Ruling Makes it Easier to Seek Attorney Fees in Cases Against Cities

Southeastern legal resolves homebuilders' case that changed law

, Daily Report


Shannon Lee Goessling
Shannon Lee Goessling

A conservative legal group has resolved a case that set new precedent, making it easier for plaintiffs to seek attorney fees from uncooperative municipalities.

The case was the Southeastern Legal Foundation's lawsuit on behalf of a group of homebuilders who claimed they were illegally charged fees by the City of McDonough. In 2002, the city adopted a moratorium on the issuance of development permits but allowed an exemption for developers who paid certain fees.

Last year, the city gave up its right to challenge further a ruling against it on the merits. Superior Court Judge Brian Amero in Henry County ordered the city to pay the builders a full refund, plus prejudgement interest, which, minus more than $36,000 in refunds the city already had paid, totalled more than $569,000.

The parties continued to fight over the builders' request for attorney fees. According to Southeastern Legal, the parties settled that issue in September, and Amero signed off on dismissal of the case on Nov. 20. The attorney fee and expenses settlement was for $395,000, according to Shannon Goessling, executive director and chief legal counsel for Southeastern Legal.

The lawsuit was based on Georgia's Development Impact Fee Act, enacted into law in 1990. That statute sets rules for local governments wishing to charge developers impact fees for a portion of the additional infrastructure needed to support new buildings.

According to a Court of Appeals ruling in the case, McDonough collected fees from developers for about a year before enacting an impact fee ordinance in July 2003, collecting about $370,000 in total. At least one developer noted on its check to the city that it was paying the fee under protest.

In 2007, as the representative of a proposed class of about 25 to 50 builders, the Greater Atlanta Home Builders Association sued the city. Represented by Southeastern Legal, the association sought a refund, arguing that the fee collection was illegal because the fees weren't imposed by a proper ordinance.

Griffin attorney Leigh Hancher, who represented the City of McDonough, said the city's position was that the builders weren't entitled to a refund because they hadn't paid an impact fee but had paid voluntarily a "moratorium exemption agreement fee." She added that the developers received the benefit of being able to build and sell homes.

If the builders' claims were for equitable relief, Hancher added, they were moot, as the city had stopped collecting any fees alleged to be illegal years before the suit was filed. If the claims were for money damages, she said, the plaintiffs' suit was untimely and the plaintiffs hadn't given the proper presuit, or ante litem, notice under a Georgia statute requiring plaintiffs to give municipalities notice of claims for money damages "on account of injuries to person or property."

Amero agreed to certify the case as a class action, a ruling the Court of Appeals affirmed in 2010. In June 2012, Amero granted the plaintiffs summary judgment on their claims for a refund and a declaration that the city's actions were unlawful, characterizing those claims as equitable in nature. Amero wrote that the city "was aware it was collecting impact fees without lawful authority from the time it first collected such fees through the current litigation of this matter." The city did not appeal.

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