Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is CJ Staff.
Plaintiffs in a class-action lawsuit challenging Raleigh water and sewer impact fees criticized the city's legal tactics in a state Supreme Court filing this week.
The dispute involves a $16 million court ruling against the capital city over fees charged to developers between 2016 and 2018.
Plaintiffs Wardson Construction and Homequest Builders challenged the $18,000 they paid to connect six homes to the city's water and sewer system. Both plaintiffs sought refunds in 2019 and filed suit after the city rejected those requests.
Wardson and Homequest eventually sought class-action status that could affect 735 potential plaintiffs.
The state Supreme Court is considering Raleigh's appeal of a lower court order certifying the class.
"This appeal should be simple, but the City of Raleigh strives to make it complex - contrary to the repeated efforts of the General Assembly," the plaintiffs' lawyers wrote Wednesday.
"Nine years ago, this Court held that municipalities did not have authority to charge water and sewer impact fees," the court filing continued.
"When, a year later, the General Assembly granted local governments, including municipalities, that authority, it refused to give local governments a 'get out of jail free card' for having charged their citizens illegal impact fees. It instead established a three-year statute of limitations for people and companies who had paid the illegally-charged water and sewer impact fees to file suit."
"Then, when municipalities continued to try to avoid refunding the illegal fees by arguing that the people who had in fact paid them the illegal fees were not entitled to recover the illegal fees, the General Assembly quickly clarified its intent and amended the statute governing the refund of illegal fees to specify that the person or company who 'made the payment' of the illegal fee was entitled to be 'return[ed]' that payment," the brief added.
"Now, the City of Raleigh - the last municipality to resist complying with the General Assembly's mandate to return the illegal fees - attempts to cling to as much of its illegally-assessed water and sewer impact fees as possible," the plaintiffs' lawyers argued.
"Its strategy is to avoid a class action solely by arguing that even though the class certified below is composed of 735 people and companies who the City has confirmed actually did 'make the payment,' the class certification order should be reversed based on the City's proffered re-definition of the class."
"According to the City (and contrary to the plain and really quite simple language of N.C.G.S. § 160D-106), the returned funds should not necessarily go to those who 'made the payment,' but rather should go to unidentified individuals who later purchased the property, parties who the City argues can only be identified through extensive individualized discovery precluding class certification," according to the brief.
"By avoiding class certification through its convoluted attempt to rewrite the plain language of the statute, the City of Raleigh hopes to be the lone municipality to avoid having to return its illegally-assessed fees."
Raleigh's lawyers offered their competing argument in June to North Carolina's highest court.
"This appeal solely concerns whether a trial court can certify a class of plaintiffs who - even if the named plaintiffs were correct about their damages theory - would not share a common injury," Raleigh's lawyers wrote in a Supreme Court brief.
"The ruling below distorted longstanding restrictions on when a class can be certified in North Carolina."
"It awarded a double recovery to plaintiffs who have suffered no damages and ignored this Court's warnings against conflicts of interest and inefficiencies," the Supreme Court brief continued.
"If the class certification ruling were allowed to stand, it would allow opportunistic litigators who have identified a potential claim to easily obtain class certification without demonstrating that the members of the class would actually warrant recovery should the potential claim prove valid."
"In the class as certified, there are 735 payors, but the record contains no information at all about whether 732 of those payors conducted their businesses in a way that could entitle them to any monetary relief," Raleigh's lawyers explained.
Raleigh is also challenging a trial court's decision in the dispute at the state Court of Appeals. The city filed a brief in June asking appellate judges to overturn the trial court's multimillion-dollar class-action award to developers who paid the disputed fees.
