2021 North Carolina Land Use Litigation
David W. Owens
School of Government
The University of North Carolina at Chapel Hill
© 2022
Below are brief digests of reported decisions regarding planning, land use, and related issues in North Carolina. State court of appeals decisions are listed first, followed by federal cases arising in North Carolina (there were no relevant state supreme court decisions). 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 Supreme Court
JVC Enterprises, LLC v. City of Concord, 376 N.C. 782, 855 S.E.2d 158 (2021)
Impact fees, Interpretation
The plaintiff challenged water and wastewater capacity fees imposed as a condition of development approval. The city contended its charter and local acts granted the authority to impose fees for services to be furnished in the future. The court applied a de novo review to the question of statutory interpretation as to the scope of the city’s authority and held these statutes unambiguously gave the city this authority. The original local act provided authority to a Board of Light and Water Commissioners to impose fees for services to be provided (as distinguished from the general public enterprise statute that did not provide that authority). A subsequent legislative act dissolved that Board and transferred all its powers and duties to the city. Given this plain and definite meaning of the two local acts, there is no need to rely on canons of statutory interpretation to ascertain whether the repeal and transfer of powers included this specific authority.
Cheryl Lloyd Humphrey Land Investment Co. v. Resco Products, Inc. 377 N.C. 384, 858 S.E.2d 795 (2021)
Hearings; First Amendment
Plaintiff entered negotiations to sell 45 acres near Hillsborough to a purchaser who planned a 118-unit townhouse development on the property. Part of the property was adjacent to a quarry owned by the defendant. When the town held hearing on annexation and rezoning of the property, defendant appeared at the hearing to oppose the rezoning, contending that they regularly engage in explosive blasting on the site and the future residents would be endangered by flying rock, air blasts, and ground vibrations. The defendant later conceded there had been no such violations of their mining permit and that they could conduct activities on the site without endangering future residents on the plaintiff’s land. After the town rezoned the property, the purchaser excluded the area adjacent to the quarry from the purchase, citing the dangers raised by the defendant in the rezoning hearing. The plaintiff brought this action, contending the intentional and malicious misrepresentations of the defendant at the rezoning hearing constituted tortious interference with the plaintiff's economic advantage by inducing the purchaser to exclude this area from their purchase of the townhouse site.
The court held the defendant’s statements at the rezoning hearing were protected First Amendment speech as part of their right petition the government. The right to attempt to influence the legislative choice of the town council exists regardless of the defendant’s motives and protects selfish or misleading speech. Neither the maliciousness nor the falsity of the speech has any bearing on its protected status.
North Carolina Court of Appeals
Hovey v. Sand Dollar Shores Homeowners Association, Inc., 276 N.C. App. 281, 857 S.E.2d 358 (2021), review denied, ___ N.C. ___, 868 S.E.2d 864 (2002)
Beach access; Subdivision; Dedication
Plaintiff contended that an eight-foot-wide pedestrian easement running from a subdivision road to the oceanfront had been dedicated to the public when a 42-lot subdivision in Duck was platted in 1981. The certificate of dedication on the plat provided that it dedicated “all roads, alleys, walks, parks, and other sites to public or private use as noted.” The court held that a transfer of property by dedication requires a clear intent to dedicate that must be unmistakable and decisive. Since this dedication expressly noted it was for both public and private use, the intent to include public use of the easement (as opposed to exclusive use by subdivision lot owners) was ambiguous at best. As the burden to show a clear intent to dedicate is on the person propounding the existence of the dedication, that ambiguity is fatal to a claim of a public dedication. The court noted this decision does not affect the rights of the plaintiff and other members of the public to use the ocean beach but only addressed the right to use this accessway across private upland property.
Cline v. James Bane Home Building, LLC, 278 N.C. App. 12, 862 S.E.2d 54 (2021)
Liability; Immunity
When the plaintiff’s septic tank failed, they sued Gaston County and the county health administrator in his official and his individual capacity. The court held the claims against the county and the staff member in his official capacity were properly dismissed given the governmental immunity of both. However, the claim against the staff member could continue as he was deemed an “employee” rather than an “officer.” An officer engaged in duties that involve exercise of judgment and discretion is not personally liable for mere negligence while an employee may be liable. To qualify as an “officer,” the factors to be considered are whether the position is created by the statutes, whether the position exercises sovereign power, and whether the person exercises discretion rather than performing ministerial duties. The court held the position of “Environmental Health Administrator” was not created by statute nor do the statutes expressly authorize delegation of the duties of a statutorily created position to this person, so this person was an employee.
85° Sunny, LLC v. Currituck County, 279 N.C. App. 1, 864 S.E.2d 742, rev. denied, ___ N.C. ___, 865 S.E.2d 858 (2021)
Nonconformities; Interpretation
Plaintiffs acquired a campground that was established prior to the adoption of county zoning in 1971. The campground had continued in operation as a nonconforming use. The county development regulation prohibited enlargement, expansion in area, or intensification of the use. The nonconforming regulation included a specific provision on existing campgrounds that provided they could not be expanded to cover additional area, nor could they exceed the total number of campsites that existed on January 1, 2013. The plaintiff proposed various improvements to the campground, including having 314 RV and trailer campsites, 78 tent campsites, and new restrooms and a new swimming pool. The plaintiff sought a determination as to the number of campsites allowed and the specific improvements that could be permitted. The zoning administrator determined that 234 campsites had been approved and existed as of January 1, 2013, that existing facilities could be repaired and modified, but that new improvements (new bathrooms, the swimming pool and pool house among them) would be a substantial and impermissible expansion. The board of adjustment conducted an evidentiary hearing on the appeal of this determination and upheld the administrator’s determination. The superior court reversed in part, holding the full number of proposed campsites and bathroom facilities should be permitted, but not the new swimming pool.
The court reversed and largely reinstated the board of adjustment’s decision. The court held there was substantial evidence in the hearing record to support the board’s decision that only 234 campsites where in existence in 2013. A reviewing court applies the whole record test to review an error of law (here the allegation that the administrator’s decision was arbitrary and capricious). Even if there is conflicting evidence presented, the court must confirm the board’s findings of fact where there is substantial evidence in the record to support it. Here site plans submitted with prior approved applications for special event permits to conduct concerts at the campground depicted 234 campsites. While the court must consider contradictory evidence, the reviewing court is not allowed to replace the board’s judgment as between two reasonably conflicting views. As for the scope of allowed improvements, the court must consider both the specific provision regarding nonconforming campgrounds and the general provisions applicable to all nonconformities. These provisions should be interpreted as general and specific provisions on the same subject to be read together and harmonized where possible. To apply only the specific campground provision (not permitting additional campsites or land area devoted to campgrounds) and not apply the general limitation (not enlarging, expanding, or intensifying the nonconforming use) would be contrary to the stated purpose of the regulation to limit the continued existence of nonconformities by allowing indefinite extension of its lifespan through regular upgrading with new amenities.
Craig v. Neal, 279 N.C. App. 148, 864 S.E.2d 802 (2021)
Dedication; Subdivision
Plaintiff contended an easement depicted on a 1952 subdivision dedicated the right of way to the public. The court held that since the plat simply identified the easement as a “R/W” there was no express intent to dedicate it as a public right of way. There was also no implied dedication, as the lot lines ran to the center of the right of way and the lots at the time were within Mecklenburg County (so there could have been no dedication to the City of Charlotte for a city street). Rather, the recording of the plat created a private easement to the purchaser of the lots depicted. As this right of way has been in continuous use, it is not extinguished by the Marketable Title Act as is provided by G.S. 47B-3(3).
Bill Clark Homes of Raleigh, LLC v. Town of Fuqua-Varina, 281 N.C. App. 1, 869 S.E.2d 1 (2021)
Impact fees, Development agreements; Statute of limitations
Plaintiff developed a 46-lot subdivision in Fuqua-Varina. The parties entered a development agreement and infrastructure agreement. The agreement required the developer to build water and sewer lines within the development, and pay “all applicable development fees, including capacity fees, . . .”; it required the town to extend a water line to the site and to build a sewage pumping station on the site. The fees charged and paid included a $195,000 capacity fee. Subsequently the supreme court held in Quality Built Homes that cities did not have the authority to charge capacity fees for future services to be provided. In response the plaintiff sought a refund of the capacity fee it paid. The town contended that since the fees were paid subject to a voluntary development agreement, they were not ultra vires.
The court held it was improper to grant a motion to dismiss the plaintiff’s claim as they alleged the fee was charged pursuant to ordinance requirements rather than the agreement and that the fee was for future services. These claims, when reviewed most favorably to the plaintiff and taking the allegations as true, are sufficient to defeat a motion to dismiss. The court also held the three-year statute of limitations for alleged statutory violations is applicable to this claim.
Federal Cases
Zito v. North Carolina Coastal Resources Commission, 8 F.4th 281 (4th Cir. 2021)
Takings; Immunity
Plaintiffs were denied a CAMA permit to replace a 1,700 sq. ft. oceanfront beach cottage in south Nags Head that had been destroyed by fire. They proposed building the structure twelve feet landward of the first line of stable vegetation, while the minimum CAMA setback for a structure of less than 5,000 sq. ft. at this site was 180 feet (30 times the site’s annual erosion rate of six feet). The rules provided a relaxed setback minimum of 60 feet for the replacement of a structure that pre-existed the 1979 setback rules with a structure less than 2,000 square feet, which the proposed structure also failed to meet. After the permit denial the Coastal Resources Commission denied a setback variance upon finding the lack of the requisite hardship.
The court dismissed the suit for lack of subject matter jurisdiction under Rule 12(b)(1) as the Eleventh Amendment bars a Fifth Amendment claim against states in federal court where the state courts remain open to adjudicate such claims. Since the Coastal Resources Commission is an arm of the state, sovereign immunity applies to it and has not been waived. A state statute, G.S. 113A-123(b), and the Law of the Land Clause of the state constitution provide a state remedy for a regulatory taking. The court noted the Supreme Court’s ruling in Knick v. Township of Scott removed the state litigation prerequisite for a federal court taking claim against a municipality, but that case did not affect the sovereign immunity of state governments.
Cities4Life, Inc. v. City of Charlotte, 2021 WL 724609 (4th Cir., March 24, 2021) [3:17-CV-00670-KDB-DSC)
Attorney fees
The plaintiffs, who regularly picketed an abortion clinic, challenged enforcement of the city’s sign regulation, picketing regulation, and zoning regulations prohibiting portable signs. After dismissal of the zoning claim and resolution of the sign claim, the parties reached a settlement agreement regarding the picketing claim. The plaintiff then sought attorney fees and the city objected, contending the plaintiff was not a “prevailing party” for attorney fee purposes. The court held that even though the settlement did not condemn the city’s pre-agreement picketing enforcement actions, it did specify how the plaintiffs would be allowed to approach vehicles entering the clinic parking area. This materially altered the legal relationship between the parties, so the plaintiff was entitled to reasonable attorney fees. The amount of the fee was reduced to exclude time devoted to unsuccessful portions of the plaintiff's claims.
Nance v. City of Albemarle, 520 F. Supp.3d 758 (M.D. N.C. 2021)
Due process; Vested rights
The plaintiff proposed to covert an existing extended stay motel to assisted low-income housing. The city, which had previously cited the motel for public nuisances related to illegal drug use, fights, and assaults at the site, denied approval for the renovations. Plaintiff alleged numerous constitutional claims. The court dismissed all the federal claims and declined to exercise supplemental jurisdiction over the state claims. The court held there was no factual support for a claim that the city had a custom or policy to unlawfully limit low-income housing. The Equal Protection claim was dismissed as the plaintiff presented no direct or indirect evidence that: (1) racial discrimination played any role in the city’s permit denial; (2) there was a pattern of permit denial for affordable housing; (3) there was historical housing discrimination by the city; or (4) there were contemporaneous statements showing a reasonable inference of discrimination. Further, the permit denials were rationally related to abatement of the nuisance. The city’s pursuit of a legitimate nuisance charge was not shown to be in retaliation for comments made by the plaintiff at a public hearing. There was no showing that the process followed in denying the application violated due process, as the applicant was allowed multiple opportunities to meet with the planning director, to address the city council, and to submit multiple applications. As the plaintiff did not show they had a property right to a non-discretionary permit approval, there could be no substantive due process violation in denial of city approval for their redevelopment plan for the motel.
Catherine H. Barber Memorial Shelter, Inc. v. Town of North Wilkesboro, 2021 WL 6065159 (W.D. N.C. Dec. 20, 2021) [No. 5:20-CV-00163-KDB-DCK]
Special use permit; Equal Protection
The plaintiff in 1987 began operation of the only homeless shelter in Wilkes County out of a single-family home. In 2018 they began searching for a new location given the existing structure was not always large enough to meet shelter needs. Prior to 2018 the town zoning ordinance did not regulate homeless shelter as a distinct use. In 2018 the ordinance was amended to define homeless shelters, limit their location to the highway-business district, set separation requirements from residences, parks and schools, and require a special use permit. After temporary relocation to a church, the plaintiff in 2020 applied for a special use permit to relocate to a former dental office that had been donated to them for this use. While the city found the application met all the objective standards of the zoning regulation, the special use permit was denied on three grounds: (1) that pedestrian traffic from the shelter would be close to the highway and pose a safety risk; (2) that neighboring property values would be harmed; and (3) that the use was not in harmony with the surrounding area.
The court held the special use permit was improperly denied under state law. The applicant presented sufficient competent, material, substantive evidence that all the SUP standards were met. The board refused to allow the applicant to cross-examine the lay witnesses who presented testimony regarding problems at the shelter’s prior location, evidence that was strongly disputed by the applicant. As failure to allow a party to cross-examine was a clear error of law, that evidence was incompetent and could not be considered to rebut the applicant’s evidence of compliance. Also, while one of the opposing neighbors was a commercial real estate appraiser, he offered no analysis or data to support his opinion of a harm to property values.
The court further held the special use permit requirement for homeless shelters violated the Equal Protection Clause as it treated similarly situated uses differently without a rational basis. The court found there no factors relating to the intensity of the land use and the potential impact on surrounding properties (the offered legislative aim of the regulation requiring a special use permit for homeless shelters) that differentiated the shelter from other similar uses that were permitted in this zoning district without a special use permit (congregate care facilities, emergency shelters, nursing homes, hospitals, lodges, and civic/fraternal/cultural/community facilities). Likewise, there was no rational basis offered to support the differential treatment from these substantially similar land uses. While the court must show deference to legislative categorizations, that does not countenance intentional differential treatment of similarly situated land uses without a rational basis for such.
