Mecklenburg County tried to recover homeowners’ damages in a building code dispute. The NC Court of Appeals said no 

The North Carolina Court of Appeals held that Mecklenburg County had authority to seek a declaratory judgment regarding compliance with building and subdivision codes but lacked statutory authority to recover damages on behalf of homeowners in a dispute over the classification of residential duplexes. 

The dispute arose after the plaintiff developed five duplex properties and later subdivided each parcel so that each half of a duplex sat on its own lot. County officials concluded the subdivisions altered the structures’ classification under the applicable building codes, potentially converting them from duplexes to townhouses and triggering more stringent fire-separation requirements. The county issued notices of violation and threatened to revoke certificates of occupancy, prompting the plaintiff to seek declaratory relief. 

Following a bench trial, the trial court ruled against the plaintiff, pierced the corporate veil and awarded trebled damages and attorney fees to homeowners who had intervened in the litigation. The Court of Appeals agreed that the county possessed statutory authority to enforce building and residential codes and to seek judicial declarations concerning code compliance. However, it concluded that nothing in the governing statutes authorized the county to pursue private damages claims on behalf of homeowners. Because local governments possess only those powers expressly granted by statute or necessarily implied, the court vacated the damages award and attorney-fee ruling. 

The court also rejected the homeowners’ argument that they could recover damages simply because they intervened in the county’s action. The panel noted that the homeowners never asserted independent claims against the plaintiff and therefore could not obtain damages through the county’s pleadings. The court observed that the homeowners remained free to pursue relief in their separate action, which had been stayed pending resolution of the appeal. 

Finally, the court held that the trial court should reconsider the code-compliance issues under the building and residential code provisions in effect when the properties were originally permitted and constructed. Because different code editions contained differing definitions of a townhouse, the court remanded for further proceedings applying the controlling ordinances.