Opinion
No. COA14–569.
04-21-2015
Kenneth B. CRUMP and wife, Cora S. Crump, Plaintiffs v. CITY OF HICKORY, Defendant.
Sigmon, Clark, Mackie, Hanvey & Ferrell, P.A., by Forrest A. Ferrell, Jason White, and Amber R. Reinhardt, for plaintiffs-appellants. Cranfill Sumner & Hartzog LLP, by Matthew Lilly and Patrick H. Flanagan, for defendant-appellee.
Sigmon, Clark, Mackie, Hanvey & Ferrell, P.A., by Forrest A. Ferrell, Jason White, and Amber R. Reinhardt, for plaintiffs-appellants.
Cranfill Sumner & Hartzog LLP, by Matthew Lilly and Patrick H. Flanagan, for defendant-appellee.
DAVIS, Judge.
Kenneth B. Crump (“Mr.Crump”) and Cora S. Crump (collectively “Plaintiffs”) appeal from the trial court's 9 December 2013 order granting summary judgment in favor of the City of Hickory (“the City”) and denying their cross-motion for summary judgment. On appeal, Plaintiffs contend that summary judgment should have instead been granted in their favor because they established as a matter of law their right to recover on their claim for unjust enrichment. After careful review, we affirm the trial court's order.
Factual Background
This case concerns Plaintiffs' payment of a $292,500.00 facility charge to the City for the purpose of reserving “sanitary sewer capacity allocation” for 117 lots of a residential subdivision called River Oaks Landings (“River Oaks”). In June 2005, Plaintiffs purchased a tract of land in Iredell County with the intention of constructing River Oaks. In October 2007, Plaintiffs sold the property to River Oaks Landings, LLC, a limited liability company formed by a group of developers to acquire and develop River Oaks. During the negotiations preceding the sale, River Oaks Landings, LLC informed Plaintiffs that it wanted the lots within River Oaks to have sewer service from the City rather than the septic service that was originally contemplated by Plaintiffs.
The City acquired the Catawba Wastewater Treatment Plant (“the WWTP”) from the Town of Catawba in 2003. Shortly afterward, the City began planning an upgrade of the facility. The City prepared a preliminary engineering report, which recommended expanding the WWTP by constructing a new plant adjacent to the existing facility that would have the capacity to treat three million gallons of wastewater per day.
In October 2006, Kevin Greer (“Mr.Greer”), Assistant Public Services Director for the City, sent a letter to Mr. Crump notifying him of the City's plans for the future development and expansion of the WWTP and explaining that “[i]n order to facilitate this wastewater plant construction and ensure this upgrade/expansion process continues moving forward, we are informing all projected users of a Facility Charge that is being implemented.” The letter further stated that
[t]his Facility Charge will be calculated on each lot and due during the planning stage of projects to ensure projects are financially solvent. Developers will be required to show full planned developments on there [sic] submittals so that the City of Hickory Public Utilities Department can determine the actual demand of the proposed improvements. This requirement is necessary so that City of Hickory staff can determine what capacity is needed to serve the immediate and foreseeable planned growth. Developers will be required to submit a Lot Take Down Schedule as well so that City of Hickory Staff can assist with capacity need determinations during the planning stage of these projects. The Facility Charge necessary has been established at $2,500.00 per lot or lot equivalent, and payment for the complete development is due during the plan review process. Water and sewer extension applications will not be executed until such payment is received.
Mr. Greer sent Mr. Crump a second letter in June 2007 stating that in order to accommodate the potential growth of the service area and ensure that the upgrade took into account all projected users and planned growth, the City needed “an accurate count of the intended connections” to the WWTP. Mr. Greer requested that all interested parties provide (1) a site plan identifying their proposed lots; (2) a “lot take down schedule”; and (3) payment of the $2,500.00 facility charge per lot.
As a result of the purchase negotiations with River Oaks Landings, LLC, Mr. Crump revised the plans for River Oaks to reflect the change from septic service to sewer service and, on 12 July 2007, paid the facility charge for River Oaks' 117 platted lots to the City, which totaled $292,500.00. The sale to River Oaks Landings, LLC was ultimately finalized on 30 October 2007. Much of the initial infrastructure needed to utilize the City's water and sewer services was installed in River Oaks, including the gravity sewer and low pressure sewer systems. However, construction came to a halt when River Oaks Landings, LLC defaulted on its loan agreement with Plaintiffs and declared bankruptcy.
Following the default, Bank of Granite acquired ownership of River Oaks in March 2010. Bank of Granite made the decision that River Oaks would use septic tanks as its sewage treatment system and that Energy United Water Corporation (“Energy United”), a municipal water supplier, would provide water service. Therefore, the plat of River Oaks recorded in the office of the Iredell County Register of Deeds—which stated that sewer and water services would be provided by the City—was amended to note instead that each lot would contain an individual septic tank and that water would be provided by “a public or community utility company.”
In January 2012, Progreso, LLC (“Progreso”) purchased River Oaks from Bank of Granite. Progreso chose to proceed with the decision to use individual septic tanks for wastewater treatment and to continue obtaining water service from Energy United. For this reason, it decided to remove the low pressure sewer boxes from River Oaks that had been previously installed to facilitate connection to the City's sewer lines.
Plaintiffs own a 10 percent stake in Progreso.
After learning that Progreso did not intend to use the City's sewer service, Mr. Crump contacted Mr. Greer and requested a refund of the $292,500.00 he had paid to the City. Upon the City's refusal to issue the requested refund, Plaintiffs filed the present action in Catawba County Superior Court on 12 December 2012 seeking (1) “a declaratory judgment as to their rights regarding the facility deposit fee policy of the [City], to wit a determination of whether they are entitled to have the $292,500.00 paid to [the City] returned to them”; and (2) recovery of the $292,500.00 under the theory that the City's retention of the facility charge would constitute unjust enrichment.
After engaging in discovery, the parties each filed a motion for summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. The parties' cross-motions came on for hearing before the Honorable Nathaniel J. Poovey on 18 November 2013. On 9 December 2013, Judge Poovey entered an order granting the City's motion and denying Plaintiffs' motion. Plaintiffs filed a timely notice of appeal.
Analysis
Summary judgment is only appropriate when the record demonstrates (1) the absence of any genuine issues of material fact; and (2) the entitlement of a party to a judgment as a matter of law. In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008). An order granting summary judgment is reviewed de novoby this Court. Id.“[A] defendant may show he is entitled to summary judgment by: (1) proving that an essential element of the plaintiff's case is non-existent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense.” Kinesis Adver., Inc. v. Hill, 187 N.C.App. 1, 10, 652 S.E.2d 284, 292 (2007) (citation and quotation marks omitted), appeal dismissed and disc. review denied,362 N.C. 177, 658 S.E.2d 485 (2008).
“Unjust enrichment is a claim in quasi contract or contract implied in law.” Progressive Am. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 184 N.C.App. 688, 695, 647 S.E.2d 111, 116 (2007) (citation and internal quotation marks omitted). “In order to properly set out a claim for unjust enrichment, a plaintiff must allege that property or benefits were conferred on a defendant under circumstances which give rise to a legal or equitable obligation on the part of the defendant to account for the benefits received, but that the defendant has failed to make restitution for the property or benefits.” Norman v. Nash Johnson & Sons' Farms, Inc., 140 N.C.App. 390, 417, 537 S.E.2d 248, 266 (2000). “It is a general principle underlying various legal doctrines and remedies that one person should not be permitted unjustly to enrich himself at the expense of another....” Peace River Elec. Coop., Inc. v. Ward Transformer Co., 116 N.C.App. 493, 509, 449 S.E.2d 202, 213 (1994) (citation, alteration, and emphasis omitted), disc. review denied, 339 N.C. 739, 454 S.E.2d 655 (1995).
However, “[m]ore must be shown than that one party voluntarily benefited another or his property.” JPMorgan Chase Bank, Nat'l Ass'n v. Browning,–––N.C.App. ––––, ––––, 750 S.E.2d 555, 560 (2013). Indeed, “the mere fact that one party was enriched, even at the expense of the other, does not bring the doctrine of unjust enrichment into play. There must be some added ingredients to invoke the unjust enrichment doctrine.” Peace River, 116 N.C.App. at 509, 449 S.E.2d at 213 (citation, quotation marks, and brackets omitted).
Here, the evidence of record demonstrates that (1) Plaintiffs paid the City the facility charge as a result of the desire of River Oaks Landings, LLC that River Oaks have sewer service rather than septic service; (2) Plaintiffs incorporated the cost of the facility charge into the purchase price of River Oaks by “rais[ing] the price” to $9.7 million after the River Oaks plan had been revised to include sewer service from the City; (3) after River Oaks Landings, LLC defaulted and declared bankruptcy, Bank of Granite acquired ownership of River Oaks and the recorded plat for the development was amended to reflect Bank of Granite's intent to use individual lot septic tanks for sewage treatment and municipal or community water service; (4) after purchasing River Oaks, Progreso opted to remove any infrastructure that had been installed for the purpose of facilitating the use of the City's sewer service; and (5) the service capacity of the WWTP that was reserved by the payment of the facility charge remains available for River Oaks' use if its owners choose to utilize the City's water and sewer services and construct the accompanying infrastructure necessary to connect to the City's system. Indeed, in his deposition, Mr. Greer testified as to the reason why River Oaks was not presently using the City's sewage treatment service, stating that the City would have “gladly serviced those lots” and that “the only thing that's a limiting factor on use of the treatment plant was that the developer did not complete construction of the infrastructure.”
Thus, it is clear that (1) the City reserved the wastewater service capacity for the 117 lots as requested by Plaintiffs; and (2) the fact that River Oaks is not currently receiving the City's sewage treatment service is due to the decisions of its owners to pursue an alternative method of wastewater treatment rather than a result of any unwillingness by the City to provide sewer service. As this Court has previously explained, “[t]he doctrine of unjust enrichment was devised by equity to exact the return of, or payment for, benefits received under circumstances where it would be unfair for the recipient to retain them without the contributor being repaid or compensated.” Collins v. Davis, 68 N.C.App. 588, 591, 315 S.E.2d 759, 761 (emphasis added), aff'd per curiam, 312 N.C. 324, 321 S.E.2d 892 (1984). Given that the City did in fact allocate sanitary sewer capacity for the 117 lots and that the owners of River Oaks have voluntarily chosen not to utilize that service capacity, the City's retention of the facility charge paid by Plaintiffs is not an injustice that the doctrine of unjust enrichment was designed to remedy.
As such, we conclude that the undisputed evidence reveals the non-existence of an essential element of Plaintiffs' claim, namely that the enrichment of the City was unjust. Accordingly, the trial court did not err in granting the City's motion for summary judgment and denying Plaintiffs' motion for summary judgment. See Peace River, 116 N.C.App. at 509, 449 S.E.2d at 214 (affirming entry of summary judgment on unjust enrichment claim because “while Peace River arguably may have been ‘enriched,’ any such enrichment was in no way unjust”).
In their principal brief, Plaintiffs reference language from our Supreme Court's decision in Town of Spring Hope v. Bissette, 305 N.C. 248, 251, 287 S.E.2d 851, 853 (1982), stating that under N.C. Gen.Stat. § 160A–314(a), “a municipality may not charge for services to be furnished. ” (Emphasis added.) However, in their reply brief, Plaintiffs unambiguously assert that they “do not contest the authority or ability of the City to collect facility deposit fees” and instead are merely claiming that the City's retention of the $292,500.00 constitutes unjust enrichment where the service was never actually provided. (Emphasis added.) Therefore, the issue of whether the City possessed the statutory authority to charge a facility fee prior to the actual provision of wastewater treatment service to Plaintiffs is not before us. See Arrington v. Martinez, 215 N.C.App. 252, 266, 716 S.E.2d 410, 419 (2011) (explaining that this Court cannot “review issues not raised or argued by the appellant” or “presume to create arguments for the parties” (citation and quotation marks omitted)).
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The trial court's entry of summary judgment in favor of the City on Plaintiffs' declaratory judgment claim was likewise appropriate as that claim merely sought a declaration that Plaintiffs were legally entitled to a refund of the facility charge. Because—as discussed above—Plaintiffs' unjust enrichment claim fails as a matter of law, Plaintiffs are not entitled to the declaratory relief they seek.
Conclusion
For the reasons stated above, the trial court's order is affirmed.
AFFIRMED.
Judges ELMORE and McCULLOUGH concur.
Report per Rule 30(e).
Opinion
Catawba County, No. 12 CVS 3212.
Appeal by plaintiffs from order entered 9 December 2013 by Judge Nathaniel J. Poovey in Catawba County Superior Court. Heard in the Court of Appeals 5 November 2014.