2018." Id.

The Amended Complaint includes the following claims for relief: (1) Declaration that Defendants' Adoption and Enforcement of the Capacity Fees was Ultra Vires; (2) Declaration that Defendants' Adoption and Enforcement of the Capacity Fees Violated Plaintiffs' Right to Substantive Due Process;: (3) Refund of Water and Wastewater Capacity Fees as Damages 42 U.S.C. § 1983 and N.C. Gen. Stat. § 160A-363; (4) Unconstitutional Exaction Without an Essential Nexus or Rough Proportionality; and (5) Costs, Expenses, and Attorneys' Fees. (Document No. 15, pp. 19-28). Defendants' "Answer To Amended Complaint" (Document No. 18) was filed on February 21, 2019.

Defendant asserts that at the time Plaintiffs filed this action, a prior action had been filed by a class of plaintiffs identical to the class of plaintiffs in this action and was pending in Mecklenburg County Superior Court against the same Defendant City of Charlotte, addressing the same subject matter. (Document No. 21-1, p. 6). The prior action, Daedalus, LLC, Epcon Communities Carolinas, LLC v. City of Charlotte, Case No. 18-CVS-21073, (the "State Court Action") was filed on or about November 5, 2018, on behalf of Daedalus, LLC "and similarly situated developers with property located in Charlotte, North Carolina." (Document No. 21-1, p. 2). An "Amended Complaint" was filed in the State Court Action on or about February 14, 2019. Id. (citing Document No. 21-3).

In this action, "Defendants' Motion For Judgment On The Pleadings" (Document No. 21) was filed on March 2, 2019. On March 15, 2019, the parties filed a "Stipulation Of Dismissal Of Charlotte Water f/k/a Charlotte Mecklenburg Utility Department" (Document No. 23). Also filed on March 15, 2019, was "Plaintiffs' Memorandum Of Law In Opposition To Motion For Judgment On The Pleadings" (Document No. 24) and the parties' "Certification And Report Of F.R.C.P. 26(f) Conference And Discovery Plan" (Document No. 25). "Defendants' Reply To Plaintiffs' Memorandum..." (Document No. 26) was filed on March 22, 2019.

This case was reassigned to the Honorable Kenneth D. Bell on June 14, 2019. On June 20, 2019, Judge Bell referred the pending "...Motion For Judgment On The Pleadings" to the undersigned Magistrate Judge.

The undersigned issued an "Order" (Document No. 27) on October 2, 2019 directing the parties to file a Status Report on or before October 11, 2019, that included: "(1) an update on the related state court action; (2) proposed revised case deadlines; and (3) a report on the result of early settlement discussions."

The parties' "Joint Status Report" (Document No. 28) was filed three (3) days late on October 14, 2019, and failed to include proposed revised case deadlines or a report on the result of early settlement discussions. Instead, the parties requested "that the Court stay discovery and deadlines in this matter pending disposition of the State Court Action at the state trial court."¹ (Document No. 28). According to the parties' "Joint Status Report," the State Court Action has a hearing on motions for summary judgment scheduled for December 18, 2019, and trial scheduled for February 24, 2020. (Document No. 28).

Despite this Court "direct[ing] the parties to discuss the possibility of settlement and include the result of those efforts in their Status Report(s)," the parties apparently failed to discuss an early settlement of this case. See (Document No. 27, p. 2; Document No. 28, p. 2).

The pending motion is now ripe for review and a recommended disposition to the Honorable Kenneth D. Bell.

II. STANDARD OF REVIEW

Rule 12(c) provides that "[a]fter the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings. Fed.R.Civ.P. 12(c). "A Rule 12(c) motion tests only the sufficiency of the complaint and does not resolve the merits of the plaintiff's claims or any disputes of fact." Massey v. Ojaniit, 759 F.3d 343, 353 (4th Cir. 2014) (quoting Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir. 2014)). In resolving a motion for judgment on the pleadings, a court must accept the nonmovant's allegations as true and view the facts in the light most favorable to the nonmoving party. Bradley v. Ramsey, 329 F.Supp.2d 617, 622 (W.D.N.C. 2004).

A motion for a judgment on the pleadings is decided under a similar standard as a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), "with the key difference being that on a 12(c) motion, 'the court is to consider the answer as well as the complaint.'" Bradley, 329 F.Supp.2d at 622 (quoting Continental Cleaning Serv. v. United Parcel Serv., Inc., 1999 WL 1939249, at *1 (M.D.N.C. 1999)); see also Burbach Broadcasting Co. of Delaware v. Elkins Radio, 278 F.3d 401, 405 (4th Cir. 2002). "[D]ocuments attached to the Answer are part of the pleadings for Rule 12(c) purposes, and may be considered without converting a motion for judgment on the pleadings into a motion for summary judgment, only if the documents are central to the Plaintiff's claim and the authenticity is not challenged." Mendenhall v. Hanesbrands, Inc., 856 F.Supp.2d 717, 724(M.D.N.C. 2012). The Court may consider materials referenced in, incorporated by reference, or attached to the pleadings, as well as exhibits to a Rule 12(c) motion that are integral to the complaint and authentic. See Fed.R.Civ.P. 10(c); Massey, 759 F.3d at 353; see also Massey, 3:11-CV-477-RJC-DCK, 2012 WL 2992129, at *2-3 (W.D.N.C. July 20, 2012).

III. DISCUSSION

The "... Motion For Judgment On The Pleadings" (Document No. 21) asserts that dismissal pursuant to Fed.R.Civ.P. 12(c) is appropriate because: (1) "Defendant Charlotte Water does not have the capacity to be sued;" (2) the "Prior Pending Action Doctrine bars this lawsuit;" and (3) this Court lacks jurisdiction "because the federal claims in this case are inextricably woven with the state common law claims." (Document No. 21, p. 2). The first argument has been mooted by the parties' "Stipulation Of Dismissal Of Charlotte Water ..." (Document No. 23); therefore, the undersigned will focus on the City of Charlotte's ("Defendant") second and third arguments. See (Document No. 24, p. 2, n.1).

A. Prior Pending Action

In support of its argument that this case should be dismissed based on a prior pending action, Defendant first provides the following synopsis of legal authority.

Under the doctrine of prior action pending, "where a prior action is pending between the same parties for the same subject matter in a court within the state having like jurisdiction, the prior action serves to abate the subsequent action." Eways v. Governor's Island, 326 N.C. 552, 554, 391 S.E.2d 182, 183 (1990). The fact that the prior action was pending in two separate jurisdictions (e.g. state v. federal) does not preclude abatement of the subsequently filed action. Id. at 560-61, 187 (holding that "a prior action pending in a federal court within the territorial limits of the state constitutes grounds for abatement of a subsequent state action on substantially similar grounds between the same parties.") The purpose of the prior action pending doctrine is to avoid subsequent actions that are wholly unnecessary and to promote judicial economy. See Id.

"The ordinary test for determining whether or not the parties and causes are the same for the purpose of abatement by reason of the pendency of the prior action is: Do the two actions present a substantial identity as to parties, subject matter, issues involved, and relief demanded?" Jessee v. Jessee, 212 N.C. App. 426, 438, 713 S.E.2d 28, 37 (2011) (quoting Cameron v. Cameron, 235 N.C. 82, 85, 68 S.E.2d 796, 798 (1952).

Here, the state action involves the same parties, subject matter, issues, and demanded relief as the instant case and was pending before the Mecklenburg County Superior Court at the time the instant case was filed. See Exhibits 1 and 2 and ECF Doc. Nos. 1 and 15.

(Document No. 21-1, pp. 6-7).

Defendant contends that the "Parties in this action and the state court action are identical." (Document No. 21-1, p. 7). Specifically, Defendant contends that Plaintiffs in both actions are developers who...