Final Approval Given to Holly Springs Recreation Fees Settlement

A North Carolina court has granted final approval of a class action settlement involving recreation fees charged and collected by the Town of Holly Springs.

The settlement creates a $7.5 million fund for eligible class members. Any person or organization that paid recreation fees to the Town of Holly Springs from December 19, 2017 to December 13, 2022 may be included in the settlement and could receive a payment.

“We are very proud of this case because there is no appellate case law interpreting the statute we contended the Town violated,” said Milberg attorney Hunter Bryson. “This is a first of its kind settlement involving these types of fees.”

What is This Lawsuit About?

The lead plaintiff in the case, Meritage Homes of the Carolinas, Inc., filed a class action complaint against the Town of Holly Springs, NC in December 2020.

Class Counsel have fairly and adequately represented and will continue to adequately represent and protect the interests of the Settlement Class members in connection with the Settlement.

Holly Springs charged mandatory recreation fees to developers prior to the Town granting subdivision plot approval for a new development. The plaintiff alleged that these fees were unlawful because the North Carolina legislature has not authorized municipalities to charge fees as a requirement to obtain development approval.

The lawsuit was certified as a class action in August 2022 by the Wake County Superior Court. A settlement in principle was reached and received preliminary court approval in January 2023.

On April 18, 2023, following a fairness hearing, the court issued an order granting final approval of the Holly Springs recreation fees settlement. Milberg attorney James DeMay from the firm’s Raleigh office provided arguments at the hearing.

Who is Included in the Settlement?

When the court certified the lawsuit as a class action, it identified the following class:

• All natural persons, corporations, or other entities who (a) at any point from December 19, 2017 through December 13, 2022 (b) paid Recreation Fees to the Town of Holly Springs pursuant to the adopted schedule of rates and fees and/or policies of the Town.

Within this class, there are two subclasses:

• The Uniform Per-Unit Fee Subclass, consisting of any person, corporation, or other entity who paid a uniform per-unit Recreation Fee to the Town of Holly Springs from December 19, 2017 through June 30, 2020.
• The Property Value Formula Fee Subclass, comprised of any person, corporation, or other entity who paid a Recreation Fee based on a property value formula to the Town of Holly Springs from July 1, 2020 through December 13, 2022.

The court also excluded WSLD 12 Oaks, LLC and Lake Time Development, LLC from the class due to development agreements they had with Holly Springs.

Class members should have received a notice about the Holly Springs recreation fees settlement explaining the lawsuit, the settlement, and their legal rights.

How Much Money Can Class Members Receive?

The settlement creates a fund of $7.5 million, of which $6.3 million is reserved for the Uniform Per-Unit Fee Subclass and $1.2 million is reserved for the Property Value Formula Fee Subclass.

• The Uniform Per-Unit Fee Subclass will receive up to 85% of the total recreation fees they paid to Holly Springs.
• The Property Value Formula Fee Subclass will receive up to 24% of the total recreation fees they paid to Holly Springs.

Per the settlement terms, any remaining funds following the initial disbursement will be distributed pro-rata among members of the settlement classes, until all the recreation fees they paid are refunded.

How Can Class Members Claim a Payment?

Settlement class members do not have to do anything to receive payment. A check will be automatically sent to them. Holly Springs will be making payments over multiple fiscal years.

• 47% will be paid upon final approval of the settlement
• 13% will be paid on or before December 1, 2023
• 40% will be paid on or before December 1, 2024

What Role Did Milberg Play in This Lawsuit?

Milberg filed this class action lawsuit on behalf of Meritage Homes of the Carolinas, Inc. The court designated attorneys James R. DeMay, J. Hunter Bryson, and W. Mark Cumalander as Class Counsel. Their role as Class Counsel was to represent the interests of the plaintiff and class members.

In its final approval order, the court stated that Milberg attorneys “have fairly and adequately represented and will continue to adequately represent and protect the interests of the Settlement Class members in connection with the Settlement.”

Previously, Mr. DeMay, Mr. Bryson, and Mr. Cumalander won summary judgment in a similar recreation fees case against the Town of Clayton, North Carolina.

Milberg’s roots in North Carolina are wide and deep. Our Raleigh office has over 15 attorneys and is led by founding partner Dan Bryson, who has practiced law in North Carolina for more than three decades. We regularly serve as local counsel in a variety of North Carolina matters from our office at 900 W. Morgan Street. To speak with our North Carolina attorneys, call 866.252.0878 or contact us.