Appeal by plaintiff from order entered 7 June 1993 by Judge Robert H. Hobgood in Durham County Superior Court and appeal by plaintiff from judgment entered 10 October 1996 and order entered 12 December 1996 by judge Henry W. Hight, Jr., in Durham County Superior Court. Heard in the Court of Appeals 23 February 1998.
The opinion of the court was delivered by: Horton, Judge.
On 3 November 1987, defendant Paul W. Woo purchased a .64-acre tract on Blackwell Street in Durham, North Carolina (the subject property), at a bankruptcy auction for $141,000.00. The subject property, which contained a 3,469-square-foot building operated as a restaurant, was located across the street from the American Tobacco Company Complex. At the time of his purchase, Woo was aware that the Tobacco Company property was being considered for development by various investors, and that the area surrounding the subject property had been the target of redevelopment efforts by the Durham Redevelopment Commission. In 1990, the owners of the American Tobacco Company property sold eight acres of the property, consisting of a parking lot, to the Glaxo Corporation for $2,500,000.00.
In an effort to keep the Durham Bulls Baseball Club from leaving the City of Durham (the City), the City purchased the American Tobacco parking lot tract from Glaxo for use as a baseball stadium. The City also notified Woo that it was interested in acquiring the subject property from him and began negotiations regarding the value of that property.
On 3 September 1992, the City gave Woo notice pursuant to N.C. Gen. Stat. § 40A-40 (1984) that it intended to condemn the subject property. Subsequently, Woo transferred the subject property to a trust for estate planning purposes and began to actively seek a purchaser for the property. On 23 September 1992, Brian Newton, as trustee, executed an option to purchase the subject property for $440,000.00. The City filed a complaint on 12 October 1992 to condemn the subject property. The complaint named as defendants Paul W. Woo, as trustee of a revocable declaration of trust dated 2 February 1989 and trustee of the PWW Family Trust; Woo's wife, Marilyn, as trustee of Paul W. Woo Enterprises; Brian Newton, as trustee for the Newton Charitable Foundation; Thomas Earles, as trustee; and Durham County. The City also deposited $165,000.00 as its estimate of just compensation.
Without filing a formal answer to the complaint within the time period set forth in N.C. Gen. Stat. § 40A-46 (1984), Woo responded to the complaint by sending a letter to the trial court, which stated that he had conveyed the subject property to Newton and therefore no longer had any interest in the property. Marilyn Woo also responded to the complaint by sending a letter to the trial court, which stated that the subject property secured the $440,000.00 purchase price paid by Newton and that she expected that amount would be paid from the condemnation proceeds. However, Paul Woo continued to negotiate with the City in order to secure an increased price for the subject property. On or about 15 April 1993, the County of Durham issued a 1993 tax reevaluation notice establishing the 1993 tax value of the subject property at $402,670.00.
Default was thereafter entered against all defendants named in the City's complaint, and a default judgment was entered against Newton and Earles. On 26 May 1993, the Woos filed a motion to set aside the entry of default against them. Newton filed a similar motion on 7 June 1993 to set aside the entry of default and judgment against him. After a hearing, the trial court concluded that the letter sent by Marilyn Woo, while not a formal answer, constituted an appearance in the condemnation proceeding and put the City on notice that it should not have proceeded to file a motion for entry of default. The trial court ordered that the entry of default against the Woos and the judgment against Newton be set aside pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b)(1), (4) and (6) (1990) and in its discretion allowed the Woos and Newton (collectively, defendants) 30 days to file an answer in the condemnation proceeding. Following a non-jury trial in September of 1996, the trial court entered a judgment concluding that defendants were entitled to recover $280,000.00 as just compensation for the subject property and to recover $10,000.00 for fixtures and personal property used in the operation of the restaurant but taken by the City.
On appeal, the City first contends the trial court abused its discretion by setting aside the entry of default against the Woos and the default judgment against Newton and by failing to render judgment in favor of the City. The City argues that N.C. Gen. Stat. § 1A-1, Rule 60 does not apply to proceedings under Chapter 40A and that defendants' failure to answer the complaint within 120 days as required by N.C. Gen. Stat. § 40A-46 constituted an admission that $165,000.00 was just compensation for the subject property. We first address the propriety of the trial court's setting aside the default judgment against Newton, and then address the propriety of the trial court's setting aside the entry of default against the Woos.
N.C. Gen. Stat. § 1A-1, Rule 60, which sets forth the method for seeking relief from a judgment or order, states in pertinent part:
(b) . . . On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
(1) Mistake, inadvertence, surprise, or excusable neglect;
(4) The judgment is void;
(6) Any other reason justifying relief from the operation of the judgment.
While no section of Chapter 40A specifically provides that Rule 60(b) applies to actions brought pursuant to that Chapter, N.C. Gen. Stat. § 40A-12 (1984) states that
[w]here the procedure for conducting an action under this Chapter is not expressly provided for in this Chapter or by the statutes governing civil procedure, or where the civil procedure statutes are inapplicable, the Judge before whom such proceeding may be pending shall have the power to make all the necessary orders and rules of procedure necessary to carry into effect the object and intent of this ...