JVC Enters.

CourtCourt of Appeals of North Carolina
DecidedDecember 17, 2019
Docket19-308
StatusPublished

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Bluebook
JVC Enters., (N.C. Ct. App. 2019).

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA19-308

Filed: 17 December 2019

Cabarrus County, No. COA19-308

JVC ENTERPRISES, LLC, as successor by merger to GEOSAM CAPITAL US, LLC; CONCORD APARTMENTS, LLC; and THE VILLAS OF WINECOFF, LLC f/k/a THE VILLAS AT WINECOFF, LLC, Plaintiffs,

v.

CITY OF CONCORD, Defendant.

Appeal by Plaintiffs and cross-appeal by Defendant from an order entered on

10 October 2018 by Judge Joseph N. Crosswhite in Cabarrus County Superior Court.

Heard in the Court of Appeals 18 September 2019.

Scarbrough & Scarbrough, PLLC, by James E. Scarbrough, John F. Scarbrough, and Madeline J. Trilling, and Ferguson, Hayes, Hawkins & DeMay, PLLC, by James R. DeMay, for Plaintiffs-Appellants.

Hamilton Stephens Steele + Martin, PLLC, by Keith J. Merritt, for Defendant- Appellee.

INMAN, Judge.

JVC Enterprises, LLC, Concord Apartments, LLC, and the Villas of Winecoff,

LLC, (“Plaintiffs”) appeal the entry of summary judgment in favor of the City of

Concord (the “City”) and dismissing Plaintiffs’ complaint. The City cross-appeals a

portion of the summary judgment order, contending the trial court impermissibly

ruled on the constitutionality of a session law. After careful review, and able JVC ENTERPRISES, LLC V. CITY OF CONCORD

Opinion of the Court

argument on behalf of the parties, we reverse the trial court’s entry of summary

judgment for the City and remand for further proceedings.

I. FACTUAL & PROCEDURAL HISTORY

The record below discloses the following:

In 2004, the City enacted an ordinance requiring developers of residential

subdivisions to pay water and wastewater capacity fees as a prerequisite for

development approval by the City. The City assessed these fees at the pre-

development stage, and developers were required to pay them before a subdivision

plat would be accepted for recordation. The fees were distinct from ordinary

installation and meter fees, as they were collected prior to the provision of water and

sewer service and were used to fund future improvements to the City’s water and

sewer systems. Plaintiffs are all developers who built residential subdivisions inside

the City prior to October of 2016. Each of the Plaintiffs paid the capacity fees required

by the City’s ordinance prior to development.

On 19 August 2016, our Supreme Court decided Quality Built Homes, Inc. v.

Town of Carthage, 369 N.C. 15, 789 S.E.2d 454 (2016), and held that although cities

could assess fees for water and sewer services actually furnished under the Public

Enterprise Statutes, N.C. Gen. Stat. §§ 160A–11 to –338 (2015), those enabling

statutes “fail[ed] to give [cities] the essential prospective charging power necessary

to assess impact fees.” Quality Built Homes, 369 N.C. at 22, 789 S.E.2d at 459. The

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City subsequently amended its capacity fee ordinance in response to Quality Built

Homes in October of 2016, changing the timing of the collection of the fees from before

the subdivision plat approval phase to before the issuance of a zoning clearance

permit.

In 2017, Plaintiffs brought suit against the City seeking, among other things,

a judgment declaring the fees ultra vires and awarding damages in the amount of

fees paid to the City in connection with their developments. Three similar cases1

were also filed against the City, and all parties filed a Joint Motion for Exceptional

Case Designation under Rule 2.1 of the General Rules of Practice for the Superior

and District Courts. That motion was granted in April 2018.

The City moved for partial summary judgement on 17 September 2018 on

Plaintiffs’ claim that the City lacked authority to levy the fees. To support its motion,

the City filed an affidavit by the city clerk which included as exhibits five session

laws amending, revising, or consolidating the City’s charter between 1959 and 1986.

The first such session law authorized a now-defunct Board of Light and Water

Commissioners of the City of Concord (the “Board”) “[t]o fix and collect rates, fees and

charges for the use of and for the services and facilities furnished or to be furnished

1 Those three cases were also appealed and are resolved consistent with this opinion in separate decisions filed today. Bost Realty Co. v. City of Concord, No. COA19-309 (N.C. Ct. App. Dec. 17, 2019) (unpublished); Journey Capital, LLC v. City of Concord, No. COA19-310 (N.C. Ct. App. Dec. 17, 2019) (unpublished); Metro Development Group, LLC v. City of Concord, No. COA19-311 (N.C. Ct. App. Dec. 17, 2019) (unpublished).

-3- JVC ENTERPRISES, LLC V. CITY OF CONCORD

in the form of electrical and water service.” 1959 N.C. Sess. Laws ch. 66, § 1

(emphasis added).2 Another session law attached to the affidavit revised and

consolidated the City’s charter, continued the existence of the Board and its powers,

and repealed 108 scattered private, public, and session laws that previously composed

the City’s charter. 1977 N.C. Sess. Laws ch. 744, §§ 1, 5-6 (hereinafter the “1977

Charter”). A third session law—the one on which the City premised its motion for

summary judgment—again consolidated the City’s charter, dissolved the Board, and

provided that “[a]ll powers and duties of said Board shall become powers and duties

of the City of Concord[,]” 1985 N.C. Sess. Laws. ch. 861 § 2 (1986) (hereinafter the

“1986 Act”);3 at the same time, that session law also expressly repealed all but two

sections of the 1977 Charter. Id. at §§ 2, 6.

At the summary judgment hearing, the City argued that it was authorized to

assess the capacity fees because the session laws: (1) authorized the Board to levy

prospective water and sewer fees; and (2) transferred those powers to the City in the

1986 Act. Plaintiffs countered by arguing the 1986 Act: (1) extinguished the Board;

and (2) eliminated any power to levy prospective fees allowed in the 1977 Charter by

repealing that charter. Plaintiffs further contended that the “powers and duties of

2 An earlier session law allowed the Board to levy prospective fees for sewer service. 1955 N.C. Sess. Laws ch. 1180, § 1. 3 Although the session law is contained in the 1985 volume of the North Carolina Session Laws,

it was ratified and made effective by the General Assembly in 1986. 1985 N.C. Sess. Laws ch. 861, § 12.

-4- JVC ENTERPRISES, LLC V. CITY OF CONCORD

said Board” that the 1986 Act transferred to the City were simply those powers that

would have otherwise resided in the Board consistent with the general Public

Enterprise Statutes. Plaintiffs relied on the doctrine of constitutional avoidance,

asserting that the City’s interpretation of the pertinent session laws ran the risk of

violating the North Carolina Constitution’s prohibition against local acts relating to

health and sanitation. See N.C. Const. art. II, § 24(1)(a).

The trial court granted summary judgment in the City’s favor and dismissed

all of Plaintiffs’ claims with prejudice on 10 October 2018. In its order, the trial court

construed the 1986 Act as transferring the Board’s ability to levy prospective fees to

the City; it then interpreted two local act decisions by our Supreme Court, Town of

Boone v. State, 369 N.C. 126, 794 S.E.2d 710

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JVC Enters., Counsel Stack Legal Research, https://law.counselstack.com/opinion/jvc-enters-ncctapp-2019.