Quality Built Homes Inc. v. Town of Carthage

• Decision Date: 11 May 2018
• Docket Number: No. 315PA15-2,315PA15-2
• Citation: 813 S.E.2d 218
• Parties: QUALITY BUILT HOMES INCORPORATED and Stafford Land Company, Inc. v. TOWN OF CARTHAGE
• Court: North Carolina Supreme Court

813 S.E.2d 218

QUALITY BUILT HOMES INCORPORATED and Stafford Land Company, Inc.

v.TOWN OF CARTHAGE

No. 315PA15-2

Supreme Court of North Carolina.

Filed May 11, 2018

Ferguson, Hayes, Hawkins & DeMay, PLLC, Concord, by James R. DeMay ; and Scarbrough & Scarbrough, PLLC, Concord, by John F. Scarbrough, Madeline J. Trilling, and James E. Scarbrough, for plaintiff-appellees.

Cranfill Sumner & Hartzog LLP, Raleigh, by Susan K. Burkhart, for defendant-appellant.

Ellis & Winters LLP, by Stephen D. Feldman, Raleigh, Steven A. Scoggan, Greensboro, and Paul M. Cox, Raleigh, for North Carolina Water Quality Association and the Municipalities of Apex, Concord, Holly Springs, Jacksonville, Kannapolis, Surf City, and Winston-Salem; and F. Paul Calamita for North Carolina Water Quality Association, amici curiae.

Erwin, Bishop, Capitano & Moss, P.A., Charlotte, by J. Daniel Bishop and Joseph W. Moss, Jr., for Union County, amicus curiae.

ERVIN, Justice.

The issues before us in this case involve when the claims that plaintiffs Quality Built Homes Incorporated and Stafford Land Company, Inc., have asserted against defendant Town of Carthage accrued and whether plaintiffs' claims are barred by the one-, two-, -three-, or ten-year statute of limitations and the doctrine of estoppel by the acceptance of benefits. After careful review of the claims asserted against the Town in plaintiffs' complaint and the applicable law, we conclude that plaintiffs' cause of action accrued upon the Town’s exaction of the unlawful impact fees against plaintiffs and that plaintiffs' claims against the Town arise from a liability created by statute that is subject to the three-year statute of limitations contained in N.C.G.S. § 1-52(2). In addition, we further conclude that the Town’s assertion that plaintiffs' claims are barred by the doctrine of estoppel by the acceptance of benefits lacks merit. As a result, we affirm the Court of Appeals' decision, in part; reverse the Court of Appeals' decision, in part; and remand this case to the Court of Appeals for further remand to the Superior Court, Moore County, for further proceedings not inconsistent with this opinion.

The Town operates a public water and sewer system for the benefit of its residents. In 2003, the Town adopted two ordinances providing for the assessment of water and sewer impact fees known, respectively, as Ordinance § 51.076 and Ordinance § 51.097. According to the Town, the required impact fees were to "be used to cover the cost of expanding the water [and sewer] system[s]," with fee payments due and owing at the time of final plat approval or at the time at which the payment of a separate fee intended to cover the cost of connecting end-user customers to the Town’s water and sewer system was made. As of the time that this action was commenced, Quality Built Homes had paid the Town $66,000.00 in water and sewer impact fees and placed an additional $4,000.00 into an escrow account following the filing of its complaint¹ and Stafford Land had paid the Town $57,000.00 in water and sewer impact fees.

On 28 October 2013, plaintiffs filed a complaint against the Town in the Superior Court, Moore County. In their complaint, plaintiffs asked the trial court "to determine whether [the Town] has authority to enact and enforce portions of its ordinance regulating the collection of [the water and sewer] impact fees" and sought to recover the unlawful impact fees that they had paid to the Town, plus interest, as authorized by N.C.G.S. § 160A-363(e), and attorneys' fees, as authorized by N.C.G.S. § 6-21.7. On 23 June 2014, plaintiffs amended their complaint to include claims asserting that the challenged impact fees violated the equal protection and due process provisions of the North Carolina Constitution, resulted in unreasonable discrimination in violation of N.C.G.S. § 160A-314, and contravened the Town’s impact fee ordinances. On 29 August 2014, the Town filed an answer to plaintiffs' amended complaint in which it denied the material allegations of the amended complaint and asserted a number of affirmative defenses, including claims that the challenged impact fees had adequate statutory authorization and that plaintiffs' claims were barred by the applicable statute of limitations and the doctrine of waiver or estoppel through the acceptance of benefits. After the parties filed cross-motions for summary judgment, the trial court entered an order on 17 October 2014 granting summary judgment in favor of the Town. Plaintiffs noted an appeal from the trial court’s order to the Court of Appeals.

On 4 August 2015, the Court of Appeals filed an unpublished opinion holding that the Town had "acted within the authority conferred by North Carolina General Statutes, sections 160A[-]312, -313, and -314 to collect a water and sewer impact fee." Quality Built Homes Inc. v. Town of Carthage , 242 N.C. App. 521, 776 S.E.2d 897, 2015 WL 4620404, at *5 (2015) (unpublished). On 5 November 2015, this Court allowed discretionary review of the Court of Appeals' decision. On 19 August 2016, this Court filed an opinion reversing the Court of Appeals' decision on the grounds that the challenged impact fee ordinances were unlawful. Quality Built Homes, Inc. v. Town of Carthage , 369 N.C. 15, 22, 789 S.E.2d 454, 459 (2016). More specifically, we determined that, "[w]hile the enabling statutes allow [the Town] to charge for the contemporaneous use of its water and sewer systems, the plain language of the Public Enterprise Statutes clearly fails to empower the Town to impose impact fees for future services." Id . at 19-20, 789 S.E.2d at 458. In light of this determination, we remanded this case to the Court of Appeals in order to allow it to address whether plaintiffs' claims were barred by the applicable statute of limitations or the doctrine of estoppel by the acceptance of benefits.² Id . at 18 n.2, 22, 789 S.E.2d at 457 n.2, 459.

On 30 December 2016, the Court of Appeals filed an unpublished opinion holding that plaintiffs' claims against the Town were subject to the ten-year statute of limitations set out in N.C.G.S. § 1-56, Quality Built Homes Inc. v. Town of Carthage , ––– N.C. App. ––––, 795 S.E.2d 436, 2016 WL 7984235, at *2 (2016) (unpublished), on the grounds that "North Carolina courts have held that ultra vires claims for charging fees without statutory authority have a ten-year statute of limitations,"id . (quoting Tommy Davis Constr. Inc. v. Cape Fear Pub. Util. Auth. , No. 7:13-CV-2-H, 2014 WL 3345043, at *3 (E.D.N.C. July 8, 2014), aff'd , 807 F.3d 62 (2015) ). As a result, given that plaintiffs had paid the challenged impact fees within ten years before filing their complaint in this case, the Court of Appeals held that plaintiffs' claims were not time-barred. Id . at *3. In addition, the Court of Appeals held that plaintiffs were not estopped from pursuing their claims against the Town on the grounds that "[o]ne cannot be estopped by accepting that which he would be legally entitled to receive in any event" and that the General Assembly "clearly contemplated that even if a party received a ‘benefit’ ... in exchange for paying an illegal fee, the party should still receive a recovery of that fee." Id . (first alteration in original) (first quoting Beck v. Beck , 175 N.C. App. 519, 525, 624 S.E.2d 411, 415 (2006) ; and then citing N.C.G.S. § 160A-363(e) ). As a result, the Court of Appeals reversed the trial court’s order and remanded this case to the Superior Court, Moore County, for the purpose of "mak[ing] the appropriate findings of fact as to (1) whether defendant abused its discretion making attorneys' fee mandatory and (2) a reasonable attorneys' fees award to plaintiff, whether discretionary or mandatory." Id . at *4. We granted the Town’s request for discretionary review of the Court of Appeals' remand decision.

In seeking relief from the Court of Appeals' decision before this Court, the Town argues that the Court of Appeals had ignored the fundamental legal principle that a claim accrues when the right to maintain an action arises, which, in this case, was the date upon which the challenged ordinances became effective, citing Williams v. Blue Cross Blue Shield of North Carolina , 357 N.C. 170, 177-78, 581 S.E.2d 415, 423 (2003). According to the Town, the "continuing wrong" doctrine has no application in this case given that, unlike the situation at issue in Williams , "the [p]laintiffs, in this case, who are in the business of developing property, knew at the moment the Ordinances were passed, that they would be subject to the Ordinances' requirement of the payment of water and sewer impact fees." (Emphasis omitted.) In addition, the Town argued that the "continuing wrong" doctrine has no application to ultra vires claims.

In the Town’s view, the applicable statute of limitations for purposes of this case is the one-year statute of limitations set out in 1-54(10) and N.C.G.S. §§ 160A-364.1(b), which governs challenges to the validity of zoning and development ordinances. According to N.C.G.S. § 160A-364.1(b), which applies to actions "challenging the validity of any zoning or unified development ordinance or any provision thereof adopted under [Article 19, Planning and Regulation of Development]," N.C.G.S. § 160A-364.1(b) (2017), and N.C.G.S. § 1-54(10), which applies to "[a]ctions contesting the validity of any zoning or unified development ordinance or any provision thereof adopted under ... Part 3 of Article 19 of Chapter 160A of the General Statutes," id . § 1-54(10) (2017), the applicable statute of limitations is one year. The Town contends that N.C.G.S. § 160A-363(e) should be harmonized and construed with N.C.G.S. § 160A-364.1(b) given that they address the same subject matter and that the two statutory provisions establish that a claim for "refund for an illegal exaction in the development process is subject to the one-year statute of limitations in N.C.G.S. § 160A-364.1(b)," citing, inter alia ,...