Tuesday, August 16, 2022

CFPUA asks court to deny trial for impact fees lawsuit and dismiss case ‘with prejudice’

In addition to other defenses, the Cape Fear Public Utility Authority pointed to a previous case, brought by the same lawyer, that was thrown out in April.

The Cape Fear Public Utility Authority denies any wrongdoing in a recent class-action lawsuit over 'impact fees.' CFPUA is asking the court to deny the plaintiffs a trial and dismiss the case. (Port City Daily photo / New Hanover County Superior Court)
The Cape Fear Public Utility Authority denies any wrongdoing in a recent class-action lawsuit over ‘impact fees.’ CFPUA is asking the court to deny the plaintiffs a trial and dismiss the case. (Port City Daily photo / New Hanover County Superior Court)

NEW HANOVER COUNTY — Several months after being sued by Wilmington developers and builders, CFPUA is asking the courts to forgo a trial and throw out claims that it allegedly charged millions of dollars in illegal, “arbitrary,” and “capricious” fees.

Related: Class-action suit alleges CFPUA fees are unlawful, says utility’s actions ‘shock the conscience’

The lawsuit was filed in August by Mecklenburg-based J.A.C.K. Development, LLC, and the Wilmington-based Coastal Cypress Building Company, founded by Steve Swain, who formerly worked with his uncle, Wilmington developer David Swain of Swain and Associates; together, the two companies seek over $30,000 in returned fees from CFPUA.

At the heart of the lawsuit are what CFPUA calls “system development charges,” also known as impact fees. These fees aren’t related to the direct cost of sewer or water service, nor are they related to the cost of physically connecting new properties to the utility network. Instead, they are charges issued to new customers, often as a prerequisite for a building permit, designed to help pay for future CFPUA projects.

In 2016, the North Carolina Supreme Court ruled impact fees that estimated future service costs were unlawful. The following year, House Bill 436 was signed into law; it clarified the ruling, allowing impact fees but only when calculated for specific capital improvement projects and charged proportionately to new customers — something the plaintiffs claim CFPUA does has not done.

In September, a similar lawsuit was filed against the Town of Leland, which has also collected several million dollars worth of impact fees over the years.

CFPUA response, motion to dismiss

CFPUA denies all wrongdoing, and points to a previous lawsuit - brought by a different contractor with the same attorney - that was dismissed in Superior Court in April. (Port City Daily photo / File)
CFPUA denies all wrongdoing, and points to a previous lawsuit – brought by a different contractor with the same attorney – that was dismissed in Superior Court in April. (Port City Daily photo / File)

According to CFPUA spokesperson Peg Hall-Williams, who has since left the utility, CFPUA believes it obeyed the law, but would not comment further on continuing litigation.

In its motion for judgment, CFPUA asked the courts to deny a jury trial – which the plaintiffs, J.A.C.K. Development and Coastal Cypress had requested. CFPUA claims it has only ever charged legal fees.

CFPUA also argues that the plaintiffs have not cited any fees after the 2017 law, thus negating claims that CFPUA broke state law. The utility also cites a three-year statute of limitations, limiting the timeframe for potential damages to August 8, 2015.

The motion does not specifically address impact fees potentially barred after the 2016 North Carolina Supreme Court ruling that were collected prior to the 2017 state law; however, CFPUA does categorically deny breaking the law.

CFPUA also notes that the plaintiff’s counsel – Daniel Bryson, of Whitfield, Bryson, and Mason, LLP, a Raleigh-based law firm – previously brought a similar lawsuit against the utility at the beginning of the year.  That suit, Chisum Construction, LLC. v. CFPUA was dismissed in April.

CFPUA’s motion for judgment essentially demands an immediate decision on the suit, and the utility requests that, in that judgment, the court dismiss all of the plaintiff’s allegations “with prejudice,” which legally bars them from filing another lawsuit for the same cause.

The utility also requests that the court award CFPUA any legal fees spent on the case.


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

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