Court rules Mecklenburg could not sue for damages for private citizens

The North Carolina Court of Appeals has determined that Mecklenburg County could not sue a developer to win damages for residents tied up in a building code dispute.

The unanimous decision Wednesday reverses a trial judge’s decision in Daedalus v. Mecklenburg County.

“The County has standing to seek a declaratory judgment over the meaning and applicability of its ordinances, but it does not possess the legal standing to file counterclaims against Plaintiffs for damages and attorney fees,” wrote Judge John Tyson.

The dispute pitted the county government and property owners against the developer of five duplexes.

After aquiring two properties in 2016 and 2017, Daedalus and another firm developed a plan for converting their combined five properties into 10. “Plaintiff would construct five duplexes, one on each property,” Tyson explained. “Plaintiff would then subdivide each property into two separate lots at the common divider wall, thereby ensuring each half of the duplex would be situated upon its own individual lot. Plaintiff would possess ten lots, each containing a half-duplex, intended for sale to separate prospective buyers.”

Yet Daedalus did not explain the subdivision plans when seeking approval from Mecklenburg County’s Code Enforcement Department, the Appeals Court opinion continued.

“In 2019, the County recognized Plaintiff had subdivided the lots without submitting the proposed modifications to the County for approval,” Tyson wrote. “These modifications purportedly caused an issue with the classification of the structures. The structures were permitted for and intended to be duplexes; however, the County contends the 2012 Residential Code classifies the subdivided structures as townhouses.”

Because townhouses required a more extensive firewall, the county issued stop-work orders and notices of violation. Owners who had purchased the properties learned the court could “revoke their certificates of occupancy,” Tyson wrote. “Owners expressed concern they might encounter difficulties in reselling the properties due to the imminent threat of losing their COs.”

Daedalus sued the county in October 2021. The company sought a judgment that the affected properties were not townhomes and that Mecklenburg lacked “legal authority” to revoke the certificates of occupancy.

The county responded in December 2021 with its own claims against Daedalus, including a claim that the company was liable for damages caused to the property owners. The owners intervened in the case in June 2022.

A trial judge ruled against Daedalus in February 2023, following up with a January 2025 order that called on Daedalus “to make substantial alterations to the properties, … awarding trebled damages to each of the ten Owners, and awarding costs and attorneys’ fees to the County,” Tyson wrote. The plaintiffs were required to post a bond of $839,300.

“Plaintiffs argue ‘[n]o particular statute grants governmental entities in North Carolina the right to bring a civil suit against a private party for damages sustained exclusively by specific citizens,’” Tyson wrote.

“In response, the County maintains its authority to enforce Building and Residential Codes pursuant to Chapter 160D of the Building Code confers upon it standing to assert counterclaims on behalf of private citizens,” he added. “Furthermore, the County contends it possessed standing to challenge the Appellants’ violation of the North Carolina Building Codes, in accordance with the standards set forth by our Supreme Court in Committee to Elect Dan Forest v. Emps. Pol. Action Comm.”

“The decision on Dan Forest permits a party, who has not demonstrated ‘injury in fact,’ to possess standing if the party belongs to a class of individuals to whom a statute grants a cause of action,” Tyson wrote.

“The language of §§ 160D-1004(b) and 160D-404(c) clearly suggests the County possesses the authority to undertake actions beyond merely enforcing the Building Code,” according to the opinion. “They explicitly state the County may pursue other suitable measures which ‘may be required in order to adequately enforce those laws’ and to ‘correct or abate the violation.’”

“Nevertheless, Chapter 160 does not explicitly specify what these appropriate measures are, nor does it clarify whether such actions may be initiated on behalf of others,” Tyson explained. “Under Dillon’s Rule, ‘a municipal corporation [political subdivision of the State] possesses and can exercise the following powers and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the declared objects and purposes of the corporation.’”

“North Carolina has also historically restricted local government entities or agencies from initiating claims on behalf of fully competent citizens unless explicitly authorized by statute,” he added.

“No such explicit language in N.C. Gen. Stat. § 160D authorizes the County or any local jurisdiction to initiate litigation to recover damages on behalf of private citizens,” Tyson wrote. “The County possessed the authority to pursue legal actions for compliance against the Plaintiffs; however, such actions do not encompass suits on behalf of private citizens seeking damages regarding private matters. The County lacked standing to file claims against Plaintiffs to recover damages on behalf of the Owners and, even more specifically, owners. who are not parties or in a certified class to this action. The damages award is vacated.”

The owners filed a separate lawsuit. “That action is the proper action for the Owners to assert and prove damages,” Tyson wrote. “This Court expresses no opinion and makes no decision on Owners’ individual or collective claims for damages.”

Judges Donna Stroud and Toby Hampson joined Tyson’s opinion.

“Court rules Mecklenburg could not sue for damages for private citizens” was originally published on www.carolinajournal.com.