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Municipal – Ultra Vires Action – Subdivision Ordinance – Schools & School Boards – School Funding – Developer & Builder Fees – Civil Practice – Appeals – Interlocutory – Mootness – Standing – Statute of Limitations – Constitutional – Due Process – Equal Protection

Amward Homes, Inc. v. Town of Cary. (Lawyers Weekly No. 10-07-0734, 44 pp.) (Robert N. Hunter Jr., J.) (Barbara Jackson, J., dissenting) Appealed from Wake County Superior Court. (Carl R. Fox, J.) N.C. App.

Holding: The defendant-town was not responsible for setting up or funding schools, and it lacked statutory authority to charge developers and/or builders a fee designed to ensure adequate funding for area schools.

Summary judgment for plaintiffs is affirmed.

Interlocutory Appeal

This appeal is interlocutory given that plaintiff-intervenor Tradition at Stonewater I, LP’s causes of action against the town are still pending in the trial court.

Given that summary judgment was granted in favor of all other plaintiffs on all their claims against the town, and only the claims of Stonewater remain at trial, the trial court’s order is “a final judgment as to one … but fewer than all of … parties,” and we agree with the trial court’s certification that there is “no just reason for delay.” N.C. R. Civ. P. 54(b). Jurisdiction in this court is accordingly proper under Rule 54(b).


Repeal of a challenged law generally renders moot the issue of the law’s interpretation or constitutionality. However, the repeal of a challenged statute does not have the effect of mooting a claim arising under that statute in the event that the repeal of the challenged statute does not provide the injured party with adequate relief or the injured party’s claim remains viable.

We are presented with an ordinance exempting specific parties – plaintiffs herein – from the effect of a repeal. Plaintiffs have filed this action for the dual purposes of (1) reclaiming the “Adequate Public School Facilities” ordinance (APSFO) fees they have already paid and (2) preventing the town from charging any further fees under Condition 17 of the permit the town issued to the developer of Cameron Pond. Condition 17 allowed the developer to pass on to its builders the fee the town demanded under the APSFO. Since the repeal of the APSFO does not redress either of these claims, clearly the issues raised in this case are still viable and not moot.


Standing to challenge the constitutionality of a legislative enactment exists where the litigant has suffered, or is likely to suffer, a direct injury as a result of the law’s enforcement.

The town asserts that Condition 17 is only a rezoning condition which was not mandated by the APSFO at the time Cameron Pond was approved as a subdivision, and based on this fact, the town contends that plaintiffs’ predecessor-in-interest voluntarily agreed to the condition now causing plaintiffs’ damages. The town argues that since Condition 17 is the sole source of injury, and it was caused by the developer of Cameron Pond, plaintiffs lack standing to pursue their claims against the town.

In accepting Cameron Pond’s subdivision proposal, the town voluntarily accepted the plain, unambiguous language of Condition 17: “Upon issuance of a building permit for each residential dwelling unit within Cameron Pond, Cameron Pond or its designee will pay the Town the following amount based on the size of the dwelling to comply with the Town’s [APSFO] for schools. …”

If the town did not wish this language regarding the APSFO to be part of Condition 17, there existed ample time to change the language prior to the adoption of Cameron Pond’s proposal. As it stands, Condition 17 is patently connected to the APSFO as it existed at the time the proposal was accepted by the town council. Thus, plaintiffs have standing to challenge the town’s imposition of fees purportedly due to the requirements of the APSFO.

Ultra Vires

In Union Land Owners Ass’n v. County of Union, 689 S.E.2d 504 (2009), this court examined the imposition of school impact fees similar to those at issue in this case and concluded that there exists no statutory authority for such fees.

The voluntary mitigation payments (VMPs) in Union, like those at issue here, were proposed at the subdivision proposal phase, and the county chose to deny or accept subdivision proposals, in part, based on whether the VMP’s were adequate: “Because our state constitution places the duty to fund public schools on the General Assembly and local governments and because the General Assembly has neither expressly nor impliedly authorized defendant to shift that duty using subdivision ordinances that impose fees or use similar devices upon developers of new construction, we hold that defendant’s adoption of an [adequate public facilities ordinance] that includes a VMP and similar measures was in excess of its statutory authority.”

Condition 17 plainly falls within the scope of our holding in Union. The town had no statutory authority to adopt the APSFO or accept fees under it, and Condition 17 and the APSFO illegally shifted the burden of paying for public education to the subdivision builder- plaintiffs in this case.

Moreover, even though Union was not decided until after the town adopted the APSFO, the town should have known that Condition 17 was ultra vires, because the APSFO at the time Cameron Pond was approved gave the town no authority to accept fees in lieu of satisfying the APSFO’s requirements.

The record clearly shows, contrary to the town’s explanations, that upon the adoption of the APSFO, the town entered into a custom and practice of accepting fees pursuant to the APSFO. The town has failed to establish even a colorable claim that the acceptance of these fees was within the town’s authority, and accordingly, we can discern no genuine issue of material fact on this issue.

Since the Town had no authority to enact or enforce the APSFO or Condition 17, it likewise had no authority to require plaintiffs to continue paying the illegal fees when the APSFO was repealed. Therefore, under Union, the APSFO and Condition 17 are ultra vires, and the trial court did not err in declaring that they are “invalid, unenforceable, void and of no legal effect.”

Statute of Limitations

The two-month statute of limitations in G.S. § 160A-364.1 does not apply because the APSFO is a subdivision ordinance rather than a zoning ordinance.

Plaintiffs’ argue that all their claims are governed by the 10-year statute of limitations in G.S. § 1-56.

The three-year statute of limitations for personal injuries in G.S. § 1-52 applies to actions brought under 42 U.S.C. § 1983. However, even though the limitations period is prescribed by state law, the question of when a § 1983 cause of action accrues is a question of federal law. A cause of action accrues under federal law when a plaintiff knows or has reason to know of the injury which is the basis of the action.

Plaintiffs have pled that they have paid the fees pursuant to Condition 17 “under protest.” Thus, it appears each plaintiff’s cause of action accrued the first time an application was made for a building permit and the fee was paid to the town under Condition 17.

The record shows that all of plaintiffs’ claims accrued sometime between May 3, 2005, and Sept. 27, 2007, the time period from the time the first payment was made by any of the plaintiffs and the filing of the complaint.

Plaintiffs argue that the town’s acceptance of the fees pursuant to Condition 17 was a continuing violation. When the “continuing wrong doctrine” applies, a statute of limitations does not begin to run until the violative act ceases.

We hold that the acceptance of each fee under Condition 17 was a continuing wrong by the town. Each time a builder-plaintiff applied for a permit and paid the fee to the town, the town perpetuated its “custom” or “usage” under “color of … ordinance” to unlawfully deprive the builders of their money. 42 U.S.C. § 1983.

In North Carolina, the payment of such illegal fees tolls the running of the statute of limitations, and a plaintiff is entitled to recover all fees within the limitations period from the time their cause of action is initiated. This rule applies so long as the illegality was not complete at the time the transaction took place between the parties.

The acceptance of the illegal fees by the town was a continuing violation, and plaintiffs are entitled to seek the recovery of the fees dating back to Sept. 27, 2004, three years from the filing of their complaint, pursuant to their 42 U.S.C. § 1983 causes of action.

Since the first impact fees were paid in May 2005, plaintiffs are entitled to recover all the fees they have paid by application of the continuing wrong doctrine in addition to the standard operation of the statute of limitations.

In determining the limitations period for claims under the N.C. Constitution, we must examine a plaintiff’s cause of action and apply the statute of limitations encompassing the claim at issue.

Plaintiffs have no adequate state remedy available in these circumstances; therefore, their state constitutional claims are appropriate.

After reviewing the entirety of G.S. Chap. I, art. 5, we can ascertain no specific shorter limitations period applying to the type of declaratory claims brought by plaintiffs. Plaintiffs’ claims involve the town’s custom, usage and practice of accepting fees through an abandoned and unlawful mechanism grandfathered by a subdivision plan.

Our General Statutes do not delineate a shortened time frame for such causes of action. Accordingly, we hold that the 10-year statute of limitations in G.S. § 1-56 applies, and plaintiffs are entitled to recoup all of the fees that they have sought in their complaint pursuant to their claims under N.C. Const. art. I, § 19.

Plaintiffs have carried their burden of showing that their claims are not barred, and the town has failed to adduce any facts showing an issue for trial. Therefore, summary judgment on this issue was proper.


The town contends that since plaintiffs and their predecessor-in-interest accepted the benefits of their subdivision approval with Condition 17, they are now estopped from challenging it. We disagree.

The acceptance of benefits under a statute generally precludes an attack upon it.

The primary benefit of the Cameron Pond subdivision proposal was an increase in the number of building lots on the 143 acres comprising the subdivision. After Cameron Pond was approved, the developer reaped this benefit to sell 125 additional lots. The secondary benefits involving setback standards, streetscapes, street design and design barriers allowed the developer of Cameron Pond to arrange these additional lots with minimal interference from the town during construction. While the developer of Cameron Pond reaped these numerous benefits, builder- plaintiffs were burdened only with the detriment of paying the fees under Condition 17.

The town fails to demonstrate how plaintiffs have received any benefit at all. There is no allegation that any of plaintiffs were able to build more homes through Condition 17 or that the zoning variances somehow benefitted plaintiffs through the building process.

The record instead shows that the developer of Cameron Pond agreed to Condition 17 despite feeling that the condition was unlawful, and then passed the burden of Condition 17 to plaintiffs, who had to actually pay the fees when applying for building permits. Since the town has failed to show that plaintiffs have received any benefit under the APSFO or Condition 17, even though plaintiffs have been forced to participate in the town’s illegal custom and practice of imposing and accepting the fees, plaintiffs are not estopped from pursuing their claims.

Due Process

Substantive due process is a guaranty against arbitrary legislation, demanding that the law shall not be unreasonable, arbitrary or capricious, and that the law be substantially related to the valid object sought to be obtained.

Plaintiffs were required to make two showings in their substantive due process claim: (1) demonstrate a fundamental property interest protected by the Fourteenth Amendment or the N.C. Constitution and (2) prove that they were deprived of this property interest by government action that either shocks the conscience or has no rational relation to a valid state objective.

There is no genuine issue of material fact regarding the first element because plaintiffs had a property interest in the fees that they paid to the town.

There is also no genuine issue of material fact as to the second element, because the town had no authority under its own APSFO to charge the fees at the time the Cameron Pond proposal was accepted, and the town had no statutory authority to enact the APSFO. As a result, the fees paid by plaintiffs pursuant to Condition 17 and the APSFO had no relation to a valid state objective.

Given that plaintiffs satisfied their burden of proof, the trial court correctly concluded that plaintiffs were entitled to judgment as a matter of law on their substantive due process claims in the absence of a triable issue presented by the town.

Equal Protection

There is no genuine issue of material fact that (1) plaintiffs were intentionally treated unequally by the town compared to similarly situated entities and (2) there is no rational basis for the town’s disparate treatment. Plaintiffs paid higher fees than several of their counterparts, and when the APSFO was repealed, plaintiffs were singled out to continue paying fees even though future subdivision lot owners would not have to pay the fees.

By the language of Condition 17, the town purposely imposed the fees to satisfy its ordinance, which we have already concluded to be beyond the town’s statutory authority. Given that these facts are not in dispute and the town has otherwise failed to demonstrate a triable issue, the trial court was correct in granting plaintiffs summary judgment.

Attorney’s Fees

We have already concluded that the trial court did not err in concluding that plaintiffs’ constitutional rights were violated by the town. Since the town offers no other argument as to how the trial court abused its discretion in awarding the fees, we hold that the award was properly granted under 42 U.S.C. § 1988.


(Jackson, J.) Because I believe this appeal is interlocutory, I would vote to dismiss.

Although Rule 54(b) provides the trial court with the authority to certify a case for immediate appeal, the trial court’s certification of an appeal pursuant to Rule 54(b) does not deprive this court of its role in determining whether the appeal is properly before us or not.

It is incumbent upon the parties also to articulate how they will be deprived of a substantial right in the absence of immediate review when the matter is not before us as the result of a final judgment. Here, the town has done no more than make the bare assertion that this matter has been “certified by the trial court for review in this Court pursuant to N.C.R. Civ. P. 54(b)” and accordingly, jurisdiction is proper. Without more, I must vote to dismiss, although I agree with the reasoning set forth in the majority opinion.

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