EVERETTE E. KIRBY AND WIFE, MARTHA KIRBY; HARRIS TRIAD HOMES, INC.; MICHAEL HENDRIX, AS EXECUTOR OF THE ESTATE OF FRANCES HENDRIX; DARREN ENGELKEMIER; IAN HUTAGALUNG; SYLVIA MAENDL; STEVEN DAVID STEPT; JAMES W. NELSON AND WIFE, PHYLLIS H. NELSON; AND REPUBLIC PROPERTIES, LLC, A NORTH CAROLINA COMPANY (GROUP 1 PLAINTIFFS) v. NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
No. 56PA14-2
IN THE SUPREME COURT OF NORTH CAROLINA
Filed 10 June 2016
368 N.C. 847 (2016)
NEWBY, Justice.
Accordingly, the judgment of the Court of Appeals is reversed as to the issue before this Court on appeal, and the trial court‘s order terminating respondent‘s parental rights is reinstated.
REVERSED.
Eminent Domain—inverse condemnation—Map Act—recordation of highway corridor map—taking without just compensation
The Court of Appeals did not err by reversing the dismissal of plaintiffs’ inverse condemnation claim. The use of the Map Act by defendant Department of Transportation to record the pertinent highway corridor map resulted in a taking of plaintiffs’ property rights without just compensation. 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 and after the corridor map was recorded, 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.
On discretionary review pursuant to
Hendrick Bryant Nerhood Sanders & Otis, LLP, by Matthew H. Bryant, T. Paul Hendrick, Timothy Nerhood, Kenneth C. Otis III, and W. Kirk Sanders, for plaintiff-appellees.
Roy Cooper, Attorney General, by John F. Maddrey, Solicitor General, for defendant-appellant.
Jonathan D. Guze for John Locke Foundation, amicus curiae.
Hansen Law Firm, PLLC, by Jessica O. Wilkie and Joshua D. Hansen; and Van Winkle Law Firm, by Jones P. Byrd, for North Carolina Advocates for Justice, amicus curiae.
Martin & Gifford, PLLC, by G. Wilson Martin, Jr.; and Wait Law, P.L.L.C., by John L. Wait, for North Carolina Association of Realtors, Inc., amicus curiae.
Carlene McNulty for North Carolina Justice Center, amicus curiae.
Elliot Engstrom for Civitas Institute, Center for Law and Freedom; and Mark Miller, pro hac vice, for Pacific Legal Foundation, amici curiae.
Shanklin & Nichols, LLP, by Kenneth A. Shanklin and Matthew A. Nichols, for Wilmington Urban Area Metropolitan Planning Organization, amicus curiae.
In this case we consider whether the use of the Map Act by the North Carolina Department of Transportation (NCDOT) resulted in a taking of certain property rights of plaintiffs without just compensation. Upon NCDOT‘s recording of the highway corridor maps at issue here, the Map Act restricted plaintiffs’ fundamental rights to improve, develop, and subdivide their property for an unlimited period of time. These restraints, coupled with their indefinite nature, constitute a taking of plaintiffs’ elemental property rights by eminent domain. The extent to which plaintiffs may be entitled to just compensation, however, depends upon market valuation of the property before and after the taking. Such determinations must be made on an individual, property-by-property basis. We therefore affirm the decision of the Court of Appeals.
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
Owners whose properties are located within the highway corridor may seek administrative relief from these restrictions by applying for a building permit or subdivision plat approval,
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.1
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),
The Court of Appeals reversed the dismissal of plaintiffs’ inverse condemnation claim. Kirby v. NCDOT, ___ N.C. App. ___, 769 S.E.2d 218, 236 (2015).3 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 ___, 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 ___, 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 ___, 769 S.E.2d at 235, that “never expire,” id. at ___, 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 ___, 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 ___, 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 ___, 769 S.E.2d at 236.
We allowed NCDOT‘s petition for discretionary review. We review orders granting summary judgment and dismissal de novo and “view the allegations as true and the supporting record in the light most favorable to the non-moving party.” E.g., Mangum v. Raleigh Bd. of Adjust., 362 N.C. 640, 644, 669 S.E.2d 279, 283 (2008).
The NCDOT contends that the Map Act is a valid, regulatory exercise of the police power, not the power of eminent domain, and that therefore no taking has occurred. The NCDOT asserts that “cost-cutting” is not the only underlying purpose of the Map Act and, quoting Blades v. City of Raleigh, 280 N.C. 531, 546, 187 S.E.2d 35, 43 (1972), argues that the Act promotes the general welfare of the public “by conserving the values of other properties and encouraging the [ir] most appropriate use.” The NCDOT points to “facilitating orderly and predictable development” with “the least impact on the natural and human environments, and minimizing the number of businesses, homeowners and renters who will have to be relocated when a [highway] project is authorized for right-of-way acquisition and road construction” in support of its contentions. While these policies are laudable, we do not agree that the Map Act is a valid, regulatory exercise of the police power. We concur with the analysis of the Court of Appeals.
The fundamental right to property is as old as our state. See
From the very beginnings of our republic we have jealously guarded against the governmental taking of property. See John Locke, Two Treatises of Government 295 (London, Whitmore & Fenn et al. 1821) (1689) (“The great and chief end, therefore, of men‘s uniting into commonwealths, and putting themselves under government, is the preservation of their property.“); James Madison, Property (1792), reprinted in 6 The Writings of James Madison 101, 102 (Gaillard Hunt ed., 1906) (“Government is instituted to protect property of every sort; as well as that which lies in the various rights of individuals, as that which the term particularly expresses.“). Though our state constitution does not contain “an express constitutional provision against the ‘taking’ or ‘damaging’ of private property for public use” without payment of just compensation, we have long recognized the existence of a constitutional protection against an uncompensated taking and “the fundamental right to just compensation as so grounded in natural law and justice” that it is considered “an integral part of ‘the law of the land’ within the meaning of
Determining if governmental action constitutes a taking depends upon “whether a particular act is an exercise of the police power or of the power of eminent domain.” Barnes v. N.C. State Highway Comm‘n, 257 N.C. 507, 514, 126 S.E.2d 732, 737-38 (1962) (quoting 11 Eugene McQuillin, The Law of Municipal Corporations § 32.27, at 319 (Ray Smith ed., Callaghan & Co. 3d ed. 1950)). Under the police power, the government regulates property to prevent injury to the public. Beroth II, 367 N.C. at 351, 757 S.E.2d at 479 (Newby, J., dissenting in part and concurring in part); City of Durham v. Eno Cotton Mills, 141 N.C. 615, 637, 54 S.E. 453, 461 (1906) (“[T]he right of property . . . [is] enjoyed subject to reasonable regulations . . . .” “The safety of the people is the supreme law . . . .“). Police power regulations must be “enacted in good faith, and ha[ve] appropriate and direct connection with that protection to life, health, and property which each State owes to her citizens.” Eno Cotton Mills, 141 N.C. at 642, 54 S.E. at 462 (quoting Mugler v. Kansas, 123 U.S. 623, 666, 8 S. Ct. 273, 299, 31 L. Ed. 205, 212 (1887)). An exercise of police power outside these bounds may result in a taking. See Responsible Citizens v. City of Asheville, 308 N.C. 255, 261-62, 302 S.E.2d 204, 208-09 (1983).
Under the power of eminent domain, the government takes property for public use because such action is advantageous or beneficial to the public. Beroth II, 367 N.C. at 351, 757 S.E.2d at 479. “[T]he
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. See Coastal Ready-Mix Concrete Co. v. Bd. of Comm‘rs, 299 N.C. 620, 629, 265 S.E.2d 379, 385 (1980) (“The best indicia of [legislative] intent are the language of the statute or ordinance, the spirit of the act and what the act seeks to accomplish.” (citations omitted)). Section 136-44.50 contemplates the filing of “a transportation corridor official map” that has been adopted or amended by a governing board overseeing a “long-range transportation plan,” and “establishment of” an “official map or amendment” triggers the beginning of “environmental impact studies” and “preliminary engineering work.” Sections 136-44.51 to 44.53 provide not only for approval of a building permit or variance but establish procedures for “advanced acquisition of” the property.
The Map Act‘s indefinite restraint on fundamental property rights is squarely outside the scope of the police power. See Eno Cotton Mills, 141 N.C. at 641-42, 54 S.E. at 462. No environmental, development, or relocation concerns arise absent the highway project and the accompanying condemnation itself. See, e.g., Town of Wake Forest v. Medlin, 199 N.C. 83, 85-86, 154 S.E. 29, 30-31 (1930) (providing examples of police power regulations for protection against nuisances). 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. See State v. Vestal, 281 N.C. 517, 523, 189 S.E.2d 152, 157 (1972) (“His property may not be taken . . . without compensation, under the guise of a regulation of his business pursuant to the police power.“). Though the reduction in acquisition costs for highway development properties is a laudable public policy, economic savings are a far cry from the protections from injury contemplated under the police power. See, e.g., Medlin, 199 N.C. at 85-86, 154 S.E. at 30-31. 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.
A taking effectuated by eminent domain does not require “an actual occupation of the land,” but “need only be a substantial interference with elemental rights growing out of the ownership of the property.” Long, 306 N.C. at 198-99, 293 S.E.2d at 109 (citations omitted). These elemental rights are generally considered “an important feature of” the land and, as such, are accounted for within the valuation of the land. See Town of Midland v. Wayne, 368 N.C. 55, 66, 773 S.E.2d 301, 309 (2015) (stating that “development rights” are “an important feature of the condemned land and not a separate, compensable property right“); Brown v. W.T. Weaver Power Co., 140 N.C. 333, 345, 52 S.E. 954, 958-59 (1905) (“The market value of property includes its value for any use to which it may be put.” (citation omitted)); see also Beroth II, 367 N.C. at 343-44, 757 S.E.2d at 474-75 (majority opinion) (discussing various valuation methods).
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.” Long, 306 N.C. at 201, 293 S.E.2d at 110-11 (citations omitted); see
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. See, e.g., Nantahala Power & Light Co. v. Moss, 220 N.C. 200, 205-06, 17 S.E.2d 10, 13-14 (1941) (discussing principles involved in fair market valuation); see also Beroth II, 367 N.C. at 343-44, 757 S.E.2d at 474-75. Accordingly, the trial court improperly dismissed plaintiffs’ inverse condemnation claim. Therefore, we affirm the decision of the Court of Appeals, which reversed the trial court‘s ruling to the contrary and remanded this case for further proceedings as described above.
AFFIRMED.