2017 North Carolina Land Use Litigation

David W. Owens

School of Government
The University of North Carolina at Chapel Hill
© 2017

Below are brief digests of reported decisions regarding planning, land use, and related issues in North Carolina. State y court of appeals decisions are listted first, followed by federal cases arising in North Carolina (there were no state Supreme Court decisions this year). The cases are in chronological order (the more recent cases at the bottom of each list). Index terms are included in italics for each case.

North Carolina Court of Appeals

Brookline Residential, LLC v. City of Charlotte, 251 N.C. App. 537, 796 S.E.2d 369 (2017)

Subdivisions; Performance guarantees

A previous owner of the site involved in this litigation received final plat approval in 2008 for the initial ten-lot phase of a 184-lot subdivision.  A performance bond was posted for road improvements for the entire development.  After building on nine of the lots and completing the road work for those lots, the owner ceased development. The plaintiff acquired the property out of bankruptcy.  The plaintiff combined a number of the lots and secured a rezoning to build multi-family housing on the site.  The city advised the plaintiff prior to their purchase that the performance bond was still in effect and later advised the plaintiff prior to the rezoning that the bond was for roadway improvements specified on the original subdivision plan and that the plaintiff would be responsible for roadway improvements on a revised plan. The plaintiff then proceeded with the revised plans and rezoning and committed to altered road improvements. The plaintiff requested that the city call the bond to pay for those portions of the road improvements that were within the original road plan and the altered plan. The city refused. The plaintiff sought an order compelling the city to call the bond or to pay damages equivalent to the cost of constructing the portions of the road improvements that were common to the original and revised plans. The trial court granted summary judgement for the city.

The court held that neither the statutes nor the city ordinance created a duty on the part of the city to call the performance bond.  As there was no express duty of the city to call the bond, the court would not imply such a duty.  Furthermore, the court noted the plaintiff was not a party to the bond, was not assigned rights under the bond, and was not a third-party beneficiary of the bond. Also, the plaintiff was expressly warned that if they sought plan revisions, they would be responsible for the improvements and the plaintiff agreed to construct these improvements.

Thompson v. Town of White Lake, 252 N.C. App. 237, 797 S.E.2d 346 (2017)

Interpretation, Accessory building, Standard of review

The plaintiff secured a permit for a metal accessory storage structure on her residentially zoned lot.  During construction the inspector found the building was being built with four doors on each side and a center dividing wall, while permit application had shown four doors, all facing away from the street. A stop work order and notice of violation was issued, based on the structure being an unlawful commercial structure, varying from approved plans, and not located behind the principal structure on the lot. On appeal the board of adjustment found the structure was commercial in nature, but that the evidence did not support the other two grounds for violation. The trial court affirmed.

The court reversed. On the allegation that the structure was commercial, the petitioner contended this was not supported by the evidence and was thus arbitrary and capricious. This allegation requires a whole record review, where the court examines whether there was substantial evidence to support the decision. Here the trial court deemed this an interpretation of the ordinance, a question of law, and thus incorrectly applied a de novo review and made new findings of fact. Rather than remand for application of the proper standard, however, the record was clear that there was no evidence presented that the structure was being devoted to a commercial use. The fact that it could be converted to such is not relevant to the question of its actual use. As that was the sole ground for denial by the board of adjustment, the trial court erred by substituting its own justification for the decision where the issue is the adequacy of the evidence before the board.

Innovative 55, LLC v. Robeson County, 253 N.C. App. 714, 801 S.E.2d 671 (2017)

Special use permit; Evidence

The plaintiff applied for a conditional use permit to construct a solar farm on 40 acres of a 54-acre parcel zoned Residential-Agricultural in a rural area of the county.  Following two hearings, the board of county commissioners denied the permit on the grounds the project would injure the use and enjoyment of neighboring properties, would impede the normal and orderly development of the surrounding property, would adversely affect neighboring property values, and would not be in harmony with the surroundings. The trial court upheld the denial.

The court reversed. The court applied a whole record review to conclude the denial was not supported by substantial evidence.  The applicant met their burden of production by submitting substantial evidence the permit standards would be met.  The opponents offered only “unsupported and highly speculative claims about their unsubstantiated fears” about traffic and property value impacts.  Further, the opponents concerns about aesthetic impacts and harmony with the neighborhood related only to the general presence of the use, not its specific design and impact.

Cheatham v. Town of Taylortown, 254 N.C. App. 613, 803 S.E.2d 658 (2017), rev. denied, 372 N.C. 360, 828 S.E.2d 765 (2018)

Housing code; Exhaustion of administrative remedies

The town affixed a “condemned” notice to an unoccupied house owned by the plaintiff and notified him that a hearing would be scheduled.  The plaintiff filed an action to contest this action, but no hearing was scheduled, and the suit was voluntarily dismissed.  The town then adopted a housing code, the plaintiff filed a second suit, and the town then investigated the property again.

The court held that the suit was properly dismissed with respect to claims arising after the town’s adoption of the housing code pursuant to G.S. 160A-441.  The statute and ordinance provided for an administrative hearing and appeal, which was not taken prior to initiation of this action.  The court remanded the matter to reconsider whether dismissal of claims arising prior to the ordinance adoption was proper.

NCJS, LLC v. City of Charlotte, 255 N.C. App. 72, 803 S.E.2d 684 (2017)

Nonconformities; Enforcement

Plaintiffs owned a warehouse that was built in 1970.  The warehouse included two unscreened dumpsters. The city in 1984 adopted a dumpster-screening requirement to be applied when property is developed or redeveloped. Based on photographs showing the dumpsters had been relocated on the site, the city issued a notice of zoning violation.  That interpretation was upheld by the board of adjustment, which held the dumpsters lost their nonconforming status when they were moved. The trial court affirmed.

The court held the interpretation of the nonconformities provisions in the ordinance is a question of law subject to de novo review. The city staff failed to assert any activity on the property constituted “redevelopment” to trigger loss of nonconforming status for the unscreened dumpsters. As the dumpsters were permitted accessory uses to the warehouses, they were not “nonconforming structures” in and of themselves. The relocation of the dumpsters was not redevelopment of the land or structures and thus the screening requirement was not triggered.

Swan Beach Corolla, LLC v. County of Currituck III, 255 N.C. App. 837, 805 S.E.2d 743 (2017), aff’d per curiam, 371 N.C. 110, 813 S.E.2d 217 (2018)

Judicial procedure; Vested rights

This case is the third time the court of appeals has heard this dispute over vested rights on the northern Currituck Banks.  In the first case, the court dismissed a uniform taxation claim but remanded the vested rights claim. When that case was remanded, the attorneys for the parties immediately began discussions about discovery and settlement. While those discussions were underway, the plaintiffs sought and obtained a default judgment in the amount of $39 million. The plaintiffs contended the defendants were required to file responsive pleadings within 30 days of the mandate being issued for the court of appeals decision remanding the matter. The defendants contended an answer was not required until the trial court entered an order reinstating the vested rights claim it had originally dismissed but filed a response some six days after the 30-day deadline. The trial court refused to set aside the entry of default.

The court reversed. The court held the proper standard to be applied in consideration of the motion to set aside the default judgment was: (1) was the moving party diligent in pursuit of the matter; (2) did the non-moving party suffer harm by virtue of the delay; and (3) would the moving party suffer a grave injustice by being unable to defend the action. The court applied these tests and found the trial court abused its discretion by not setting aside the default judgment.  First, both parties were diligently pursuing the matters, scheduling meetings regarding settlement during the 30-day period. Second, there was no showing of harm to the plaintiff occasioned by a six-day delay in filing in the context of litigation that had been underway for two years. Third, given the size of the damage award, the inability to defend against the substance of the vested right claim worked a grave injustice against the defendant. Given a colorable argument that a response was not required, that there was no dilatory action by the defendant, and the lack of harm occasioned by the modest delay, the failure to set aside the entry of a default judgment for good cause was an abuse of discretion.

Ring v. Moore County, 256 N.C. App. 168, 809 S.E.2d 11 (2017), review denied, 371 N.C. 474, 818 S.E.2d 285 (2018)

Standing; Rezoning

Neighboring landowners challenged the rezoning of a 108-acre tract from RA-40 to RA-20, objecting to the increased residential density it would allow, alleging it was illegal spot zoning and that there were procedural defects in its adoption. The court noted the plaintiff has the burden of showing they have a specific personal and legal interest that would be directly and adversely affected by the rezoning to have standing. An actual, concrete, particularized injury must be shown. While the plaintiffs owned adjacent property (on which they operated a poultry farm), this rezoning did not change the permitted uses (rather it allowed a greater density of single-family homes). As there was no showing of an actual or imminent injury, the plaintiffs did not have standing.

Beroth Oil Co. v. N.C. Department of Transportation, 256 N.C. App. 401, 808 S.E.2d 488 (2017)

Judicial process; Takings

This case involves claims for compensation due to the property restrictions imposed by the Official Map Act that were held to be a compensable taking in Kirby v. N.C. Department of Transportation, 368 N.C. 847 (2016).  The trial court issued an order finding the plaintiff’s property rights had been taken and setting forth the rules and procedures for determining the compensation due.   The state filed this interlocutory appeal, contending its substantial rights were affected and would not be fully protected by appellate review of a final decision.

The court dismissed the appeal. It held that while decisions involving title and area taken in an eminent domain proceeding affect substantial rights, in this instance those are rights of the landowners, not the contemnor.  The court further held that the state’s claim of sovereign immunity is a substantial right, but that is a jurisdictional issue, and this litigation has passed the point that could be raised.  Further, the General Assembly’s enactment of a statutory framework for claims in inverse condemnation is an implicit waiver of sovereign immunity in an eminent domain proceeding. NCDOT’s admission that it had filed an official map affecting the plaintiff’s property, an action deemed in Kirby to be a taking, is at this point in the litigation properly deemed to be an admission of a taking within the statutory framework of G.S. 136-111.

Hampton v. Cumberland County, 256 N.C. App. 656, 808 S.E.2d 763 (2017), cert. improvidently granted, 373 N.C. 2 (2019)

Agricultural uses

Plaintiffs in 2011 acquired a 74-acre tract zoned as rural residential with an intent to build a home, running trail, and firing ranges.  Shortly after acquisition the plaintiffs obtained a USDA farm identification number.  In 2012 the plaintiffs built a 25-yard firing range and began instructing students there.  The range was expanded to 40-yards in 2013.  The county amended the ordinance in 2014 to set standards and require a permit for outdoor firing ranges.  Among the standards was a minimum 200-acre site size.  This amendment also provided the use must be considered a principal use (not an incidental or accessory use), contained several exemptions (occasional target practice, sighting of weapons for hunting, and temporary turkey shoots), and exempted ranges in existence as of 2005.  In 2014 the plaintiffs added a 100-yard range adjacent to the initial range where additional instruction was provided. No residential or use of the property other than as a shooting range was in place.  In 2015 the county issued a notice of violation and ordered the shooting ranges be razed.  On appeal the board of adjustment affirmed the finding of a zoning violation and modified the corrective action required to ceasing to use the firing range as it conflicts with the ordinance.  The superior court reversed and held non-commercial use of the firing range for target shooting and weapons siting was a legal use of the property and that the firing range was incidental to the principal use of the property for a residence and farming operations.

The court held that securing a farm identification number does not as a matter of law exempt all activity on the property from county zoning.  While G.S. 153A-340(b) provides that a farm number is sufficient evidence the property is being used for bona fide farm properties, that is not conclusive if contrary evidence is presented that nonfarm use of farm property (which is not exempt from county zoning) is taking place on the property. The court the board of adjustment had failed to make critical findings of fact, such as whether the actual use of the property fell within any of the exempted uses of a firing range or whether commercial uses of the ranges were involved.  The court noted these are mixed questions of law and fact and remanded the case to the board of adjustment to make findings and in its discretion take such new evidence and argument as it deems appropriate.

McDowell v. Randolph County, 256 N.C. App. 708, 808 S.E.2d 513 (2017)

Due process; Plan consistency; Spot zoning

Adjoining property owners challenged the county’s approval of an amended site plan that had been incorporated into a prior conditional zoning. The property was zoned “Rural Industrial Overlay Conditional” and the site plan amendment authorized relocation of an existing chemical vat to another location on the site, place it on a concrete pad to divert stormwater runoff to an on-site retention pond, and to add covers and screening walls for the vat.

The court noted this text amendment was presumed valid and there was no showing it was in bad faith, whimsical, or lacked fair and careful consideration. There were several plausible bases to justify the decision, so the court defers to the elected body. The plan consistency statement was adequate in that it cited three specific plan policies to support the action taken rather than being only a conclusory statement. Finally, as there was no change in zoning classification, this could not be deemed spot zoning.

Azar v. Town of Indian Trail Board of Adjustment, 257 N.C. App. 1, 809 S.E.2d 17 (2017)

Parties

Plaintiff secured a rezoning and special use permit to build townhouses. After twice renewing the special use permit, the board of adjustment denied the third renewal application, finding the project would materially endanger public health and safety and would substantially injure neighboring property values.  Plaintiff filed a timely petition for judicial review, but named the board of adjustment rather than the town as the respondent. The board moved for dismissal on the grounds that the town had not been named as a party and that the appeal had been filed under the Administrative Procedures Act rather than G.S. 160A-393. The plaintiff then filed an amended petition for judicial naming the town as respondent.

The court upheld dismissal of the petition. G.S. 160A-393(e) explicitly requires that the town be named as the respondent. That was not done until the amended petition was filed, which was well outside of the 30-day period from receipt of the board’s written decision. As the town has not participated in the case or otherwise waived the failure to name them as a party, the petition was properly dismissed for failure to name a necessary party. The amended petition does not relate back to the original filing as it adds a new party rather than correcting a misnomer.

Ecoplexus Inc. v. County of Currituck, 257 N.C. App. 9, 809 S.E.2d 148 (2017)

Special use permit; Evidence: Interpretation

The plaintiff applied for a special use permit for construction of a solar farm on an abandoned golf course.  The county staff and planning board recommended approval, but the county board of commissioners denied the permit on the grounds it would endanger public health and safety due to runoff and herbicide use, was not harmonious with the surrounding area, and was not consistent with the plan.

The court reversed and ordered the permit issued. The plaintiff’s witnesses and evidence established a prima facie case of compliance with the ordinance standards.  The plaintiff’s witnesses testified that most existing trees would remain on the site given the 300-foot setback required, that no hazardous materials would be used, that impervious surface areas would be reduced and stormwater managed, and that no adverse property value impacts would occur. Opposing witnesses objected to solar energy, the value of the existing holding ponds from the golf course that would be filled, potential runoff issues, and that this was not the “highest and best” economic use of the property. The court found the plaintiff had presented competent, material, and substantial lay and expert testimony that the relevant standards would be met. The court found the board wholly ignored the plaintiff’s expert testimony on water management and relied instead upon lay witnesses’ generalized and speculative fears. On the question of harmony and property value impacts, the board similarly ignored expert testimony and erroneously equated “harmonious use” with “highest and best use.” Further, the board improperly applied policies in the land use plan regarding energy production facilities such as oil and natural gas wells and associated facilities, noting these facilities are distinctly different from a solar energy farm.

Little River, LLC v. Lee County, 257 N.C. App. 55, 809 S.E.2d 42 (2017), rev. denied, ___ N.C. ___, 818 S.E.2d 692 (2018).

Special use permit; Standing; Evidence

Plaintiff applied for a special use permit for a rock quarry to be located on a 48-acre portion of a 377-acre parcel. The board of adjustment denied the permit, finding the plaintiff failed to show it would not endanger public health and safety, it met required conditions, it would not substantially injure adjoining property values, and that it was in harmony with the surrounding area.

The court held the neighbors had standing to participate in this challenge to the permit denial brought by the plaintiff. The plaintiff expressly consented to the neighbors’ motion to intervene before the superior court.

The court held the plaintiff had submitted competent, material, and substantial evidence sufficient to make a prima facie showing of compliance with the ordinance standards, noting this is a burden of production, not a burden of proof. Plaintiff presented evidence regarding compliance with state and federal regulations regarding blasting, noise, water quality, and traffic safety, an expert property appraisal showing no adverse impacts, and showed 75% of the property would remain undisturbed as a buffer to surrounding properties. Both adjoining neighbors who testified supported the project. The court noted the ordinance does not mandate that required state and federal permits regarding health safety impacts be secured prior to approval of a special use permit and since the special use permit can be conditioned upon securing those approvals, the fact that this had not yet been done was not ground for permit denial. Similarly, project details required at subsequent stages of project review (such as site plan and building permit approvals) are properly addressed at those points in the development review process and cannot be grounds for denial of the special use permit. The court noted the standard on property value impacts applied to adjoining and abutting properties, which none of the intervening neighbors owned. As the intervenors had not presented substantial, competent, and material evidence to rebut the plaintiff’s prima facie showing of compliance, it was an error of law to deny the permit.

The court held the due process rights of the plaintiff were not violated by the board.  Every party was represented by counsel at the five evidentiary hearings and mutually agreed upon procedures were followed at each hearing.

The court remanded with instructions that the permit be issued, subject to consideration and detailing of any appropriate conditions.

Walton North Carolina, LLC v. City of Concord, 257 N.C. App. 227, 809 S.E.2d 164 (2017), rev. denied, 371 N.C. 447, 817 S.E.2d 388 (2018)

Vested rights; Rezoning

The property subject to this litigation was zoned for low density residential use. The zoning in 2005 allowed a higher density with an approved cluster development.  The cluster development option was repealed in 2006, but the prior owners had submitted an application prior to its repeal.  Their application for a preliminary plat under the cluster development option was approved for 563 dwellings. The approval was conditioned upon securing approval of construction drawings, a final plat, and water and sewer infrastructure approvals prior to the end of 2013.  Construction drawings for 551 units and an infrastructure agreement were approved, but no final plat was ever submitted or approved. Prior to purchasing the property in 2012, the plaintiffs received a report noting the prior approvals had expired and a rezoning would be needed for a density greater than two units per acre. The city confirmed the expiration to the plaintiff in 2012. In 2014 the plaintiff and city entered a development agreement regarding off-site sewer extensions to the site. The plaintiff then submitted a site plan for 551 units, a net density of 4.5 dwellings per acre, which the city denied. The plaintiff then sought a rezoning to a conditional district and a preliminary subdivision plat that would allow development of 551 units. Citing increased traffic in a congested area and negative impacts to the public school system and neighboring homes, the city denied the rezoning request. The plaintiff challenged this decision, contending they had a common law right to develop under the 2006 approval, that the rezoning denial was arbitrary and capricious, and seeking specific performance of the 2014 development agreement.

The court held there were no vested rights established under the 2006 approval.  Common law vesting cannot be based on the zoning ordinance itself, but requires substantial expenditures made in good faith reliance on a valid governmental approval resulting in the party’s detriment. The 2006 approval had expired prior to the plaintiff’s purchase of the property and the cluster development option had been repealed and the plaintiff knew this at the time of their acquisition. As their expenditures to date would also be needed for the lower density allowed by the current ordinance, there was also no showing of detriment. The 2014 development agreement likewise established no vested rights to the higher density as it explicitly stated development must be consistent with current zoning requirements.

The court held the decision to deny rezoning to a higher density was not arbitrary and capricious.  The council found the proposed rezoning to be inconsistent with the current land use plan, as well as noting problems with increased traffic, negative impacts on public schools, and potential harm to neighboring homes and properties. These constitute a plausible basis for the decision and thus the courts will not overturn the legislative judgment of the city council.