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Posted March 5, 2013 | comments Leave a comment

Court rules for county in building case

By Alex Bridges

Warren County doesn't have to pay back $200,000 in fees to a developer, the Supreme Court of Virginia has ruled.

D.R. Horton Inc. challenged a ruling in Warren County Circuit Court that the developer voluntarily had paid certain building permit fees to the locality even though the levies were later found unlawful.

D.R. Horton paid the fees under the common law voluntary payment doctrine and thus defeated its claim for the return of the money, according to the opinion written for the court Thursday by Justice Elizabeth A. McClanahan that affirms the judgment of the trial court.

County Attorney Blair Mitchell advised the Board of Supervisors of the high court's ruling on Tuesday. Mitchell noted the ruling shows "the county was justified in keeping the money; we do not have to pay back a single penny of that $208,000 that's already been paid in."

D.R. Horton bought land that was slated for the development of up to 225 homes from Blue Ridge Shadows near Front Royal. Blue Ridge Shadows had agreed to pay $8,000 per unit to the county each time the locality issued a building permit for one of the homes, according to information provided in the opinion.

Blue Ridge Shadows proposed that county supervisors allow the developer to obtain water and sewer services from Front Royal in lieu of the builder constructing such systems. In exchange, the developer would pay the county $4,000 for each hook-up to the utility services, the opinion notes. Parties never executed the agreement. Supervisors then amended the revised proffer to the county to delete the developer's obligation to construct water and sewer systems.

D.R. Horton bought most of the property in the proposed development from Blue Ridge Shadows. The county issued 52 building permits to D.R. Horton from May 2006 to January 2010, according to the opinion. The developer learned of the additional hook-up fee in early 2006. D.R. Horton representatives objected to this fee in meetings with county officials. However, the developer's legal counsel advised county officials later in 2006 the firm would pay the fee in protest until the matter was resolved.

D.R. Horton filed for declaratory judgment against the county in 2007 to declare the county couldn't lawfully assess the $4,000 fee. The court sided with the developer and issued an order in 2011 stating D.R. Horton did not have to pay the fee after the firm had paid the charge on all 52 permits.

D.R. Horton sought restitution and filed an appeal to the circuit court in 2008. Even though the circuit court judge ruled in favor of D.R. Horton on the initial complaint, the judge denied the request for restitution. The judge ruled the developer paid the unlawful fee voluntarily.

The appellant argued the trial court erred in its ruling by not properly applying the voluntary payment doctrine.

The state high court cited Virginia common law pertaining to the voluntary payment doctrine in making a ruling.

Among its arguments, D.R. Horton claimed it faced criminal charges if it proceeded without obtaining the permits from the county or it faced breach of contract actions by third parties, the opinion notes. The Supreme Court saw "no evidence in the record ... that the county was threatening Horton with any criminal action or that Horton had executed any contract with a third party for construction of a residence within the subdivision," the opinion states.

The developer also asserted it needed to pay the fees because the firm faces an immediate necessity to build and sell houses and that included paying the permit fees, according to the court. However, D.R. Horton failed to show that it had no time before paying the fees; the developer paid the charges over a period of more than three years.

"Instead, Horton paid the fees to the County on its own both before and after filing the declaratory judgment action and the instant restitution action; and it continued doing so for the three and a half years until it had paid all of the fees to the County," the opinion states.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com

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