CARY - A developer is suing the town of Cary and the Wake County School Board for a $6 million refund. The lawsuit, filed at the end of last month, came just as the town and its insurer prepared to pay out hundreds of thousands of dollars to end a similar case.

Panther Creek-Raleigh, developer of the Cary Park area, contends the town unlawfully required the company to pay millions of dollars to fund construction of Mills Park Elementary School.

The company and its co-plaintiff, Cary Park Associates, argue that the town was not authorized by state law to manage the funding and construction of schools, and they say that the Wake County School Board also was wrong to take the money.

The developer agreed to fund the school because then-council members said it was the ticket to approval for Cary Park, a nearly 500-acre residential and commercial project, according to the lawsuit filed Dec. 29.

By funding the school, Panther Creek fulfilled a now-repealed town rule that essentially required developers to mitigate the burden on schools created by new subdivisions.

Neither the town of Cary nor the school board have filed a response, but town spokeswoman Susan Moran offered Cary staff's initial reaction.

"While disappointed, we're not at all surprised by the suit given the recent 3-3 N.C. Supreme Court decision in a similar ... suit, which did not affect other potential cases," Moran wrote in an email Wednesday. "We are in the process of obtaining outside counsel to review the filing and work with us on next steps."

The earlier suit, filed by Amward Homes and other home builders, made similar claims. It focused on a development project where, the builders argued, town officials demanded funding for schools before new subdivisions would be approved.

The town of Cary contended, among other arguments, that the developers voluntarily agreed to the condition.

Lower courts ruled in favor of the builders and the N.C. Supreme Court split on the issue last year, leaving the town and its insurance company to pay more than $800,000.

Attorney Bill Brian of K&L Gates has been a key litigator for plaintiffs in both the recently settled and recently opened lawsuit. But at least two factors distinguish the lawsuits from one another.

While the Amward suit was about a zoning condition, the new case involves a developer agreement, a contract signed by both the plaintiffs and the town. Secondly, there's the money.

Cary never spent the money at the center of the first lawsuit. But the money now at issue was supposedly used years ago to build an elementary school. Panther Creek gave $500,000 to the town in 2001 and $5.5 million to the school board in 2007. Mills Park Elementary School opened in 2008.

The town of Cary has at least two more weeks to decide on its course of action in the lawsuit, according to a town spokeswoman.

A school board spokesman did not respond before press time to a request for comment.