TRANSCO v. Calco Enterprises, COA98-687.

• Decision Date: 16 February 1999
• Docket Number: No. COA98-687.,COA98-687.
• Citation: 511 S.E.2d 671,132 NC App. 237
• Parties: TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Petitioner, v. CALCO ENTERPRISES, a North Carolina Partnership, North Carolina Equipment Company, Paul E. Castelloe, Receiver by Court Appointment, Ronald H. Garber, Receiver by Court Appointment, Mary H. Calton, Executrix of the Estate of W.C. Calton, W.C. Calton, Jr., Executor of the Estate of W.C. Calton, Respondents.
• Court: North Carolina Court of Appeals

511 S.E.2d 671

132 NC App. 237

TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Petitioner, v. CALCO ENTERPRISES, a North Carolina Partnership, North Carolina Equipment Company, Paul E. Castelloe, Receiver by Court Appointment, Ronald H. Garber, Receiver by Court Appointment, Mary H. Calton, Executrix of the Estate of W.C. Calton, W.C. Calton, Jr., Executor of the Estate of W.C. Calton, Respondents.

No. COA98-687.

Court of Appeals of North Carolina.

February 16, 1999.

Womble Carlyle Sandridge & Rice, PLLC, by Michael E. Ray and Lynn Watson Neumann, Winston-Salem, for petitioner-appellee.

Hill, Evans, Duncan, Jordan & Davis, PLLC, by William W. Jordan and Joseph P. Gram, Greensboro, for respondent-appellant North Carolina Equipment Company.

EDMUNDS, Judge.

Transcontinental Gas Pipe Line Corporation (Transco) is a Delaware corporation engaged in the business of transporting and delivering natural gas via pipeline from the Gulf of Mexico to the Northeastern United States. In order to expand its Kernersville delivery point, Transco filed a petition to condemn certain real property pursuant to its power of eminent domain under N.C. Gen.Stat. § 62-190 (1989) and Chapter 40A.

The property at issue is .210 acres of land owned by Calco Enterprises (Calco). Calco is a partnership formed to purchase land and lease it to North Carolina Equipment Company (NCEC). Calco and NCEC signed a five-year lease agreement dated 31 May 1988, which described a 3.156 acre tract in Forsyth County. In addition, Calco owned 6.2 acres adjacent to the property de scribed in the written lease. NCEC and Calco also orally agreed for NCEC to lease the 6.2 acre tract for the term of the written lease. When the written lease expired, Calco and NCEC continued their arrangement. The.210 acres of land in dispute are part of the 6.2 acre tract.

Because the agreement between Calco and NCEC was not recorded, Transco only discovered its existence during discussions with Calco prior to institution of this suit. On 2 July 1996, Transco petitioned to condemn the.210 acres, naming Calco, NCEC, and others as party opponents. NCEC initially responded by seeking just compensation, then later amended its response to the petition to allege that Transco's actions were arbitrary, capricious, and an abuse of discretion. On 29 July 1996, the Clerk of Superior Court appointed Commissioners to appraise the property and determine the compensation to be paid by Transco for the .210 acres. The Commissioners reported the value of the property to be $9,200. NCEC filed exceptions to the appraisal and to the Clerk's order of 29 July 1996. When the Clerk of Superior Court entered judgment overruling NCEC's exceptions on 29 August 1996, NCEC appealed that judgment to Superior Court on 9 September 1996. On 3 January 1997, Transco filed a motion to dismiss pursuant to N.C. Gen.Stat. § 1A-1, Rule 12 (1990), which Judge H.W. Zimmerman, Jr., ultimately denied on 10 February 1997.

On 7 February 1997, in its response to Transco's motion to dismiss, NCEC admitted that Transco had paid the judgment amount of $9,200 into the court. On 14 February 1997, Transco sent a letter to NCEC purporting to terminate NCEC's leasehold at the earliest date permitted by applicable law. On 27 August 1997, Transco filed a motion for summary judgment. NCEC thereafter responded and filed its own motion for summary judgment, supported by affidavits. On 24 February 1998, finding no genuine issue of material fact and that Transco was entitled to judgment as a matter of law, Judge Peter M. McHugh granted Transco's motion for summary judgment. From this order, NCEC appeals.

Respondent-appellant NCEC first contends that the trial court committed reversible error when it granted Transco's motion for summary judgment after a previous motion to dismiss had been denied by another judge. We disagree. NCEC argues that the earlier motion to dismiss was in fact a motion for summary judgment because the trial judge considered matters beyond those in the pleadings. The trial judge's order, in fact, recites that the case file and briefs of counsel had been reviewed. "Where matters outside the pleadings are presented to and not excluded by the court on a motion to dismiss for failure to state a claim, the motion shall be treated as one for summary judgment...." DeArmon v. B. Mears Corp., 312 N.C. 749, 758, 325 S.E.2d 223, 229 (1985). Thus, under most situations, consideration of the court file, briefs, and attached affidavits would indeed convert a motion to dismiss into a motion for summary judgment pursuant to Rule 56. Where such conversion occurs, reconsideration of a motion for summary judgment by a second judge is precluded by the well-established rule in North Carolina that: (1) no appeal lies from one superior court judge to another; (2) one superior court judge may not correct another's errors of law; and (3) ordinarily one judge may not modify, overrule, or change the judgment of another superior court judge previously made in the same action. See Calloway v. Motor Co., 281 N.C. 496, 501, 189 S.E.2d 484, 488 (1972)

.

However, in this case, Transco's original motion to dismiss alleged that NCEC had no standing to contest the clerk's judgment. Standing is treated differently than most other issues because it is an aspect of subject matter jurisdiction. See Union Grove Milling and Manufacturing Co. v. Faw, 109 N.C.App. 248, 426 S.E.2d 476,

disc. review allowed, 333 N.C. 578, 429 S.E.2d 577, and aff'd. per curiam, 335 N.C. 165, 436 S.E.2d 131 (1993). In determining the issue of subject matter jurisdiction on a motion to dismiss, the court is not restricted to the face of the pleadings in making its determination. See Cline v. Teich for Cline, 92 N.C.App. 257, 374 S.E.2d 462 (1988). Furthermore, the question of subject matter jurisdiction may be raised at any time, even on appeal. See Lemmerman v. Williams Oil Co., 318 N.C. 577, 350 S.E.2d 83,

reh'g denied,

318 N.C. 704, 351 S.E.2d 736 (1986). "If a court finds at any stage of the proceedings that it lacks jurisdiction over the subject matter of a case, it must dismiss the case...." McAllister v. Cone Mills Corp., 88 N.C.App. 577, 579, 364 S.E.2d 186, 188 (1988). Accordingly, the original ruling did not preclude Transco from raising the jurisdictional issue before the second judge, who properly considered Transco's motion. This assignment of error is overruled.

Transco again raises the issue of standing on appeal, contending that NCEC is a month-to-month tenant that lacks standing to challenge the taking as arbitrary and capricious. Under the facts of this case, we do not agree. Chapter 40A details the power of eminent domain in North Carolina. N.C. Gen.Stat. § 40A-28(c) (1984) confers standing upon "[a]ny party to the proceedings," and grants such party the power to "file exceptions to the clerk's final determination on any exceptions to the report and [to] appeal to the judge of superior court having jurisdiction." Here, NCEC was made a party from the outset of these proceedings initiated by Transco. Thus, the statute does not prohibit NCEC's appeal.

This Court has also said that "[t]he gist of standing is whether there is a justiciable controversy being litigated among adverse parties with substantial interest affected so as to bring forth a clear articulation of the issues before the court." Texfi Industries v. City of Fayetteville, 44 N.C.App. 268, 269-70, 261 S.E.2d 21, 23 (1979), disc. review denied in part, 299 N.C. 741, 267 S.E.2d 671, and aff'd, 301 N.C. 1, 269 S.E.2d 142 (1980). With regard to a zoning proceeding, this Court stated that a party must "own the affected property or have some interest in it" to challenge the proceeding. See Wil-Hol Corp. v. Marshall, 71 N.C.App. 611, 613, 322 S.E.2d 655, 657 (1984)

(barring the zoning challenge of a month-to-month tenant whose challenge was initiated after the leasehold was terminated). The Court must therefore determine NCEC's interest, if any, in the condemned property.

Here, there was no written and thus no recorded instrument that represented NCEC's interest in the property condemned. However, Transco had actual notice that NCEC was in possession of and paid rent for the condemned property. "[W]hen a tenant enters into possession under an invalid lease and tenders rent which is accepted by the landlord, a periodic tenancy is created.... The period of the tenancy is determined by the interval between rental payments." Kent v. Humphries, 303 N.C. 675, 679, 281 S.E.2d 43, 46 (1981). Accordingly, we conclude that NCEC had a present possessory interest, namely, a month-to-month periodic tenancy, and that Transco was on notice of that interest. Thus, the key to deciding whether NCEC has standing in this suit is whether a month-to-month tenancy sufficiently solidifies the adversarial role so that the issues before the court are brought forth and clearly articulated. See Texfi, 44 N.C.App. 268,

261 S.E.2d 21.

Usually, a lessee has standing to litigate its portion of the total award upon condemnation. See Durham v. Realty Co., 270 N.C. 631, 155 S.E.2d 231 (1967)

. However, the interest of a month-to-month tenant generally merits no compensation due to the difficulty of calculating its portion of an award. See 26 Am.Jur.2d Eminent Domain § 259 (1996). Whether a month-to-month tenant has standing, not merely to challenge the apportionment of a condemnation award, but to challenge the condemnation proceeding itself as arbitrary, capricious, and an abuse of discretion, is an issue of first impression in North Carolina. Therefore, we look to the applicable statutes for guidance.

Chapter 40A defines "owner" as "any person having an interest or estate in the property." N.C. Gen.Stat. § 40A-2(5) (1984) (emphasis added). Section 40A-25, dealing with private condemnations, is equally absolute and allows "all or any of the persons whose estates or interests are to be affected by the proceedings" to answer and...