City of Charlotte v. Bmj of Charlotte, LLC

• Court: North Carolina Court of Appeals
• Writing for the Court: Stroud
• Citation: City of Charlotte v. Bmj of Charlotte, LLC, 675 S.E.2d 59 (N.C. App. 2009)
• Decision Date: 07 April 2009
• Docket Number: No. COA08-147.,COA08-147.
• Parties: The CITY OF CHARLOTTE, a municipal corporation, Plaintiff, v. BMJ OF CHARLOTTE, LLC; Consolidated Textiles, Inc., Lessee; And Any Other Parties in Interest, Defendants.

675 S.E.2d 59

The CITY OF CHARLOTTE, a municipal corporation, Plaintiff, v. BMJ OF CHARLOTTE, LLC; Consolidated Textiles, Inc., Lessee; And Any Other Parties in Interest, Defendants.

No. COA08-147.

Court of Appeals of North Carolina.

April 7, 2009.

Appeal by defendants from order entered 5 November 2007 by Judge W. Robert Bell in Mecklenburg County Superior Court. Heard in the Court of Appeals 24 September 2008.

Horack Talley Pharr & Lowndes, P.A., by Robert B. McNeill and Phillip E. Lewis, Charlotte, for plaintiff-appellee.

Katten Muchin Rosenman LLP, by Richard L. Farley and Jeffrey C. Grady, Charlotte, for defendant-appellant.

STROUD, Judge.

This appeal addresses a counterclaim for inverse condemnation¹ filed in response to a condemnation action by the City of Charlotte. The gravamen of the counterclaim is that plaintiff's use of a railroad right of way that runs over defendants' land is in derogation of defendants' rights as the holder of the underlying fee. Defendants offer two different legal theories as to why they are entitled to compensation for use of the railroad right of way. Defendants' first theory is that any rights which might have previously existed to use the railroad right of way have reverted to the holder of the underlying fee estate. Defendants' alternative theory is that even if any rights to use the railroad right of way still exist, the manner in which it is currently being used is beyond the scope of the right of way, thus creating a compensable overburden on the servient estate. For the reasons which follow, we affirm the trial court.

I. Background

On 2 January 1847 the North Carolina General Assembly chartered ("the original charter") "a company to construct a rail road from some point on the South Carolina Rail Road to the town of Charlotte, in Mecklenburg [C]ounty, to be called `the Charlotte and South Carolina Rail Road Company ["C & SC"].'" The original charter was amended by the General Assembly on 29 January 1849 ("the amended charter") in order to "produce conformity" with the railroad charter granted by the state of South Carolina. The amended charter is the same as the original charter in all material respects relevant to this appeal.

Among the powers granted, section 20 of the amended charter gave C & SC the power to take land by statutory presumption² for a railroad right of way:

That in the absence of any contract or contracts with the said company, in relation to lands through which the said road or its branches may pass, signed by the owner thereof ... it shall be presumed that the land upon which the said road or any of its branches may be constructed, together with a space of sixty-five feet on each side of the centre of the said road, has been granted to the company, by the owner or owners thereof; and the said company shall have good right and title thereto, and shall have, hold and enjoy the same as long as the same be used only for the purposes of said railroad ... and no longer, [unless the owner applies for compensation] within two years next after that part of said road was finished[.]

The right of statutory presumption was eventually used by C&SC to acquire a railroad right of way ("the right of way" or "the easement")³ across property located at what is now 707 East Hebron Street in Charlotte, Mecklenburg County.

In 1969, Robert J. Kunik acquired the property located at 707 East Hebron Street. The property was acquired subject to the right of way, which was held at the time by Southern Railway, successor-in-interest to C&SC.

In 2003, the property was conveyed, subject to the right of way, by Robert J. Kunik's successors-in-interest to defendant BMJ of Charlotte, LLC ("BMJ"), a corporation owned by members of the Kunik family. Defendant Consolidated Textiles, Inc. ("Consolidated") is the lessee of the property and operates a warehouse located thereon. On 2 August 1988, Southern Railway executed a license agreement with Consolidated which allowed Consolidated to use the right of way to access the warehouse for truck unloading. On 11 December 2003, Norfolk Southern Railway Company ("NS" or "Norfolk Southern"), the successor-in-interest to Southern Railway, conveyed an interest in the western half of the right of way by quitclaim deed to the City of Charlotte ("the city" or "plaintiff"). Norfolk Southern retained all of its interest in the eastern portion of the railroad right of way.

The city constructed and began operating a light rail system for transporting the public by rail ("Light Rail") in the western half of the right of way.⁴ Light Rail runs from downtown Charlotte to a location just north of Interstate 485, still in North Carolina; it does not connect with any railroad in South Carolina. Light Rail is separate and independent from the rail line currently operated and maintained by Norfolk Southern on the eastern portion of the Norfolk Southern right of way, which will continue to operate.

Light Rail has substantially increased rail traffic upon the right of way. With the addition of Light Rail's two line sections, one running northbound and the other southbound; there are two separate railroad lines, Light Rail and Norfolk Southern, operating at least 3 separate railroad tracks within the western 65 feet of the right of way. The tracks currently in the Norfolk Southern right of way and used by Norfolk Southern are part of its R-Line, which serves approximately 10 trains per day. Norfolk Southern has no current plans to increase the number of times a train will pass through the right of way, but does expect that its business will grow.

When Light Rail began operation in November 2007, both the northbound and southbound lines began passing through the Norfolk Southern right of way every seven minutes during peak times and every fifteen minutes during non-peak times.⁵ As a result, a Light Rail train passes through the Norfolk Southern right of way twice every seven minutes during peak times and twice every fifteen minutes during non-peak times. Each time a Light Rail train passes through the Norfolk Southern right of way, the signal gates at the grade crossing of East Hebron Street and South Boulevard come down and stop traffic on East Hebron Street. The gates stay down for about 45 seconds each time.

Light Rail occupies a portion of the Norfolk Southern right of way previously used by Consolidated in connection with its loading docks pursuant to a license agreement with Norfolk Southern. There is a fence between the Light Rail tracks and the Norfolk Southern rail line, which prevents access from South Boulevard to the BMJ property without first going to the street intersection of South Boulevard and East Hebron Street. As a result of the construction and operation of Light Rail, neither Consolidated nor a subsequent tenant can use any portion of the western Norfolk Southern right of way to access the loading docks.

On 22 March 2005, pursuant to N.C. Gen. Stat. § 136-103⁶ et seq., plaintiff filed a complaint for condemnation and appropriation of a ten feet wide temporary construction easement adjacent to the railroad right of way and a 2 feet wide by 22 feet long permanent utility easement within the temporary construction easement. Plaintiff deposited the sum of $7,125.00 as its estimate of just compensation for the taking.

Defendants BMJ and Consolidated (collectively "defendants") filed an answer on 5 May 2006. The answer asserted inverse condemnation and overburdening of the easement as counterclaims. The first counterclaim alleged that defendants were entitled to compensation because the city had no interest in the right of way, which defendant asserted no longer exists, having reverted to the holder of the underlying fee. Alternatively, a second counterclaim alleged that even if the easement still exists and the city had an interest in it, the city's use of the easement for Light Rail is beyond the scope of use permitted by the easement.

On 4 April 2007, plaintiff filed a Motion to Determine Issues Other than Damages, pursuant to N.C. Gen.Stat. § 136-108. The trial court held a hearing on the motion during the week of 16 April 2007 and entered its order dismissing defendants' counterclaims on 5 November 2007. Defendants appeal from the order dismissing their counterclaims.

II. Procedural Issues

A. Interlocutory Order

Because plaintiff's initial claim for determination of just compensation for the taking set forth therein is still pending, the order dismissing defendants' counterclaims did not resolve all of the claims in this action. Hence, the order is interlocutory. Duval v. OM Hospitality, LLC, 186 N.C.App. 390, 392, 651 S.E.2d 261, 263 (2007). Generally, an appeal from an interlocutory order will not be reviewed until all claims in the case are resolved by the trial court. Id. However, an interlocutory order is immediately reviewable in two circumstances:

First, the trial court may certify that there is no just reason to delay the appeal after it enters a final judgment as to fewer than all of the claims or parties in an action. Second, a party may appeal an interlocutory order that affects some substantial right claimed by the appellant and will work an injury to him if not corrected before an appeal from the final judgment.

Dep't of Transp. v. Rowe, 351 N.C. 172, 174-75, 521 S.E.2d 707, 709 (1999) (citations and quotation marks omitted).

The North Carolina Supreme Court has determined that "orders from a condemnation hearing concerning title and area taken are vital preliminary issues[,]" and has allowed immediate appeal therefrom. Id. at 176, 521 S.E.2d at 709 (citation and quotation marks omitted). Even where an order does not address title per se, the North Carolina Supreme Court has held that

"A title is not a piece of paper. It is an abstract concept which represents the legal system's conclusions as to how the interests in a parcel of realty are arranged and who owns them." ... The possible existence of...