Town of Midland v. Wayne

• Decision Date: 11 June 2015
• Docket Number: No. 458PA13.,458PA13.
• Citation: 773 S.E.2d 301,368 N.C. 55
• Parties: TOWN OF MIDLAND v. Darryl Keith WAYNE, Trustee, or any successors in trust, under the Darryl Keith Wayne Revocable Trust Agreement, and any Amendments thereto, dated February 23, 2007.
• Court: North Carolina Supreme Court

368 N.C. 55

773 S.E.2d 301

TOWN OF MIDLAND

v.Darryl Keith WAYNE, Trustee, or any successors in trust, under the Darryl Keith Wayne Revocable Trust Agreement, and any Amendments thereto, dated February 23, 2007.

No. 458PA13.

Supreme Court of North Carolina.

June 11, 2015.

Hartsell & Williams, P.A., by Andrew T. Cornelius, Concord, and Brittany M. Love, for plaintiff-appellee.

Vandeventer Black LLP, by Norman W. Shearin, Kitty Hawk, David P. Ferrell, and Ashley P. Holmes, Raleigh, for defendant-appellant.

NEWBY, Justice.

In this condemnation action we decide the existence of a vested right to develop a subdivision and the effect of that vested right on the questions of unity of ownership and damages. We hold that the owners of the undeveloped portions of the subdivision have a vested right to complete the subdivision in accordance with the pre-approved plan. Having a vested right to complete the subdivision means both owners of the remaining undeveloped property, the named defendant and the limited liability company, have interests affected by the condemnation of a portion of the subdivision, satisfying the unity of ownership requirement. The measure of damages is the difference between the value of the property before the taking and the value immediately afterwards. The vested right enhances the value of the property before the taking but is not a separate element of damages. Accordingly, we modify and affirm in part and reverse in part the decision of the Court of Appeals.

Defendant's predecessor in title, Darryl Keith Wayne ("Wayne"), owned two tracts of land totaling ninety acres ("Wayne Tracts").¹

Park Creek, LLC ("the LCC"), the majority of which is owned by Wayne, held the adjacent one hundred sixty acres. Together, Wayne and the LLC submitted a Customized Development Plan ("the 1997 plan") for a multiphase, two hundred fifty acre residential subdivision known as Park Creek ("Park Creek"). The Cabarrus County Planning and Zoning Commission approved the 1997 plan provided that the development met certain requirements. These requirements specified minimum lot sizes and established a certain percentage of the "high-income," two hundred home subdivision as open space. Wayne and the LLC developed the first two phases using some of the land owned by the LLC, installing water lines and other infrastructure designed and constructed to service the future phases as well. On or after 23 February 2007, Wayne conveyed his property to defendant, his revocable trust of which he is the trustee ("defendant"). By 2009 the first two development phases of Park Creek were substantially completed, representing roughly fifty percent of the subdivision, at a cost of approximately $4.6 million dollars. Most of the lots in the first two phases had been sold. At that time, the future phases of the subdivision, including one tract of about forty acres owned by the LLC ("LLC Tract") and the Wayne Tracts, remained mostly undeveloped. Since its inception defendant and the LLC have maintained the 1997 plan as required by the Town, and the legal effectiveness of the 1997 plan has never lapsed.

In February 2009 in Superior Court, Cabarrus County, the Town of Midland filed two separate condemnation actions against defendant, condemning three acres of the Wayne Tracts for a right-of-way and easement "to construct and operate a natural gas pipeline for the transmission and distribution of natural gas," "to construct and operate a fiber optic line," and "to obtain a temporary construction easement in order to construct the pipeline" ("the easement"). As required by statute, the Town deposited its estimated value and asked for a determination of just compensation. The Town did not name the LLC as a party or identify its tract in the condemnation actions, presumably because the easement did not cross any portion of the LLC property. Likewise, the Town did not specify the taking of the vested right to complete the subdivision as approved. The Town's condemnation actions contemplated taking only the three acres necessary for the easement.

Defendant filed an answer to each complaint, claiming the amount offered by the Town was insufficient and asking for a determination of just compensation.² In October 2011 defendant moved to consolidate the two actions for purposes of hearing all issues other than compensation. Defendant also moved to amend his answers to include additional issues for adjudication, particularly those addressing "the scope of the land affected by the taking and the Town's inverse condemnation of certain areas of [his] property outside the temporary and permanent easement areas."

The same day that defendant moved to consolidate the actions, the LLC moved to intervene in the actions, asserting that the easement affected the LLC Tract as well. The LLC stated that since its undeveloped land was part of Park Creek, "[t]he Court's determination of the area affected by the taking and disposition of [this action] may, as a practical matter, impair or impede [the LLC's] ability to protect its interest in the Subdivision rights in parcels of land which lie upon the Subdivision."³

On 27 October 2011, the trial court found that the two affected Wayne Tracts are adjacent to the LLC Tract and that Wayne "is the Trustee of Defendant and also the principal or exclusive owner of [the] LLC." The trial court, however, denied the LLC's motion to intervene as untimely. The trial court noted that the LLC "can separately and adequately protect its interest by pursuing any separate action that may be available to it."⁴ In the same order the trial court also consolidated the two condemnation actions for certain purposes⁵ and allowed defendant to amend his answers: (1) "to assert a counterclaim to seek compensation for an inverse condemnation resulting from [the Town's] actions in connection with the pipeline outside the boundaries of the property described in the declaration of taking," and (2) to request that the court treat the Wayne tracts "as a single parcel with ‘other adjoining parcels owned by Defendant or individuals or related entities to Defendant.’ "

In his amended answers dated 1 November 2011, defendant counterclaimed that, while constructing the natural gas pipeline and fiber optic line, the Town's contractor transported equipment and maintained construction staging areas outside the easement boundaries without his consent. Defendant claimed that, as a result, "the Town has physically damaged and inversely condemned the Wayne Tracts outside and beyond the easement areas." Defendant reiterated his request that plaintiff pay him "just compensation for the taking of the Wayne Tracts." Additionally, defendant "reserve[d] the right to have the parcels to be condemned ... and any other adjoining parcels owned by Defendant or individuals or related entities to Defendant treated as a single parcel for purposes of determining just compensation."

At the hearing for determination of issues under N.C.G.S. § 40A–47, defendant presented evidence that the easement's far-reaching effect, though perhaps unforeseen, decreases the net developable area of the subdivision property and impairs vital flexibility in its development. Defendant's expert asserted that the easement reduces road frontage on some lots, diminishes lot yield, adversely affects street designs and water line placement, shrinks or eliminates vegetative buffers, and reduces overall residential density. The expert noted that the easement mandates certain grade restrictions and includes other requirements such as buffer zones and set-offs. For example, before the easement took effect, any lots developed could extend onto a pre-existing utility easement; however, the new easement prevents development over itself, and its grading restrictions prevent the development of land used for the pre-existing utility easement as well. Moreover, according to defendant, the grading restrictions adversely affect the predetermined road network within the subdivision. Likewise, construction of the pipeline within the easement eliminated an existing buffer of mature woodlands, forcing defendant to plant a new vegetative buffer and further reducing the remaining developable land. The permanent effects of the easement, defendant argued, have made it economically unfeasible for him to develop the Wayne Tracts in accordance with the 1997 plan, will cause him to incur additional development costs, and will reduce the overall value of the remaining undeveloped lots in the subdivision.

In an order dated 21 March 2012, the trial court concluded as a matter of law that the Town had inversely condemned a portion of the Wayne Tracts situated outside the easement by maintaining staging areas during construction. In the same order the trial court found that "the Cabarrus County Planning & Zoning Commission approved a Customized Development Plan for the Subdivision which included the Wayne Tracts," and subsequently, "Wayne has maintained the Plan as required by Cabarrus County." Based on defendant's evidence, the trial court found "that the impact of the gas pipeline easements would reduce the developable area of the Wayne Tracts, reduce road frontage for some lots, reduce lot yield, reduce flexibility in development, including adversely affecting street designs and locations, reduce or eliminate some vegetative buffers, and reduce residential density." As a result, "[t]he installation of the gas pipeline ... reduced the net developable area available in the Wayne Tracts," making "it no longer economically feasible for Wayne to develop the Wayne Tracts in accordance with the Plan." The trial court further concluded that the easement "substantially interfere[d] with the elemental property rights in the Wayne Tracts, and thereby diminished the fair market value of the entire Wayne Tracts." As a matter of law, the trial court stated that "[t]he decrease in developable land and loss of density resulting from [the easement] has had...