Duluth Lawsuit Alleges City Illegally Overcharged Millions in Permit Fees

A lawsuit filed in early January alleges the City of Duluth charged building permit-related fees far beyond the actual cost of plan review and inspection services, seeking refunds and an end to the practice. Plaintiff Joe Kovich is named in the Duluth portion of the broader case, and attorney Shawn M. Raiter says the complaint relies on city documents to show the discrepancy.

Attorney Shawn M. Raiter said, “Certain cities in Minnesota, including Duluth, have unlawfully overcharged property owners well over $100 million for building permit and plan inspection fees. Minnesota law only allows a city to assess charges that are proportionate to the cost of providing permit and inspection services. Duluth’s own documents show that in the last six years, it charged over $9 million more than its cost to provide building permit reviews and plan inspections. This lawsuit was brought to return the overcharges to property owners and to stop Duluth from violating the law.”

The complaint invokes a state building code provision that fees “must be by legal means and must be fair, reasonable, and proportionate to the actual cost of the services for with the fee is imposed.” The suit’s Duluth filing is one piece of a set of related cases, some of which began in 2025. Court filings and motions are underway, and the parties are not scheduled to appear again until mid-April 2026. The Duluth Public Information Office, through Kelli Latuska, declined to comment on the litigation, saying the city “does not comment on active litigation.”

For local contractors, developers, and property owners, the suit raises immediate financial and procedural questions. If the allegations that Duluth charged more than $9 million above costs in the past six years are borne out, affected permit payers could seek refunds or other relief. The case also challenges how municipal fees are calculated and whether city fee-setting practices comply with statutory limits on cost recovery.

The permit-fee lawsuit follows a separate but thematically related legal fight over stormwater utility fees that began in 2021. In that case, businesses including Moline Machinery and Walsh Building Products alleged disproportionate billing and sought class relief. St. Louis County District Court Judge Eric Hylden granted summary judgment to the city in November 2024, finding the city did not “retain” the overcharges and was “really just ‘breaking even’ with its stormwater utility.” An appeals court later said Hylden erred on an unjust-enrichment issue while affirming that fee collection did not amount to an unlawful taking; Chief Judge Jennifer Frisch wrote, “The city received the money, so it was enriched by it, regardless of how it was used.” Plaintiffs in the stormwater litigation alleged as much as $14.85 million in overpayments for the class and identified potential annual overcharges in specific accounts of $28,818 to $32,569. The stormwater case also used an Equivalent Residential Unit model and saw an ERU adjustment in January 2024.

What happens next for Duluth permit payers will depend on upcoming motions and the April court appearance. Property owners who paid permits in recent years may want to monitor filings, and local builders and development offices should track whether the city produces the documents Raiter cites. The litigation could reshape how Duluth and other Minnesota cities set and justify permit and inspection fees.