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March 20, 2026 Get Citation Alerts Download PDF Add Note

Wardson Constr., Inc. v. City of Raleigh

Supreme Court of North Carolina

• Citations: None known

• Docket Number: 115A25

• Opinion

• Authorities (8)

• Cited By (0)

• Summaries (0)

• Similar Cases (68.6K)

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Syllabus

Whether the trial court abused its discretion by certifying a class of home builders seeking a refund of certain Capital Facilities Fees.

Combined Opinion

                        by Justice Anita Earls

IN THE SUPREME COURT OF NORTH CAROLINA

No. 115A25

Filed 20 March 2026

WARDSON CONSTRUCTION, INC. and HOMEQUEST BUILDERS, INC.

v.
CITY OF RALEIGH

Appeal pursuant to N.C.G.S. § 7A-27(a)(4) from an order granting plaintiffs’

motion for class certification entered on 16 September 2024 by Judge G. Bryan Collins

Jr. in Superior Court, Wake County. Heard in the Supreme Court on 28 October 2025.

James R. DeMay, Scott C. Harris, Martha A. Geer, and John Hunter Bryson
for plaintiff-appellees.

Fox Rothschild LLP, by Robin L. Tatum and Kip D. Nelson; and Carolyn A.
Bachl for defendant-appellant.

EARLS, Justice.

This case concerns whether a lawsuit challenging certain Capital Facilities

Fees imposed by the City of Raleigh may proceed as a class action. Wardson

Construction and other home builders allege that Raleigh unlawfully required them

to pay these fees as a condition of development, and they seek return of those

payments under state law. The trial court certified a class consisting of builders who

paid the fees, allowing the claims to be resolved in a single proceeding. Raleigh

appeals that decision, arguing that some builders passed the costs of the fees on to

home purchasers and therefore cannot pursue relief together as a class.
WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

We affirm the certification order. North Carolina law directs that any fee

unlawfully collected by a local government be returned to the person who made the

payment. See N.C.G.S. § 160D-106 (2025). Because the right to seek repayment turns

on payment itself—not on who may ultimately have borne the cost—the possibility

that some builders later incorporated the fees into home prices does not prevent class

treatment. The question of whether the fees were lawful is for another day; today’s

decision addresses only whether the case may proceed on behalf of all affected home

builders as certified in one action. We hold that the trial court did not err in its

analysis of the legal criteria for class certification and did not abuse its discretion

when it concluded that a class action is the superior method of adjudicating the claim.

I. Background

A. Statutory Background

In 2013, Raleigh adopted an ordinance related to water and sewer extension

policies that imposed fees for connecting with the city’s water and sewer systems.

These Capital Facilities Fees (CFFs) were apparently reserved for future expansion

or future water and sewer systems or services. Developers, builders, and other

entities alike were required to pay CFFs any time they submitted a water or sewer

connection application to the city.

In 2016, this Court held in Quality Built Homes Inc. v. Town of Carthage, 369

N.C. 15 (2016), that municipalities lack the statutory authority under the Public

Enterprise Statutes to charge for the future furnishing of water and sewer services.

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

Id. at 20–21. In so holding, however, we noted that municipalities may assess such

impact fees by obtaining separate enabling legislation from the General Assembly to

do so. See id. at 21.

In 2017, the General Assembly enacted the Public Water and Sewer System

Development Fee Act (the Fee Act). S.L. 2017-138, § 1, 2017 N.C. Sess. Laws 996,

996–99. The Fee Act authorized local governments to adopt water and sewer impact

fees, or “system development fee[s],” subject to certain “conditions and limitations,”

effective 1 October 2017. Id. §§ 1, 11, 2017 N.C. Sess. Laws at 997, 1002; see also

N.C.G.S. § 162A-203(a) (2025). The Fee Act also included a “bridge provision,”

providing that any “system development fee adopted by a local government under any

lawful authority other than this Article and in effect on October 1, 2017, shall be

conformed to the requirements of this Article not later than July 1, 2018.” N.C.G.S.

§ 162A-203(b). In response, Raleigh subsequently amended its CFF ordinance on 5

September 2017 and 5 June 2018.

In 2019, the General Assembly enacted a “refund statute,” N.C.G.S. § 160D-

106, which provides:

If a local government is found to have illegally
imposed a tax, fee, or monetary contribution for
development or a development approval not specifically
authorized by law, the local government shall return the
tax, fee, or monetary contribution plus interest of six
percent (6%) per annum to the person who made the
payment or as directed by a court if the person making the
payment is no longer in existence.

N.C.G.S. § 160D-106; see also An Act to Clarify, Consolidate, and Reorganize the

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

Land-Use Regulatory Laws of the State, S.L. 2019-111, § 2.4, 2019 N.C. Sess. Laws

424, 443. Absent from this statute is any provision that limits the passing on of CFFs.

Instead, the statute expressly states that such refunds will be made available to “the

person who made the payment.” N.C.G.S. § 160D-106.

B. Factual Background

Plaintiffs Wardson Construction, Inc. and HomeQuest Builders, Inc. (together,

Wardson Construction) are home builder corporations organized and operated under

North Carolina law. In adherence to defendant Raleigh’s CFF ordinance, Wardson

Construction allegedly paid a combined total of nearly $20,000 in CFFs in connection

with six different properties between 2016 and 2018. Contending that the payment

of the CFFs was illegal, Wardson Construction sued to recover these fees. It also

sought to represent a class of residential and commercial developers, builders, and

contractors who similarly paid CFFs to Raleigh. Although the cost of CFFs are often

passed on to the property owners who would, in turn, reimburse the payor, Wardson

Construction contends that the party who paid an illegally charged fee is entitled to

a state-mandated refund. Accordingly, it sought recovery for these fees, as well as

recovery for other builders, contractors, and developers who also paid CFFs to Raleigh

between 12 January 2016 and 30 September 2018.

C. Procedural Posture

On 12 August 2019, Wardson Construction filed a complaint in the Superior

Court, Wake County and sought class certification. Wardson Construction sought a

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

declaratory judgment that Raleigh adopted CFFs as a condition for issuing certain

permits and in order to furnish future water or sewer services without lawful

authority. Wardson Construction also sought certification of a class of all fee payors,

the return of all unlawfully collected CFFs plus interest, and an award of costs,

expenses, and attorneys’ fees.

In response to the complaint, Raleigh moved to dismiss, petitioned for writ of

certiorari to review the order denying its motion to dismiss, moved for judgment on

the pleadings, and moved to stay discovery, each of which was ultimately denied.

On 8 July 2024, Wardson Construction moved for class certification under Rule

23 of the North Carolina Rules of Civil Procedure. On 16 September 2024, the trial

court granted that motion. The trial court certified the class as follows:

All natural persons, corporations, or other entities who
(a) at any point from January 12, 2016 through June 30,
2018 (b) paid water or sewer Capital Facilities Fees to the
City of Raleigh pursuant to the Schedule of Fees and Code
of Ordinances adopted by the City of Raleigh.

The class here includes 735 payors of CFFs and over 3,900 different payments,

and the class is comprised of contractors and builders, commercial developers, and

individual property owners. In its certification order, the trial court reasoned that the

identities of class members were ascertainable during the class period, plaintiffs

would fairly and adequately represent the class, the number of class members was

sufficiently numerous, common issues of law and fact predominated among all

members of the class, and that a class action was a superior method of adjudication

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

for the as many as 630 potential actions, in light of the potential for duplicative costs

and potential to obtain recovery for otherwise nominal claims. It also concluded that

proper notice would be sent to the class. Accordingly, the trial court granted Wardson

Construction’s motion for class certification.

Also on 16 September 2024, by separate order, the trial court granted Wardson

Construction’s motion for summary judgment on the merits and denied Raleigh’s

similar motion. Raleigh then separately appealed the summary judgment order to

the North Carolina Court of Appeals.1

On 15 October 2024, Raleigh appealed the trial court’s class certification order

directly to this Court under the provisions of N.C.G.S. § 7A-27(a)(4). The issue of class

certification is the only issue we address on appeal.

II. Governing Law

A. Class Certification Under Rule 23

Rule 23 of the North Carolina Rules of Civil Procedure permits representative

litigation “[i]f persons constituting a class are so numerous as to make it

impracticable to bring them all before the court,” provided that the representatives

“fairly insure the adequate representation of all.” N.C.G.S. § 1A-1, Rule 23(a) (2025).

1 The appeal of the order granting Wardson Construction’s motion for summary
judgment on the merits of its claims is still pending before the Court of Appeals. See Wardson
Constr., Inc. v. City of Raleigh, No. 19CVS10860-910 (Super. Ct. Wake Cnty. Sep. 16, 2024),
appeal docketed, No. 25-416 (N.C. Ct. App. Apr. 30, 2025). We reiterate that this Court’s
review is confined to the class certification order.

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

Although the rule’s text is concise, this Court has developed guiding principles

governing certification through its decisions.

A proper class exists when the members share an interest in the same issue of

law or fact and that issue predominates over issues affecting only individual

members. Crow v. Citicorp Acceptance Co., 319 N.C. 274, 277 (1987). The party

seeking certification bears the burden of demonstrating that the action satisfies Rule

23’s requirements, including numerosity and adequate representation. Id. at 282.

Adequate representation requires that the named plaintiffs possess a genuine

interest in the litigation and that no conflict exists between the representatives and

the absent class members. Faulkenbury v. Tchrs.’ & State Emps.’ Ret. Sys., 345 N.C.

683, 697 (1997). Differences among class members do not necessarily rise to the level

of an intraclass conflict of interest capable of defeating certification unless those

differences create antagonistic legal interests. See Amchem Prods., Inc. v. Windsor,

521 U.S. 591, 626 (1997) (noting that the plaintiffs could not adequately represent a

class where diversity in their medical conditions created a direct contradiction

between class members who needed “generous immediate payments” and those who

needed “an ample, inflation-protected fund for the future”). Conflicts of interest that

involve differing legal interests that are not directly antagonistic typically can be

addressed by creating subclasses with separate counsel. See Surgeon v. TKO Shelby,

LLC, 385 N.C. 772, 779 (2024).

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

In addition to these requirements, our precedents recognize that class actions

serve important institutional purposes, including promoting efficiency, preventing

inconsistent adjudications, and enabling the resolution of claims that might

otherwise be impracticable to litigate individually. See Fisher v. Flue-Cured Tobacco

Coop. Stabilization Corp., 369 N.C. 202, 215–16 (2016). When these prerequisites are

satisfied, the determination of whether a class action is superior to other available

methods of adjudication is committed to the sound discretion of the trial court. Beroth

Oil Co. v. N.C. Dep’t of Transp., 367 N.C. 333, 337 (2014). Accordingly, the trial court’s

legal analysis of the class certification criteria is reviewed de novo, the court’s

corresponding fact findings are reviewed for competent evidence, and the court’s

ultimate determination to certify a class as the superior method of adjudicating the

claims is reviewed solely for abuse of discretion. Empire Contractors, Inc. v. Town of

Apex, 388 N.C. 552, 556–57 (2025).

Finally, certification does not resolve the merits of the underlying dispute. A

court may examine issues touching on the merits only to the extent necessary to

determine whether the requirements of Rule 23 are satisfied. See Surgeon, 385 N.C.

at 781–82.

B. Interpretation of N.C.G.S. § 160D-106

In the case at hand, the home builders’ claims arise from N.C.G.S. § 160D-106,

which governs the refund of fees determined to have been unlawfully imposed. The

statute in question provides as follows:

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

If a local government is found to have illegally
imposed a tax, fee, or monetary contribution for
development or a development approval not specifically
authorized by law, the local government shall return the
tax, fee, or monetary contribution plus interest of six
percent (6%) per annum to the person who made the
payment or as directed by a court if the person making the
payment is no longer in existence.

N.C.G.S. § 160D-106.

Statutory interpretation begins with the text enacted by the General

Assembly. When statutory language is clear and unambiguous, courts apply the

statute as written and do not add conditions the legislature did not include. See Wynn

v. Frederick, 385 N.C. 576, 581 (2023); O & M Indus. v. Smith Eng’g Co., 360 N.C.

263, 268 (2006). Section 160D-106 identifies a single criterion for return of an

unlawful fee: payment by the claimant. The statute does not distinguish between

those who ultimately bore the economic burden of the fee and those who may have

incorporated the fee into subsequent private transactions. Nor does it require tracing

the downstream incidence of the payment or authorize offsets based on possible

reimbursements.

Therefore, if a fee is determined to have been unlawfully imposed, then the

statutory injury occurs at the time the payment is made. This conclusion accords with

our decisions recognizing that claims challenging unlawful development fees arise

from the act of payment itself. Quality Built Homes Inc. v. Town of Carthage, 371

N.C. 60, 72 (2018).

The structure of section 160D-106 further confirms this reading. See Cohane v.

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

Home Missioners of Am., 387 N.C. 1, 8 (2025) (“[W]ords and phrases are interpreted

in their statutory context . . . .”). By directing repayment to the payor alone, the

General Assembly adopted an administrable and objective rule that avoids

individualized inquiries into private contractual arrangements. This scheme also

avoids making the local government vulnerable to multiple entities seeking to recoup

the same fee. Nothing in the statutory text or structure encourages courts to

undertake case-by-case determinations of ultimate economic incidence before a

refund may be ordered where the entity that made the payment still exists.

Because entitlement under section 160D-106 turns on payment rather than

downstream reimbursement, the alleged passing on of fees does not alter the nature

of the statutory claim and does not independently create obstacles to class

certification under Rule 23.

III. The Passing-On Defense Does Not Defeat Class Certification

Raleigh’s challenge to certification rests on a single premise advanced in

several forms. Raleigh contends that some members of the certified class incorporated

the CFFs into the prices charged to home purchasers and therefore did not ultimately

bear the economic burden of the fees. From this premise, Raleigh argues that the

home builders lack a common injury, that individualized issues predominate, that

conflicts exist within the class, and that a class action is not a superior method of

adjudication.

Each of these arguments depends upon the same assumption—that the legally

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

relevant payor is the party who ultimately absorbed the economic cost of the fee

rather than the party who remitted payment to Raleigh. That assumption is

inconsistent with the governing statute.

As explained above, N.C.G.S. § 160D-106 directs that an unlawfully imposed

fee “shall return . . . to the person who made the payment.” N.C.G.S. § 160D-106. The

statute ties entitlement to the act of payment itself. Raleigh’s argument instead asks

this Court to look beyond the transaction between the home builders and Raleigh and

determine who ultimately bore the economic burden through subsequent private

arrangements. But legal rights arising from a payment ordinarily belong to the party

who remitted funds to the counterparty, even when the expense is later reallocated

through reimbursement or pricing decisions. Subsequent agreements between

private actors may shift economic incidence, but they do not alter who made the

initial payment in the underlying transaction.

Because entitlement under section 160D-106 turns on payment rather than

ultimate economic burden, the alleged passing on of fees does not defeat certification

under Rule 23.

A. Existence of a Class and Predominant Issue

Under Rule 23, a class exists when members share an interest in the same

issue of law or fact and that issue predominates over issues affecting only individual

members. Crow, 319 N.C. at 277. Here, the central question—whether Raleigh

lawfully imposed the CFFs—is identical for every member of the certified class.

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

Resolution of that question will determine liability for all home builders’ claims in a

single stroke. See Dewalt v. Hooks, 382 N.C. 340, 344 (2022).

Raleigh’s passing-on theory does not alter this analysis. Because the statute

defines the relevant injury as the payment of an unlawful fee, variations in how

individual builders later structured their private transactions do not change the

nature of the legal claim. Differences in downstream reimbursement therefore do not

displace the predominant common issue presented by the legality of the fees.

Nor does Raleigh’s argument affect numerosity. The record reflects hundreds

of payors and thousands of fee transactions, rendering joinder impracticable. The

possibility that some class members later recovered costs from purchasers does not

alter the size or cohesion of the class defined by payment of the fees.

Raleigh’s reliance on Anderson Creek Partners, L.P. v. County of Harnett, 382

N.C. 1 (2022), does not alter this conclusion. Anderson Creek involved a constitutional

takings challenge to a “capacity use” development fee. Id. at 19. Resolving the merits

of that challenge required considerations of proportionality and the factual nexus

between the fee charged and the development’s impact. Id. at 27–28. The case did not

interpret section 160D-106 or consider a statutory refund scheme directing

repayment to the person who made the payment. See id. at 42 (noting that “the

passage of the Public Water and Sewer Development Fee Act” was “relevant to the

validity of any challenge to the County’s statutory authority to enact ‘capacity use’

fees like those at issue” but ultimately had “no bearing on the constitutionality of

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

those fees,” the issue presented).

Here, by contrast, entitlement arises from a statute that defines injury by the

act of payment itself. The home builders’ claims therefore do not depend on tracing

downstream economic effects or determining who ultimately bore the cost of the fees.

Because the statutory right asserted in this case is uniform across all payors, the

individualized concerns present in Anderson Creek’s constitutional takings analysis

are not implicated, and that decision does not undermine certification.

Raleigh also argues that certification will require individualized discovery to

determine whether particular home builders passed the fees on to purchasers and

therefore suffered no injury. That argument rests on the same mistaken premise

discussed above. Because section 160D-106 defines the relevant injury as the

payment of an unlawful fee, discovery concerning downstream pricing decisions or

private reimbursement arrangements is not necessary to establish liability under the

statute. The central questions in this litigation—whether Raleigh lawfully imposed

the fees and which entities paid them—are capable of common proof. The possibility

that individualized evidence may later bear on damages or private relationships

among nonparties does not defeat certification where liability turns on issues

common to the class. See Crow, 319 N.C. at 277.

B. Adequacy of Representation and Alleged Intraclass Conflict

Rule 23 requires that the class representatives fairly ensure the adequate

representation of absent class members. That requirement is defeated where

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

substantial conflicts of interest exist within the class. Some conflicts of interests, such

as those creating fundamentally adverse legal interests, will preclude class

certification altogether. See Amchem, 521 U.S. at 626; Surgeon, 385 N.C. at 779.

Other conflicts, such as those requiring some class members to address additional

defenses or evidentiary burdens not applicable to other class members, could require

the creation of subclasses with separate counsel. Surgeon, 385 N.C. at 779.

All members of the certified class share the same statutory claim: each paid

the challenged fees and seeks return of those payments under section 160D-106.

Wardson Construction advances that claim on behalf of all home builders and does

not assert any distinct entitlement based on whether particular builders passed on

costs to purchasers. The legal theory and requested relief are therefore uniform across

the class.

The fact that some builders may have incorporated the fees into home prices

does not create antagonistic interests. Differences in downstream economic effects do

not transform aligned statutory claims into conflicting ones. See Faulkenbury, 345

N.C. at 698. Because the certified class consists solely of payors, any disputes between

builders and home purchasers arise outside the class definition and do not create

intraclass conflict, nor do they call into question the adequacy of the class

representatives.

C. Superiority

Once the prerequisites of Rule 23 are satisfied, the determination of whether

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

a class action is superior to other available methods of adjudication rests within the

sound discretion of the trial court. Beroth, 367 N.C. at 337. Class actions promote

efficiency, prevent inconsistent adjudications, and allow claims that might otherwise

be impracticable to pursue individually to be resolved in a single proceeding. Fisher,

369 N.C. at 215–16.

The trial court reasonably concluded that those considerations support

certification here. As the trial court noted, the legality of a uniform municipal fee

presents a common question capable of resolution on a class-wide basis. Requiring

individual actions by hundreds of home builders would risk inconsistent outcomes

while imposing litigation costs disproportionate to many individual claims.

Raleigh argues that certification may permit recovery by builders who passed

on the fees. But declining certification would not eliminate the possibility of unjust

enrichment; it would instead make the retention of allegedly unlawful fees by Raleigh

substantially more likely. The class mechanism ensures that the legality of the

challenged exaction is adjudicated once, as Rule 23 contemplates.

Moreover, recovery by the home builders does not foreclose downstream

adjustments among private parties. Contractual or equitable remedies may govern

relationships between builders and purchasers, but those issues do not affect whether

aggregate adjudication is the superior means of resolving the statutory dispute

between the payors and Raleigh.

The trial court therefore acted within its discretion in concluding that a class

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

action is the superior method for adjudicating this controversy.

IV. Scope of the Decision

The question before this Court is limited to whether the trial court properly

analyzed the legal criteria for class certification and whether the court abused its

discretion in certifying a class action under Rule 23. This appeal does not require us

to determine whether the CFFs were lawfully imposed, whether any particular class

member is ultimately entitled to recovery, or the amount of any refund that may be

owed. Those issues remain for resolution in further proceedings.

In evaluating certification, a court may consider aspects of the underlying

claims only to the extent necessary to determine whether the requirements of Rule

23 are satisfied. See Fisher, 369 N.C. at 208–09. Our analysis of N.C.G.S. § 160D-106

therefore addresses the statute solely insofar as it bears on the existence of a common

claim and the propriety of class treatment. Nothing in this opinion should be

understood as resolving the merits of Wardson Construction’s challenge to the fees or

Raleigh’s defenses to liability.

Nor does today’s decision determine how any recovery, if one is ultimately

ordered, must be distributed among private parties. Section 160D-106 governs the

relationship between the payor and the governmental entity that collected the fee.

Questions concerning contractual or equitable adjustments among home builders and

home purchasers are not before us and are unaffected by this decision.

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WARDSON CONSTR., INC. V. CITY OF RALEIGH

Opinion of the Court

V. Conclusion

The trial court properly evaluated the legal criteria for class certification under

Rule 23 and acted within its discretion in certifying a class consisting of home

builders who paid the challenged CFFs. Because N.C.G.S. § 160D-106 ties

entitlement to repayment to the act of payment itself, Raleigh’s passing-on argument

does not defeat the existence of a class, create impermissible conflicts among class

members, or render class adjudication inferior to other available methods of resolving

this controversy. Accordingly, the order certifying the class is affirmed.

AFFIRMED.

Justice BARRINGER did not participate in the consideration or decision of this

case.

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