{
  "id": 8525922,
  "name": "BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. and THE BOARD OF DIRECTORS OF BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. v. TOWN OF ATLANTIC BEACH",
  "name_abbreviation": "Bogue Shores Homeowners Ass'n v. Town of Atlantic Beach",
  "decision_date": "1993-04-06",
  "docket_number": "No. 923SC191",
  "first_page": "549",
  "last_page": "557",
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        8521065
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    "date_added": "2019-08-29",
    "source": "Harvard",
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  "casebody": {
    "judges": [
      "Judges JOHNSON and MARTIN concur."
    ],
    "parties": [
      "BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. and THE BOARD OF DIRECTORS OF BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. v. TOWN OF ATLANTIC BEACH"
    ],
    "opinions": [
      {
        "text": "GREENE, Judge.\nPlaintiffs appeal from an order of the trial court entered 26 November 1991, in part granting defendant\u2019s motion for summary judgment. Defendant appeals from the same order in part granting summary judgment in favor of plaintiffs.\nThe evidence before the trial court at the summary judgment hearing established that in 1981, Morris and Mary Lucy Cherry acquired title to a 150-room motel located near the town of Atlantic Beach, North Carolina. The Cherrys modified the rooms, which contain either 488 or 282 square feet, by adding to each permanent kitchen facilities and by combining two of the rooms to make one unit, and pursuant to N.C.G.S. \u00a7\u00a7 47A-2 and -13, recorded in the Carteret County Registry a \u201cDeclaration of Unit Ownership of Bogue Shores Condominiums\u201d dated 5 October 1991 (the Declaration). The Declaration established Bogue Shores Homeowner\u2019s Association, Inc., a plaintiff herein along with its board of directors. The individual rooms were then sold as condominium units. Pursuant to the Declaration, each owner of one of the 149 Bogue Shores condominium units also owns an interest in common areas, including a swimming pool, utility areas, parking areas, an office and manager\u2019s apartment, and grassed areas. The Declaration states that the use of each unit is restricted to \u201csingle-family residential purposes.\u201d\nEven though the individual rooms are separately owned, a majority of the owners choose to participate in a rental program whereby a manager is employed to rent rooms on a nightly to weekly basis. A \u201cfront desk\u201d is staffed with clerks who register guests. The rooms, which open directly onto the parking area, are furnished, and maid and linen service is provided. Plaintiffs advertise as \u201cBogue Shores Motel-Condominiums.\u201d The Declaration provides that \u201cthe office and manager\u2019s apartment building or any portion thereof may be used by the association for any lawful purpose which benefits the members thereof\u201d and that the unit owners may lease their units. The owners, however, are not required to lease their units.\nOn 28 February 1987, the town of Atlantic Beach, defendant herein, annexed the property owned by plaintiffs. As a result, plaintiffs in the summer of 1988 had the option of connecting to defendant\u2019s water supply system, and were so informed by defendant. Defendant\u2019s water policy, established in 1986 pursuant to the authority granted in N.C.G.S. \u00a7 160A-311 et seq. and amended in 1989 and 1991, contains a multi-rate schedule which establishes a minimum monthly rate for single residential or commercial users depending on the size of the customer\u2019s meter, or service line. For example, the minimum monthly rate for a single customer with a three-inch line is $125.00; those with a three-quarter inch line pay a minimum of $8.00. The policy also establishes a rate for customers with multiple units which are served by a single service line, such as condominium and apartment complexes and hotels and motels. The monthly minimum for such customers is based, not on the size of the service line, but on the number of units in the development.\nSection 22 of defendant\u2019s water policy requires payment of an \u201cimpact fee\u201d for new or modified services which, according to the policy, shall be used to fund system improvements and modifications. For connection of a three-inch line, the impact fee is $15,000.00. According to plaintiffs, it is defendant\u2019s unwritten policy to waive the impact fee for customers in newly annexed areas, and, in fact, when defendant notified plaintiffs that water service was available, it informed plaintiffs that they had thirty days to apply in order to avoid the impact fee.\nAfter receiving notification from defendant, plaintiffs immediately applied for water service and requested to be charged either according to the size of the building\u2019s service line (i.e., three inches, for a minimum monthly bill of $125.00), or at the rate for hotels and motels, which, pursuant to defendant\u2019s water policy, is $8.00 per every three rooms in the establishment. Defendant, however, advised plaintiffs that they would be charged at the rate for residential condominiums. This rate is a monthly minimum of $8.00 multiplied by the number of units in the complex, or usage, whichever is greater. For plaintiffs, this amounts to $8.00 times 149 units, or $1,192.00 per month, for an annual minimum total water bill of $14,304.00. Plaintiffs unsuccessfully appealed this decision to the Board of Commissioners of the Town of Atlantic Beach in October, 1988, and on 25 August 1989, filed the complaint in the instant action.\nPlaintiffs\u2019 complaint alleges that their property is \u201csubstantially similar to a motel for purposes of water service and billing by defendant\u201d and that therefore they are entitled to connect to defendant\u2019s water system and be billed at the rate for hotels and motels. Plaintiffs further allege that defendant\u2019s water rate schedule is arbitrary and discriminatory in violation of its ordinances and in violation of the Equal Protection Clause of Article I, Section 19 of the North Carolina Constitution and of the provisions of N.C.G.S. \u00a7 160A-314.\nPlaintiffs and defendant filed cross-motions for summary judgment. The trial court, after consideration of the pleadings, a deposition, affidavits, exhibits to the deposition and affidavits, briefs, and arguments of the attorneys for the parties, entered an order on 26 November 1991, in part granting summary judgment in favor of defendant on plaintiffs\u2019 claims. The court, however, in part granted summary judgment for plaintiffs on the ground that the portion of defendant\u2019s water policy which would require that plaintiffs pay an \u201cimpact fee\u201d of $15,000.00 for a three-inch service line connection is arbitrary and capricious. Both parties appeal.\nThe issues are whether the evidence presented at the summary judgment hearing established that (I) defendant pursuant to its water policy properly charged plaintiffs for water service at the rate established for condominiums; (II) defendant\u2019s water ordinance is not arbitrary or discriminatory; and (III) whether defendant required payment by plaintiffs of a $15,000.00 \u201cimpact fee\u201d for connection of plaintiffs\u2019 three-inch service line, and, if not, whether the trial court\u2019s granting of summary judgment on this issue was premature.\nSummary judgment is proper \u201cif the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.\u201d N.C.G.S. \u00a7 1A-1, Rule 56 (1990).\nPlaintiffs' Appeal\nI\nPlaintiffs argue that the evidence presented by the parties establishes that the property at issue is for all practical purposes a motel and that defendant violated its water policy by charging plaintiffs for water at the rate for condominiums. In the alternative, plaintiffs argue that the evidence conflicts and that there is a genuine issue of material fact with regard to the status of their property as a motel or a condominium complex and, therefore, that summary judgment was improperly granted on this issue.\nContrary to plaintiffs\u2019 contention, the facts are not in dispute; rather, all of the evidence establishes that the rooms were in 1981 modified by adding kitchens and then individually sold as condominium units for \u201csingle-family residential purposes\u201d pursuant to a declaration of unit ownership; that plaintiffs, however, continued a traditional motel operation, with the majority of owners renting out their furnished units by the day or week, and the provision of a manager, and linen and maid service; that plaintiffs advertise as \u201cBogue Shores Motel-Condominiums\u201d; and that owners are not required to lease their units.\nIt is apparent based on the evidence in the record that \u201cBogue Shores Motel-Condominiums\u201d fits the common, ordinary definition both of \u201ccondominium\u201d and \u201cmotel.\u201d See Webster\u2019s Third New International Dictionary 473, 1474 (1968) (defining condominium as \u201cindividual ownership of a unit in a multi-unit structure,\u201d and motel as \u201ca group of furnished [rooms] . . . near a highway that offer accommodation to tourists\u201d). Defendant, however, determined that plaintiffs\u2019 property, within the context of defendant\u2019s water ordinance, is in fact a condominium complex, and we agree. When the rooms in the building and an undivided interest in the common areas were sold to individuals, the rooms became condominium units and the building lost its status as a motel. This view is supported by the declaration of unit ownership recorded by the original owners designating the property as \u201cBogue Shores Condominiums,\u201d and establishing a homeowner\u2019s association. The fact that many of the individual condominium owners choose to operate like a motel is not determinative. The trial court properly granted summary judgment in favor of defendant on this issue.\nII\nPlaintiffs argue that, even if this Court determines that defendant properly billed \u201cBogue Shores Motel-Condominiums\u201d as a condominium complex, defendant\u2019s water ordinance is both arbitrary and discriminatory and in violation of the Equal Protection Clause, Article I, Section 19 of the North Carolina Constitution. Specifically, plaintiffs contend that defendant\u2019s water policy is discriminatory because it does not uniformly charge for minimum monthly water service. According to plaintiffs, all, not just some, customers should be charged based solely on the size of the service line in use.\nDefendant, pursuant to N.C.G.S. \u00a7 160A-314(a), has the authority to charge, and to vary, minimum monthly amounts for water service based on reasonable classifications. In setting rates for its water service, however, defendant may not discriminate among customers of essentially the same character and services. Ricks v. Town of Selma, 99 N.C. App. 82, 87, 392 S.E.2d 437, 440 (1990). \u201c[Tjhere must be some reasonable proportion between the variance in the conditions and the variances in the charges.\u201d Id. The party claiming that a rate-setting ordinance is unreasonable or discriminatory has the burden of proof on the issue. Id.\nThe evidence before the trial court established that under defendant\u2019s ordinance, single customers are charged a minimum monthly amount based on the size of their service line. For example, a residential customer living in a house with a three-quarter-inch service line is charged a minimum of $8.00 per month. A commercial customer in a building with a three-inch service line is charged a minimum of $125.00 per month. However, multiple unit residential customers with one service line, such as an apartment, condominium, or mobile home complex, are not charged based on the size of the service line. Rather, these establishments are charged a minimum of $8.00 times the number of units in the establishment.\nAccording to defendant, multiple unit residential customers are analogous to residential customers living in houses with regard to the cooking, bathing, and laundry uses associated with long-term residence. Therefore, their charge per unit is the same as that for a single residential customer with a three-quarter-inch line \u2014 $8.00 per month. If, instead of using a single three-inch service line for the entire complex, plaintiffs decided to equip each condominium unit with its own separate three-quarter-inch line, then each unit owner would be individually billed a minimum of $8.00 per month. However, when only one service line is used, the complex is billed $8.00 for every unit therein. According to defendant, charging a condominium complex based only on the size of the service line rather than on the number of residential units in the complex would unfairly discriminate against single residential customers because it would place an unfair portion of the cost of water service on them. We agree. Accordingly, we conclude that the minimum monthly charge assessed condominium complexes is neither discriminatory nor arbitrary, but is reasonable, and hold that the trial court properly granted summary judgment in favor of defendant on this issue.\nDEFENDANT\u2019S APPEAL\nIII\nDefendant argues that the trial court erred in determining that defendant\u2019s assessment of a $15,000.00 \u201cimpact fee\u201d for connecting plaintiffs\u2019 three-inch service line is arbitrary and capricious and in granting summary judgment in favor of plaintiffs on this issue. We agree.\nThe undisputed evidence at the summary judgment hearing established that Section 22 of defendant\u2019s water policy states that \u201cimpact fees will be required for all new and modified services\u201d and \u201cshall be put into a capital reserve fund for system improvements and modifications.\u201d However, defendant, pursuant to its unwritten policy of waiving the fee for customers in newly annexed areas, informed plaintiffs by letter that this fee would be waived if plaintiffs applied for service \u201cprior to Tuesday, July 19, 1988 at 12 noon,\u201d but that \u201can impact fee ... will be charged if your application is received after Tuesday, July 19, 1988 at 12 noon.\u201d Plaintiffs immediately applied for water service, and defendant determined that \u201cby [plaintiffs] promptly coming in and beginning negotiations, that [defendant] would not require an impact fee if [plaintiffs] decided to hook up the water service at this time.\u201d\nOther than the aforementioned evidence, nothing in the record sheds any light on whether or not plaintiffs have been or will be assessed a $15,000.00 impact fee. The record does not specifically indicate whether defendant determined at any point after informing plaintiffs that the fee would be waived that plaintiffs were no longer eligible for the impact fee waiver. Nonetheless, the trial court determined that defendant\u2019s water policy \u201cwhich would require that plaintiffs pay an impact fee of $15,000.00 for a three-inch service connection ... is arbitrary and capricious,\u201d and granted summary judgment in favor of plaintiffs on this issue. Because plaintiffs do not challenge the right of defendant to charge \u2014or to waive \u2014 an impact fee, because there is no evidence that defendant has demanded payment of the fee by plaintiffs, and because plaintiffs have not sought declaratory relief, that portion of the trial court\u2019s order granting summary judgment in favor of plaintiffs is premature.\nBased on the foregoing, we affirm that portion of the trial court\u2019s order granting summary judgment in favor of defendant, and reverse that portion of the order granting summary judgment in favor of plaintiffs.\nAffirmed in part and vacated in part.\nJudges JOHNSON and MARTIN concur.",
        "type": "majority",
        "author": "GREENE, Judge."
      }
    ],
    "attorneys": [
      "Kirkman & Whitford, P.A., by Neil B. Whitford, for plaintiff-appellants.",
      "Richard L. Stanley for defendant-appellee."
    ],
    "corrections": "",
    "head_matter": "BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. and THE BOARD OF DIRECTORS OF BOGUE SHORES HOMEOWNERS ASSOCIATION, INC. v. TOWN OF ATLANTIC BEACH\nNo. 923SC191\n(Filed 6 April 1993)\n1. Municipal Corporations \u00a7 185 |NCI4th)\u2014 water rates \u2014 motel-condominium \u2014 minimum monthly charge\n\u25a0 The trial court did not err by granting summary judgment for defendant on the issue of whether a minimum monthly charge assessed a motel-condominium was arbitrary or discriminatory where title was acquired to a motel in 1981; the rooms were modified by the addition of permanent kitchen facilities and by combining rooms; a Declaration of Unit Ownership was recorded which established a homeowner\u2019s association; the rooms were sold as condominium units; the majority of owners choose to participate in a rental program whereby a manager is employed to rent rooms on a nightly to weekly basis; a front desk is staffed and maid and linen service is provided; plaintiffs advertise as Bogue Shores Motel-Condominiums; defendant annexed the property; defendant had a multi-rate water schedule which established a minimum monthly rate for single residential or commercial users depending on the size of the meter, or service line; the monthly minimum for customers with multiple units served by a single service line is based on the number of units in the development, with motels paying $8.00 for every three rooms and residential condominiums paying $8.00 per unit or usage, whichever is greater; and defendant advised plaintiffs that they would be charged at the rate for residential condominiums. It is apparent that Bogue Shores Motel-Condominiums fits the common, ordinary definition of both \u201ccondominium\u201d and \u201cmotel,\u201d however, plaintiffs\u2019 property is a condominium complex within the context of defendant\u2019s water ordinance. The fact that many of the individual condominium owners choose to operate like a motel is not determinative.\n2. Municipal Corporations \u00a7 185 (NCI4th)\u2014 water rates \u2014motel-condominium \u2014 multi-rate schedule \u2014not discriminatory\nThe trial court properly granted summary judgment for defendant on the issue of whether a multi-rate water schedule based on the size of the service line was discriminatory or arbitrary where plaintiffs, the owners of Bogue Shores Motel-Condominiums, contended that defendant\u2019s water policy is discriminatory because it does not uniformly charge for minimum monthly water service. Defendant\u2019s schedule charges multiple unit residential customers with one service line a monthly minimum per unit, as if each unit was equipped with a separate line. Charging a condominium complex based only on the size of the service line rather than on the number of residential units in the complex would unfairly discriminate against single residential customers because it would place an unfair portion of the cost of water service on them.\n3. Municipal Corporations \u00a7 185 (NCI4th)\u2014 water rates \u2014impact fee \u2014summary judgment premature\nSummary judgment for plaintiffs was premature on the issue of whether an impact fee for connecting a three-inch water service line was arbitrary and capricious where defendant waived the fee pursuant to an unwritten policy for newly annexed areas, the record does not specifically indicate whether defendant determined at any point that plaintiffs were no longer eligible for the impact fee waiver, plaintiffs do not challenge the right of defendant to charge or waive an impact fee, there is no evidence that defendant has demanded payment of the fee, and plaintiffs have not sought declaratory relief.\nAppeal by plaintiffs and defendant from order entered 26 November 1991 in Carteret County Superior Court by Judge James Llewellyn. Heard in the Court of Appeals 3 February 1993.\nKirkman & Whitford, P.A., by Neil B. Whitford, for plaintiff-appellants.\nRichard L. Stanley for defendant-appellee."
  },
  "file_name": "0549-01",
  "first_page_order": 577,
  "last_page_order": 585
}