Kirby v. N.C. Dep't of Transp.

• Citation: 368 N.C. 847,786 S.E.2d 919
• Decision Date: 10 June 2016
• Docket Number: No. 56PA14–2,56PA14–2
• Court: United States State Supreme Court of North Carolina
• Parties: Everette E. Kirby and wife, Martha Kirby; Harris Triad Homes, Inc.; Michael Hendrix, as Executor of the Estate of Frances Hendrix; Darren Engelkemier; Ian Hutagalung; Sylvia Maendl; Steven David Stept; James W. Nelson And Wife, Phyllis H. Nelson; and Republic Properties, LLC, a North Carolina company (Group 1 Plaintiffs) v. North Carolina Department of Transportation

368 N.C. 847

786 S.E.2d 919

Everette E. Kirby and wife, Martha Kirby; Harris Triad Homes, Inc.; Michael Hendrix, as Executor of the Estate of Frances Hendrix; Darren Engelkemier; Ian Hutagalung; Sylvia Maendl; Steven David Stept; James W. Nelson And Wife, Phyllis H. Nelson; and Republic Properties, LLC, a North Carolina company (Group 1 Plaintiffs)

v.North Carolina Department of Transportation

No. 56PA14–2

Supreme Court of North Carolina.

Filed June 10, 2016

Hendrick Bryant Nerhood Sanders & Otis, LLP, Winston Salem, by Matthew H. Bryant, T. Paul Hendrick, Timothy Nerhood, Kenneth C. Otis III, and W. Kirk Sanders, for plaintiff-appellees.

Roy Cooper, Attorney General, by John F. Maddrey, Solicitor General, for defendant-appellant.

Jonathan D. Guze, Raleigh, for John Locke Foundation, amicus curiae.

Hansen Law Firm, PLLC, Raleigh, by Jessica O. Wilkie and Joshua D. Hansen; and Van Winkle Law Firm, Asheville, by Jones P. Byrd, for North Carolina Advocates for Justice, amicus curiae.

Martin & Gifford, PLLC, Winston–Salem, by G. Wilson Martin, Jr. ; and Wait Law, P.L.L.C., Winston–Salem, by John L. Wait, for North Carolina Association of Realtors, Inc., amicus curiae.

Carlene McNulty, Raleigh, for North Carolina Justice Center, amicus curiae.

Elliot Engstrom, Raleigh, for Civitas Institute, Center for Law and Freedom; and Mark

Miller, Sacramento, pro hac vice, for Pacific Legal Foundation, amici curiae.

Shanklin & Nichols, LLP, Wilmington, by Kenneth A. Shanklin and Matthew A. Nichols, for Wilmington Urban Area Metropolitan Planning Organization, amicus curiae.

NEWBY

, Justice.

In this case we consider whether the use of the Map Act by the North Carolina Department of Transportation (NCDOT) resulted in a taking of certain property rights of plaintiffs without just compensation. Upon NCDOT's recording of the highway corridor maps at issue here, the Map Act restricted plaintiffs' fundamental rights to improve, develop, and subdivide their property for an unlimited period of time. These restraints, coupled with their indefinite nature, constitute a taking of plaintiffs' elemental property rights by eminent domain. The extent to which plaintiffs may be entitled to just compensation, however, depends upon market valuation of the property before and after the taking. Such determinations must be made on an individual, property-by-property basis. We therefore affirm the decision of the Court of Appeals.

In 1987 the General Assembly adopted the Roadway Corridor Official Map Act (Map Act). Act of Aug. 7, 1987, ch. 747, sec. 19, 1987 N.C. Sess. Laws 1520, 1538–43 (codified as amended at N.C.G.S. §§ 136–44.50 to –44.54 (2015)); see also N.C.G.S. §§ 105–277.9

to –277.9A, 160A–458.4 (2015). Under the Map Act, once NCDOT files a highway corridor map with the county register of deeds, the Act imposes certain restrictions upon property located within the corridor for an indefinite period of time. N.C.G.S. § 136–44.51. After a corridor map is filed, “no building permit shall be issued for any building or structure or part thereof located within the transportation corridor, nor shall approval of a subdivision, as defined in G.S. 153A–335 and G.S. 160A–376, be granted with respect to property within the transportation corridor.” Id. § 136–44.51(a) ; see also

id. § 153A–335(a) (2015) (“ ‘[S]ubdivision’ means all divisions of a tract or parcel of land into two or more lots, building sites, or other divisions when any one or more of those divisions are created for the purpose of sale or building development (whether immediate or future) and includes all division of land involving the dedication of a new street or a change in existing streets....”); id. § 160A–376(a) (2015) (same). Recognizing the impact of these restrictions, the General Assembly also designated the property as a “special class” for ad valorem tax purposes, assessed at reduced rates of “twenty percent (20%) of the appraised value” for unimproved property, id. § 105–277.9, and “fifty percent (50%) of the appraised value” for improved property, id. § 105–277.9A. Despite the restrictions on improvement, development, and subdivision of the affected property, or the tax benefits provided, NCDOT is not obligated to build or complete the highway project.

Owners whose properties are located within the highway corridor may seek administrative relief from these restrictions by applying for a building permit or subdivision plat approval, id. § 136–44.51(a)

-(c), a variance, id. § 136–44.52, or an “advanced acquisition” of the property “due to an imposed hardship,” id. § 136–44.53. In the first instance, if after three years a property owner's application for a building permit or subdivision plat has not been approved, the “entity that adopted the transportation corridor official map” must either approve the application or initiate acquisition proceedings, or else the applicant “may treat the real property as unencumbered.”

Id. § 136–44.51(b)

. In the second instance, “[a] variance may be granted upon a showing that: (1) Even with the tax benefits authorized by this Article, no reasonable return may be earned from the land; and (2) The requirements of G.S. 136–44.51 result in practical difficulties or unnecessary hardships.” Id. § 136–44.52(d). In the third instance, an “advanced acquisition” may be made upon establishing “an undue hardship on the affected property owner.” Id. § 136–44.53(a). Property approved under the hardship category must be acquired within three years or “the restrictions of the map shall be removed from the property.” Id. In all instances, however, the restrictions imposed upon the property remain indefinitely, absent affirmative action by the owner and either approval from the State or a certain lapse of time.

Plaintiffs are landowners whose properties are located within either the Western or Eastern Loops of the Northern Beltway, a highway project planned around Winston–Salem. Plaintiffs allege that the project “has been planned since 1965, and shown on planning maps since at least 1987 with the route determined by the early 1990s.”

On 6 October 1997, in accordance with the Map Act, NCDOT recorded a highway transportation corridor map with the Forsyth County Register of Deeds that plotted the Western Loop of the Northern Beltway. Plaintiffs whose properties are located within the Western Loop had all acquired their properties before NCDOT recorded the pertinent corridor map. On 26 November 2008, NCDOT recorded a second map that plotted the Eastern Loop. Plaintiffs whose properties are located within the Eastern Loop had also purchased their properties before NCDOT recorded that corridor map, some as recently as 2006. The parties do not dispute that the Map Act imposed restrictions on property development and division as soon as NCDOT recorded the corridor maps.

The NCDOT has voluntarily purchased at least 454 properties within the beltway through condemnation proceedings, and since July 2010, has continued to purchase property located in the Western and Eastern Loops. In June 2013, NCDOT announced a public hearing regarding modification of the Western Loop boundaries, noting that “[a] ‘Protected Corridor’ has been identified that includes the areas of the beltway that the Department expects to purchase to build the proposed road.” At the hearing an NCDOT official advised that “no funding for the proposed Western Section of the Northern Beltway had been included in the current” budget through 2020 and that there was “no schedule” establishing when construction would start.

From October 2011 to April 2012, following denial of their motion for class certification, Beroth Oil Co. v. NCDOT (Beroth II) , 367 N.C. 333, 347, 757 S.E.2d 466, 477 (2014)

, aff'g in part and vacating in part

Beroth Oil Co. v. NCDOT (Beroth I) , 220 N.C.App. 419, 725 S.E.2d 651 (2012), plaintiffs filed separate complaints against NCDOT, asserting various, similar constitutional claims related to takings without just compensation, including inverse condemnation. On 31 July 2012, the Chief Justice certified plaintiffs' cases as “exceptional” under Rule 2.1 of the General Rules of Practice for the Superior and District Courts, and the trial court subsequently consolidated plaintiffs into the same group for case management purposes.¹

The NCDOT timely answered, asserted various affirmative defenses, including, inter alia , lack of standing, and moved to dismiss plaintiffs' claims under Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the North Carolina Rules of Civil Procedure

. On 8 January 2013, the trial court entered an order denying NCDOT's motion to dismiss the claim for inverse condemnation.

All parties moved for summary judgment. The trial court first determined that plaintiffs failed to establish a taking, reasoning that “a regulatory taking” by police power only occurs when the legislation “deprive[s] the property of all practical use, or of all reasonable value” (citing and quoting

Beroth I , 220 N.C.App. at 436–39, 725 S.E.2d at 661–63

), and that the “mere recording of project maps do[es] not constitute a taking” (citing, inter alia , Browning v. N.C. State Highway Comm'n , 263 N.C. 130, 135–36, 139 S.E.2d 227, 230–31 (1964) ). Therefore, the trial court concluded the inverse condemnation claim was “not yet ripe” and granted summary judgment for NCDOT, dismissing the claim without prejudice.² Plaintiffs appealed the dismissal and summary judgment orders to the Court of Appeals, and NCDOT cross-appealed the same, arguing for dismissal “with prejudice.”

The Court of Appeals reversed the dismissal of plaintiffs' inverse condemnation claim. Kirby v. NCDOT , ––– N.C. App. ––––, ––––, 769 S.E.2d 218, 236 (2015)

.³ The Court of Appeals concluded that, unlike regulations under the police power, which the State deploys to protect the public from injury, “the Map Act is a cost-controlling mechanism,” id. at ––––, 769 S.E.2d at 232

, that employs the power of eminent domain, allowing NCDOT “to foreshadow which...