K.L.N. Constr. Co. v. Town of Pelham, 2013-374

• Decision Date: 10 December 2014
• Docket Number: No. 2013-374,2013-374
• Citation: 167 N.H. 180,107 A.3d 658
• Parties: K.L.N. CONSTRUCTION COMPANY, INC. & a. v. TOWN OF PELHAM
• Court: New Hampshire Supreme Court

167 N.H. 180

107 A.3d 658

K.L.N. CONSTRUCTION COMPANY, INC. & a.

v.TOWN OF PELHAM

No. 2013-374

Supreme Court of New Hampshire.

Argued: March 5, 2014

Opinion Issued: December 10, 2014

Cronin, Bisson & Zalinsky, P.C., of Manchester (John G. Cronin and

Daniel D. Muller, Jr. on the joint brief, and Mr. Cronin orally), for the petitioners.

Beaumont & Campbell, P.A., of Salem (Bernard H. Campbell on the joint brief), for the intervenor.

Donahue, Tucker & Ciandella, PLLC, of Exeter (Katherine B. Miller on the brief and orally), for the respondent.

BASSETT, J.

The petitioners, K.L.N. Construction Company, Inc., Cormier & Saurman, LLC, and Brian Soucy, and the intervenor, Gerald Gagnon Sr. (collectively, the petitioners), appeal an order of the Superior Court (Nicolosi , J.) dismissing their petition for declaratory judgment and writ of mandamus seeking the return of impact fees paid to the respondent, the Town of Pelham (Town). In its order, the trial court ruled that it was within the Town's statutory authority to adopt an ordinance that allows current property owners to seek a refund of unencumbered impact fees. The trial court ruled that the petitioners had no standing to seek the return of the impact fees. We affirm.

The record establishes the following facts. In 1999, the Town adopted an impact fee ordinance pursuant to RSA 674:16 (2008) and RSA 674:21, V (2008) (amended 2012). The ordinance allowed the Town to assess fees on new development in order to pay for capital improvements necessitated by the development. The ordinance also provided that, if the Town had not spent or otherwise encumbered the impact fees within six years, "[t]he current owners of property on which impact fees have been paid may apply for a full or partial refund of such fees, together with any accrued interest." Pelham, N.H., Impact Fee Ordinance § 1002.00(a) (1999), superseded by Pelham, N.H., Impact Fees for Public Facilities Ordinance § K(1) (2006).

Subsequent to the enactment of the 1999 ordinance, the Town required certain residential real estate developers, including the petitioners, to pay impact fees to the Town. After paying the fees, the petitioners sold the properties to individual homeowners. The Town imposed these fees to partially fund the construction of a new fire station. The balance of the construction costs was to be borne by the Town. Between 2002 and 2010, the Town spent some of the impact fees paid by the developers, including the petitioners, on feasibility studies, architectural drawings, and construction estimates relating to the fire station. On several occasions between 2006 and 2010, the voters in the Town turned down proposals to appropriate the additional funds needed to construct the fire station. In March 2012, the voters approved a warrant article for the construction of the fire station.

In March 2012, the petitioners filed an action in the superior court seeking a declaratory judgment and writ of mandamus. The petitioners sought the refund of impact fees that they had paid more than six years earlier. The petition sought a declaration that the Town's expenditure of the funds for pre-construction activity violated both the impact fee statute, RSA 674:21, V(e), and the Town ordinance. It further alleged that, because the Town had failed to lawfully use the impact fees within six years, the petitioners were entitled to a refund. A short time later, Gerald Gagnon, Sr. intervened in the matter, arguing that, as successor-in-interest to Woodview Development Corporation, he was entitled to a refund of impact fees that the corporation had paid prior to selling its properties.

In its answer, the Town denied the petitioners' claim that using the impact fees for feasibility studies and to pay for architectural drawings and construction estimates was contrary to the impact fee statute and Town ordinance. The Town also filed a motion to dismiss. The Town argued that, under the ordinance, only a current property owner is entitled to a refund of impact fees. Because the petitioners no longer own the properties which had been developed, the Town argued that the petitioners lacked standing to seek a refund of the impact fees. The petitioners objected to the motion to dismiss on the ground that the Town lacked the authority under RSA 674:21, V(e) to enact an ordinance directing refunds to be paid to the current property owners.

The trial court agreed with the Town. It found that RSA 674:21, V(e) did not prevent municipalities from choosing to direct refunds to the current property owners. The court concluded that the ordinance was not ultra vires, reasoning that the term "refund" as used in RSA 674:21, V(e) did not require that the fees be returned to the entity that paid them. Accordingly, the trial court ruled that, under the ordinance, the petitioners did not have standing to seek a refund and granted the Town's motion to dismiss. This appeal followed.

"Generally, in ruling upon a motion to dismiss, the trial court is required to determine whether the allegations contained in the petitioners' pleadings are sufficient to state a basis upon which relief may be granted." Avery v. N.H. Dep't of Educ., 162 N.H. 604, 606, 34 A.3d 712 (2011). "To make this determination, the court would normally accept all facts pled by the petitioners as true, construing them most favorably to the petitioners." Id. "When the motion to dismiss does not challenge the sufficiency of the petitioners' legal claim but, instead, raises certain defenses, the trial court must look beyond the petitioners' unsubstantiated allegations and determine, based on the facts, whether the petitioners have sufficiently demonstrated their right to claim relief." Id. (quotation and brackets omitted). "A jurisdictional challenge based upon lack of standing is such a defense." Id. at 607, 34 A.3d 712. "Since the relevant facts are not in dispute, we review the trial court's determination on standing de novo. " Id .

On appeal, the petitioners argue that the trial court erred in interpreting "refund" as used in RSA 674:21, V(e) to allow payment of the unencumbered impact fees to the current property owners. The Town counters that the trial court correctly ruled that the Town ordinance falls within the parameters established by the legislature.

Deciding the issue before us requires that we interpret the impact fee statute. "Statutory interpretation is a question of law that we review de novo. " EnergyNorth Natural Gas v. City of Concord, 164 N.H. 14, 16, 48 A.3d 960 (2012). "We are the final arbiter of the intent of the legislature as expressed in the words of a statute considered as a whole." Id. "In interpreting a statute, we first look to the language of the statute itself, and, if possible, construe that language according to its plain and ordinary meaning." Id. "Furthermore, we interpret statutes in the context of the overall statutory scheme and not in isolation." Id. "This enables us to better discern the legislature's intent and to interpret statutory language in light of the policy or purpose sought to be advanced by the statutory scheme." Petition of Eskeland, 166 N.H. ––––, ––––, 101 A.3d 11 (2014) (quotation omitted). "We interpret legislative intent from the statute as written and will not consider what the legislature might have said or add language that the legislature did not see fit to include." Eaton v. Eaton, 165 N.H. 742, 745, 82 A.3d 1284 (2013) (quotation omitted).

When a municipality enacts an ordinance pursuant to a grant of authority by the legislature, "the municipality must exercise [its] power in conformance with the enabling legislation." Cmty. Res. for Justice v. City of Manchester, 154 N.H. 748, 754, 917 A.2d 707 (2007) (quotation omitted) (addressing a municipality's zoning power under RSA 674:16, I). If a town enacts an ordinance "for considerations or purposes not embodied in an enabling act, it will be held invalid ... as an ultra vires enactment" beyond the scope of the delegated authority. Id. (quotation omitted).

The Town enacted the ordinance at issue pursuant to its authority to adopt innovative land use controls under RSA 674:16, II. Impact fees are among the types of innovative land use controls specifically identified in the enabling statute. See RSA 674:21, I(m) (2008). Impact fees are assessments imposed upon development "in order to help meet the needs occasioned by [a] development for the construction or improvement of capital facilities," RSA 674:21, V, thereby enabling "a municipality to shift the cost for capital improvements necessitated by a development to the developer and new residents." Upton v. Town of Hopkinton, 157 N.H. 115, 119, 945 A.2d 670 (2008) (quotation omitted).

The statutory provision at issue here states that a municipal impact fee ordinance:

shall establish reasonable times after which any portion of an impact fee which has not become encumbered or otherwise legally bound to be spent for the purpose for which it was collected shall be refunded, with any accrued interest. Whenever the calculation of an impact fee has been predicated upon some portion of capital improvement costs being borne by the municipality, a refund shall be made upon the failure of the legislative body to appropriate the municipality's share of the capital improvement costs within a reasonable time. The maximum time which shall be considered reasonable hereunder shall be 6 years.

RSA 674:21, V(e) (emphases added). The term "refund" is not defined in the statute. See generally RSA ch. 674 (2008 & Supp.2013). Nor does RSA 674:21, V(e) explicitly address whether the unencumbered impact fees must be returned to the entity that paid them, or whether they may be paid to another entity.

The petitioners argue that, in the absence of a stated recipient for unencumbered or unspent fees, "refund" must be given its plain meaning, which they suggest is "to pay back or to reimburse." Consequently, they assert that the unencumbered fees must necessarily...