Anderson Creek Partners, L.P. v. Cnty. of Harnett

854 S.E.2d 1

ANDERSON CREEK PARTNERS, L.P.; Anderson Creek Inn, LLC ; Anderson Creek Developers, LLC; Fairway Point, LLC; Stone Cross, LLC d/b/a Stone Cross Estates, LLC; Ralph Huff Holdings, LLC ; Woodshire Partners, LLC; Crestview Development, LLC; Oakmont Development Partners, LLC; Wellco Contractors, Inc.; North South Properties, LLC; W.S. Wellons Corporation ; Rolling Springs Water Company, Inc. ; and Stafford Land Company, Inc., Plaintiffs,

v.COUNTY OF HARNETT, Defendant.

PF Development Group, LLC, Plaintiff,

v.County of Harnett, Defendant.

Nos. COA19-533

COA19-534

Court of Appeals of North Carolina.

Filed: December 31, 2020

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

Fox Rothschild LLP, by Kip David Nelson, Greensboro, Bradley M. Risinger, Raleigh, and Troy D. Shelton, Raleigh, and Christopher Appel, for Defendant-Appellee.

McGEE, Chief Judge.

Plaintiffs Anderson Creek Partners, L.P., et al. ("Anderson Creek"), and PF Development Group, LLC ("PF Development") (together, the "Developers"), each brought suit seeking refunds for fees paid to Defendant Harnett County (the "County") for water and sewer services "to be furnished" to their future real estate developments. Each of the two cases was designated to be an exceptional civil case and the two cases were consolidated for a single decision in the trial court, as well as consolidated for appeal to this Court.

The Developers appeal from the 26 November 2018 order of the trial court granting the County's motion for judgment on the pleadings. The Developers contend that (1) the trial court erred by taking judicial notice of an interlocal agreement between the County and its water and sewer districts; (2) the pleadings presented material issues of fact with respect to whether the County was authorized to charge fees for services "to be furnished;" and (3) the pleadings presented a viable unconstitutional conditions claim.

We hold (1) that the trial court did not err in taking judicial notice of the interlocal agreements because the agreements are public documents; (2) there were no issues of material fact in the pleadings with respect to whether the County had authority to charge prospective fees; and (3) the capacity use fees collected by the County are not subject to review under the unconstitutional conditions doctrine. We affirm the trial court's order.

I. Factual and Procedural Background

A. Interlocal Agreements and Assessment of Fees

The Harnett County Board of Commissioners created a water and sewer district in Buies Creek (the "Buies Creek District") to collect wastewater within the district. The County and the Buies Creek District entered into an interlocal agreement in 1984 (the "1984 Buies Creek Agreement"), whereby the County agreed to operate the Buies Creek District's water and sewer system. The 1984 Buies Creek Agreement was the subject of the North Carolina Supreme Court decision in McNeill v. Harnett County , 327 N.C. 552, 398 S.E.2d 475 (1990). In McNeill , the North Carolina Supreme Court held that counties could lawfully enter into and act upon an interlocal agreement to operate a water and sewer system on behalf of a water and sewer district, and could exercise the water and sewer district's "rights, powers, and functions" in carrying out those operations. Id. at 559–60, 398 S.E.2d at 479.

By 1998, the County created eight water and sewer districts (the "Districts") to manage wastewater across its entire jurisdiction. The County and the Districts then entered into a joint interlocal agreement in May 1998 (the "1998 Agreement"), whereby the County agreed to administer the Districts’ water and sewer systems. Per the 1998 Agreement, the County and the Districts agreed that the County would lease the Districts’ property; the Districts would transfer their intangible assets to the County; the County would assume most of the Districts’ liabilities; and the County would "administer all operations and maintenance" of the Districts’ water and sewer systems.

The County then incorporated its duties under the 1998 Agreement into the Harnett County Water and Sewer Ordinance (the "Ordinance"). See Harnett County, N.C., Water and Sewer Ordinance (July 1, 2016) [hereinafter, Ordinance]. Pursuant to section 28(h) of the Ordinance, the County charges landowners "capacity use" fees (the "Fees") for future water or sewer service as a mandatory condition prior to the County issuing approvals and/or permits for developments to real property. Ordinance § 28(h). The Fees for a single-family residential lot are a one-time, non-negotiable payment of $1,000 for water and $1,200 for sewer. Ordinance § 28(h).

B. Anderson Creek's Case

The Developers each sought to build a number of residences in the County in or around 2017. Cumulatively, the County required the Developers to pay over $25,000 in Fees prior to issuing its approval for the Developers’ proposed plans.

Anderson Creek filed a complaint against the County on 1 March 2017. The complaint initially alleged six claims for relief, requesting:

(1) a declaration that the Ordinance and Fees were unlawful because the County exceeded its authority under N.C. Gen. Stat. § 153-277 in adopting and enforcing the Ordinance and Fees, and/or because the Fees lacked an "essential nexus" and "rough proportionality" to the impact of the proposed developments on the County's water and sewer systems;

(2) a declaration that the Ordinance and Fees violated the Developers’ rights to equal protection and substantive due process under Article I, Section 19 of the North Carolina Constitution ;

(3) a refund to the Developers of all fees exacted by the County, together with interest at the rate of 6% per annum pursuant to N.C. Gen. Stat. § 153A-324 ;

(4) an award of costs, expenses, and attorneys’ fees pursuant to N.C. Gen. Stat. § 6-21.7 and/or other applicable law;

(5) an accounting of all fees exacted by the County from the Developers; and

(6) an order allowing any future Fees required to be paid into escrow pending the litigation resolution.

The County filed an amended¹ answer, counterclaims, and motion for sanctions in response to Anderson Creek's complaint on 19 May 2017. Anderson Creek then filed a motion to amend its complaint on 23 August 2017. The trial court granted the motion, and Anderson Creek filed an amendment to its complaint asserting a seventh and eighth claim for relief:

(7) alleging that the County breached the terms of a 4 April 2018 agreement with Anderson Creek, specifically; and

(8) requesting a declaration regarding the severability of a provision of the agreement with Anderson Creek relating to the payment of fees from Anderson Creek's development properties.

The Anderson Creek case was designated an exceptional civil case under Rule 2.1 of the General Rules of Practice for the Superior and District Courts on 27 September 2017 and was reassigned to another Superior Court Judge in Chatham County.

The County filed an answer and counterclaim in response to Anderson Creek's amended complaint on 1 February 2018.² The County's counterclaim requested a declaration that the 1998 Agreement gave the County authority to collect fees through the Ordinance.

On 12 February 2018, the County filed a Rule 12(c) motion for judgment on the pleadings as to claims 1 through 6 and 8 of Anderson Creek's amended complaint, and filed a motion to join necessary parties or, in the alternative, motion for permissive joinder of parties. The County attached to its motions the 1984 Buies Creek Agreement at issue in McNeill , as well as the subsequent 1998 Agreement. The motions were heard at the 6 August 2018 civil session of Chatham County, Superior Court.

C. PF Development's Case

PF Development's complaint was filed against the County on 19 July 2017. Six claims for relief were alleged in PF Development's complaint. These claims were identical to the claims raised in Anderson's Creek initial complaint. The County filed an answer denying the material allegations of the complaint and a counterclaim for declaratory relief on 9 October 2017. PF Development filed a reply to the counterclaim on 9 November 2017.

The County filed a Rule 12(c) motion for judgment on the pleadings as to all six of PF Development's claims, and a motion to join necessary parties or, in the alternative, motion for permissive joinder of parties on 12 February 2018. The PF Development case was designated an exceptional civil case on 4 October 2018 and also reassigned to the same Superior Court Judge in Chatham County.

D. Consolidation for Decision and Appeal

The Developers initially filed a motion to consolidate their cases before the trial court on 30 January 2018. After consideration of the pleadings, arguments of counsel at the 6 August 2018 hearing in Anderson Creek's case, and materials submitted to the trial court, the trial court informed the Developers that the County's Rule 12(c) motion would be partially allowed in Anderson Creek's case. The Developers again filed a joint consent motion to consolidate their cases with the trial court on 5 October 2018. The trial court entered an order granting the consent motion to consolidate on 26 November 2018. The parties to the PF Development case elected to accept the result of the Anderson Creek case and did not request additional oral argument for PF Development's case.

On 26 November 2018, the trial court entered an order (the "Consolidated Order") resolving each case, granting: (1) in the Anderson Creek case, the County's motion for judgment on the pleadings on claims 1 through 6 and 8 and dismissing each with prejudice; and (2) in the PF Development case, the County's motion for judgment on the pleadings on all claims and dismissing all with prejudice. The Consolidated Order noted that the court had "taken judicial notice of public documents appended to [the County's] Rule 12(c) ...