Court Opinion

ID: 4464784
Source: CourtListenerOpinion
Date Created: 2019-12-17 13:07:10.673072+00
Date Added: 2024-06-11T14:28:03.810319
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                 No. COA19-308

                             Filed: 17 December 2019

Cabarrus County, No. COA19-308

JVC ENTERPRISES, LLC, as successor by merger to GEOSAM CAPITAL US, LLC;
CONCORD APARTMENTS, LLC; and THE VILLAS OF WINECOFF, LLC f/k/a THE
VILLAS AT WINECOFF, LLC, Plaintiffs,

            v.

CITY OF CONCORD, Defendant.

      Appeal by Plaintiffs and cross-appeal by Defendant from an order entered on

10 October 2018 by Judge Joseph N. Crosswhite in Cabarrus County Superior Court.

Heard in the Court of Appeals 18 September 2019.

      Scarbrough & Scarbrough, PLLC, by James E. Scarbrough, John F.
      Scarbrough, and Madeline J. Trilling, and Ferguson, Hayes, Hawkins &
      DeMay, PLLC, by James R. DeMay, for Plaintiffs-Appellants.

      Hamilton Stephens Steele + Martin, PLLC, by Keith J. Merritt, for Defendant-
      Appellee.

      INMAN, Judge.

      JVC Enterprises, LLC, Concord Apartments, LLC, and the Villas of Winecoff,

LLC, (“Plaintiffs”) appeal the entry of summary judgment in favor of the City of

Concord (the “City”) and dismissing Plaintiffs’ complaint. The City cross-appeals a

portion of the summary judgment order, contending the trial court impermissibly

ruled on the constitutionality of a session law.   After careful review, and able
                     JVC ENTERPRISES, LLC V. CITY OF CONCORD

                                   Opinion of the Court

argument on behalf of the parties, we reverse the trial court’s entry of summary

judgment for the City and remand for further proceedings.

                    I. FACTUAL & PROCEDURAL HISTORY

      The record below discloses the following:

      In 2004, the City enacted an ordinance requiring developers of residential

subdivisions to pay water and wastewater capacity fees as a prerequisite for

development approval by the City.         The City assessed these fees at the pre-

development stage, and developers were required to pay them before a subdivision

plat would be accepted for recordation.         The fees were distinct from ordinary

installation and meter fees, as they were collected prior to the provision of water and

sewer service and were used to fund future improvements to the City’s water and

sewer systems. Plaintiffs are all developers who built residential subdivisions inside

the City prior to October of 2016. Each of the Plaintiffs paid the capacity fees required

by the City’s ordinance prior to development.

      On 19 August 2016, our Supreme Court decided Quality Built Homes, Inc. v.

Town of Carthage, 369 N.C. 15, 789 S.E.2d 454 (2016), and held that although cities

could assess fees for water and sewer services actually furnished under the Public

Enterprise Statutes, N.C. Gen. Stat. §§ 160A–11 to –338 (2015), those enabling

statutes “fail[ed] to give [cities] the essential prospective charging power necessary

to assess impact fees.” Quality Built Homes, 369 N.C. at 22, 789 S.E.2d at 459. The

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City subsequently amended its capacity fee ordinance in response to Quality Built

Homes in October of 2016, changing the timing of the collection of the fees from before

the subdivision plat approval phase to before the issuance of a zoning clearance

permit.

       In 2017, Plaintiffs brought suit against the City seeking, among other things,

a judgment declaring the fees ultra vires and awarding damages in the amount of

fees paid to the City in connection with their developments. Three similar cases1

were also filed against the City, and all parties filed a Joint Motion for Exceptional

Case Designation under Rule 2.1 of the General Rules of Practice for the Superior

and District Courts. That motion was granted in April 2018.

       The City moved for partial summary judgement on 17 September 2018 on

Plaintiffs’ claim that the City lacked authority to levy the fees. To support its motion,

the City filed an affidavit by the city clerk which included as exhibits five session

laws amending, revising, or consolidating the City’s charter between 1959 and 1986.

The first such session law authorized a now-defunct Board of Light and Water

Commissioners of the City of Concord (the “Board”) “[t]o fix and collect rates, fees and

charges for the use of and for the services and facilities furnished or to be furnished

       1  Those three cases were also appealed and are resolved consistent with this opinion in
separate decisions filed today. Bost Realty Co. v. City of Concord, No. COA19-309 (N.C. Ct. App. Dec.
17, 2019) (unpublished); Journey Capital, LLC v. City of Concord, No. COA19-310 (N.C. Ct. App. Dec.
17, 2019) (unpublished); Metro Development Group, LLC v. City of Concord, No. COA19-311 (N.C. Ct.
App. Dec. 17, 2019) (unpublished).

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                                         Opinion of the Court

in the form of electrical and water service.”               1959 N.C. Sess. Laws ch. 66, § 1

(emphasis added).2         Another session law attached to the affidavit revised and

consolidated the City’s charter, continued the existence of the Board and its powers,

and repealed 108 scattered private, public, and session laws that previously composed

the City’s charter. 1977 N.C. Sess. Laws ch. 744, §§ 1, 5-6 (hereinafter the “1977

Charter”). A third session law—the one on which the City premised its motion for

summary judgment—again consolidated the City’s charter, dissolved the Board, and

provided that “[a]ll powers and duties of said Board shall become powers and duties

of the City of Concord[,]” 1985 N.C. Sess. Laws. ch. 861 § 2 (1986) (hereinafter the

“1986 Act”);3 at the same time, that session law also expressly repealed all but two

sections of the 1977 Charter. Id. at §§ 2, 6.

        At the summary judgment hearing, the City argued that it was authorized to

assess the capacity fees because the session laws: (1) authorized the Board to levy

prospective water and sewer fees; and (2) transferred those powers to the City in the

1986 Act. Plaintiffs countered by arguing the 1986 Act: (1) extinguished the Board;

and (2) eliminated any power to levy prospective fees allowed in the 1977 Charter by

repealing that charter. Plaintiffs further contended that the “powers and duties of

        2 An earlier session law allowed the Board to levy prospective fees for sewer service. 1955 N.C.
Sess. Laws ch. 1180, § 1.
        3 Although the session law is contained in the 1985 volume of the North Carolina Session Laws,

it was ratified and made effective by the General Assembly in 1986. 1985 N.C. Sess. Laws ch. 861, §
12.

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                                   Opinion of the Court

said Board” that the 1986 Act transferred to the City were simply those powers that

would have otherwise resided in the Board consistent with the general Public

Enterprise Statutes. Plaintiffs relied on the doctrine of constitutional avoidance,

asserting that the City’s interpretation of the pertinent session laws ran the risk of

violating the North Carolina Constitution’s prohibition against local acts relating to

health and sanitation. See N.C. Const. art. II, § 24(1)(a).

      The trial court granted summary judgment in the City’s favor and dismissed

all of Plaintiffs’ claims with prejudice on 10 October 2018. In its order, the trial court

construed the 1986 Act as transferring the Board’s ability to levy prospective fees to

the City; it then interpreted two local act decisions by our Supreme Court, Town of

Boone v. State, 369 N.C. 126, 794 S.E.2d 710 (2016), and City of Asheville v. State,

369 N.C. 80, 794 S.E.2d 759 (2016), and concluded that the 1986 Act was

constitutional. Plaintiffs appealed the order in its entirety, while the City cross-

appealed the portion of the order addressing the constitutionality of the 1986 Act.

                                    II. ANALYSIS

A. Standard of Review

      We review the trial court’s entry of summary judgment de novo, and will affirm

the ruling “when the record shows 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.” In re Will of

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                                    Opinion of the Court

Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation and quotation marks

omitted).

       The de novo standard also applies to questions of statutory interpretation.

Armstrong v. State Bd. of Dental Examiners, 129 N.C. App. 153, 156, 499 S.E.2d 462,

466 (1998). In discerning the effect of a statute, we “look[ ] first to the plain meaning

of the words of the statute itself[.]” State v. Ward, 364 N.C. 157, 160, 694 S.E.2d 729,

731 (2010) (citation omitted). “When determining the extent of legislative power

conferred upon a municipality, the plain language of the enabling statute governs.”

Quality Built Homes, 369 N.C. at 19, 789 S.E.2d at 457 (citation omitted). If the

statutory language is unambiguous, we apply its “plain and definite meaning. Id.

(citation and quotation marks omitted). “But where a statute is ambiguous or unclear

in its meaning, resort must be had to judicial construction to ascertain the legislative

will, and the courts will interpret the language to give effect to the legislative intent.”

In re Banks, 295 N.C. 236, 239, 244 S.E.2d 386, 389 (1978) (citations omitted).

Canons of statutory interpretation are employed “[i]f the language of the statute is

ambiguous or lacks precision, or is fairly susceptible of two or more meanings[.]”

Abernethy v. Bd. of Comm’rs, 169 N.C. 631, 636, 86 S.E. 577, 580 (1915).

B. Plaintiffs’ Appeal

       Plaintiffs first contend that the 1977 Charter failed to give the Board authority

to charge prospective water and sewer fees. Alternatively, Plaintiffs argue that the

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                                  Opinion of the Court

provisions in the 1986 Act revoking the 1977 Charter’s grant of powers to the Board

but transferring the Board’s powers to the City created an ambiguity as to what

powers were actually conveyed to the City by the General Assembly. We address each

argument in turn.

      We disagree with Plaintiffs’ assertion that the 1977 Charter did not authorize

the Board to levy fees for future service. The 1977 Charter enabled the Board to:

             Fix and collect rates, fees and charges for the use of and for
             the services and facilities furnished or to be furnished in
             the form of electrical, sewer and water service to be paid by
             the owner, tenant or occupant of each lot or parcel of land
             which may be served by such electrical, sewer and water
             facilities[.]

1977 N.C. Sess. Laws ch. 744, § 1 (emphasis added). Plaintiffs interpret the phrase

“to be paid by the owner, tenant or occupant of each lot or parcel of land which may

be served” as limiting the Board to charging fees for services currently provided. But

the words “owner, tenant or occupant . . . which may be served” encompass persons

currently served as well as those who may be served in the present or future. That

language aligns with—rather than limits—the Board’s authority under the 1977

Charter to levy prospective fees for “services and facilities furnished or to be

furnished.” Cf. McNeill v. Harnett Cty., 327 N.C. 552, 570, 398 S.E.2d 475, 485 (1990)

(holding that the language “to be furnished” in the Public Enterprise Statutes

applicable to county water and sewer districts authorized said districts to levy

prospective fees); Quality Built Homes, 369 N.C. at 20-21, 789 S.E.2d at 458 (holding

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                                  Opinion of the Court

that the Public Enterprise Statutes applicable to cities did not allow for prospective

water and sewer fees because it lacked “the essential ‘to be’ language” (citation

omitted)). Construing these phrases in pari materia as we must to give effect to each,

State v. Johnson, 278 N.C. 126, 145, 179 S.E.2d 371, 383 (1971), we hold the 1977

Charter provided the Board with authority to levy prospective fees.

      We agree with Plaintiffs that the 1986 Act is ambiguous. Section 2 of the Act

dissolved the Board and provided “[a]ll powers and duties of said Board shall become

powers and duties of the City of Concord.” 1985 N.C. Sess. Laws. ch. 861, § 2. But

Section 6 of the Act repealed the provisions of the 1977 Charter affording those

powers to the Board in the first instance. Id. at § 6. So, the 1986 Act ostensibly both

eliminates and transfers the powers of the Board afforded by the 1977 Charter.

      Plaintiffs resolve this ambiguity by arguing that the 1986 Act eliminated the

specific powers designated to the Board in the 1977 Charter and merely transferred

any remaining powers, i.e., those powers contained in the General Enterprise

Statutes applicable to all municipalities, to the City upon the Board’s dissolution.

Plaintiffs note that, as held by our Supreme Court in Quality Built Homes, those

General Enterprise Statutes did not authorize the City to levy prospective water and

sewer fees.

      The City argues that the 1986 Act is not ambiguous, pointing out the language

of Section 4 of the Act, which provides that the General Assembly “intended to

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                                   Opinion of the Court

continue without interruption those provisions of prior acts which are consolidated

into this act, so that all rights and liabilities that have accrued are preserved and

may be enforced.” Id. at § 4. The City contends that, by this statement, the General

Assembly made clear its intent to transfer the power to levy prospective fees from the

Board to the City, even as it repealed the statute vesting those powers in the Board.

       But Section 4, considered in context with other provisions of the Act, does not

resolve the ambiguity identified by Plaintiffs. Section 4 provides that the Act was

intended “to revise the Charter of the City of Concord and to consolidate herein

certain acts” so that “those provisions of prior acts which are consolidated into this

act” would continue. Id. (emphasis added). Section 6 repeals the portions of the 1977

Charter granting the Board the power to levy prospective fees. Section 1 recites the

newly consolidated charter for the City and contains no mention of the Board’s

powers. Id. at §§ 1, 6. Its powers are not referenced in the new Charter. Id. at § 1.

Given the repeal of the enabling provisions in the 1977 Charter, id. at § 2, it is unclear

whether the Board’s powers were actually incorporated into the new charter or the

Act itself.

       Plaintiffs’ interpretation does not deprive Sections 4 or 2 of the meanings

argued by the City. Plaintiffs construe Section 4 to continue those powers found in

previous statutes and charters that were consolidated into and contained within the

1986 Act—but the power to levy prospective water and sewer fees is simply not one

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                                  Opinion of the Court

of those continued powers. Plaintiffs construe Section 2, in turn, merely to clarify

that the Board was eliminated, and that the general power to operate the water and

sewer system reverted to the City.

      We are left, then, with two reasonable competing interpretations of the 1986

Act: either (1) the General Assembly intended to eliminate the Board’s powers in

Section 6 and convey any powers under the General Enterprise Statutes that would

have remained with the Board to the City under Section 2; or (2) it merely intended

to eliminate the Board, preserve and transfer its powers under the 1977 Charter to

the City, and sweep away the 1977 Charter by repeal as a matter of legislative

housekeeping. Resort to the canons of statutory construction is necessary to resolve

this ambiguity. Abernethy, 169 N.C. at 636, 86 S.E. at 580.

      Plaintiffs argue, and we agree, that the canon of constitutional avoidance

compels us to adopt their interpretation. Under that canon, “[w]hen reasonably

possible, a statute . . . should be construed so as to avoid serious doubt as to its

constitutionality.” Comm’r of Ins. v. N.C. Fire Ins. Rating Bureau, 291 N.C. 55, 70,

229 S.E.2d 268, 276 (1976). The canon applies in equal measure to the United States

and North Carolina Constitutions. See, e.g., N.C. State Bd. Of Educ. v. State, 371
N.C. 170, 180, 814 S.E.2d 54, 62 (2018) (acknowledging the canon in resolving a

potential conflict between a state statute and the North Carolina Constitution).

Reliance on the canon does not involve a determination of constitutionality. See, e.g.,

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                                   Opinion of the Court

Delconte v. State, 313 N.C. 384, 402, 329 S.E.2d 636, 647 (1985) (“We do not, of course,

purport to decide this constitutional issue. We rely, instead, on the familiar canon of

statutory construction that ‘[w]here one of two reasonable constructions will raise a

serious constitutional question, the construction which avoids the question should be

adopted.’ ” (quoting In re Arthur, 291 N.C. 640, 642, 231 S.E.2d 614, 616 (1977)

(alteration in original) (additional citations omitted))). This canon does not limit

avoidance to interpretations that render a statute conclusively unconstitutional:

             The cardinal principle of statutory construction is to save
             and not to destroy. We have repeatedly held that as
             between two possible interpretations of a statute, by one of
             which it would be unconstitutional and by the other valid,
             our plain duty is to adopt that which will save the act. Even
             to avoid a serious doubt the rule is the same.

In re Dairy Farms, 289 N.C. 456, 465, 223 S.E.2d 323, 328-29 (1976) (citation and

internal quotation marks omitted) (emphasis added). And, contrary to the arguments

raised by the City in its cross-appeal, the canon is not an affirmative cause of action

directly challenging the constitutionality of a statute:

             This accusation misconceives—and fundamentally so—the
             role played by the canon of constitutional avoidance in
             statutory interpretation. The canon is not a method of
             adjudicating constitutional questions by other means.
             Indeed, one of the canon’s chief justifications is that it
             allows courts to avoid the decision of constitutional
             questions. It is a tool for choosing between competing
             plausible interpretations of a statutory text, resting on the
             reasonable presumption that Congress did not intend the
             alternative which raises serious constitutional doubts. The
             canon is thus a means of giving effect to congressional

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                                    Opinion of the Court

             intent, not of subverting it. And when a litigant invokes
             the canon of avoidance, he is not attempting to vindicate
             the constitutional rights of others . . . ; he seeks to vindicate
             his own statutory rights. We find little to recommend [this]
             novel interpretive approach . . . , which would render every
             statute a chameleon, its meaning subject to change
             depending on the presence or absence of constitutional
             concerns in each individual case.

Clark v. Martinez, 543 U.S. 371, 381-82, 160 L. Ed. 2d 734, 747 (2005) (citations

omitted) (emphasis in original).

      The City’s interpretation in this case raises a serious constitutional question:

whether the 1986 Act, in transferring the Board’s power to levy prospective water

and sewer fees in the 1977 Charter—which were absent from the General Enterprise

Statutes in effect at the time—to the City constitutes a local act affecting health and

sanitation as prohibited by Article II, Subsection 24(1)(a) of the North Carolina

Constitution. See City of Asheville, 369 N.C. at 105-06, 794 S.E.2d at 776 (holding

that a local act transferring control over Asheville’s water system from the city to

Buncombe County was an unconstitutional local act in violation of Article II,

Subsection 24(1)(a)). Resolving that question involves the predicate constitutional

issue of whether the 1986 Act represents an exercise of the General Assembly’s

plenary authority to establish the boundaries and organization of municipalities,

which would not be subject to the prohibition found in Article II. See Town of Boone,
396 N.C. at 136, 794 S.E.2d at 718 (holding that an exercise of that plenary authority

under Article VII, Section 1 is not restricted by the prohibitions against certain local

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                                          Opinion of the Court

acts in Article II, Section 24). As revealed by the thorough briefs from Plaintiffs and

the City, these constitutional questions are not easily resolved,4 and serious doubts

as to constitutionality of the 1986 Act, as interpreted by the City, redound as a result.5

        For example, in arguing that the 1986 Act was an exercise of the General

Assembly’s plenary powers under Article VII, Section 1, the City points out that the

1986 Act “is a complete revision of the Charter for the City and is concerned with all

facets of the governance of the City[,]” while Plaintiffs rightly note that the 1986 Act

appears principally concerned with shifting control of the City’s water system, as “a

close comparison of the [1986 Act and the 1977 Charter it replaced] reveals that

        4  Though Town of Boone and City of Asheville were filed on the same date, each one garnered
different majorities and dissents with conflicting interpretations of both decisions. Compare Town of
Boone, 369 N.C. at 164-65, 794 S.E.2d. at 737 (Ervin, J., concurring) (disagreeing with the majority’s
holding that a local act was not subject to analysis under Article II, Section 24 and instead applying
the test developed in City of Asheville to determine that the local act was constitutional), and id. at
173-74, 794 S.E.2d at 741-42 (Beasley, J., dissenting) (agreeing with the concurrence that the local act
was subject to Article II, Section 24 analysis but disagreeing that it was constitutional under City of
Asheville), with City of Asheville, 369 N.C. at 107-08, 794 S.E.2d at 779 (Newby, J., dissenting)
(departing from the majority’s holding that an act transferring Asheville’s water system to Buncombe
County was an unconstitutional local act and arguing instead that it was an exercise of plenary power
under Article VII, Section 1 based in part on Town of Boone).
         5 We acknowledge that the Supreme Court in Quality Built Homes noted that “[m]unicipalities

routinely seek and obtain enabling legislation from the General Assembly to assess impact fees.” 369
N.C. at 21, 789 S.E.2d at 459. However, Quality Built Homes did not involve the constitutional
question of whether those enabling local acts were unconstitutional under Article II, Section 24.
Further, the quoted language appears to be a simple factual observation rather than the legal
reasoning relied upon to resolve the case, and thus constitutes nonbinding dicta. See, e.g., State v.
Rankin, ___ N.C. App. ___, ___, 809 S.E.2d 358, 363 (“Our Supreme Court has defined obiter dictum
as ‘[l]anguage in an opinion not necessary to the decision.’ ” (quoting Trs. of Rowan Tech. Coll. v. Hyatt
Hammond Assocs., Inc., 313 N.C. 230, 242, 328 S.E.2d 274, 281 (1985)), aff’d, 371 N.C. 885, 821 S.E.2d
787 (2018).

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except for the repeal of the provisions relating to the Board . . . , there are hardly any

other substantive changes that result.” (emphasis omitted).6

       Similarly, Plaintiffs point to our Supreme Court’s holding in City of Asheville

that a statute that “works a change in the governance of the City’s water

system . . . impermissibly relate[s] to health and sanitation in violation of Article II,

Section 24(1)(a) of the North Carolina Constitution” for the proposition that the City’s

interpretation is potentially unconstitutional. 369 N.C. at 105, 794 S.E.2d at 777.

The City, by contrast, relies on a decision by this Court in a different case—which

was not expressly overruled by our Supreme Court in City of Asheville—holding that

a local act modifying Asheville’s ability to charge certain water service fees was not

related to health or sanitation as prohibited by the Constitution. City of Asheville v.

State, 192 N.C. App. 1, 36-37, 665 S.E.2d 103, 128 (2008).

       Rather than compelling us to resolve the serious constitutional doubts present

in this case, Plaintiffs’ interpretation of the 1986 Act removes those doubts consistent

with the canon of constitutional avoidance. Under that interpretation of the Act, the

General Assembly did little more than provide the City with the fee-levying powers

granted to all municipalities under the pertinent General Enterprise Statutes and

       6 Beyond eliminating the Board, the only substantive change found in the 1986 Act was the
creation of the position of City Clerk, who was tasked with keeping minutes at Board of Aldermen
meetings and acting as custodian of city records. 1985 N.C. Sess. Laws ch. 861, § 1. The 1986 Act did
not otherwise substantively alter the City’s charter, as it did not change the City’s boundaries or
modify the size or duties of any other offices except where accounting for the abolishment of the Board.
Compare 1977 N.C. Sess. Laws 744, § 1, with 1985 N.C. Sess. Laws ch. 861, § 1.

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eliminated the Board consistent with the plenary powers found in Article VII, Section

1. We therefore hold that the 1986 Act eliminated the Board, revoked the power to

levy prospective fees provided to it under the 1977 Charter, and vested the City with

the ability to levy water and sewer fees consistent with the General Enterprise

Statutes.

C. The City’s Cross-Appeal

      In its cross-appeal, the City asserts that the Plaintiffs’ reliance on the canon of

constitutional avoidance is in reality a distinct cause of action to declare the 1986 Act

unconstitutional, and that it must have been specifically pled consistent with the

notice pleading standard found in the North Carolina Rules of Civil Procedure and

precedents applying them. As detailed above, however, application of the canon is

not a veiled facial constitutional challenge and is, in actuality, merely a tool for

divining legislative intent and statutory meaning. See Delconte, 313 N.C. at 402, 329

S.E.2d at 647 (“We do not, of course, purport to decide this constitutional issue.”);

Clark, 543 U.S. at 381, 160 L. Ed. 2d at 747 (“This accusation misconceives—and

fundamentally so—the role played by the canon of constitutional avoidance in

statutory interpretation. The canon is not a method of adjudicating constitutional

questions by other means. Indeed, one of the canon’s chief justifications is that it

allows courts to avoid the decision of constitutional questions.” (citations omitted)

(emphasis in original)). We are not aware of any precedents—and the City provides

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none—holding that a party arguing against a particular interpretation of a statute

relied upon by a movant on summary judgment must have previously pled (or moved

to amend a pleading to include) a canon of construction in order to raise it at the

summary judgment hearing.      We therefore hold the trial court did not err in

considering the canon of constitutional avoidance in entering summary judgment.

                               III. CONCLUSION

      We hold that the trial court erred in entering summary judgment in favor of

the City because the 1986 Act did not give the City the power to levy prospective

water and sewer fees. We reverse the trial court’s entry of summary judgment and

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

this opinion.

      REVERSED AND REMANDED.

      Judges BERGER and MURPHY concur.

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