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Beroth Oil Co. v. North Carolina Department of Transportation

Court of Appeals of North Carolina

November 21, 2017

BEROTH OIL COMPANY; SMITH, PAULA AND KENNETH; CLAPP, BARBARA; CROCKETT, PAMELA MOORE; ESTATE OF WR MOORE; N&G PROPERTIES, INC.; KOONCE, ELTON V.; REPUBLIC PROPERTIES; KIRBY, EUGENE AND MARTHA; HARRIS TRIAD HOMES, INC.; HENDRIX, MICHAEL; ENGELKEMIER, DARREN; HUTAGALUNG, IAN; MAEDL, SYLVIA; STEPT, STEPHEN; NELSON, JAMES AND PHYLISS; SHUGART ENTERPRISES, LLC; STUMP, FRANKLIN AND MINNIE; JADE ASSOCIATES, LLC.; CLAYTON, ALMA C.; PEGRAM, ELAINE SMITH; TRIDENT PROPERTIES, LLC; MCALLISTER, JUDITH T.; MARSHALL, ANDREW WILLIAM (JOINTLY HELD FAM. PROPERTY); SEIDELMANN, JOHN H. AND ROSEMARY; POPE, JAMES AND WANDA; PATEE, RONNIE AND VESTA; MCFADDEN, KENNETH AND PAMELA; MANN, RONALD CARSON; HIATT, EARL B. AND CRISSMAN; LITTLE, LOREN A. AND MARGARET; LEWIS, HENRY AND REBECCA; LAWSON, KATHRYN L.; KINNEY, LOIS K.; FULK, MICHAEL DAVID; EUDY, KRONE EDWARD; DILLON, CHARLES RAY AND JUDY; BULLINS, BILLIE JOE AND CAROLYN; CW MYERS TRADING POST, INC.; BRABHAM, VERDELL & MARLA; DIEHL, SCOTT C.; HIATT, EVERETT AND TERESA; LASLEY, KATHRYN M.; OMEGA SEAFOOD (GUS AND MARIA HODGES); PEAK, GARY W.; SHROPSHIRE, JOHN AND BESSIE; SMITH, CHESTER MONROE AND BETTY; THORE, BRENDA SUE, SDARAH THORE HAMMOND, JAMES THORE; TURPIN, JAMES AND SISTER, MARJORIE HUTCHENS; HOWELL, MARK AND MELISSA; WATKINS, JAMES AND DELORES; LEWIS, JERRY B. AND DENNIS; CANIPE, CONSTANCE FLYNT MULLINEX AND DONALD F. WEISNER; WEISNER, JOHNNY AND HAZEL (JOINTLY HELD FAM PROPERTY); ALLAN, AND WIFE, JOAN; BOOSE, THELMA; MYERS, DALE AND MARY; CONTE, JUDITH A.; CLINE, JEFFERY AND DANA; PFAFFTOWN BAPTIST; PROVIDENCE MORAVIAN; GREER, HONEY CHRISTINE COLLINS AND JEFFEREY; TERRONEZ, INOCENTE AND SONIA DOMIQUEZ; FOLK, JOHN AND MARGARET; HOUCK, SCOTT; BLANCHARD, PAUL; BERRIER, DON M. AND LINDA; BLACKFORD, KEN A.; WEEKS, SHAWN D.; ALEXANDER, JOHN H. AND WIFE KAREN L.; BAILEY, ROBERT CHRISTOPHER AND KAREN K.; BARRY, HILDA S.; BUCHANAN, JOHN A. JR. AND WIFE CAROL JONES; CALDWELL, MELVIN AND SHERIE; CAMERON, CARMIE J. AND WAYNE R.; CENTRAL TRIAD CHURCH - LEROY KELLY; CHURCH, CHRISTOPHER D. AND SHELLEY J.; CONRAD-WHITT, GLADY B. AND LORETTA C. WHITT ET AL.; CONRAD, HAROLD GRAY; DARRAH, ELIZABETH S. AND JASON D.; DAVENPORT, LEONARD C. AND ELSIE H.; DAVIS, SHERRY L.; DECKER, DONNA BALLARD; DILLON, TONY LEE AND TONI P.; DORN, FRANK R.; FABRIZIO, JEFFREY P.; FRANCIS, LINDA DENISE; FULP, JARVIS R. AND GLORIA F.; GIRARD, FRANK J. AND WIFE CAROL; GRIFFIN, THOMAS J. AND NANCY C.; HAMMAKER, DOUGLAS E. AND MELICENT S.; HAMMOCK, HELEN MANOS AND MARGARET HAMMOCK HOERNER; HAYWORTH, SIBYL F.; HEMRIC, DANNY W. AND BEVERLY M.; HENNIS, TAMRA; HOBAN, JANET AND CRAIG; HOLMES, SCOTT P. AND PAMELA A. HILL-HOLMES; HUBBARD REALTY OF W-S INC.; IRON CITY INVESTMENTS, LLC - SCOTT SCEARCE; JONES ESTATE ET AL.; KEITH, MARK A. AND CATHY E.; KISER, JEFFREY AND ELIZABETH; LEE/MCDOWELL, LATRICE NICOLE; LOWRY, HARRY R. AND SANDRA P; LUTHERAN HOME W/S PROPERTY; MAIN, JEFFREY C. AND AMBER D.; MARTIN, TERRY W. AND JO ANN H.; MILLER, CARL JR. AND CURTIS CARPENTER; MITCHELL, CHRISTOPHER R.; MOORE, HILDA BROWN, WIDOW; MORAVIAN CHURCH SOUTHERN PROVINCE; NASH, RICHARD AND MEL - CROWDER, RICK AND SARAH ET AL.; BOARD OF TRUSTEES OF OAK GROVE MORAVIAN CHURCH; REGIONAL REALTY, INC - KEITH D. NORMAN ET AL.; SHELTON, JC AND MAGALENE R.; SIMCIC, JOESPH J. AND REBECCA M.; SMITH, LINDA G.; SNELL, DAVID P.; STACK, WILLIAM C. AND DONYA J.; STAFFORD, VIOLET G.; STEPHENSON, GREGORY J. AND LE'ANNA H.; SUMNER, JOHN E., SR. AND ANN H.; SWAIM, DERRICK AND WIFE KRISTINA C.; TAFFER, LANDON AND EVON; TAFT, LAMAR S. AND CHARLES V.; THOMASON, PATTIE W. AND VELMA G PARNELL; VANHOY, DALE C.; VIOLETTE, MICHAEL E. AND DEBORAH W.; WHITE, LEE AND AREATHER; WRAY, MEGAN P AND ALAN MICHAEL; WESTFALL, ROBERT W. AND KELLI D.; BEHAN, AUSTIN C. AND MARY JEAN; BENTLEY, CHARLES J., SR. AND BRENDA G.; BETHANY BAPTIST CHURCH; COOK, SHIRLEY T. AND COOPER, JENNY C.; WILMOTH-DOUTHIT ET AL.; DASILVA, GEORGE; FLUITT, JOE AND PAMELA MARTIN; HANNA, HEATHER W. AND MARK J.; HUBBARD REALTY; KUHL, WILLIAM A. AND BRENDA S.; LB3 LLC - HILO ENTERPRISES, LLC; LINER, DALE S. AND PEGGY; LUPER, FERRELL M. AND JOYCE; GLASS, LAVONDA; MDC INVESTMENTS, LLC; SEIVERS, HARVEY W. AND BETTY C.; SMALLS, SAMPSON H. AND SHARON; SMITH, SAM & CHRIS; SWAISGOOD, THOMAS D.; THRUSH, GLENN E., JR.; TROTTER, HELEN L.; TUCKER, MARGARET; VANCE, LATANDRA T.; WESTMORELAND, CB HEIRS ET AL.; WHITE, DORIS T., WIDOW; HICKS, RONALD; SMITH, LINDA; SNOW, CRAIG; SEDGE GARDEN POOL; KEARNEY, CLYDE AND HUGH; BEANE, TABITHA; FLAKE, WILDON C., JR.; ADAMS, WEBB, THOMAS; GORDON, HELEN; PEARSON, BEVERLY; BIAS, TERESA; BOYLES, DANTE; CLARK, JON; FLETCHER, JOSEPH; EMBLER, DEBBIE; GURSTEIN, SCOTT; HOBBS, STEVEN; THORE, BOBBY; CHARLES, DEBORAH T.; FORTNEY, WALTER; NODINE, DENNIS AND ELIZABETH; MESSICK, BILL (J.G. MESSICK & SON, INC.); MONROE, ELDER RONALD; WARD, PEGGY; PERKINS, JERRIE; SHOUSE, CHRISTINE R. KAUTZ AND PAUL KAUTZ; PEEPLES, WADE AND MARY LOU; CUNNINGHAM, JOHN AND GAYLE; CHAPMAN, LEE AND PEGGY - CHAPMAN FAMILY TRUST; WILLARD, DANIEL; CREWS, RACHEL; ROGERS, DARRELL AND AMBER; HEMMINGWAY, REESHEMAH; HOLT, LINDA; ALDRIDGE, MARTHA; HOOPER, MARY; WESTMORELAND, JACK; BOLIN, AMBER; BREWER JR., BOBBY; BRIGGS, JOHN; BURCHETTE, GLENN & TAMMY; HILL, EUGENE - ESH RENTAL; HAWKS, HOWARD; SPEAR, JOYCE & KIMBERLY; STOLTZ, WILLIAM; STIMPSON, ROBERT; STEWART, ASHLEY; RODDY, TERRY; NELSON, STEPHEN AND THERESA; MCKINNEY, MATTHEW AND TANGELA; FLINCHUM, MARLENE; Plaintiffs,
v.
NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, Defendant. and BELL, KENNETH E.; BARLEY, JO ELLEN AND MARY B. WATSON; SUMMERS, MICHAEL AND BRENDA; GRUNDMAN, ROBERT E. AND LINDA L.; PICKARD, MARK J. AND LINDA J.; FELTS FAMILY LIMITED PARTNERSHIP; Plaintiffs,
v.
NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, Defendant.

          Heard in the Court of Appeals 17 May 2017.

         Appeal by defendant from order entered 3 October 2016 by Judge John O. Craig III in Forsyth County Nos. 10-CVS-6926; 11-CVS-2998, 7119, 7120, 8170-8174, 8338; 12-CVS-4851, 4853-4859, 4861-4870, 4873-4876, 4916, 5953-5961, 5963, 6321, 6322, 6652, 7721, 8189; 13-CVS-1645, 4506, 6794, 7129; 14-CVS-4803-4806, 4808, 4809, 5702, 5703, 6311; 15-CVS-0301, 0610, 2471-2532, 3208-3231, 4011-4016, 4655-4657, 5447, 5448, 6744, 7770-7772, 7783, 7784; 16-CVS-0274-0276, 0812-0814, 1290, 1292, 1293, 2670-2688, 3083; Superior Court and Guilford County Nos. 14-CVS-10615; 15-CVS-4276-4278, 4799, 6926; Superior Court.

          Hendrick Bryant Nerhood Sanders & Otis, LLP, by Matthew H. Bryant, T. Paul Hendrick, Timothy Nerhood, W. Kirk Sanders, and Kenneth C. Otis III, for plaintiffs-appellees.

          Attorney General Joshua H. Stein, by Special Deputy Attorney General James M. Stanley, Jr.; Teague Campbell Dennis & Gorham, LLP, by Matthew W. Skidmore and Jacob H. Wellman; and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Steven M. Sartorio and William H. Moss, for the North Carolina Department of Transportation, defendant-appellant.

          BERGER, Judge.

         The North Carolina Department of Transportation ("NCDOT") appeals an October 3, 2016 order (the "Order") that addressed three issues in an inverse condemnation action filed by two hundred and eleven plaintiffs in both Forsyth and Guilford Counties against NCDOT seeking just compensation for the regulatory taking effectuated by NCDOT's recordation of a transportation corridor map pursuant to N.C. Gen. Stat. § 136-44.50 to .54 (the "Map Act"). In some instances, the plaintiff's property rights were taken almost two decades ago. The appealed order granted nine plaintiffs' summary judgment motion as directed by our Supreme Court and this Court, partially granted the remaining plaintiffs' motion for judgment on the pleadings, and set forth the rules and procedures by which the trial court would adjudicate the remaining issues of the individual cases.

         To establish grounds for immediate review of the interlocutory order, NCDOT asserts two substantial rights that it alleges would not be fully and adequately protected by appellate review after final judgment. First, NCDOT argues that decisions involving title and area taken in eminent domain proceedings affect a substantial right and are appropriate for immediate review. While this is a substantial right, and may justify interlocutory review, it is a right of one who holds an interest in property, not a right of the condemnor if that condemnor holds no interest. NCDOT has not argued that it holds any interest in the properties at issue in this appeal. Therefore, this ground for interlocutory review must fail.

         Second, NCDOT argues that decisions depriving the State of its right to sovereign immunity affect a substantial right and require immediate review. Again, this is generally a substantial right and could certainly justify our interlocutory review, except that the litigation has progressed well past the point where sovereign immunity could be asserted, as it is a jurisdictional bar to suit against the State. Furthermore, sovereign immunity does not bar suit against the State when the State has exercised its eminent domain power. Therefore, in this instance, sovereign immunity provides no protection for the State, and NCDOT's assertion of sovereign immunity appears to be for no reason but either delay or distraction.

         Because sovereign immunity has generally been held to be a substantial right allowing interlocutory appeal, NCDOT initially introduces its argument attempting to establish grounds for appellate review as one of sovereign immunity. Yet, the substance of its argument quickly shifts to a separation of powers argument in which NCDOT asserts that the judicial branch is barred from ordering the executive branch to expend monies from the state treasury absent an appropriation of the legislative branch. See N.C. Const. art. V, § 7 ("No money shall be drawn from the State treasury but in consequence of appropriations made by law."). However, NCDOT cites no precedent whereby this Constitutional restriction of power creates for it a substantial right that could permit NCDOT interlocutory review.

         "There is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders." Veazey v. Durham, 231 N.C. 357, 363, 57 S.E.2d 377, 382, reh'g denied, 232 N.C. 744, 59 S.E.2d 429 (1950). When the State takes private property for a public use, it must pay just compensation. Sovereign immunity will not relieve it of this restriction on the use of its eminent domain power. Because both grounds given by NCDOT to justify our interlocutory review fail, we dismiss.

         Factual & Procedural Background

          The order NCDOT has herein appealed was entered October 3, 2016. In the order, the trial court followed the instructions of this Court, that reversed a prior order, and the Supreme Court, that affirmed the opinion of this Court. Kirby v. N.C. Dep't of Transp. (Kirby I), 239 N.C.App. 345, 769 S.E.2d 218, appeal dismissed, disc. review allowed, ___ N.C. ___, 775 S.E.2d 829 (2015), aff'd, Kirby v. N.C. Dep't of Transp. (Kirby II), 368 N.C. 847, 786 S.E.2d 919 (2016). Because only procedural aspects of this case have changed since Kirby II, we adopt that opinion's recitation of the pertinent facts:

In 1987 the General Assembly adopted the Roadway Corridor Official Map Act (Map Act). Act of Aug. 7, 1987, ch. 747, sec. 19, 1987 N.C. Sess. Laws 1520, 1538-43 (codified as amended at N.C. G.S. §§ 136-44.50 to -44.54 (2015)); see also N.C. G.S. §§ 105-277.9 to -277.9A, 160A-458.4 (2015). Under the Map Act, once NCDOT files a highway corridor map with the county register of deeds, the Act imposes certain restrictions upon property located within the corridor for an indefinite period of time. N.C. G.S. § 136-44.51. After a corridor map is filed, "no building permit shall be issued for any building or structure or part thereof located within the transportation corridor, nor shall approval of a subdivision, as defined in G.S. 153A-335 and G.S. 160A-376, be granted with respect to property within the transportation corridor." Id. § 136-44.51(a)[.] . . . Despite the restrictions on improvement, development, and subdivision of the affected property, or the tax benefits provided, NCDOT is not obligated to build or complete the highway project.
. . . .
Plaintiffs are landowners whose properties are located within either the Western or Eastern Loops of the Northern Beltway, a highway project planned around Winston-Salem. Plaintiffs allege that the project "has been planned since 1965, and shown on planning maps since at least 1987 with the route determined by the early 1990s."
On 6 October 1997, in accordance with the Map Act, NCDOT recorded a highway transportation corridor map with the Forsyth County Register of Deeds that plotted the Western Loop of the Northern Beltway. Plaintiffs whose properties are located within the Western Loop had all acquired their properties before NCDOT recorded the pertinent corridor map. On 26 November 2008, NCDOT recorded a second map that plotted the Eastern Loop. Plaintiffs whose properties are located within the Eastern Loop had also purchased their properties before NCDOT recorded that corridor map, some as recently as 2006. The parties do not dispute that the Map Act imposed restrictions on property development and division as soon as NCDOT recorded the corridor maps.
The NCDOT has voluntarily purchased at least 454 properties within the beltway through condemnation proceedings, and since July 2010, has continued to purchase property located in the Western and Eastern Loops. In June 2013, NCDOT announced a public hearing regarding modification of the Western Loop boundaries, noting that "[a] 'Protected Corridor' has been identified that includes the areas of the beltway that the Department expects to purchase to build the proposed road." At the hearing an NCDOT official advised that "no funding for the proposed Western Section of the Northern Beltway had been included in the current" budget through 2020 and that there was "no schedule" establishing when construction would start.
From October 2011 to April 2012, following denial of their motion for class certification, Beroth Oil Co. v. NCDOT (Beroth II), 367 N.C. 333, 347, 757 S.E.2d 466, 477 (2014), aff'g in part and vacating in part Beroth Oil Co. v. NCDOT (Beroth I), 220 N.C.App. 419, 725 S.E.2d 651 (2012), plaintiffs filed separate complaints against NCDOT, asserting various, similar constitutional claims related to takings without just compensation, including inverse condemnation. On 31 July 2012, the Chief Justice certified plaintiffs' cases as "exceptional" under Rule 2.1 of the General Rules of Practice for the Superior and District Courts, and the trial court subsequently consolidated plaintiffs into the same group for case management purposes.
The NCDOT timely answered, asserted various affirmative defenses, including, inter alia, lack of standing, and moved to dismiss plaintiffs' claims under Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the North Carolina Rules of Civil Procedure. On 8 January 2013, the trial court entered an order denying NCDOT's motion to dismiss the claim for inverse condemnation.
All parties moved for summary judgment. The trial court first determined that plaintiffs failed to establish a taking, reasoning that "a regulatory taking" by police power only occurs when the legislation "deprive[s] the property of all practical use, or of all reasonable value" (citing and quoting Beroth I, 220 N.C.App. at 436-39, 725 S.E.2d at 661-63), and that the "mere recording of project maps do[es] not constitute a taking" (citing, inter alia, Browning v. N.C. State Highway Comm'n, 263 N.C. 130, 135-36, 139 S.E.2d 227, 230-31 (1964)). Therefore, the trial court concluded the inverse condemnation claim was "not yet ripe" and granted summary judgment for NCDOT, dismissing the claim without prejudice. Plaintiffs appealed the dismissal and summary judgment orders to the Court of Appeals, and NCDOT cross-appealed the same, arguing for dismissal "with prejudice."
The Court of Appeals reversed the dismissal of plaintiffs' inverse condemnation claim. Kirby [I]. The Court of Appeals concluded that, unlike regulations under the police power, which the State deploys to protect the public from injury, "the Map Act is a cost-controlling mechanism, " id. at [363], 769 S.E.2d at 232, that employs the power of eminent domain, allowing NCDOT "to foreshadow which properties will eventually be taken for roadway projects and in turn, decrease the future price the State must pay to obtain those affected parcels, " id. at [363], 769 S.E.2d at 232 (quoting Beroth II, 367 N.C. at 349, 757 S.E.2d at 478 (Newby, J., dissenting in part and concurring in part)). The Court of Appeals determined that the Map Act imposed restrictions on "Plaintiffs' ability to freely improve, develop, and dispose of their own property, " id. at [367], 769 S.E.2d at 235, that "never expire, " id. at [366], 769 S.E.2d at 234 (quoting Beroth II, 367 N.C. at 349, 757 S.E.2d at 478), and that, as a result, the Map Act effectuated a taking of their "elemental [property] rights, " id. at [366], 769 S.E.2d at 234. Therefore, the Court of Appeals concluded that plaintiffs' inverse condemnation claim was ripe and remanded the matter for a "discrete fact-specific inquiry, " id. at [368], 769 S.E.2d at 235 (quoting and discussing Beroth II, 367 N.C. at 343, 757 S.E.2d at 474 (majority opinion)), to determine "the amount of compensation due, " id. at [368], 769 S.E.2d at 236.

Kirby II, 368 N.C. at 848-52, 786 S.E.2d at 921-23 (footnotes omitted).

         The Supreme Court granted NCDOT's petition for discretionary review, and affirmed this Court's opinion in Kirby I. Specifically, the Supreme Court held, inter alia: "The language of the Map Act plainly points to future condemnation of land in the development of corridor highway projects, thus requiring NCDOT to invoke eminent domain." Id. at 854, 786 S.E.2d at 925. "The Map Act's indefinite restraint on fundamental property rights is squarely outside the scope of the police power." Id. at 855, 786 S.E.2d at 925. "Justifying the exercise of governmental power in this way would allow the State to hinder property rights indefinitely for a project that may never be built." Id. "The societal benefits envisioned by the Map Act are not designed primarily to prevent injury or protect the health, safety, and welfare of the public. Furthermore, the provisions of the Map Act that allow landowners relief from the statutory scheme are inadequate to safeguard their constitutionally protected property rights." Id.

         The Supreme Court concluded by stating that:

Through inverse condemnation the owner may recover to the extent of the diminution in his property's value as measured by the difference in the fair market value of the property immediately before and immediately after the taking. Obviously, not every act or happening injurious to the landowner, his property, or his use thereof is compensable. Thus, to pursue a successful inverse condemnation claim, a plaintiff must demonstrate not only a substantial interference with certain property rights but also that the interference caused a decrease in the fair market value of his land as a whole.
By recording the corridor maps at issue here, which restricted plaintiffs' rights to improve, develop, and subdivide their property for an indefinite period of time, NCDOT effectuated a taking of fundamental property rights. On remand, the trier of fact must determine the value of the loss of these fundamental rights by calculating the value of the land before the corridor map was recorded and the value of the land afterward, taking into account all pertinent factors, including the restriction on each plaintiff's fundamental rights, as well as any effect of the reduced ad valorem taxes. Accordingly, the trial court improperly dismissed plaintiffs' inverse condemnation claim.

Id. at 855-56, 786 S.E.2d at 925-26 (citations and internal quotation marks omitted).

         After the case was remanded, the trial court entered the order herein appealed on October 3, 2016, which had followed the instructions given by both Appellate Courts. That order granted Plaintiffs' motion for partial judgment on the pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure, finding a taking of Plaintiffs' fundamental property rights had occurred by inverse condemnation; granted Plaintiffs' partial summary judgment finding a taking; and established the rules and procedures by which NCDOT would file plats, appraise ...


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