Town of Nags Head v. Toloczko
| Decision Date | 18 August 2014 |
| Docket Number | No. 2:11-CV-1-D,2:11-CV-1-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | TOWN OF NAGS HEAD, Plaintiff, v. MATTHEW A. TOLOCZKO, and LYNN B. TOLOCZKO, Defendants. |
Fundamentally, this case concerns whether the Town of Nags Head ("Town") committed a taking in violation of the Fifth Amendment to the United States Constitution and the Law of the Land Clause of the North Carolina Constitution by declaring the beachfront cottage ("Cottage") of Matthew and Lynn Toloczko ("Toloczkos") a public nuisance and ordering the Cottage's removal without offering the Toloczkos an opportunity to repair it. The controversy arose after a major storm struck the Town on November 12, 2009. The storm eroded the beach in front of the Toloczkos' Cottage, and damaged the Cottage itself. On November 30, 2009, the Town condemned the Cottage, declared it a public nuisance, and ordered the Toloczkos to remove or destroy it. The Town's decision to declare the Cottage a public nuisance was based, in part, on the Town's view that the Cottage was located in a public trust area—that is, an area for which, under North Carolina law, the State holds certain property rights in trust for the public. The Toloczkos disagreed that their Cottage was located in a public trust area, refused to remove or destroy their Cottage, and asked for permission to repair it to a habitable state.
In years past, when a storm damaged the Cottage, the Town had permitted the Toloczkos to make repairs. After the 2009 storm, however, the Town refused to do so. Instead, on December 6, 2010, the Town initiated this litigation by suing the Toloczkos in Dare County Superior Court, seeking an order of abatement and civil penalties against the Toloczkos. See [D.E. 1-2]. The Town amended its complaint on January 6, 2011. See [D.E. 1-3]. The complaint makes three claims:
(3) Recovery of civil penalties pursuant to N.C. Gen. Stat. § 160A-175. Id. ¶ D.
On January 7, 2011, the Toloczkos removed the action to this court based on diversity jurisdiction. See [D.E. 1]; 28 U.S.C. § 1332. On January 21, 2011, the Toloczkos filed an answer and asserted twenty-one counterclaims against the Town [D.E. 7]:
(3) Declaratory judgment that the Town's ordering defendants to demolish the Cottage violated N.C. Gen. Stat. §§ 160A-441 to -450. Id. ¶¶ 123-30.
(4) Declaratory judgment that the Cottage is "not likely to cause personal or property injury." Id. ¶¶ 131-37.
(5) Declaratory judgment that the Town lacks the authority to declare structures on the "dry sand beach" nuisances solely because they are on the "dry sand beach." Id. ¶¶ 138-53.
(6) Declaratory judgment that Ordinance 16-31(6)(c) does not authorize the Town to declare as nuisances structures located on the "dry sand beach." Id. ¶¶ 154-62.
(9) Declaratory judgment that the Town's enactment of Ordinance 10-07-021 exceeded the Town's nuisance authority. Id. ¶¶ 192-209.
(10) Declaratory judgment that Ordinance 10-07-021 unlawfully delegates the Town's zoning power to the town manager. Id. ¶¶ 210-21.
(11) Declaratory judgment that the Cottage is not subject to Ordinance 10-07-021. Id. ¶¶ 222-31.
(12) Declaratory judgment that the Town's enactment of Ordinance 10-07-021 violated defendants' vested rights to the application of the Town's unamended ordinances. Id. ¶¶ 232-52.
(13) Declaratory judgment that the Town's actions deprived defendants of their substantive due process rights as provided by the United States and North Carolina Constitutions. Id. ¶¶ 253-56.
(14) Declaratory judgment that the Town's actions deprived defendants of their procedural due process rights as provided by the United States and North Carolina Constitutions. Id. ¶¶ 257-60.
(15) Declaratory judgment that the Town's actions deprived defendants of equal protection under the law as provided by the United States and North Carolina Constitutions. Id. ¶¶ 261-68.
(16) The Town acted under color of state law to deprive defendants of their rights secured by the Fifth and Fourteenth Amendments of the United States Constitution, in violation of 42 U.S.C. § 1983. Id. ¶¶ 269-73.
(17) Preliminary and permanent injunctions against the Town's demolishing the Cottage. Id. ¶¶ 274-82.
(18) The Town's actions were a regulatory taking under the United States and North Carolina Constitutions. Id. ¶¶ 283-92.
(19) Initiation of an inverse condemnation proceeding against the Town. Id. ¶¶ 293-306.
(20) The Town slandered defendants' property title. Id. ¶¶ 307-15.
(21) The Town was negligent in determining that the Cottage violated Ordinance 16-31(6). Id. ¶¶ 316-21.
On March 28, 2012, this court dismissed certain claims and counterclaims and abstained from deciding other claims and counterclaims. Town of Nags Head v. Toloczko, 863 F. Supp. 2d 516, 519 (E.D.N.C. 2012). On appeal, the United States Court of Appeals for the Fourth Circuit held that, in Town of Nags Head v. Cherry, Inc., 723 S.E.2d 156 (N.C. Ct. App.), disc. rev. denied, 366 N.C. 386, 733 S.E.2d 85 (2012), the North Carolina Court of Appeals clarified the issues raised in this case sufficiently such that abstention was no longer appropriate, and remanded the case. Town of Nags Head v. Toloczko, 728 F.3d 391, 398-400 (4th Cir. 2013).
On November 6, 2013, the court held a status conference and established a briefing schedule [D.E. 68]. On December 6, 2013, the parties submitted supplemental memorandums concerning the remaining claims and counterclaims and cross-moved for summary judgment [D.E. 72, 73]. On December 20, 2013, the parties submitted responses [D.E. 74, 75]. On June 11, 2014, the court heard oral argument. [D.E. 89]; see Oral Arg. Tr. [D.E. 91]. As explained below, the court grants summary judgment to the Toloczkos on the Town's third claim and on the Toloczkos' first, second, fourth, and fifth counterclaims. The court grants summary judgment to the Town on the Toloczkos' physical-occupation takings claim in the sixteenth, eighteenth, and nineteenth counterclaims, but denies summary judgment to the Town and the Toloczkos on the Toloczkos' temporary regulatory takings claim in the sixteenth, eighteenth, and nineteenth counterclaims. The court also grants summary judgment to the Town on the Toloczkos' twentieth and twenty-first counterclaims, and dismisses the Toloczkos' third and sixth counterclaims as moot.
(b) Damaged structure or debris from damaged structures where it can reasonably be determined that there is a likelihood of personal or property injury;
(c) Any structure, regardless of condition, or any debris from damaged structure which is located in whole or in part in a public trust area or public land.
Nags Head, N.C., Code ("Town Code") § 16-31(6) ("Nuisance Ordinance"). Subsection (c), unlike the other two subsections, concerns only a structure's location, not its condition. Even if a structure is in perfect condition, it is a nuisance under subsection (c) if it is located in a public trust area—and the only way to abate the nuisance is to remove the structure from that area.
The Nuisance Ordinance does not define the term "public trust area," but the Town has interpreted it to include land that is subject to public trust rights, which are "those rights held in trust by the State [of North Carolina] for the use and benefit of the people of the State in common," including "the right to freely use and enjoy the State's ocean and estuarine beaches and public access to the beaches." Friends of Hatteras Island Nat'l Historic Maritime Forest Land Trust for Pres., Inc. v. Coastal Res. Comm'n, 117 N.C. App. 556, 574, 452 S.E.2d 337, 348 (1995) (quoting N.C. Gen. Stat. § 1-45.1). Although the matter is unsettled under North Carolina law, the Town contends thatpublic trust rights apply to the entire beach, both the wet-sand and dry-sand portions. See, e.g., 2013 Amends, to Town of Nags Head Land Use Plan [D.E. 90-1] 6 ("2013 LUP Amends.").1 Thus, under subsection (c) of the Nuisance Ordinance, as the Town interprets it, any structure located on any part of the beach is a nuisance.
Although subsection (c) of the Nuisance Ordinance purports to render every structure in Nags Head located "in whole or in part in a public trust area or public land" a public nuisance—and thus to authorize the Town to require that every such structure be demolished or removed—the Town has not attempted to enforce subsection (c) in this way. Instead, the Town developed an informal, de facto enforcement standard. In the words of the town manager, ...
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