Court Opinion

ID: 9951810
Source: CourtListenerOpinion
Date Created: 2024-03-19 12:07:11.821756+00
Date Added: 2024-06-11T14:42:51.269948
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                      No. COA22-699

                                Filed 19 March 2024

Currituck County, No. 19-CVS-171

GERALD COSTANZO, et al., Plaintiffs,

             v.

CURRITUCK COUNTY, NORTH CAROLINA, et al., Defendants.

      Appeal by plaintiffs from order entered 28 December 2021 by Judge Wayland

J. Sermons, Jr. in Currituck County Superior Court. Heard in the Court of Appeals

8 February 2023.

      Fox Rothschild L.L.P., by Troy D. Shelton and Robert H. Edmunds, Jr., for the
      plaintiffs-appellants.

      Womble Bond Dickinson (US) L.L.P., by Christopher J. Geis, for the
      defendants-appellees.

      STADING, Judge.

      Gerald Costanzo, et al., (“plaintiffs”) appeal an order granting summary

judgment for Currituck County, et al., (“the County”). For the reasons set forth below,

we reverse the order in part, vacate in part, and remand for further proceedings.

                                 I.     Background

      Currituck County is North Carolina’s northernmost coastal county containing

a strip of land that is part of the Outer Banks. The town of Corolla, situated on this

strip of land, is a tourist destination. This area generates most of the County’s
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

occupancy tax revenue from lodging facilities. Although comprising approximately

one-tenth of the County’s land, this area also contributes to more than half of the

County’s property tax base. The property tax, sales tax, and other tax revenue

generated in this area feeds into the County’s General Fund allocated for public

purposes throughout the County under N.C. Gen. Stat. §§ 153A-149, 153A-151, and

105-113.82 (2023).

      In 1987, the General Assembly gave the County authority to collect an

occupancy tax on rentals of rooms and other lodgings (“the Session Law”). See 1987

N.C. Sess. Laws 209, § 1(a). The Session Law required that “at least seventy-five

percent (75%) of the net proceeds” of the occupancy tax levied be used “only for tourist

related purposes, including construction and maintenance of public facilities and

buildings, garbage, refuse, and solid waste collection and disposal, police protection,

and emergency services.” N.C. Sess. Law 1987, Chapter 209, H.B. 555, § 1(e). The

County then had to deposit the remaining net proceeds of the occupancy tax into its

General Fund, which could “be used for any lawful purpose.” Id. In 1999, the Session

Law was modified, and the County was permitted to levy an “[a]dditional occupancy

tax” under its subsection 1(a1). N.C. Sess. Law 1999-155, H.B. 665 § 1(a1). The

County could use the net proceeds of taxes levied under this subsection for the

Currituck Wildlife Museum. N.C. Sess. Law 1999-155, H.B. 665 § 1(a1); N.C. Sess.

Law 2004-95, H.B. 1721 § 2(e).

                                          -2-
                           COSTANZO V. CURRITUCK CNTY.

                                  Opinion of the Court

      In 2004, the General Assembly amended the Session Law (“the Amendment”),

narrowing the scope of how the County may use occupancy tax proceeds. N.C. Sess.

Law 2004-95, H.B. 1721 § 2(e). In contrast to the Session Law, the Amendment

deleted the phrase “tourist related purposes,” opting instead for “tourism-related

expenditures, including beach nourishment.” N.C. Sess. Law 1987, Chapter 209, H.B.

555, § 1(e); N.C. Sess. Law 2004-95, H.B. 1721 §§ 1(a2), 2(e).          Moreover, the

Amendment removed the language that authorized the County to make certain

expenditures, “including construction and maintenance of public facilities and

buildings, garbage, refuse, and solid waste collection and disposal, police protection,

and emergency services.” N.C. Sess. Law 1987, Chapter 209, H.B. 555, § 1(e); N.C.

Sess. Law 2004-95, H.B. 1721 § 2(e).

      Even so, after the Amendment’s enactment, the County continued to allocate

occupancy tax revenue to expenditures previously authorized under the Session Law.

The County’s continued allocation of these funds, in a manner not specifically

authorized by the Amendment, prompted plaintiffs to file their complaint on 7 May

2019, suing for declaratory judgment and injunctive relief. Plaintiffs alleged that

defendants “improperly and unlawfully diverted [tax levies] to purposes other than

those purposes permitted by the [Amendment].” Specifically, plaintiffs sought relief

as follows: (1) declaratory judgment that transfers of occupancy tax proceeds from the

designated tourism development fund to the County’s General Fund are unlawful, (2)

declaratory judgment that the County’s expenditures of occupancy tax proceeds for

                                         -3-
                           COSTANZO V. CURRITUCK CNTY.

                                  Opinion of the Court

public safety services are unlawful, (3) declaratory judgment that the County’s

expenditures of occupancy tax proceeds for non-promotional operations and activities

of the County’s Economic Development Department are unlawful, (4) declaratory

judgment that the County’s expenditures of occupancy tax proceeds for two ongoing

projects—park facility construction and historic building restoration—are unlawful,

(5) declaratory judgment that the County’s loan of occupancy tax proceeds to finance

the construction of a water treatment facility is unlawful, (6) declaratory judgment

that the County’s expenditures of occupancy tax proceeds to fund special service

districts are unlawful, (7) declaratory judgment that the aforementioned claims

violate the Amendment and N.C. Gen. Stat. § 159.13(b)(4) (2023), which prohibits

expenditures of revenue for purposes not permitted by law, (8) declaratory judgment

that the County’s use of occupancy tax proceeds violates the North Carolina

Constitution, (9) preliminary injunction against the use of occupancy tax proceeds for

public safety services and equipment, (10) permanent injunction against the transfer

of occupancy tax proceeds to the County’s General Fund, and the use occupancy tax

proceeds for public safety services or any other unlawful purpose, (11) court

construction of the term “tourism-related expense” under N.C. Gen. Stat. § 1-254

(2023), (12) permanent injunction requiring the County to restore and replace

unlawfully used occupancy tax proceeds, and (13) inclusion of the County Manager in

his individual capacity.

                                         -4-
                                  COSTANZO V. CURRITUCK CNTY.

                                             Opinion of the Court

        The County filed its answer and partial motion to dismiss plaintiffs’ claims

pursuant to N.C. Gen. Stat. § 1A-1, Rules 12(b)(1), (2), and (6) (2023). The motion to

dismiss alleged that: (1) the Board of Commissioners did not have the legal capacity

to be sued,1 (2) the County Manager was not a proper party,2 and (3) plaintiffs’ claim

under the North Carolina Constitution was unavailable.3 Plaintiffs then moved to

preliminarily enjoin use of the funds for contested purposes, which the trial court

later denied. Thereafter, plaintiffs moved for partial summary judgment as to their

second cause of action concerning expenditures of occupancy tax proceeds “for public

safety services, including police, emergency medical and fire services and equipment.”

The County moved for summary judgment as to all of plaintiffs’ claims and requested

the trial court to strike an affidavit submitted in plaintiffs’ motion. The trial court

held a hearing on the cross-motions in which it assessed “such weight and relevancy

as it deem[ed] appropriate” to the contested affidavit, ordered summary judgment for

the County on all claims, and denied plaintiffs’ request for partial summary

judgment. Plaintiffs timely entered their notice of appeal.

                                       II.      Jurisdiction

        Jurisdiction is proper under N.C. Gen. Stat. § 7A-27(b)(1) (2023) since the trial

court’s order granting summary judgment is a final judgment.

1 The trial court dismissed the Board of Commissioners from the suit.
2 Plaintiffs filed a notice of voluntary dismissal of the County Manager in his individual capacity and

the trial court granted a dismissal in his official capacity from the suit.
3 The trial court dismissed this cause of action from the suit.

                                                    -5-
                               COSTANZO V. CURRITUCK CNTY.

                                       Opinion of the Court

                                      III.    Analysis

                           A. Tourism-Related Expenditures

       The Session Law, enacted in 1987, allowed for three-quarters of the net

proceeds of the tax levied under its subsection 1(a), to be spent “only for tourist related

purposes, including construction and maintenance of public facilities and buildings,

garbage, refuse, and solid waste collection and disposal, police protection, and

emergency services.” N.C. Sess. Law 1987, Chapter 209, H.B. 555, § 1(e). But, in

2004, the Amendment deleted this text and directed that the net proceeds of such tax

levied under this subsection shall be used “only for tourism-related expenditures,

including beach nourishment.” N.C. Sess. Law 2004-95, H.B. 1721 § 2(e). The

Amendment also removed the text directing the County to deposit the remainder of

the net proceeds into its General Fund to “be used for any lawful purpose.” N.C. Sess.

Law 1987, Chapter 209, H.B. 555, § 1(e); N.C. Sess. Law 2004-95, H.B. 1721 § 2(e).

Additionally, the Amendment authorized a “Second Additional Occupancy Tax”

under its subsection 1(a2) only if the County “also levies the tax under subsections

(a) and (a1).” 4 N.C. Sess. Law 2004-95, H.B. 1721 § 1(a2). However, the Amendment

modified how the County “may” use the net proceeds of tax levied under subsections

(a1) and (a2) to “shall use at least two-thirds” of these funds “to promote travel and

tourism and shall use the remainder . . . for tourism-related expenditures.” N.C. Sess.

4 Referencing 1987 N.C. Sess. Laws 209, § 1(a) and N.C. Sess. Law 1999-155, H.B. 665 § 1(a1).

                                               -6-
                             COSTANZO V. CURRITUCK CNTY.

                                    Opinion of the Court

Law 2004-95, H.B. 1721 § 2(e). Moreover, the Amendment required the County to

create a Tourism and Development Authority to “expend the net proceeds of the tax

levied under this act.” N.C. Sess. Law 2004-95, H.B. 1721 § 3.

      Not only did the Amendment eliminate portions of the Session Law, but it also

provided greater specificity with definitions to direct the use of funds. N.C. Sess. Law

2004-95, H.B. 1721 § 2(e).       Notably, the Amendment defined “tourism-related

expenditures” as those that “in the judgment of the . . . Board of Commissioners, are

designed to increase the use of lodging facilities, meeting facilities, recreational

facilities, and convention facilities in a county by attracting tourists or business

travelers to the county. The term includes tourism-related capital expenditures and

beach nourishment.” Id. And it defined expenditures that “promote travel and

tourism” as those that “advertise or market an area or activity, publish and distribute

pamphlets and other materials, conduct market research, or engage in similar

promotional activities that attract tourists or business travelers to the area; the term

includes administrative expenses incurred in engaging in these activities.”          Id.

Language was also added to clarify the definition of net proceeds as “[g]ross proceeds

less the cost to the county of administering and collecting the tax, as determined by

the finance officer, not to exceed three percent [ ] of the first five hundred thousand

dollars [ ] of gross receipts collected each year.” Id.

      The parties do not dispute that the Amendment eliminated the term “tourism

related purposes,” which the 1987 Session Law defined to include “construction and

                                           -7-
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

maintenance of public facilities and buildings, garbage, refuse, and solid waste

collection and disposal, police protection and emergency services.” Also, the parties

do not dispute that the Amendment replaced the term “tourism related purposes”

with “tourism-related expenditures.” The dispute concerns whether the Amendment

prohibits certain expenditures that the County has classified as tourism-related

expenditures. Plaintiffs contend that the County acted ultra vires by using these

funds to pay for general public services because the General Assembly deauthorized

such spending in the Amendment. However, the County points to language in the

Amendment that allows for the “the judgment of the . . . Board of Commissioners,” to

determine which expenditures are categorized as tourism-related.

      Questions of statutory interpretation are reviewed de novo. In re Ernst &

Young, L.L.P., 363 N.C. 612, 616, 684 S.E.2d 151, 154 (2009) (citations omitted). “The

primary objective of statutory interpretation is to ascertain and effectuate the intent

of the legislature.” McCracken & Amick, Inc. v. Perdue, 201 N.C. App. 480, 485, 687

S.E.2d 690, 694 (2009), disc. review denied, 364 N.C. 241, 698 S.E.2d 400 (2010).

“When the language of a statute is clear and without ambiguity, it is the duty of this

Court to give effect to the plain meaning of the statute, and judicial construction of

legislative intent is not required.” Diaz v. Div. of Soc. Servs., 360 N.C. 384, 387, 628

S.E.2d 1, 3 (2006) (citation omitted). “However, when the language of a statute is

ambiguous, this Court will determine the purpose of the statute and the intent of the

legislature in its enactment.” Id. “Where . . . the statute, itself, contains a definition

                                          -8-
                             COSTANZO V. CURRITUCK CNTY.

                                     Opinion of the Court

of a word used therein, that definition controls, however contrary to the ordinary

meaning of the word it may be.” In re Clayton-Marcus Co., 286 N.C. 215, 219, 210

S.E.2d 199, 203 (1974). “If the words of the definition, itself, are ambiguous, they

must be construed pursuant to the general rules of statutory construction, including

those above stated.” Id. at 220, 210 S.E.2d at 203. With these principles in mind, we

must consider whether the disputed expenditures are “designed to increase the use

of lodging facilities, meeting facilities, recreational facilities, and convention facilities

in a county by attracting tourists or business travelers to the county.” N.C. Sess. Law

2004-95, H.B. 1721 § 2(e).

       To the extent any ambiguity exists in the Amendment’s use of the language

“the judgment of the . . . Board of Commissioners” or “tourism-related expenditure,”

our analysis is guided by precedent which weighs against constructing the text as

giving the Board of Commissioners unlimited discretion. “It is not consonant with

our conception of municipal government that there should be no limitation upon the

discretion granted municipalities. . . .” Efird v. Bd. of Comm’rs for Forsyth Cnty., 219

N.C. 96, 106, 12 S.E.2d 889, 896 (1941) (citations omitted). “Counties . . . exist solely

as political subdivisions of the State and are creatures of statute. They are authorized

to exercise only those powers expressly conferred upon them by statute and those

which are necessarily implied by law from those expressly given.” Davidson Cnty. v.

High Point, 321 N.C. 252, 257, 362 S.E.2d 553, 557 (1987) (citations omitted). And,

“[p]owers which are necessarily implied from those expressly granted are only those

                                            -9-
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

which are indispensable in attaining the objective sought by the grant of express

power.” Id. (citation omitted). Furthermore, such statutorily granted powers are to

be “strictly construed.” Id. (citations omitted). Thus, total deference to the judgment

of the Board of Commissioners defies strict construction of their statutorily granted

powers under the Amendment. See Nash-Rocky Mount Bd. of Educ., 169 N.C. App.

587, 589, 610 S.E.2d 255, 258 (2005).

      We are also guided by the actions of the Legislature in their enactment of the

Amendment. “[A] change in the language of a prior statute presumably connotes a

change in meaning.”      Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 256 (2012). “Legislative history is a factor to consider in

determining legislative intent.” Burgess v. Your House of Raleigh, Inc., 326 N.C. 205,

216, 388 S.E.2d 134, 141 (1990) (citation omitted). The Amendment serves as “an aid

in arriving at the correct meaning of a prior statute by utilizing the natural inferences

arising out of the legislative history.” Id. (citations omitted). Here, we cannot ignore

the Legislature’s deliberate actions that eliminated some explicitly permitted uses of

occupancy tax proceeds and crafted a definition of “tourism-related expenditures.”

N.C. Sess. Law 2004-95, H.B. 1721, § 2(e)(4). Likewise, it is difficult to overlook the

Amendment’s creation of a Tourism Development Authority “to expend the net

proceeds of the tax levied under this act. . . .” N.C. Sess. Law 2004-95, H.B. 1721, §

3. See Bryant v. Wake Forest Univ. Baptist Med. Ctr., 281 N.C. App. 630, 642, 870

S.E.2d 269, 277 (2022) (“[A] statute should not be interpreted in a manner which

                                          - 10 -
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

would render any of its words superfluous. We construe each word of a statute to

have meaning, where reasonable and consistent with the entire statute, because it is

always presumed that the legislature acted with care and deliberation.”).

      Our interpretation is correspondingly informed by the Amendment’s title: “AN

ACT TO ALLOW AN INCREASE IN THE CURRITUCK COUNTY TAX AND TO CHANGE THE

PURPOSE FOR WHICH THE TAX MAY BE USED.” N.C. Sess. Law 2004-95, H.B. 1721; see

State ex rel. Cobey v. Simpson, 333 N.C. 81, 90, 423 S.E.2d 759, 763-64 (1992) (“We

therefore cannot, as defendant would have us do, ignore the title of the bill.”) When

“the meaning of a statute is in doubt, reference may be made to the title and context

of an act to determine the legislative purpose.” Preston v. Thompson, 53 N.C. App.

290, 292, 280 S.E.2d 780, 782 (1981); see also Sykes v. Clayton, 274 N.C. 398, 406, 163

S.E.2d 775, 781 (1968) (holding the title of a bill is “a legislative declaration of the

tenor and object of the act”). Though not dispositive, the Amendment’s title—which

includes notating a change to the purpose for which the occupancy tax may be used—

displays an intent by the Legislature to limit the scope of how occupancy tax

expenditures may be used. See, e.g., In re FLS Owner II, LLC, 244 N.C. App. 611,

616, 781 S.E.2d 300, 303 (2016); Ray v. N.C. Dep’t of Transp., 366 N.C. 1, 8, 727 S.E.2d

675, 681 (2012); State v. Flowers, 318 N.C. 208, 215, 347 S.E.2d 773, 778 (1986).

      Considering the Legislature’s actions—the significant changes in the text and

title of the Amendment—we can only conclude that their intent was to narrow the

scope of how the County is permitted to use occupancy tax funds. While the County

                                          - 11 -
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

has discretion in deciding how to dispel occupancy taxes, it must do so within the

directives set by the Legislature. See Nash-Rocky Mount Bd. of Educ., 169 N.C. App.

at 590, 610 S.E.2d at 258. Our de novo review leads us to conclude that although the

County was permitted some discretion in determining the use of net proceeds from

occupancy tax levies, the Legislature intentionally removed some previously

permitted uses and provided a narrower definition with definitive perimeters to

prohibit some of the County’s customary expenditures permitted by the Session Law.

              B. The Trial Court’s Order for Summary Judgment

      Following the dismissal of plaintiffs’ claim under the North Carolina

Constitution and denial of a preliminary injunction, plaintiffs moved for partial

summary judgment and the County moved for summary judgment as to the

remaining claims. Among those remaining claims, plaintiffs requested that the trial

court enter declaratory judgment that the County’s expenditures of occupancy tax

proceeds for the following purposes are unlawful: (1) public safety services and

equipment, (2) non-promotional operations and activities of the County’s Economic

Development Department, (3) construction of a park and restoration of a building

historically used as a jail, (4) loan of occupancy tax proceeds to finance the

construction of a water treatment facility, and (5) funding of special service districts.

Further, plaintiffs maintained that these disputed uses of occupancy tax proceeds

violate the Amendment and N.C. Gen. Stat. § 159.13(b)(4) (2023), which prohibit

expenditures of revenue for purposes not permitted by law and sought judgment

                                          - 12 -
                            COSTANZO V. CURRITUCK CNTY.

                                   Opinion of the Court

declaring the transfer of these funds from the Tourism Development Authority Fund

to the County’s General Fund unlawful. Additionally, plaintiffs requested court

construction of the term “tourism-related expense” under N.C. Gen. Stat. § 1-254

(2023). In view of the foregoing claims, plaintiffs requested a permanent injunction

against the transfer occupancy tax proceeds to the County’s General Fund, used for

any unlawful purpose, as well as a permanent injunction requiring the County to

restore and replace unlawfully used occupancy tax proceeds. The parties presented

the trial court with their cross-motions for summary judgment based on conflicting

interpretations of the Amendment and its impact on expenditures originally

authorized under the Session Law. N.C. Sess. Law 2004-95, H.B. 1721; N.C. Sess.

Law 1987, Chapter 209, H.B. 555. The trial court denied partial summary judgment

for plaintiffs and granted summary judgment for the County as to all claims.

      A trial court should grant summary judgment only if “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.” N.C. Gen. Stat. § 1A-1, Rule

56(c). “An issue is material if the facts alleged would constitute a legal defense, or

would affect the result of the action. . . . The issue is denominated ‘genuine’ if it may

be maintained by substantial evidence.” Koontz v. City of Winston-Salem, 280 N.C.

513, 518, 186 S.E.2d 897, 901 (1972). “When considering a motion for summary

judgment, the trial judge must view the presented evidence in a light most favorable

                                          - 13 -
                             COSTANZO V. CURRITUCK CNTY.

                                    Opinion of the Court

to the nonmoving party.” Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707

(2001) (citation omitted). “The trial court may not resolve issues of fact and must

deny the motion if there is a genuine issue as to any material fact.” Forbis v. Neal,

361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007) (citation omitted).

       Plaintiffs moved for summary judgment only as to their second cause of action,

asserting an “impropriety of occupancy tax expenditures by the County on what [it]

termed general public safety services.” Plaintiffs characterized “general public safety

services” to include police, fire, and emergency medical services and equipment.

Further, plaintiffs maintained that other taxes, such as lodging and sales tax from

tourists, are available to cover costs incidental to the impact of tourism with respect

to these items. In support of their position, plaintiffs presented an affidavit citing

documents and records of the County. The data displayed unrefuted instances of

occupancy tax proceeds appropriated for the Currituck Outer Banks area’s seasonal

law enforcement and emergency medical services correlating to full annual costs.

Moreover, the numbers showed that these funds covered the costs of equipment for

law enforcement and a fire hydrant. The County does not dispute the expenditures

alleged by plaintiffs. Rather, it moved the trial court for summary judgment as to

the balance of the claims, arguing that “finances are just not relevant in this motion,”

and that the law “allow[ed] the County Board of Commissioners to determine what is

a tourism-related expenditure.” The record reveals no controversy as to the facts but

as to the legal significance of those facts.

                                           - 14 -
                            COSTANZO V. CURRITUCK CNTY.

                                  Opinion of the Court

         While plaintiffs’ claim sought declaratory relief, this case is proper for

summary judgment determining the applicability of the Amendment. See Blades v.

Raleigh, 280 N.C. 531, 545, 187 S.E.2d 35, 43 (1972) (“Here, there is no substantial

controversy as to the facts disclosed by the evidence. The controversy is as to the

legal significance of those facts. Such controversy as there may be in respect of the

facts presents questions of fact for determination by the court.”). The County does

not dispute the actions of the Legislature and contents of the Amendment but

contends that since tourists create an increased need for services, it is permitted to

use occupancy tax dollars to offset such costs. However, our analysis of the text of

the Amendment and the Legislature’s intent leads us to a different conclusion. The

expenditures of the occupancy tax proceeds in the “judgment” of the Board of

Commissioners are reviewable and subject to the constraints contained in the law.

See Efird v. Bd. of Comm’rs for Forsyth Cnty., 219 N.C. at 106, 12 S.E.2d at 896. The

constraints here are readily apparent from the plain language contained in the

Amendment as the authority to expend these resources in this manner was neither

expressly conferred upon the County nor necessarily implied from those expressly

given.    See Davidson Cnty. v. High Point, 321 N.C. at 257, 362 S.E.2d at 557.

Moreover, any alleged ambiguity within the law is resolved by the title of the

Amendment and the Legislature’s removal of specific language. See Burgess v. Your

House of Raleigh, Inc., 326 N.C. at 216, 388 S.E.2d at 141; see State ex rel. Cobey v.

Simpson, 333 N.C. at 90, 423 S.E.2d at 763-64.

                                         - 15 -
                             COSTANZO V. CURRITUCK CNTY.

                                    Opinion of the Court

      We conclude that the disputed expenditures in plaintiffs’ second cause of action

are not “designed to increase the use of lodging facilities, meeting facilities,

recreational facilities, and convention facilities . . . by attracting tourists or business

travelers to the county.” N.C. Sess. Law 2004-95, H.B. 1721 § 2 (e). Here, “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” as to plaintiffs’ second

claim for relief. N.C. Gen. Stat. § 1A-1, Rule 56(c). Accordingly, we reverse the trial

court’s denial of partial summary judgment for plaintiff and vacate the trial court’s

grant of summary judgment for the County as to the remaining claims. We remand

this matter for proceedings not inconsistent with this opinion.

                                 IV.    Conclusion

      An application of guiding legal principles and precedent leads us to conclude

that significant alterations to the original language contained in the Session Law and

additions included in the Amendment convey an intent by the Legislature to narrow

the scope of expenditures funded by the net proceeds of levied occupancy tax. The

Amendment limits the discretion of the Board of Commissioners and requires that

such funds shall be spent only as permitted by strict construction of the term

“tourism-related expenditures.” Considering the evidence contained in the record, in

a light most favorable to the County, we hold that the County did not act in

accordance with the Amendment when spending occupancy tax proceeds for public

                                           - 16 -
                           COSTANZO V. CURRITUCK CNTY.

                                  Opinion of the Court

safety services and equipment. This is not to say that the County has acted in bad

faith, rather our determination is based on expenditures contained in the record

which were no longer authorized after the Amendment was enacted. Therefore, we

reverse the trial court’s denial of summary judgment for plaintiffs and remand to the

Superior Court for entry of summary judgment for plaintiffs as to the past

expenditures in their second cause of action. We also vacate the trial court’s grant of

summary judgment for the County on the remaining claims.            Furthermore, we

remand this matter to the trial court for proceedings not inconsistent with this

opinion.

      REVERSED IN PART, VACATED IN PART, AND REMANDED.

      Judge MURPHY concurs.

      Judge HAMPSON concurs in a separate opinion.

                                         - 17 -
 No. COA22-699 – Costanzo v. Currituck Cnty.

         HAMPSON, Judge, concurring.

         I agree with the Opinion of the Court that (a) summary judgment was

improperly entered for the County on the second claim for relief; (b) summary

judgment as to the remaining claims should also be vacated; and (c) this matter

should be remanded to the trial court for further proceedings. I write separately to

emphasize that—in my view—the County’s use of occupancy tax funds to fund law

enforcement, emergency medical services, and fire protection might well be

expenditures that, “in the judgment of the . . . Board of Commissioners, are designed

to increase the use of lodging facilities, meeting facilities, recreational facilities, and

convention facilities in a county by attracting tourists or business travelers to the

county.” 2004 N.C. Sess. Law 95, § 2(e)(4). Here, however, the Record does not

disclose that in appropriating the proceeds of the occupancy tax, the County—

through its Board of Commissioners—exercised its judgment, or discretion, in so

doing.

         The local legislation at issue provides a statutory mechanism whereby the

County may enact occupancy taxes. See 1987 N.C. Sess. Laws 209, § 1(a); 2004 N.C.

Sess. Law 95, § 1(a2). The Board of Commissioners then exercises its judgment to

determine what are tourism-related expenditures. 2004 N.C. Sess. Law 95, § 2(e).

As Defendants note in their briefing, the 2004 amended act also required creation of

the Currituck County Tourism Development Authority (TDA).                The act further
                           COSTANZO V. CURRITUCK CNTY.

                               HAMPSON, J., concurring

imposes the duty on the TDA to expend the occupancy tax revenue to “promote travel,

tourism, and conventions in the county, sponsor tourist-related events and activities

in the county, and finance tourist-related capital projects in the county.” 2004 N.C.

Sess. Law 95, § 3(1.1).

      The Record here—including Defendants’ own forecast of evidence—reflects,

however, all occupancy tax revenue goes to the TDA, which keeps 1/3 of the funds for

its tourism-related activities and submits the remaining 2/3 of the funds back to the

County’s general fund for spending by the County in the Commissioners’

discretionary budgetary authority. Nowhere in this process is there any indication

that the Board of Commissioners is exercising any judgment in determining what

constitutes a tourism-related expenditure before funds are assigned to the general

fund (or other special funds). In my view, while it facially appears the County is

proceeding in good faith and there is no allegation the County’s budgetary process

does not conform to law, the County’s appropriations of the occupancy tax is being

performed under a misapprehension of the applicable law. See Hines v. Wal-Mart

Stores E., L.P., 191 N.C. App. 390, 393, 663 S.E.2d 337, 339 (2008) (“A discretionary

ruling made under a misapprehension of the law, may constitute an abuse of

discretion.” (citations omitted)). Thus, I would conclude the County has abused its

discretion in its appropriation of the occupancy tax revenues without exercising its

judgment to determine it was expending those funds for tourism-related activities.

Therefore, the trial court’s order is properly reversed in part, vacated in part, and

                                        -2-
                          COSTANZO V. CURRITUCK CNTY.

                              HAMPSON, J., concurring

this matter remanded for further proceedings.

                                       -3-