Be sure to check out the North Carolina Court of Appeals’ recent opinion in LDI Shallotte 197 Holdings, LLC v. North Carolina, No. COA24-443 (Jan. 21, 2026), where the court held the plaintiff’s allegation that a two-year delay in the State issuing a permit adequately pleaded a temporary taking claim. The court reversed the dismissal of the complaint.

The question of whether a permitting authority’s delay in approving or denying some entitlement can be deemed to be “normal planning delay” (not a taking), or a temporary taking, has been on our radar screens since at least First English. There, the Court noted:

Agins likewise rejected a claim that the city’s preliminary activities constituted a taking, saying that “[m]ere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are ‘incidents of ownership.'” See 447 U.S. at 447 U. S. 263, n. 9. But these cases merely stand for the unexceptional proposition that the valuation of property which has been taken must be calculated as of the time of the taking, and that depreciation in value of the property by reason of preliminary activity is not chargeable to the government. Thus, in Agins, we concluded that the preliminary activity did not work a taking. It would require a considerable extension of these decisions to say that no compensable regulatory taking may occur until a challenged ordinance has ultimately been held invalid.

482 U.S. at 321.

In LDI Shalolotte, the NC Department of Environmental Quality’s refusal to issue a stormwater permit (more accurately to renew an existing permit held by the property’s prior owner) to the owner. Reading the owner-agency communications about the application detailed at pages 3-5 of the slip opinion should be very familiar to you land users versed in the back-and-forth that goes on between regulators and the regulated. Bottom line is that the agency refused to consider the application until some outstanding notice of violations were resolved.

Eventually, the administrative process resulted in a hearings officer agreeing with the owner that the State should have considered renewing the permit. Slip op. at 6. The State appealed to a trial court, which ultimately dismissed the petition. “Defendant eventually processed Plaintiff’s application and issued a new stormwater permit for the Property on or about 1 August 2023, approximately six months after the trial court dismissed Defendant’s petition for judicial review.” Slip op. at 7. That took the two years noted above.

Next, the owner filed a state court lawsuit against the state, “asserting claims for inverse condemnation, unconstitutional taking, denial of substantive due process, and denial of procedural due process. In addition to damages, Plaintiff requested certain declaratory relief. ” Id. The trial court dismissed the complaint for failure to state a claim.

The court of appeals reversed, concluding that the complaint:

[S]ufficiently alleged claims for inverse condemnation and unconstitutional taking because it set forth facts … demonstrating that Defendant’s refusal to consider Plaintiff’s application for a stormwater permit until Plaintiff resolved the NOVs resulted in Plaintiff being deprived of all economically beneficial or productive use of the Property for approximately two years.

Slip op. at 9.

The court first rejected the State’s claim that the owner doesn’t own private property. You know this argument (it finds its origins in due process analysis): the government claims that the owner doesn’t have a right to whatever permit the owner is seeking, and thus there’s no taking because, ha ha, you don’t own property. As we’ve argued before, the private property question is not the same in takings as the property question in due process, and it should be enough that the plaintiff owns, you know, the fee simple, or the development rights, or some other similar property interest.

The court didn’t go down that path, but instead treated this as a ripeness issue:

Here, Plaintiff’s takings claim, like those in Cary Creek and Messer, is regulatory in nature. Plaintiff’s claim, however, does not concern the validity of a land-use regulation. Instead, Plaintiff attacks Defendant’s regulatory action, or inaction, in applying certain land-use regulations. Because Plaintiff challenges a regulatory action rather than a regulation itself, a “final determination,” or “final deprivation” as characterized by Defendant, is not required in this context as there are no questions regarding whether a particular land-use regulation will impact the Property. See Messer, 125 N.C. at 61, 479 S.E.2d at 223. To the contrary, Plaintiff’s claim sounds in the adverse effects of Defendant unjustifiably withholding review of Plaintiff’s application for a stormwater permit. Because Plaintiff’s allegations are ripe for review, Cary Creek and Messer are distinguishable.

Slip op. at 12-13. The court held, “we are not persuaded by Defendant’s argument that Plaintiff was precluded from asserting a takings claim because Defendant never formally denied Plaintiff’s request for a stormwater permit. Indeed, Defendant eventually processed Plaintiff’s application and issued a new stormwater permit following the ALJ’s Final Decision, but the question remains as to whether Plaintiff is entitled to compensation for the two-year period in which Defendant refused to process Plaintiff’s application for a stormwater permit.”

Slip op. at 13-14.

On the merits of whether the complaint adequately alleged a temporary taking, the court concluded that North Carolina applies its Law of the Land Clause to require the same or similar to the Fifth Amendment. See City of Charlotte v. Combs, 216 N.C. App. 258, 261, 719 S.E.2d 59, 62 (2011) (A temporary taking occurs where a landowner is denied all use of his property for a finite period and “requires just compensation for the use of the land during the period of the taking.”). The court held that there isn’t some automatic get of of takings free card, but that, if true, the factual allegations made in the complaint deserve their day in court:

Plaintiff’s allegations were sufficient to allege a temporary regulatory taking as the Complaint sufficiently describes the conduct at issue, explains the conduct was not a proper exercise of the police power, and alleges a denial of the full use of its Property for the relevant time frame. At the motion to dismiss stage, taking all of Plaintiffs allegations as true, Plaintiff sufficiently alleged an unconstitutional temporary taking and a claim for inverse condemnation.

Slip op. at 16.

We think the court got this right, and other courts should follow a similar approach.

LDI Shallotte 197 Holdings, LLC v. North Carolina, No. COA24-443 (N.C. App. Jan. 21, 2026)