United States District Court, W.D. North Carolina, Asheville Division
RED SQUARE PROPERTIES, LLC, a North Carolina Limited Liability Company, Plaintiff,
TOWN OF WAYNESVILLE, NORTH CAROLINA, a North Carolina municipality, and ELIZABETH TEAGUE in her official capacity, Defendants.
MEMORANDUM AND RECOMMENDATION
CARLETON METCALF UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on Defendants' Motion to
Dismiss (Doc. 24), which has been referred to the undersigned
pursuant to 28 U.S.C. § 636(b)(1)(B). Having carefully
considered the arguments, the record, and applicable
authority, the undersigned respectfully recommends that the
Motion be granted.
initiated this action on July 26, 2018, see (Doc.
1), asserting claims against the Town of Waynesville, North
Carolina (“Town”) and the Town's Development
Services Director, Elizabeth Teague (“Teague”),
both in her individual and official capacities.
Town and Teague, in her official capacity, filed their Answer
(Doc. 17) on August 30, 2018.
subsequently dismissed its claims against Teague in her
individual capacity (Doc. 21).
September 24, 2018, the parties filed a certification of
initial attorneys' conference and discovery plan (Doc.
22). A Pretrial Order and Case Management Plan (Doc. 23) was
entered the next day.
October 12, 2018, Defendants filed the instant Motion to
Dismiss (Doc. 24) and a supporting Memorandum of Law (Doc.
25). Plaintiff later filed a Memorandum in Opposition (Doc.
27), to which Defendants replied (Doc. 28).
material facts as alleged in Plaintiff's Complaint are as
This case involves two houses - one located at 73 Hunters
Crossing Ridge (“73 Hunters Crossing”) and one
located at 75 Hunters Crossing Ridge (“75 Hunters
Crossing”). Compl. (Doc. 1) ¶ 8 (collectively
“Houses”). Both Houses were built in 1995 and are
located in a subdivision formerly known as Hunters Crossing
Ridge. Id. ¶ 9. At all relevant times, the
Houses have been outside the legal corporate limits of the
Town but within one mile of the Town's limits and
therefore in an area over which the Town exercises
extraterritorial jurisdiction. Compl. (Doc. 1) ¶ 10. The
Town enforces its zoning ordinances and its building and
construction codes in this area. Id. ¶ 11.
2005, 73 Hunters Crossing was owned by Elaine Kuhl
(“Kuhl”) and 75 Hunters Crossing was owned by
Jeff Coghill and his wife (the “Coghills”).
Id. ¶ 12. Neither Kuhl nor the Coghills had any
connection with Plaintiff. Id.
2005, a Town water line that served an unrelated house up the
mountain from the Houses experienced a major leak involving
“several hundred thousand gallons.” Id.
¶ 13. The water damaged the foundations of the Houses.
Id. The water line was shut down and will never be
used again. Id.
water leak also caused movement in the slope where the Houses
are located, though “upon information and belief”
once the leak stopped, the slope returned to a stable
condition. Id. ¶ 14.
the damage from the water leak, Kuhl and the Coghills vacated
the Houses. Id. ¶ 15. Additionally, after
receiving “pessimistic engineering evaluations, ”
and perhaps in order to have existing mortgage debt on the
properties forgiven, the owners sought to have the Houses
condemned by the Town. Id.
owners' request was accommodated and, on September 27,
2006, the Town's Code Enforcement Official at the time,
Jason R. Rogers (“Rogers”), held hearings
regarding the condition of the Houses. Id. ¶
16. Neither the Coghills nor Kuhl opposed the hearings and,
according to the Town's records, no one attended the
hearings, which both lasted ten minutes. Id.
letters dated November 7, 2006, Rogers advised Kuhl and the
Coghills that he was condemning the Houses. Id.
Town sent a notice that the structures were unsafe and
ordered Kuhl and the Coghills to demolish them on or before
January 16, 2007. Id. ¶ 17.
condemnation orders, however, were not recorded in the Office
of the Register of Deeds for Haywood County. Id.
¶ 18. In addition, no notices of the orders, or any
notices about the status of the properties, were posted at
the Houses. Id. ¶ 19.
the Town took no further action and Kuhl and the Coghills
took no action to demolish the Houses. Id. ¶
2007, Plaintiff purchased other homes directly across the
street from 73 Hunters Crossing and 75 Hunters Crossing and
used those other homes as short-term rentals. Id.
2008, Plaintiff grew concerned about 73 Hunters Crossing and
75 Hunters Crossing because they were being vandalized and
trespassers were parking in the driveway and entering the
structures at night, which created concerns for
Plaintiff's guests. Id. ¶ 23. Plaintiff
requested that the Town take action to resolve the existing
nuisance that was caused by the abandoned Houses, but the
Town did not respond or act. Id. ¶¶ 24-25.
by Plaintiff to contact Kuhl and the Coghills and the lenders
that held deeds of trust on the Houses were similarly
unsuccessful. Id. ¶¶ 26-27.
then decided to address the issue itself by taking control of
the Houses, and therefore requested that the Haywood County
Tax Department (“Tax Department”) foreclose on
the Houses for unpaid real property taxes. Id.
¶¶ 28-29. The Tax Department agreed after Plaintiff
gave assurances that the Tax Department's attorney's
fees involved in the foreclosure would be covered by the bid.
Id. ¶ 30.
foreclosure sale occurred, and Plaintiff was the highest
bidder, acquiring title to the Houses on April 20, 2016.
Id. ¶¶ 31-32.
inspected the Houses and found that they were in surprisingly
good condition. Id. ¶ 33. Plaintiff then
proceeded to repair and renovate the Houses. Id.
Plaintiff did most of the work itself and did not get a
general building permit for much of the work, though
Plaintiff did hire a licensed contractor to install new
heating and air conditioning units, based on the belief that
the contractor would obtain permits and have the work
inspected. Id. ¶¶ 33-34.
repair and renovation work commenced in the Spring of 2016
and was completed in about a year. Id. ¶ 35.
May of 2017, Plaintiff put the Houses into use as short-term
rental properties. Id. ¶ 36.
September 28, 2017, Plaintiff received a letter from a
construction code enforcement official for the Town advising
that the Town needed to “verify that the properties (73
and 75 Hunters Crossing Ridge) are in compliance with State
and local fire and building safety codes.” Id.
hired an architect and engineers to respond to the Town and
to satisfy all building code requirements. Id.
¶ 38. Plaintiff also agreed not to occupy the Houses
until the building code requirements were satisfied.
Id. ¶ 39.
response, the Town threatened to cut water lines and order
Duke Energy to cut electric power service to the Houses, and
in October of 2017, power to the Houses was cut, and has not
been restored, such that the Houses are unused. Id.
structural engineer opined that the Houses were structurally
sound, safe for occupancy, and not in imminent danger of
failing. Plaintiff's geo-technical engineer concluded
that the slope was stable and recommended continual
monitoring. Id. ¶ 40.
November 2017, Plaintiff met with Teague and the Town's
construction code enforcement officials. Id. ¶
41. The Town and Teague agreed that Plaintiff would apply for
building permits and hire licensed contractors to do any ...