in the Court of Appeals 16 November 2017.
by Defendants from Judgment Notwithstanding the Verdict
entered 17 October 2016 by Judge Gary E. Trawick in Dare
County Superior Court. Cross-appeal by Plaintiff from orders
entered 17 December 2014 and 25 August 2015 by Judge Gary E.
Trawick in Dare County No. 11-CVS-304 Superior Court.
Hornthal, Riley, Ellis & Maland, LLP, by Benjamin M.
Gallop and M. H. Hood Ellis, for Plaintiff.
Pruet, by Norman W. Shearin, for Defendants.
appeal, following a jury verdict for property owners and
entry of judgment notwithstanding the verdict
("JNOV"), presents an issue of first impression:
whether a municipality that takes an easement in privately
owned oceanfront property to replenish the beach can avoid
compensating the private property owner by asserting public
trust rights vested in the State. On the record before us, we
hold that the property owner is entitled to compensation as
provided by the eminent domain statute.
hold that the jury's verdict was supported by a scintilla
of evidence and reverse the trial court's entry of JNOV.
But because expert testimony supporting the verdict was
admitted in error, we remand for a new trial.
William W. Richardson and Martha W. Richardson (the
"Richardsons") appeal the entry of JNOV that set
aside a jury verdict of $60, 000.00 compensating them for an
easement taken by the Town of Nags Head (the
"Town") through eminent domain. The Town took the
easement across a portion of the Richardsons' property to
complete a beach nourishment project. In entering the JNOV,
the trial court concluded that the Richardsons were entitled
to no compensation, reasoning that: (1) the land subject to
the easement was encumbered by public trust rights, so the
easement was already implied in favor of the Town to protect
and preserve those public trust rights; and (2) in the event
the easement was not already implied and thus constituted a
compensable taking, the Richardsons failed to introduce
evidence supporting the jury's verdict based on the fair
market value of the temporary easement. The Town
cross-appeals the denial of its motions in limine
seeking to exclude testimony by the Richardsons' expert
witnesses. We reverse both entry of JNOV and denial of the
motions in limine and remand for new trial.
FACTUAL AND PROCEDURAL HISTORY
early 2011, the Town undertook a beach nourishment project
along ten miles of its coastline to combat erosion and
improve flood and hurricane protections. The Town mailed a
notice of condemnation to owners of oceanfront property along
the affected coastline, including the Richardsons. In the
notice, the Town informed private property owners of the
purposes of the project and asked them to grant the Town an
easement across the sand beach portion of their properties.
Specifically, the Town requested the following:
The property on which the Town will need to work lies
waterward of the following locations, whichever is most
waterward: the Vegetation Line; the toe of the Frontal Dune
or Primary Dune; or the Erosion Escarpment of the Frontal
Dune or Primary Dune.
Please be aware that this is not a perpetual
easement; the Town only requests that it have the easement
rights through April 1, 2021.
You will not lose land or access rights if you sign the
easement. We are simply asking for your approval to deposit
sand and work on a specific section of your property on one
or perhaps more occasions, during a ten year period. Except
for the brief periods when construction or repairs are
ongoing, you will still be able to access the beach from your
property and construct a dune walkover . . . .
At the outset of the nourishment project, a survey will be
conducted to establish the existing mean high water line,
which is currently your littoral property line and will
remain your property line after the project. . . . As set
forth on the enclosed Notice, the Town may need to enter the
beach in front of your property.
notice also included this rendering, which identifies the
portion of beach subject to the requested easement and the
Town's understanding of related rights and interests:
the notice stated that the Town would bring a condemnation
action to take, by eminent domain, the easement rights
requested in the notice if no voluntary grant of the easement
Richardsons did not grant the Town the easement rights
requested in the notice and, on 28 March 2011, the Town filed
a condemnation action. The Town sought the following easement
rights (the "Easement Rights") in the
Richardsons' dry-sand beach property lying between the
toe of the dune and the mean high water mark (the
"Easement Area;" together with the Easement Rights
as the "Easement"):
The Town, its agents, successors and assigns may use the
Easement Area to evaluate, survey, inspect, construct,
preserve, patrol, protect, operate, maintain, repair,
rehabilitate, and replace a public beach, a dune system, and
other erosion control and storm damage reduction measures
together with appurtenances thereof, including the right to
perform the following on the property taken:
• deposit sand together with the right of public use and
access over such deposited sand;
• any alterations of contours on said land;
• construct berms and dunes;
• nourish and renourish periodically;
• perform any other work necessary and incident to the
construction, periodic Renourishment and maintenance of the
Town's Beach Nourishment Project . . . .
with the Town's earlier notice, the Easement terminates
on 1 April 2021.
Richardsons filed an answer and motion to dismiss in response
to the complaint. On 20 July 2011, the trial court entered a
consent order denying the Richardsons' motion to dismiss,
vesting title to the Easement in the Town as of the date the
complaint was filed pursuant to Section 40A-42 of our General
Statutes, and continuing all other hearings authorized by
statute until after the Town deposited sand on the beach and
Easement Area as part of the nourishment project. The action
was then designated an exceptional case and assigned for all
purposes to a single superior court judge.
2014, after the nourishment project was completed, Judge Gary
Trawick presided over a hearing pursuant to Section 40A-47 on
all issues other than damages. By order entered 17 December
2014 (the "40A-47 Order"), Judge Trawick decreed
that: (1) the area affected by the taking of the Easement was
the Richardsons' entire lot consisting of 30, 395.2
square feet; (2) the property taken, i.e., the
Easement Area, was approximately 7, 280.54 square feet of
beach lying between the toe of the dune and the mean high
water mark at the time of condemnation; and (3) the rights
taken were those described in the Town's
complaint. Judge Trawick denied a motion by the Town
requesting a ruling that the Easement Area, or any portion of
it, was subject to public trust rights.
damages issue was scheduled for trial before a jury in August
2015. In pre-trial motions, both parties raised the issue of
the public trust doctrine. After reviewing the issue further,
Judge Trawick continued the trial and entered an order
revising the 40A-47 Order (the "Revised 40A-47
Revised 40A-47 Order concluded that the entire Easement Area
was located within the State's "ocean beaches"
as defined in N.C. Gen. Stat. § 77-20(e) (2015), and
therefore was subject to public trust rights as described in
N.C. Gen. Stat. § 1-45.1. The Revised 40A-47 Order provided
both parties with the opportunity to seek new appraisals in
light of Judge Trawick's ruling. Judge Trawick certified
the Revised 40A-47 Order for immediate appeal pursuant to
Rule 54(b) of the North Carolina Rules of Civil Procedure,
but neither party noticed an appeal.
advance of the trial on damages, the Town filed motions
in limine seeking to exclude testimony by two
appraisers hired by the Richardsons, Gregory Bourne
("Mr. Bourne") and Dennis Gruelle ("Mr.
Gruelle"). The trial court prohibited all expert
witnesses from testifying to opinions not disclosed prior to
or at the time of their respective depositions. The trial
court otherwise denied the motions.
trial, Messrs. Bourne and Gruelle provided testimony and
portions of their written appraisal reports were published to
the jury. Mr. Bourne's report and testimony asserted that
the taking had diminished the fair market value of the
remainder of the Richardsons' property by $160, 000. Mr.
Gruelle's report and testimony asserted that the taking
had diminished the value of the remainder of the
Richardsons' property by $233, 000.00.
Bourne testified that, in valuing only the land constituting
the Richardsons' entire lot, he first determined the
"[h]ighest and best use[, which] is that use which you
can physically and possibly build that is legally
permissible, that is financially feasible, and that reflects
the maximum value, that will generate the maximum value of
the property." After determining the best and highest
use of the Richardsons' entire lot to be residential, he
employed sales comparison and cost approaches to reach a
"before [taking] land value [of] $855, 000." After
including the improvements to the property and other
adjustments, Mr. Bourne arrived at a pre-taking value of the
improved lot of $1, 040, 000.
determine the impact of the Easement taking on the fair
market value of the Richardsons' lot, Mr. Bourne reviewed
comparable sales and found an eight percent difference in the
value of oceanfront lots that extended all the way to the
mean high water mark and beachfront lots that stopped short
of the ocean. He made this comparison because, per Section
146-6(f), title to new land seaward of the former mean high
water mark created by the nourishment project would vest in
the State.The Town's use of the Easement,
therefore, affixed the Richardsons' property line at the
former mean high water mark and created a strip of
State-owned land between the Richardsons' property line
and the ocean. After considering damage to the unencumbered
portion of the lot, Mr. Bourne testified that the proper
measure of damages was "[t]he difference between the
before and the after [fair market values of the
Richardsons' property] and I came up with $160,
000." Applying his calculation to the entire lot's
unimproved value of $855, 000, Mr. Bourne "came up with
an after the taking land value, that is the value of the land
now encumbered by this easement for 10 years, of $70,
Richardsons' other appraiser, Mr. Gruelle, testified that
the highest and best use of the Richardsons' lot was
residential and, after comparing sales of similar properties,
concluded that "the value of the site was [$]880, 000. .
. . [$]880, 000 is attributable to the value of the
the $880, 000 value of the entire lot with its highest and
best use as residential property, Mr. Gruelle calculated a
value of $28.95 per square foot. He then multiplied that
number by the total square footage of the Easement Area, 7,
280, and arrived at a total value of $210, 756 for the
Easement Area. Mr. Gruelle estimated that, based on the
Easement Rights taken, the Town's use of the Easement
Area for ten years exploited 90 percent of its land value; as
a result, Mr. Gruelle testified that the value of the
Easement taken was approximately $190, 000. Mr. Gruelle
combined the Easement value with other negative impacts on
the unencumbered property-including the effect on the view
and ease of beach access resulting from the increased height
of the dunes-to which he assigned a value of $43, 000, and
opined that "the total impact of the property is $233,
000. . . . That is the just compensation to leave the
property owner whole."
close of the Richardsons' evidence, the Town moved for
directed verdict. Reasserting the grounds raised in its
motions in limine, the Town argued that Messrs.
Bourne's and Gruelle's valuations were unreliable and
should be stricken; if that evidence were stricken, the
Richardsons would have failed to prove damages, and the Town
would be entitled to a directed verdict. The trial court
denied the motion.
Moody, an expert witness for the Town, provided an opinion on
two distinct fair market values: (1) the difference in fair
market value of the Richardsons' entire lot before the
taking and the remainder after the taking under the
"before and after method;" and (2) the fair market
value of the Easement. Mr. Moody determined the difference in
total market value to be zero and determined the fair market
value of the Easement to be $330. He arrived at the second
number through the "market extraction" method,
whereby he found two comparable vacant oceanfront lot sales,
one encumbered by a permanent easement for beach nourishment
and one unencumbered. Mr. Moody then calculated the
difference in those sale prices, which came out to $1, 000,
and attributed that difference to the presence of the
permanent easement. Because the Easement in this case was for
a ten-year period rather than perpetual in duration, he
reduced the extracted amount by two-thirds and arrived at a
fair market value of $330 for the Town's taking.
Town renewed its earlier motion for directed verdict at the
close of its evidence, and the motion was denied. Following
instruction by Judge Trawick and deliberations, the jury
returned a verdict finding that the fair market value of the
Easement was $60, 000, and the difference in fair market
value of the Richardsons' property pre-taking and the
remainder post-taking was zero. The jury awarded the
Richardsons $60, 000 as the greater value.
Town timely filed a motion for JNOV, arguing, among other
things, that the Richardsons had failed to introduce evidence
showing the fair market value of the Easement. Joined in the
motion for JNOV was a motion for new trial and a motion for
remittitur. Neither motion was ruled on by the trial court.
months later, following a hearing and additional briefing,
Judge Trawick entered JNOV in favor of the Town, declaring
that the Richardsons should recover nothing. Judge Trawick
identified two bases for his ruling: (1) there was no
compensable taking, as the Town already possessed an easement
by implication to protect and preserve the State's ocean
beaches by virtue of the State's public trust rights; and
(2) in the event there was a compensable taking, there was no
evidence from which the jury could find a fair market value
of the Easement,  so the only available calculation of
damages was the "before and after" value of the
unencumbered property. Because the jury found that value to
be $0, that was the proper amount of damages.
Richardsons appealed the JNOV; the Town cross-appealed the
40A-47 Order and Judge Trawick's ...