Posted by: Patricia Salkin | April 6, 2013

VA Sup. Court Finds that Illegal Building Permit Fees Paid Voluntarily Need Not Be Refunded

Blue Ridge Shadows, LLC (“BRS”) was D.R. Horton, Inc.’s (“Horton”) predecessor in title. BRS, a real estate development company, petitioned the Board of Supervisors of Warren County (“Board”) to rezone a tract of land from agricultural to suburban residential. As part of the approval process, BRS submitted a number of written “proffers” as inducements for the right to develop the property with up to 225 residential units. In one proffer, BRS promised to install a wastewater treatment plant and also to make $8,000.00 payments to Warran County each time it issued a building permit for one of the units. Later on, the agreement was amended whereby BRS would be able to obtain water treatment and sewer services from the Town in exchange for a $4,000.00 “hook-up fee” for each unit.

Horton, another developer, purchased most of the subdivision property from BRS subject to the above proffer fees. Horton began paying $12,000 for each building permit issued, but later learned that the County would still charge him the additional $4,000 per permit as the hook-up fee. Horton decided to continue paying the excess amount in order to avoid any further damage to himself and the construction, and eventually filed a declaratory judgment action asking the trial court to declare that the County could not lawfully assess the $4,000 fee against it. The court agreed with Horton, holding that he was not obligated to pay the fee. Also before the court was Horton’s restitution action seeking reimbursement of the fees. The Board put forth the voluntary payment doctrine as an affirmative defense, and the court sided with the Board on this issue: “After ruling in Horton’s favor in the declaratory judgment action, the court held in this action that Horton was nevertheless barred from being awarded reimbursement of the unlawful fees because it paid them ‘voluntarily’ within the meaning of the voluntary payment doctrine.”

On appeal to the Supreme Court of Virginia, the court first explained  the voluntary payment doctrine: “Where a party pays an illegal demand with a full knowledge of all the facts which render such demand illegal, [i] without an immediate and urgent necessity therefor [sic], or [ii] unless to release his person or property from detention, or [iii] to prevent an immediate seizure of his person or property, such payment must be deemed voluntary, and cannot be recovered back. And the fact that the party at the time of making the payment, files a written protest, does not make the payment involuntary.” In addition, all payments are presumed to be made voluntarily unless the plaintiff can prove otherwise.

To negate the voluntary payment defense, Horton put forth four arguments, the first being that the payments were made involuntarily because the County would not have issued the permits without the fees and this amounted to a seizure of a Horton’s right to develop the property. The court rejected this argument on the grounds that Horton was not in fact deprived of the right to develop the property. Indeed, he proceeded with development to the completion of the project. Secondly, Horton contended that he faced criminal and civil penalties for breaching the contract, so he was forced to pay. The court rejected this argument too, pointing out that the County never threatened him with criminal proceedings. Additionally, Horton would have had to demonstrate an “immediate and urgent necessity” for paying the County’s unlawful demand, which he did not.  The court elaborated on this necessity more for Horton’s third argument. There, he asserted this necessity as the reason for making the payments involuntarily, arguing that Horton’s need to construct the houses and finish the project amounted to an immediate and urgent necessity. But to succeed on a claim, a plaintiff must show that the immediacy of the situation precluded being able to seek an appropriate legal remedy. This proved fatal for Horton who acquired the permits and paid the fees for over three years and did not establish any reason why it could not have sought injunctive relief before acquiring any one of the permits. Therefore, this argument failed as well.

Lastly, Horton claimed that his protestations to County officials for paying the fees and its filing of the declaratory judgment action supported his claim for involuntarily making the payments. The court found this argument to be without merit because simply protesting an unlawful demand does not render payment of the demand involuntary. Because Horton could not establish that his payments were involuntary, he did not rebut the assumption that all payments are made voluntarily. Therefore, the court found in favor of the Board under the voluntary payment doctrine.

D.R. Horton, Inc v. Board of Sup’rs for County of Warren, 2013 WL 718757 (VA. 2/28/2013)

The opinion can be accessed at: http://www.courts.state.va.us/opinions/opnscvwp/1120384.pdf

 


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Categories

<span>%d</span> bloggers like this: