Court sides with county in occupancy tax lawsuit

Superior Court Judge Wayland Sermons, Jr. recently delivered a favorable ruling for Currituck County in a lawsuit regarding the use of occupancy tax revenue. Following arguments during the December 6, 2021, session of Pasquotank Superior Court, Judge Sermons granted the county’s motion for summary judgment while denying the Corolla Civic Association’s partial motion for summary judgment. The decision in favor of the county, and dismissal of the Corolla Civic Association’s complaint, was entered on December 22, 2021.

Interim County Manager and County Attorney Ike McRee stated, “The county is pleased with the court’s ruling which is an affirmation that the county has used occupancy tax revenue in accordance with state law and is a good steward of public funds.”

This lawsuit was originally filed by the Corolla Civic Association (CCA) in 2019 and claimed that Currituck County did not spend occupancy tax revenue in accordance with state law.  However, the court has consistently sided with Currituck County regarding its use of occupancy tax revenue.

In an October 3, 2019 order, Judge Sermons denied CCA’s request for a preliminary order enjoining Currituck County’s use of occupancy tax revenue for public safety purposes.  On July 19, 2021, Judge Sermons dismissed the CCA’s North Carolina constitutional claim that Currituck County was improperly spending occupancy tax revenue. Judge Sermons also granted the county’s motion to dismiss former County Manager Dan Scanlon and the members of the Board of Commissioners as defendants from the lawsuit to clarify the defendants as Currituck County and the Tourism Development Authority.

The CCA’s lawsuit hoped to prove that Currituck County improperly spent occupancy tax revenue on items such as law enforcement and public safety services. It also requested that up to $40 million be transferred from the county’s General Fund back to its occupancy tax fund.