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North Carolina Department of Transportation v. Laxmi Hotels of Spring Lake, Inc.

Court of Appeals of North Carolina

May 15, 2018

NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, Plaintiff,
v.
LAXMI HOTELS OF SPRING LAKE, INC.; CIENA CAPITAL FUNDING, LLC; and AMERICAN BUSINESS LENDING, INC., Defendants.

          Heard in the Court of Appeals 22 February 2018

          Appeal by plaintiff from order entered 18 April 2017 by Judge Mary Ann Tally in Cumberland County, No. 13 CVS 6416 Superior Court.

          Attorney General Joshua H. Stein, by Assistant Attorney General Alvin W. Keller, Jr. and Assistant Attorney General James Aldean Webster, III, for plaintiff-appellant.

          McCoy Wiggins Cleveland & McLean PLLC, by Richard M. Wiggins, for defendants-appellees.

          ZACHARY, Judge.

         The North Carolina Department of Transportation ("DOT") appeals from the trial court's order granting defendant Laxmi Hotels of Spring Lake's ("Laxmi") 60(b) motion to set aside the parties' Consent Judgment. After careful review, we affirm.

         I. Background

         Laxmi owns real property abutting South Main Street in Spring Lake, upon which it operates a Super 8 Motel franchise ("the Hotel"). DOT intended to acquire a portion of the Hotel's property in order to widen and improve South Main Street. On 8 February 2012, DOT right of way agent Greg Kolat met with Laxmi's president Dev Rajababoo and informed him that DOT would be exercising its power of eminent domain to take a portion of the Hotel's property in order to execute DOT's South Main Street project. Kolat informed Rajababoo that DOT was going to acquire a small portion of the property fronting South Main Street in addition to taking a permanent utility easement along the frontage of the property. According to Kolat's testimony and the DOT Negotiating Diary admitted into evidence, Kolat explained the DOT "acquisition procedure and why it is fair" to Rajababoo.

         DOT maintains that Kolat informed Rajababoo that DOT would also build a retaining wall to run adjacent to South Main Street along the Hotel property; Rajababoo testified that no one from DOT told him about the retaining wall. The appraisal that DOT provided to Rajababoo showed a retaining wall along the property's frontage, but did not indicate the height of the prospective wall. Rajababoo also testified that DOT assured him that the Hotel would not lose any parking spaces as a result of the taking, and the appraisal did not indicate a loss of parking spaces.

         Based on these plans, DOT's initial appraisal reflected a $25, 700 "offer of just compensation" for the taking. On 6 June 2012, Laxmi made a counteroffer of $35, 000. DOT accepted Laxmi's counteroffer; however, Laxmi was unable to obtain the consent of one of its lenders, so the parties did not complete the settlement at that time.

         At some point after accepting Laxmi's counteroffer, DOT made various changes to its South Main Street project plans. These changes were reflected in a modified appraisal summary. The modified appraisal indicated that the right of way would be enlarged, and added a temporary construction easement and a slope easement. DOT provided Laxmi with a copy of the revised offer and appraisal summary, but Laxmi maintains that it was never orally informed by DOT of the change in construction plans. The revised appraisal reflected a settlement offer to Laxmi of $35, 000 as just compensation for the taking, which Laxmi accepted. According to Laxmi, it believed that the increase of DOT's offer to $35, 000 was in response to Laxmi's counteroffer rather than in response to an increase in the scope of the taking. On 23 July 2014, the parties entered into a Consent Judgment in which the parties agreed to settle for $35, 000 as just compensation for the taking. DOT prepared the Consent Judgment.

         Laxmi contends that it did not realize that DOT had changed its project plans until after construction began. The DOT project eliminated several of Laxmi's parking spaces, which caused the Hotel's parking lot to be in violation of local codes. In addition, when the Department completed construction of the retaining wall, the wall was roughly fifteen feet tall, completely blocking the Hotel's visibility from the street. The Hotel, which prior to the taking was fully visible from the main thoroughfares in the area, was, according to Rajababoo, now in a "dungeon." The pictures taken after the construction show the Hotel to be invisible from the main roadways because of the retaining wall.

         DOT maintains that it informed Laxmi of the plan changes by providing Laxmi with copies of the modified appraisal and increased settlement offer. In support of this contention, DOT points to the Consent Judgment, which incorporated by reference the revised project plans. However, the Consent Judgment "states there is a slope easement under a heading entitled 'TEMPORARY CONSTRUCTION EASEMENT, ' but does not mention the height of the retaining wall or the loss of parking spaces."

         In contrast, Rajababoo testified that he was never informed of the changes to the plans regarding the loss of parking spaces or the increased height of the retaining wall. At trial, no one from DOT testified that he or she told Laxmi or Rajababoo that DOT's plans had changed. While the documents that DOT provided to Laxmi mentioned a "retaining wall, " no document, including the modified appraisal summary, referenced a loss of parking spaces. Moreover, while the retaining wall was mentioned, none of the documents indicated how tall that wall would be.

         Rajababoo testified that he first discovered that the Hotel was going to lose parking spaces "[w]hen they were already gone. . . . They just started the work. And one fine day I come to work and all the land is bulldozed, and there's-they are putting in dirt to make a ramp to come in. . . . Nobody had ever approached me for that." Laxmi maintains that "the construction of the wall in front of [the] hotel has severely impacted the value of the hotel . . . and that the taking of the additional parking space from the available usable parking spaces has also severely impacted the value of the hotel." When asked whether Laxmi would have entered into the Consent Judgment if it had been told about the wall or the loss of parking spaces, Rajababoo responded, "Absolutely no way."

         On 15 February 2017, Laxmi filed a motion to set aside the Consent Judgment pursuant to Rule 60(b) of the North Carolina Rules of Civil Procedure. Laxmi's motion alleged that in persuading Laxmi to enter into the Consent Judgment, DOT misrepresented (1) the nature and extent of Laxmi's property that DOT intended to take, and (2) the effect that the taking would ultimately have on "the ability of [Laxmi] to operate or work on the site after the taking."

         A hearing on Laxmi's motion was conducted before the Honorable Mary Ann Tally in Cumberland County Superior Court. Judge Tally determined that Laxmi "reasonably relied upon the representations made by [DOT]" and that Laxmi "was never informed of the loss of parking spaces or the change in the height of the retaining wall placed in front of the Hotel." Based on these facts, Judge Tally concluded that DOT "did not adequately inform [Laxmi] of the extent of the taking of the Hotel property, and did not provide just compensation to the Hotel." Judge Tally concluded that these facts warranted the setting aside of the Consent Judgment pursuant to Rule 60(b)(6) of the North Carolina Rules of Civil Procedure. Accordingly, Judge Tally granted Laxmi's motion and ordered that the case proceed to trial in order to determine the appropriate amount of compensation for the taking. DOT timely appealed.

         On appeal, DOT argues that the trial court erred in setting aside the Consent Judgment (1) because Laxmi's motion was not timely, and (2) because there was no substantive basis to justify overturning the judgment.

         II. Grounds for Appellate Review

         We initially consider whether this Court has jurisdiction to review the trial court's order granting Laxmi's Rule 60(b) motion.

         DOT maintains that this Court has jurisdiction over the trial court's order setting aside the Consent Judgment because the trial court's order "affects a final judgment" pursuant to N.C. Gen. Stat. § 7A-27(b)(1). However, even if we deem DOT's appeal to be interlocutory, DOT asserts that the trial court's order is immediately appealable because it affects a substantial right. Finally, in the event that this Court determines that the trial court's order does not affect a substantial right, DOT has filed a petition for writ of certiorari asking this Court to assert jurisdiction and address the merits of its arguments.

         A. Interlocutory Appeals

         This Court customarily entertains appeals only from final judgments. See N.C. Gen. Stat. § 7A-27(b) (2017). A judgment is final if it "leaves nothing further to be done in the trial court." Campbell v. Campbell, 237 N.C.App. 1, 3, 764 S.E.2d 630, 632 (2014) (citing Steele v. Hauling Co., 260 N.C. 486, 491, 133 S.E.2d 197, 201 (1963)). In contrast, "[a]n order is interlocutory 'if it does not determine the issues but directs some further proceeding preliminary to final decree.' " Waters v. Qualified Personnel, Inc., 294 N.C. 200, 207, 240 S.E.2d 338, 343 (1978) (quoting Greene v. Laboratories, Inc., 254 N.C. 680, 693, 120 S.E.2d 82, 91 (1961)). Because an interlocutory order is not yet final, with few exceptions, "no appeal lies to an appellate court from an interlocutory order or ruling of the trial judge[.]" Consumers Power v. Power Co., 285 N.C. 434, 437, 206 S.E.2d 178, 181 (1974).

         DOT first argues that even though the order setting aside the parties' Consent Judgment was interlocutory, this Court nevertheless "has jurisdiction to review the trial court's order because it set aside a final judgment." This argument is not persuasive. Judge Tally's order set aside the Consent Judgment in order for the parties "to put on evidence at trial . . . to determine the amount of damages to which [Laxmi] is entitled pursuant to the General Statutes of North Carolina." Clearly, as it contemplates further proceedings at the trial level on the issue of just compensation-the crux of the Consent Judgment-Judge Tally's order is interlocutory. See Campbell, 237 N.C.App. at 3, 764 S.E.2d at 632.

         However, notwithstanding its lack of finality, an interlocutory order may be immediately appealed if "the trial court certifies, pursuant to N.C. G.S. § 1A-1, Rule 54(b), that there is no just reason for delay of the appeal, " Turner v. Hammocks Beach Corp., 363 N.C. 555, 558, 681 S.E.2d 770, 773 (2009) (citation omitted), or if the "order deprives the appellant of a substantial right which he would lose if the ruling or order is not reviewed before final judgment." Consumers Power, 285 N.C. at 437, 206 S.E.2d at 181 (citation omitted); N.C. Gen. Stat. § 7A-27(b)(3)(a) (2017). "A substantial right is 'a legal right affecting or involving a matter of substance as distinguished from matters of form: a right materially affecting those interests which one is entitled to have preserved and protected by law: a material right.' " Gilbert v. N.C. State Bar, 363 N.C. 70, 75, 678 S.E.2d 602, 605 (2009) (quoting Oestreicher v. Am. Nat'l Stores, Inc., 290 N.C. 118, 130, 225 S.E.2d 797, 805 (1976)). "We consider whether a right is substantial on a case-by-case basis." Id.

         In the instant case, the trial court did not certify the order setting aside the Consent Judgment for immediate appellate review. Nevertheless, DOT argues that "the trial court's setting aside the consent judgment deprived the Department of a substantial right, i.e., the benefit of its bargain in the court-sanctioned settlement of the case." [PWC p 15] In support of its argument, DOT turns our attention to Turner v. Hammocks Beach Corp. We do not find Turner persuasive in the case at bar.

         In Turner, the defendant had previously "filed a declaratory judgment action seeking to quiet title" to a tract of property which was the subject of a charitable trust. Turner, 363 N.C. at 557, 681 S.E.2d at 773. The plaintiffs contested the quiet title action and the case was set for trial. Id. However, "[p]rior to trial . . ., the parties reached a settlement and signed a consent judgment, which was entered by the trial court[.]" Id. Nearly twenty years later, the plaintiffs brought an action seeking termination of the trust "alleging that fulfillment of the trust terms has become impossible or impracticable[.]" Id. The defendant filed a motion to dismiss the plaintiffs' action on the grounds that the "plaintiffs' rights to the property now in question . . . had already been determined by [a prior] consent judgment and that relitigation is barred by collateral estoppel." Id. The trial court denied the defendant's motion to dismiss, which the defendant argued was immediately appealable because "the denial of a motion to dismiss a claim for relief affects a substantial right when the motion to dismiss makes a colorable assertion that the claim is barred under the doctrine of collateral estoppel." Id. at 558, 681 S.E.2d at 773. Our Supreme Court agreed with the defendant, and explained that "[u]nder the collateral estoppel doctrine, 'parties and parties in privity with them are precluded from retrying fully litigated issues that were decided in any prior determination and were necessary to the prior determination.' " Id. (quoting King v. Grindstaff, 284 N.C. 348, 356, 200 S.E.2d ...


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