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Civil Practice – Rule 11 Sanctions – Improper Purpose – Insufficient Showing – Municipal – Zoning – Notice

Coventry Woods Neighborhood Association, Inc. v. City of Charlotte (Lawyers Weekly No. 11-07-0668, 26 pp.) (Douglas McCullough, J.) Appealed from Mecklenburg County Superior Court. (Forrest D. Bridges, J.) N.C. App. Click here for the full-text opinion.

Holding: Contrary to the trial court’s finding, plaintiffs refuted evidence that their primary purposes in filing their lawsuits were to delay and harass the defendant-developer. Plaintiffs showed that resort to the courts was their only avenue to contest the defendant-city’s decision to allow the developer to increase the density of homes on property adjacent to plaintiffs’.

We reverse the trial court’s imposition of sanctions against plaintiffs under N.C. R. Civ. P. 11.


Originally, the defendant-developer petitioned the defendant-city to have its 16-acre tract, Independence Woods, which is adjacent to plaintiffs’ neighborhoods, rezoned to allow it to build more residences than allowed under the property’s current zoning designation. Plaintiffs publicly opposed the rezoning petition, and the petition was denied.

Subsequently, the developer submitted a new subdivision plan, requesting a “density bonus”, which would allow it to build 72 residences, rather than the 58 allowed under the property’s zoning designation. The city’s planning staff gave preliminary approval to the new plan, including the density bonus.

The planning staff did not notify plaintiffs of the preliminary approval. The staff did not post its preliminary approval of the plan on the planning commission’s website until after the 10-day appeals period had expired.

After plaintiffs learned of the preliminary approval, they filed three lawsuits: the first alleged the subdivision ordinance was unconstitutional and requested a preliminary injunction of further construction of Independence Woods, the second challenged the planning commission’s ruling that plaintiffs’ appeal was untimely, and the third challenged the zoning board of adjustment’s ruling that plaintiffs were not entitled to individual notice prior to the planning staff’s preliminary approval of the Independence Woods subdivision plan.

Plaintiffs were unsuccessful in all three actions. The developer moved for sanctions under Rule 11 as to all three actions.

The trial court found that the lawsuits had been filed for an improper purpose: “3. At the time that these actions were filed, the plaintiffs published in their ‘Coventry Woods Neighborhood Association’ newsletter and on its website an article which read, in part: ‘CWNA Sues City Hall … the Coventry Woods Neighborhood Association has filed suit in North Carolina court, charging that the Charlotte Planning staff’s approval of the Independence Woods Subdivision is in violation of due process. The suit was filed by CWNA attorney Kenneth Davies of Davies & Grist, the top real-estate firm in Charlotte. Davies says our case is very strong…. The filing of this suit, Davies says, will have the effect of putting … (Independence’s) financing of Independence Woods on hold; Independence Woods will grind to a stop. The suit may take a year before it is heard in court.

‘The Independence Woods issue has galvanized residents of Coventry Woods…. CWNA membership is up 20 percent and we have received financial donations from members and friends. But litigation is expensive…. The CWNA Board of Directors unanimously believes that stopping Independence Woods  – once and for all  – is the Number One priority of our organization…. Your donation … will help stop this project once and for all….’”

The trial court concluded, “6…. [T]his evidence – which neither the plaintiffs nor their counsel denied or refuted in any way – is sufficient to create a strong inference that these actions were filed for an improper purpose, specifically to harass [the developer], make its Independence Woods development prohibitively expensive, interfere with or defeat its financing for that project, and to achieve through delay what could not be accomplished through those actions – the blocking or prevention of that development.”


It appears the trial court relied on its findings that plaintiffs filed their actions many months after Independence Woods had been preliminarily approved by planning staff, that CWNA published in its newsletter the fact that litigation would delay the financing and development of Independence Woods, and that plaintiffs did not deny or refute the statements concerning project delay published in CWNA’s newsletter.

The trial court’s Conclusion of Law No. 6 is actually a mixed conclusion of law and finding of fact, and it is erroneous.

The CWNA newsletter principally relied on by the trial court as evidence of improper purpose contains language negating any inferences that plaintiffs commenced their actions for the principal purposes of harassment and unnecessary project delay.

The newsletter stated, “City ordinances allow for a 10-day window in which subdivision approvals can be appealed.  But no notice had been given us.  More important for our case: There was no public record of this approval on the city’s Web site until several weeks after the 10-day window had come and gone. Our suit says this is a clear-cut, Catch-22 violation of the law.”

Further, the newsletter concludes by stating, “A successful lawsuit will benefit all neighborhoods. When our suit is won, we all will have won.”

These statements negate any inference that plaintiffs’ principal purpose in filing their actions was an improper one.

Also, the affidavit of CWNA president John Borsden stated that plaintiffs’ purpose in filing the lawsuits “was to attempt to re-open the subdivision approval process so [plaintiffs] could be heard on the merits of [their] objections.” Bordsen continued, “We believe that our objections, if given due consideration by the Planning Commission, would result in the disapproval of the Independence Woods preliminary subdivision plan.”

Bordsen admitted that plaintiffs “did anticipate that filing [their] lawsuits would potentially put development on hold during the course of the lawsuit,” but he clarified that plaintiffs “hope[d] to avoid a fait accompli wherein [plaintiffs] would later win the case, but the subdivision would be built anyway.”

Bordsen said he felt comfortable proceeding with the lawsuits after talking to plaintiffs’ counsel and to the mayor and a city councilman who were also lawyers.

Further, in his deposition, Bordsen clarified that plaintiffs’ counsel had told plaintiffs that the act of filing a lawsuit ordinarily has the effect of delaying a construction project. Bordsen also clarified that, while the newsletter stated that it might take a year before their lawsuit was heard in court, plaintiffs “hoped it would happen beforehand.”

Thus, the trial court was presented with ample evidence refuting any implication of improper purpose from the statements quoted in Finding of Fact No. 3. As such, the trial court’s finding of fact that plaintiffs did not deny or refute the statements concerning project delay published in CWNA’s newsletter is erroneous and, therefore, cannot support its conclusion that such evidence was sufficient to create a strong inference that plaintiffs filed their actions for an improper purpose.

An inherent byproduct to every valid lawsuit of this nature is project delay. In light of the trial court’s conclusion that plaintiffs’ actions “could have been warranted by a good faith argument for the extension, modification or renewal of existing law,” we fail to see how construction and financing delay under the circumstances of the present case is so exceptional such as to create a strong inference that this was plaintiffs’ principal purpose in filing their actions.

Thus, we find the trial court’s Finding of Fact No. 3, encompassing such language, does not support the trial court’s conclusion that such evidence is sufficient to create a strong inference that plaintiffs filed their action for an improper purpose. Accordingly, the trial court’s findings are insufficient to support its conclusion that plaintiffs filed their three actions for improper purposes.

Contrary to the developer’s arguments, we find plaintiffs’ continued prosecution of their actions and the language concerning project delay in CWNA’s newsletter insufficient to create a strong inference that plaintiffs’ principal purpose in filing their three actions was to harass the developer or to cause unnecessary delay and disruption to the Independence Woods development.

Because we find the trial court’s findings of fact are erroneous in part and do not support its conclusion to impose sanctions on plaintiffs for filing their actions for improper purposes, the order of the trial court imposing sanctions on plaintiffs based on the improper purpose prong of Rule 11 must be reversed.

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