IN THE SUPREME COURT OF NORTH CAROLINA
No. 115A25
Filed 20 March 2026
WARDSON CONSTRUCTION, INC. and HOMEQUEST BUILDERS, INC.
v. CITY OF RALEIGH
Appeal pursuant to N.C.G.S. § 7A-27(a)(4) from an order granting plaintiffs’
motion for class certification entered on 16 September 2024 by Judge G. Bryan Collins
Jr. in Superior Court, Wake County. Heard in the Supreme Court on 28 October 2025.
James R. DeMay, Scott C. Harris, Martha A. Geer, and John Hunter Bryson for plaintiff-appellees.
Fox Rothschild LLP, by Robin L. Tatum and Kip D. Nelson; and Carolyn A. Bachl for defendant-appellant.
EARLS, Justice.
This case concerns whether a lawsuit challenging certain Capital Facilities
Fees imposed by the City of Raleigh may proceed as a class action. Wardson
Construction and other home builders allege that Raleigh unlawfully required them
to pay these fees as a condition of development, and they seek return of those
payments under state law. The trial court certified a class consisting of builders who
paid the fees, allowing the claims to be resolved in a single proceeding. Raleigh
appeals that decision, arguing that some builders passed the costs of the fees on to
home purchasers and therefore cannot pursue relief together as a class. WARDSON CONSTR., INC. V. CITY OF RALEIGH
Opinion of the Court
We affirm the certification order. North Carolina law directs that any fee
unlawfully collected by a local government be returned to the person who made the
payment. See N.C.G.S. § 160D-106 (2025). Because the right to seek repayment turns
on payment itself—not on who may ultimately have borne the cost—the possibility
that some builders later incorporated the fees into home prices does not prevent class
treatment. The question of whether the fees were lawful is for another day; today’s
decision addresses only whether the case may proceed on behalf of all affected home
builders as certified in one action. We hold that the trial court did not err in its
analysis of the legal criteria for class certification and did not abuse its discretion
when it concluded that a class action is the superior method of adjudicating the claim.
I. Background
A. Statutory Background
In 2013, Raleigh adopted an ordinance related to water and sewer extension
policies that imposed fees for connecting with the city’s water and sewer systems.
These Capital Facilities Fees (CFFs) were apparently reserved for future expansion
or future water and sewer systems or services. Developers, builders, and other
entities alike were required to pay CFFs any time they submitted a water or sewer
connection application to the city.
In 2016, this Court held in Quality Built Homes Inc. v. Town of Carthage, 369
N.C. 15 (2016), that municipalities lack the statutory authority under the Public
Enterprise Statutes to charge for the future furnishing of water and sewer services.
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Id. at 20–21. In so holding, however, we noted that municipalities may assess such
impact fees by obtaining separate enabling legislation from the General Assembly to
do so. See id. at 21.
In 2017, the General Assembly enacted the Public Water and Sewer System
Development Fee Act (the Fee Act). S.L. 2017-138, § 1, 2017 N.C. Sess. Laws 996,
996–99. The Fee Act authorized local governments to adopt water and sewer impact
fees, or “system development fee[s],” subject to certain “conditions and limitations,”
effective 1 October 2017. Id. §§ 1, 11, 2017 N.C. Sess. Laws at 997, 1002; see also
N.C.G.S. § 162A-203(a) (2025). The Fee Act also included a “bridge provision,”
providing that any “system development fee adopted by a local government under any
lawful authority other than this Article and in effect on October 1, 2017, shall be
conformed to the requirements of this Article not later than July 1, 2018.” N.C.G.S.
§ 162A-203(b). In response, Raleigh subsequently amended its CFF ordinance on 5
September 2017 and 5 June 2018.
In 2019, the General Assembly enacted a “refund statute,” N.C.G.S. § 160D-
106, which provides:
If a local government is found to have illegally imposed a tax, fee, or monetary contribution for development or a development approval not specifically authorized by law, the local government shall return the tax, fee, or monetary contribution plus interest of six percent (6%) per annum to the person who made the payment or as directed by a court if the person making the payment is no longer in existence.
N.C.G.S. § 160D-106; see also An Act to Clarify, Consolidate, and Reorganize the
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Land-Use Regulatory Laws of the State, S.L. 2019-111, § 2.4, 2019 N.C. Sess. Laws
424, 443. Absent from this statute is any provision that limits the passing on of CFFs.
Instead, the statute expressly states that such refunds will be made available to “the
person who made the payment.” N.C.G.S. § 160D-106.
B. Factual Background
Plaintiffs Wardson Construction, Inc. and HomeQuest Builders, Inc. (together,
Wardson Construction) are home builder corporations organized and operated under
North Carolina law. In adherence to defendant Raleigh’s CFF ordinance, Wardson
Construction allegedly paid a combined total of nearly $20,000 in CFFs in connection
with six different properties between 2016 and 2018. Contending that the payment
of the CFFs was illegal, Wardson Construction sued to recover these fees. It also
sought to represent a class of residential and commercial developers, builders, and
contractors who similarly paid CFFs to Raleigh. Although the cost of CFFs are often
passed on to the property owners who would, in turn, reimburse the payor, Wardson
Construction contends that the party who paid an illegally charged fee is entitled to
a state-mandated refund. Accordingly, it sought recovery for these fees, as well as
recovery for other builders, contractors, and developers who also paid CFFs to Raleigh
between 12 January 2016 and 30 September 2018.
C. Procedural Posture
On 12 August 2019, Wardson Construction filed a complaint in the Superior
Court, Wake County and sought class certification. Wardson Construction sought a
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declaratory judgment that Raleigh adopted CFFs as a condition for issuing certain
permits and in order to furnish future water or sewer services without lawful
authority. Wardson Construction also sought certification of a class of all fee payors,
the return of all unlawfully collected CFFs plus interest, and an award of costs,
expenses, and attorneys’ fees.
In response to the complaint, Raleigh moved to dismiss, petitioned for writ of
certiorari to review the order denying its motion to dismiss, moved for judgment on
the pleadings, and moved to stay discovery, each of which was ultimately denied.
On 8 July 2024, Wardson Construction moved for class certification under Rule
23 of the North Carolina Rules of Civil Procedure. On 16 September 2024, the trial
court granted that motion. The trial court certified the class as follows:
All natural persons, corporations, or other entities who (a) at any point from January 12, 2016 through June 30, 2018 (b) paid water or sewer Capital Facilities Fees to the City of Raleigh pursuant to the Schedule of Fees and Code of Ordinances adopted by the City of Raleigh.
The class here includes 735 payors of CFFs and over 3,900 different payments,
and the class is comprised of contractors and builders, commercial developers, and
individual property owners. In its certification order, the trial court reasoned that the
identities of class members were ascertainable during the class period, plaintiffs
would fairly and adequately represent the class, the number of class members was
sufficiently numerous, common issues of law and fact predominated among all
members of the class, and that a class action was a superior method of adjudication
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for the as many as 630 potential actions, in light of the potential for duplicative costs
and potential to obtain recovery for otherwise nominal claims. It also concluded that
proper notice would be sent to the class. Accordingly, the trial court granted Wardson
Construction’s motion for class certification.
Also on 16 September 2024, by separate order, the trial court granted Wardson
Construction’s motion for summary judgment on the merits and denied Raleigh’s
similar motion. Raleigh then separately appealed the summary judgment order to
the North Carolina Court of Appeals.1
On 15 October 2024, Raleigh appealed the trial court’s class certification order
directly to this Court under the provisions of N.C.G.S. § 7A-27(a)(4). The issue of class
certification is the only issue we address on appeal.
II. Governing Law
A. Class Certification Under Rule 23
Rule 23 of the North Carolina Rules of Civil Procedure permits representative
litigation “[i]f persons constituting a class are so numerous as to make it
impracticable to bring them all before the court,” provided that the representatives
“fairly insure the adequate representation of all.” N.C.G.S. § 1A-1, Rule 23(a) (2025).
1 The appeal of the order granting Wardson Construction’s motion for summary judgment on the merits of its claims is still pending before the Court of Appeals. See Wardson Constr., Inc. v. City of Raleigh, No. 19CVS10860-910 (Super. Ct. Wake Cnty. Sep. 16, 2024), appeal docketed, No. 25-416 (N.C. Ct. App. Apr. 30, 2025). We reiterate that this Court’s review is confined to the class certification order.
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Although the rule’s text is concise, this Court has developed guiding principles
governing certification through its decisions.
A proper class exists when the members share an interest in the same issue of
law or fact and that issue predominates over issues affecting only individual
members. Crow v. Citicorp Acceptance Co., 319 N.C. 274, 277 (1987). The party
seeking certification bears the burden of demonstrating that the action satisfies Rule
23’s requirements, including numerosity and adequate representation. Id. at 282.
Adequate representation requires that the named plaintiffs possess a genuine
interest in the litigation and that no conflict exists between the representatives and
the absent class members. Faulkenbury v. Tchrs.’ & State Emps.’ Ret. Sys., 345 N.C.
683, 697 (1997). Differences among class members do not necessarily rise to the level
of an intraclass conflict of interest capable of defeating certification unless those
differences create antagonistic legal interests. See Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 626 (1997) (noting that the plaintiffs could not adequately represent a
class where diversity in their medical conditions created a direct contradiction
between class members who needed “generous immediate payments” and those who
needed “an ample, inflation-protected fund for the future”). Conflicts of interest that
involve differing legal interests that are not directly antagonistic typically can be
addressed by creating subclasses with separate counsel. See Surgeon v. TKO Shelby,
LLC, 385 N.C. 772, 779 (2024).
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In addition to these requirements, our precedents recognize that class actions
serve important institutional purposes, including promoting efficiency, preventing
inconsistent adjudications, and enabling the resolution of claims that might
otherwise be impracticable to litigate individually. See Fisher v. Flue-Cured Tobacco
Coop. Stabilization Corp., 369 N.C. 202, 215–16 (2016). When these prerequisites are
satisfied, the determination of whether a class action is superior to other available
methods of adjudication is committed to the sound discretion of the trial court. Beroth
Oil Co. v. N.C. Dep’t of Transp., 367 N.C. 333, 337 (2014). Accordingly, the trial court’s
legal analysis of the class certification criteria is reviewed de novo, the court’s
corresponding fact findings are reviewed for competent evidence, and the court’s
ultimate determination to certify a class as the superior method of adjudicating the
claims is reviewed solely for abuse of discretion. Empire Contractors, Inc. v. Town of
Apex, 388 N.C. 552, 556–57 (2025).
Finally, certification does not resolve the merits of the underlying dispute. A
court may examine issues touching on the merits only to the extent necessary to
determine whether the requirements of Rule 23 are satisfied. See Surgeon, 385 N.C.
at 781–82.
B. Interpretation of N.C.G.S. § 160D-106
In the case at hand, the home builders’ claims arise from N.C.G.S. § 160D-106,
which governs the refund of fees determined to have been unlawfully imposed. The
statute in question provides as follows:
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If a local government is found to have illegally imposed a tax, fee, or monetary contribution for development or a development approval not specifically authorized by law, the local government shall return the tax, fee, or monetary contribution plus interest of six percent (6%) per annum to the person who made the payment or as directed by a court if the person making the payment is no longer in existence.
N.C.G.S. § 160D-106.
Statutory interpretation begins with the text enacted by the General
Assembly. When statutory language is clear and unambiguous, courts apply the
statute as written and do not add conditions the legislature did not include. See Wynn
v. Frederick, 385 N.C. 576, 581 (2023); O & M Indus. v. Smith Eng’g Co., 360 N.C.
263, 268 (2006). Section 160D-106 identifies a single criterion for return of an
unlawful fee: payment by the claimant. The statute does not distinguish between
those who ultimately bore the economic burden of the fee and those who may have
incorporated the fee into subsequent private transactions. Nor does it require tracing
the downstream incidence of the payment or authorize offsets based on possible
reimbursements.
Therefore, if a fee is determined to have been unlawfully imposed, then the
statutory injury occurs at the time the payment is made. This conclusion accords with
our decisions recognizing that claims challenging unlawful development fees arise
from the act of payment itself. Quality Built Homes Inc. v. Town of Carthage, 371
N.C. 60, 72 (2018).
The structure of section 160D-106 further confirms this reading. See Cohane v.
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Home Missioners of Am., 387 N.C. 1, 8 (2025) (“[W]ords and phrases are interpreted
in their statutory context . . . .”). By directing repayment to the payor alone, the
General Assembly adopted an administrable and objective rule that avoids
individualized inquiries into private contractual arrangements. This scheme also
avoids making the local government vulnerable to multiple entities seeking to recoup
the same fee. Nothing in the statutory text or structure encourages courts to
undertake case-by-case determinations of ultimate economic incidence before a
refund may be ordered where the entity that made the payment still exists.
Because entitlement under section 160D-106 turns on payment rather than
downstream reimbursement, the alleged passing on of fees does not alter the nature
of the statutory claim and does not independently create obstacles to class
certification under Rule 23.
III. The Passing-On Defense Does Not Defeat Class Certification
Raleigh’s challenge to certification rests on a single premise advanced in
several forms. Raleigh contends that some members of the certified class incorporated
the CFFs into the prices charged to home purchasers and therefore did not ultimately
bear the economic burden of the fees. From this premise, Raleigh argues that the
home builders lack a common injury, that individualized issues predominate, that
conflicts exist within the class, and that a class action is not a superior method of
adjudication.
Each of these arguments depends upon the same assumption—that the legally
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relevant payor is the party who ultimately absorbed the economic cost of the fee
rather than the party who remitted payment to Raleigh. That assumption is
inconsistent with the governing statute.
As explained above, N.C.G.S. § 160D-106 directs that an unlawfully imposed
fee “shall return . . . to the person who made the payment.” N.C.G.S. § 160D-106. The
statute ties entitlement to the act of payment itself. Raleigh’s argument instead asks
this Court to look beyond the transaction between the home builders and Raleigh and
determine who ultimately bore the economic burden through subsequent private
arrangements. But legal rights arising from a payment ordinarily belong to the party
who remitted funds to the counterparty, even when the expense is later reallocated
through reimbursement or pricing decisions. Subsequent agreements between
private actors may shift economic incidence, but they do not alter who made the
initial payment in the underlying transaction.
Because entitlement under section 160D-106 turns on payment rather than
ultimate economic burden, the alleged passing on of fees does not defeat certification
under Rule 23.
A. Existence of a Class and Predominant Issue
Under Rule 23, a class exists when members share an interest in the same
issue of law or fact and that issue predominates over issues affecting only individual
members. Crow, 319 N.C. at 277. Here, the central question—whether Raleigh
lawfully imposed the CFFs—is identical for every member of the certified class.
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Resolution of that question will determine liability for all home builders’ claims in a
single stroke. See Dewalt v. Hooks, 382 N.C. 340, 344 (2022).
Raleigh’s passing-on theory does not alter this analysis. Because the statute
defines the relevant injury as the payment of an unlawful fee, variations in how
individual builders later structured their private transactions do not change the
nature of the legal claim. Differences in downstream reimbursement therefore do not
displace the predominant common issue presented by the legality of the fees.
Nor does Raleigh’s argument affect numerosity. The record reflects hundreds
of payors and thousands of fee transactions, rendering joinder impracticable. The
possibility that some class members later recovered costs from purchasers does not
alter the size or cohesion of the class defined by payment of the fees.
Raleigh’s reliance on Anderson Creek Partners, L.P. v. County of Harnett, 382
N.C. 1 (2022), does not alter this conclusion. Anderson Creek involved a constitutional
takings challenge to a “capacity use” development fee. Id. at 19. Resolving the merits
of that challenge required considerations of proportionality and the factual nexus
between the fee charged and the development’s impact. Id. at 27–28. The case did not
interpret section 160D-106 or consider a statutory refund scheme directing
repayment to the person who made the payment. See id. at 42 (noting that “the
passage of the Public Water and Sewer Development Fee Act” was “relevant to the
validity of any challenge to the County’s statutory authority to enact ‘capacity use’
fees like those at issue” but ultimately had “no bearing on the constitutionality of
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those fees,” the issue presented).
Here, by contrast, entitlement arises from a statute that defines injury by the
act of payment itself. The home builders’ claims therefore do not depend on tracing
downstream economic effects or determining who ultimately bore the cost of the fees.
Because the statutory right asserted in this case is uniform across all payors, the
individualized concerns present in Anderson Creek’s constitutional takings analysis
are not implicated, and that decision does not undermine certification.
Raleigh also argues that certification will require individualized discovery to
determine whether particular home builders passed the fees on to purchasers and
therefore suffered no injury. That argument rests on the same mistaken premise
discussed above. Because section 160D-106 defines the relevant injury as the
payment of an unlawful fee, discovery concerning downstream pricing decisions or
private reimbursement arrangements is not necessary to establish liability under the
statute. The central questions in this litigation—whether Raleigh lawfully imposed
the fees and which entities paid them—are capable of common proof. The possibility
that individualized evidence may later bear on damages or private relationships
among nonparties does not defeat certification where liability turns on issues
common to the class. See Crow, 319 N.C. at 277.
B. Adequacy of Representation and Alleged Intraclass Conflict
Rule 23 requires that the class representatives fairly ensure the adequate
representation of absent class members. That requirement is defeated where
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substantial conflicts of interest exist within the class. Some conflicts of interests, such
as those creating fundamentally adverse legal interests, will preclude class
certification altogether. See Amchem, 521 U.S. at 626; Surgeon, 385 N.C. at 779.
Other conflicts, such as those requiring some class members to address additional
defenses or evidentiary burdens not applicable to other class members, could require
the creation of subclasses with separate counsel. Surgeon, 385 N.C. at 779.
All members of the certified class share the same statutory claim: each paid
the challenged fees and seeks return of those payments under section 160D-106.
Wardson Construction advances that claim on behalf of all home builders and does
not assert any distinct entitlement based on whether particular builders passed on
costs to purchasers. The legal theory and requested relief are therefore uniform across
the class.
The fact that some builders may have incorporated the fees into home prices
does not create antagonistic interests. Differences in downstream economic effects do
not transform aligned statutory claims into conflicting ones. See Faulkenbury, 345
N.C. at 698. Because the certified class consists solely of payors, any disputes between
builders and home purchasers arise outside the class definition and do not create
intraclass conflict, nor do they call into question the adequacy of the class
representatives.
C. Superiority
Once the prerequisites of Rule 23 are satisfied, the determination of whether
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a class action is superior to other available methods of adjudication rests within the
sound discretion of the trial court. Beroth, 367 N.C. at 337. Class actions promote
efficiency, prevent inconsistent adjudications, and allow claims that might otherwise
be impracticable to pursue individually to be resolved in a single proceeding. Fisher,
369 N.C. at 215–16.
The trial court reasonably concluded that those considerations support
certification here. As the trial court noted, the legality of a uniform municipal fee
presents a common question capable of resolution on a class-wide basis. Requiring
individual actions by hundreds of home builders would risk inconsistent outcomes
while imposing litigation costs disproportionate to many individual claims.
Raleigh argues that certification may permit recovery by builders who passed
on the fees. But declining certification would not eliminate the possibility of unjust
enrichment; it would instead make the retention of allegedly unlawful fees by Raleigh
substantially more likely. The class mechanism ensures that the legality of the
challenged exaction is adjudicated once, as Rule 23 contemplates.
Moreover, recovery by the home builders does not foreclose downstream
adjustments among private parties. Contractual or equitable remedies may govern
relationships between builders and purchasers, but those issues do not affect whether
aggregate adjudication is the superior means of resolving the statutory dispute
between the payors and Raleigh.
The trial court therefore acted within its discretion in concluding that a class
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action is the superior method for adjudicating this controversy.
IV. Scope of the Decision
The question before this Court is limited to whether the trial court properly
analyzed the legal criteria for class certification and whether the court abused its
discretion in certifying a class action under Rule 23. This appeal does not require us
to determine whether the CFFs were lawfully imposed, whether any particular class
member is ultimately entitled to recovery, or the amount of any refund that may be
owed. Those issues remain for resolution in further proceedings.
In evaluating certification, a court may consider aspects of the underlying
claims only to the extent necessary to determine whether the requirements of Rule
23 are satisfied. See Fisher, 369 N.C. at 208–09. Our analysis of N.C.G.S. § 160D-106
therefore addresses the statute solely insofar as it bears on the existence of a common
claim and the propriety of class treatment. Nothing in this opinion should be
understood as resolving the merits of Wardson Construction’s challenge to the fees or
Raleigh’s defenses to liability.
Nor does today’s decision determine how any recovery, if one is ultimately
ordered, must be distributed among private parties. Section 160D-106 governs the
relationship between the payor and the governmental entity that collected the fee.
Questions concerning contractual or equitable adjustments among home builders and
home purchasers are not before us and are unaffected by this decision.
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V. Conclusion
The trial court properly evaluated the legal criteria for class certification under
Rule 23 and acted within its discretion in certifying a class consisting of home
builders who paid the challenged CFFs. Because N.C.G.S. § 160D-106 ties
entitlement to repayment to the act of payment itself, Raleigh’s passing-on argument
does not defeat the existence of a class, create impermissible conflicts among class
members, or render class adjudication inferior to other available methods of resolving
this controversy. Accordingly, the order certifying the class is affirmed.
AFFIRMED.
Justice BARRINGER did not participate in the consideration or decision of this
case.
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