Daedalus, LLC v. Mecklenburg Cnty.

• Court: Court of Appeals of North Carolina
• Decided: June 3, 2026
• Docket: 25-730
• Status: Published
• Author: Judge John Tyson

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA25-730

Filed 3 June 2026

Mecklenburg County, No. 21CVS015506-590

DAEDALUS, LLC, Plaintiff,

v.

MECKLENBURG COUNTY, Defendant/Third-Party Plaintiff,

JASON MURPHY and DAEDALUS REALTY, LLC, Third-Party Defendants.

Appeal by plaintiff from judgment entered 31 January 2025 by Judge Donnie

Hoover in Mecklenburg County Superior Court. Heard in the Court of Appeals 15

April 2026.

TLG Law, by David G. Redding, Tyler A. Rhoades, and Benjamin J. Axelman, for plaintiff-appellant Daedalus, LLC.

Ronald L. Gibson, for defendant/third-party plaintiff Mecklenburg County.

Gardner Skelton, PLLC, by Preston O. Odom, III, and James, McElroy & Diehl, P.A., by John R. Buric for the intervenors Heather Brennan, Adam Olszak, Chris Osborn, Wendy Osborn, Henry Stepp, Hillary Stepp, Laura Dyches, and Austin Dyches.

TYSON, Judge.

Daedalus, LLC (“Plaintiff”), Daedalus Realty, LLC, and Jason Murphy (“Third-

Party Defendants)(collectively “Plaintiffs”) appeal from a declaratory judgment DAEDALUS, LLC V. MECKLENBURG CNTY.

Opinion of the Court

entered in favor of Mecklenburg County (“Defendant”) and the issuance and award of

damages for intervenors: Heather Brennan, Adam Olszak, Chris Osborn, Wendy

Osborn, Henry Stepp, Hillary Stepp, Laura Dyches, Austin Dyches, and other non-

party owners (collectively “Owners”). We affirm in part, reverse in part, and remand.

I. Background

During 2016 and 2017, Plaintiff acquired two properties located in

Mecklenburg County. Around the same time, BBT Series XVI, LLC (“BBT”), a Texas

limited liability company, acquired three nearby properties in the same county.

Plaintiff and BBT entered into an agreement under which Plaintiff would

construct five duplexes, one on each property. Plaintiff would then subdivide each

property into two separate lots at the common divider wall, thereby ensuring each

half of the duplex would be situated upon its own individual lot. Plaintiff would

possess ten lots, each containing a half-duplex, intended for sale to separate

prospective buyers.

An architect prepared the design plans for the duplexes. Id. The design plans

did not present or convey Plaintiff’s intention to subdivide each property into two lots.

Plaintiff submitted the plans to the County’s Code Enforcement Department (“CED”).

Following CED’s approval, Plaintiff constructed the duplexes in accordance with the

approved plans. CED inspected, approved, and issued a certificate of occupancy

(“CO”) for each duplex dwelling unit. Id.

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Plaintiff hired a surveyor to prepare a plat and subdivided each of the five

properties into two lots, resulting in a total of ten lots, in contrast to the five lots

specified in the design plans submitted to and approved by the County. The

subdivision maps received approval from the Charlotte Planning Commission and the

County plat review officer and were duly recorded with the County’s Register of

Deeds. In 2018, the Third-Party Defendants sold the dwelling units to the Owners.

In 2019, the County recognized Plaintiff had subdivided the lots without

submitting the proposed modifications to the County for approval. These

modifications purportedly caused an issue with the classification of the structures.

The structures were permitted for and intended to be duplexes; however, the County

contends the 2012 Residential Code classifies the subdivided structures as

townhouses. The 2012 Residential Code defines a townhouse as “a single-family

dwelling unit constructed in a row of attached units, separated by property lines.”

Residential Code, § R202 (2012) (emphasis added).

The 2012 Building Code, the 2018 Building Code, and the 2018 later Building

Code all classify townhouses as “a single-family dwelling unit constructed in a group

of three or more attached units separated by property lines.” Building Code, § 202

(2012); Building Code, § 202 (2018); Residential Code, § R202 (2018) (emphasis

added). The 2018 Building and Residential Codes did not come into effect until 1

January 2019, and each of the Plaintiff’s buildings was approved in 2017 and 2018.

Building Code, § R101.1 (2018). The 2024 update to the Residential Code (“2024

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Residential Code”) reclassified a townhouse as “a single-family dwelling unit

constructed in a group of two or more attached units separated by property lines.”

Residential Code, § R202 (2024). The 2024 edition of the Residential Code did not

become effective until January 1, 2025. Id.

Under both versions of the 2012 and 2018 Building Codes, townhouses are

mandated to have a two-hour rated firewall separating the units, whereas duplexes

are only required to have a one-hour rated firewall. The Plaintiff’s buildings were

separated by a one-hour rated firewall. As a result, the County issued Stop Work

Orders (“SWO”) and Notices of Violation (“NOV”), as well as correspondence to the

Owners, indicating the County’s intent to revoke their certificates of occupancy

(“CO”).

Due to the COVID-19 pandemic, the County did not immediately proceed with

its threat to revoke the CO. Nevertheless, the Owners expressed concern they might

encounter difficulties in reselling the properties due to the imminent threat of losing

their COs. Consequently, Plaintiff initiated a legal action for a declaratory judgment

against the County on 4 October 2021, requesting a declaration: (1) the Properties

are not classified as townhouses under the applicable Codes and are therefore in

compliance; and, (2) the County lacks the legal authority to revoke the COs.

On 3 December 2021, the County filed an Answer requesting a declaratory

judgment, asserting Counterclaims and asserting a Third-Party Complaint against

the Third-Party Defendants pursuant to the North Carolina Declaratory Judgment

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Act, N.C. Gen. Stat. §§ 1-253 et seq. (2025) (the “DJA”). The County sought to obtain

judicial declarations the Plaintiffs: (1) were liable for damages caused to the Owners,

(2) should have their corporate veils pierced, (3) committed fraud, (4) owed the County

reasonable costs and attorneys’ fees, and (5) engaged in unfair and deceptive trade

practices.

On 27 June 2022, with the consent of all parties, the Owners were permitted

to intervene in the case below because the trial court had determined the Owners’

interests were “not adequately represented by the existing parties.”

On 14 February 2023, following a bench trial, Judge Hoover entered a

declaratory judgment finding Plaintiffs liable. Pursuant to N.C. Gen. Stat. § 1-259

(2025), the trial court reserved the determination of damages for a later hearing. The

declaratory judgment stated Plaintiffs had “deliberately submitted drawings and

plans to the County for approval, knowing that they intended to make a significant

change in the submitted plans.” The trial court pierced the corporate veil, concluding

“Daedalus Realty, LLC and Jason Murphy are liable for damages resulting from their

actions as set forth herein.”

The County filed a motion for attorneys’ fees and costs pursuant to the North

Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”) on 5 October 2023.

N.C. Gen. Stat. § 75-1.1 (2025). On 22 March 2024, Plaintiffs moved for relief from

the declaratory judgment. On 29 May 2024, the trial court denied Plaintiffs’ motion

for relief.

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On 31 January 2025, the trial court entered an Order and Judgment on

Damages, directing Plaintiffs to make substantial alterations to the properties, which

are the subject of this litigation, awarding trebled damages to each of the ten Owners,

and awarding costs and attorneys’ fees to the County. Plaintiffs timely filed a notice

of appeal on 3 March 2025.

On 20 June 2025, the trial court entered an order staying enforcement of the

Damages Award pending this appeal and further ordered Plaintiffs to post a bond of

$839,300.00.

II. Jurisdiction

This Court possesses jurisdiction pursuant to N.C. Gen. Stat. §§ 1-258 and 7A-

27(b)(1) (2025).

III. Issues

Plaintiffs argue the County lacked (1) standing to file the declaratory judgment

action; (2) the Owners lacked standing; and, (3) the trial court erred in granting the

declaratory judgment in favor of the County and damages and attorney fees to the

Owners.

IV. Standing

A. Standard of Review

“Standing is a necessary prerequisite to a court’s proper exercise of subject

matter jurisdiction[,] and is a question of law which the Court reviews de novo.”

Smith v. Forsyth Cty. Bd. of Adjust., 186 N.C. App. 651, 653, 652 S.E.2d 355, 357

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(2007) (citation and internal quotation marks omitted).

“Zoning regulations are in derogation of common law rights and they cannot

be construed to include or exclude by implication that which is not clearly their

express terms. It has been held that well-founded doubts as to the meaning of obscure

provisions of a Zoning Ordinance should be resolved in favor of the free use of

property.” Yancey v. Heafner, 268 N.C. 263, 266, 150 S.E.2d 440, 443 (1966) (citation

omitted).

B. The County’s Standing

“Standing is a threshold matter and necessary prerequisite to the court’s

proper exercise of subject[-]matter jurisdiction.” Prevette v. Elsner, 298 N.C. App.

720, 723, 917 S.E.2d 275, 280 (2025) (citation and internal quotations omitted). The

question of standing may be raised at any time, including for the first time on appeal.

Id. To establish standing, three elements must be satisfied:

(1) injury in fact—an invasion of a legally protected interest that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 114, 574 S.E.2d

48, 52 (2002) (citation and internal quotation marks omitted), disc. rev. denied, 356

N.C. 675, 577 S.E.2d 628 (2003).

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Plaintiffs argue “[n]o particular statute grants governmental entities in North

Carolina the right to bring a civil suit against a private party for damages sustained

exclusively by specific citizens.”

In response, the County maintains its authority to enforce Building and

Residential Codes pursuant to Chapter 160D of the Building Code confers upon it

standing to assert counterclaims on behalf of private citizens. N.C. Gen. Stat. § 160D-

1104(b); 1118 (2025). Furthermore, the County contends it possessed standing to

challenge the Appellants’ violation of the North Carolina Building Codes, in

accordance with the standards set forth by our Supreme Court in Committee to Elect

Dan Forest v. Emps. Pol. Action Comm., 376 N.C. 558, 853 S.E.2d 698 (2021). In the

case of Dan Forest, the Supreme Court stated:

[O]ur courts have recognized the broad authority of the legislature to create causes of action, such as “citizen-suits” and “private attorney general actions,” even where personal, factual injury did not previously exist, in order to vindicate the public interest. In such cases, the relevant questions are only whether the plaintiff has shown a relevant statute confers a cause of action and whether the plaintiff satisfies the requirements to bring a claim under the statute. There is no further constitutional requirement because the issue does not implicate the concerns that motivate our standing doctrine.

376 N.C. at 599, 853 S.E.2d at 727-28 (emphasis supplied). The decision on Dan

Forest permits a party, who has not demonstrated “injury in fact”, to possess standing

if the party belongs to a class of individuals to whom a statute grants a cause of

action. Id.

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The County is responsible for enforcing the Building Code. N.C. Gen Stat. §

160D-1102(a)(2025). The County has the authority to bring “judicial actions against

actual or threatened violations [of the Building Code] . . . and any other actions that

may be required in order [to] adequately . . . enforce those laws.” N.C. Gen. Stat. §

160D-1104(b) (emphasis supplied). Further, N.C. Gen. Stat. § 160D-404(c) permits

the County to “institute any appropriate action or proceedings to restrain, correct or

abate the violation [of the Building Code].”

Plaintiffs acknowledge the County is authorized by statute and therefore

possesses standing to enforce the Building Codes under the precedent in Dan Forest;

however, Plaintiffs contest the assertion the County has standing to initiate legal

action on behalf of the affected citizens.

The language of §§ 160D-1004(b) and 160D-404(c) clearly suggests the County

possesses the authority to undertake actions beyond merely enforcing the Building

Code. They explicitly state the County may pursue other suitable measures which

“may be required in order to adequately enforce those laws” and to “correct or abate

the violation.” N.C. Gen. Stat. § 160D-1104(b); N.C. Gen. Stat. § 160D-404(c) (2025).

Nevertheless, Chapter 160 does not explicitly specify what these appropriate

measures are, nor does it clarify whether such actions may be initiated on behalf of

others. Under Dillon’s Rule, “a municipal corporation [political subdivision of the

State] possesses and can exercise the following powers and no others: First, those

granted in express words; second, those necessarily or fairly implied in or incident to

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the powers expressly granted; third, those essential to the declared objects and

purposes of the corporation.” Lanvale Props., LLC v. Cnty. of Cabarrus, 366 N.C. 142,

153, 731 S.E.2d 800, 809-10 (2012) (citations omitted).

North Carolina has also historically restricted local government entities or

agencies from initiating claims on behalf of fully competent citizens unless explicitly

authorized by statute. For instance, the Attorney General may commence private

lawsuits on behalf of citizens only when explicitly granted by statute. See State ex

rel. Easley v. Rich Food Servs., Inc., 139 N.C. App. 691, 535 S.E.2d 84 (2000) (holding

the North Carolina Attorney General is expressly authorized by statute to act as

parens patriae in certain consumer protection matters). The statute in Rich Food

Servs. explicitly stated the Attorney General has the authority to institute and

originate proceedings before courts on behalf of citizens in all matters affecting the

public interest. N.C. Gen. Stat. § 114-2(8)(a) (1999) (repealed by Session Laws 2024-

57, s. 3D.1(h), effective December 11, 2024).

No such explicit language in N.C. Gen. Stat. § 160D authorizes the County or

any local jurisdiction to initiate litigation to recover damages on behalf of private

citizens. The County possessed the authority to pursue legal actions for compliance

against the Plaintiffs; however, such actions do not encompass suits on behalf of

private citizens seeking damages regarding private matters. Id. The County lacked

standing to file claims against Plaintiffs to recover damages on behalf of the Owners

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and, even more specifically, owners. who are not parties or in a certified class to this

action. The damages award is vacated.

C. Owner’s Standing

Plaintiffs do not question the Owners’ standing on the basis of their harm;

rather, they argue because the Owners did not bring a pending claim, they are not

entitled to a standing analysis. The Owners make two arguments to show standing:

(1) their claims were litigated by consent; and, (2) as intervenors, they automatically

have the right to benefit from any claim the adjudication of which benefits them.

1. Litigation by Consent

Rule 15(b) of our Rules of Civil Procedure permits pleadings to be amended by

implied consent when evidence outside the pleadings is introduced without objection.

Roberts v. Memorial Park, 281 N.C. 48, 57, 187 S.E.2d 721, 726 (1972).

No evidence of the “Owner’s claims” outside the pleadings was entered into the

record. Rather, the Owners were seemingly neutral on the issue until it appeared the

County might win. The theory of litigation by consent is not applicable here. See

Tyson v. Ciba-Geigy Corp., 82 N.C. App. 626, 630, 347 S.E.2d 473, 476 (1986) “Where

the evidence which supports an unpleaded issue also tends to support an issue

properly raised by the pleadings, no objection to such evidence is necessary and the

failure to object does not amount to implied consent to try the unpleaded issue.” Id.

(citation omitted).

2. Automatic Right to Benefit

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The Owners also argue they “get the benefit of [the County’s] claims just by

intervening.”) However, the Owners cite no authority to support this statement.

An intervening party typically pleads and asserts its own claims against a

party it seeks to recover damages and fees from. See City of Raleigh v. Edwards, 234

N.C. 528, 530, 67 S.E.2d 669, 671 (1951) (holding an order allowing intervention

“merely grants leave to the interveners to become parties to this proceeding so that

they may assert [their own claims]”). Here, the Owners asserted no claims against

Plaintiffs by filing pleadings or under the theory of litigation by consent. Id.

The Owners cite no authority in their brief to support the claim asserting mere

intervention automatically entitles them to collect private damages and fees

pursuant to or as a benefit of the County’s declaratory judgment claim. The Owners

did not bring or file any claims upon which relief may be granted. The Owners have

filed a separate cause, which was been stayed pending the outcome of this action.

That action is the proper action for the Owners to assert and prove’ damages. In light

of the precedents and our decision, the trial court’s award of Owners’ damages and

attorney’s fees is vacated.

V. Plaintiff’s Declaratory Judgment Action

“The standard of review in declaratory judgment actions where the trial court

decides questions of fact is whether the trial court's findings are supported by any

competent evidence.” Cross v. Capital Transaction Grp., Inc., 191 N.C. App. 115, 117,

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661 S.E.2d 778, 780 (2008) (citation and quotation marks omitted). “However, the

trial court’s conclusions of law are reviewable de novo.” Browning v. Helff, 136 N.C.

App. 420, 423, 524 S.E.2d 95, 98 (2000) (citation omitted).

B. Analysis

Plaintiffs argue they are entitled to a new trial on liability in their declaratory

judgment action and assert the trial court should have looked to the 2012 and 2018

and not the 2024 Building Code changes to the definition of townhomes, which

removed the “two-unit” townhouse to cure their noncompliance.

Our Supreme Court has held:

When the language of a statute is clear and unambiguous, there is no room for judicial construction, and the courts must give it its plain and definite meaning.’ . . . ‘[A] statute clear on its face must be enforced as written.’ Consequently, [N.C. Gen. Stat. §] 153A-4 applies only when our zoning statutes are ambiguous, or when its application is necessary to give effect to ‘any powers that are reasonably expedient to [a county’s] exercise of the power.’

Lanvale Properties, 366 N.C. at 153-55, 731 S.E.2d at 809-10 (internal citations

The 2024 Building Code changed the definition of and now defines “townhouse”

as “[a] single family dwelling unit constructed in a group of two or more attached units

separated by property lines in which each unit extends from foundation to roof and

with a yard or public way on not less than two sides.” Plaintiffs’ project was

submitted and approved under the definitions contained in the 2012 and 2018

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versions of the Building Code. We vacate and remand for consideration of Plaintiffs’

claims under those applicable and controlling ordinances. Id.

VI. Conclusion

The County has standing to seek a declaratory judgment over the meaning and

applicability of its ordinances, but it does not possess the legal standing to file

counterclaims against Plaintiffs for damages and attorney fees. The Owners failed

to assert or prove any claims or damages of their own in this action and lack standing.

The award of attorney’s fees and damages award to Owners is vacated without

prejudice to their pending action. This Court expresses no opinion and makes no

decision on Owners’ individual or collective claims for damages. The standing to

assert the declaratory judgment action is affirmed.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Judges STROUD and HAMPSON concur.

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