Municipal Laws

N.C. Appellate Court Speaks On Attorney Fee Recovery Law Applicable to Local Governments

In 2011, the North Carolina General Assembly enacted the following statute allowing payment of attorney fees in the face of certain local government acts:

In any action in which a city or county is a party, upon a finding by the court that the city or county acted outside the scope of its legal authority, the court may award reasonable attorneys’ fees and costs to the party who successfully challenged the city’s or county’s action, provided that if the court also finds that the city’s or county’s action was an abuse of its discretion, the court shall award attorneys’ fees and costs.

NCGS 6-21.7.  The statute is relatively new, and has not received much attention at all from the courts.

Yesterday, however, the North Carolina Court of Appeals upheld an award of attorney fees against Orange County, North Carolina.  The case is Phillips v. Orange County Health Department, No. COA13-1463 (November 18, 2014).

While not the central holding of the case — the central holding is that the County was preempted by State law from regulating plaintiff’s wastewater discharge system — the attorney fee holding is the most interesting aspect to me.

The trial court awarded fees pursuant to NCGS 1-263, the State’s Declaratory Judgment Act.  The trial court does not appear to have relied on NCGS 6-21.7 in rendering its award.

The appellate court, however, recites the language of NCGS 1-263 — “the court may make such award of costs as may seem equitable and just” — but it also recites the language of NCGS 6-21.7 in affirming the award.  What’s more, the issue is whether the County’s regulations and actions pursuant to its regulations were preempted by State law.  Thus, is the award pursuant to NCGS 1-263, or is it pursuant to NCGS 6-21.7?  Is the appellate court’s invocation of NCGS 6-21.7 dicta?  If the Phillips Court’s invocation of NCGS 6-21.7 is not dicta, is a local government preemption case to be viewed as one in which the local government “acted outside the scope of its legal authority” or “abused its discretion” such that attorney fees might be recoverable?

We think the courts will continue to explore the boundaries of this attorney fee provision.

Mike Thelen practices in Womble, Carlyle’s Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and “like” us on Facebook here.

Categories: Municipal Laws

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