The latest in the "Map Act" inverse cases out of North Carolina. This is a longer post, but you really will want to read the summary, or just pick up the opinion and read it.
These are the cases in which the N.C. Department of Transportation, under the power of the state's Map Act, for decades has designated private property for future acquisition for highway corridors, which prevented present use and development, but hasn't bothered to actually take the properties.
Hundreds of property owners sued in inverse condemnation (the North Carolina Supreme Court denied class action status). More on the issue and the N.C. Supreme Court's landmark opinion in Kirby v. N.C. DOT, which concluded the properties' designation was a taking, here. The cases were remanded for trials for what should have been compensation and damages calculations, but the DOT instead sought to reboot the cases, and argued on remand that there hadn't been a taking (even though the Supreme Court in Kirby pretty plainly held there had been).
The latest is the North Carolina Court of Appeals' opinion in Beroth Oil Co. v. North Carolina Dep't of Transportation, No. COA-17-74 (Nov. 21, 2017). There, the trial court granted the owners judgment on several key issues:
That order granted Plaintiffs’ motion for partial judgment on the pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure, finding a taking of Plaintiffs’ fundamental property rights had occurred by inverse condemnation; granted Plaintiffs’ partial summary judgment finding a taking; and established the rules and procedures by which NCDOT would file plats, appraise Plaintiffs’ properties, deposit just compensation, as well as any hearing or trial schedules and procedures as may be required moving forward.
Slip op. at 12.
The DOT sought an immediate interlocutory appeal, and the issue before the court was whether it should undertake appellate review even though the trial court had not yet resolved all of the issues in the case. Things like compensation and damages. The DOT raised two reasons why the court should review it now, each based on North Carolina's "substantial right" test: (1) when title is taken, North Carolina's appellate courts grant immediate review; (2) this case involves the State's sovereign immunity, and because the DOT can't be sued, the court should hear the appeal now.
The Court of Appeals disagreed with both contentions.
First, it held that the "taken title" rule only allows property owners to seek immediate appellate review, not the condemnor. Slip op. at 15-16 ("However, this substantial right accrues only to one who holds an interest in the subject property of the eminent domain proceeding, if title to the interest is contested, or to a party who contends that the area taken is different from that identified by the condemnor on the map or plat of the land taken filed by the condemnor pursuant to Article 9 of Chapter 136."). The taker doesn't have any substantial rights at stake:
The government authority effectuating the taking has no substantial right justifying interlocutory review of an order concerning title or area taken unless and until that condemnor has filed a map or plat pursuant to Article 9 identifying the property subject to eminent domain proceedings and condemnation.
Slip op. at 16.
The most interesting part of the opinion is the court's rejection of the DOT's second argument on sovereign immunity starting on page 18 of the slip opinion. There, the court concluded that the state's sovereign immunity "must be juxtaposed with the contrary sovereignty of the individual, whose natural rights preceded government and were enumerated in the federal Bill of Rights and our own State Constitution’s Declaration of Rights." Slip op. at 19. Rather than us cutting-and-pasting the good stuff in the passages which follow, go read the opinion from page 19-21.
Applying these principles, the court held that property owners have a statutory and constitutional right to just compensation if their property has been taken, and thus the State has "implicitly waived sovereign immunity." Slip op. at 21. But, the DOT argued, these property owners don't have a right to compensation because we haven't taken their property because we haven't formally condemned their land by filing a declaration of taking. The court rejected that circular and syllogistic argument, concluding that it was enough that the DOT had filed corridor maps under the Map Act, which placed development and use restrictions on the plaintiffs. Besides, the Supreme Court already said there was a taking:
In its pleadings filed prior to July 15, 2015, NCDOT consistently admitted that it had filed transportation corridor maps for the Northern Beltway, that the filing of the maps placed restrictions upon the properties located within the corridor’s borders, and that the property of the particular plaintiff to whose complaint NCDOT was responding was within the corridor’s borders. As our Supreme Court held, “[t]hese restraints, coupled with their indefinite nature, constitute a taking of plaintiffs’ elemental property rights by eminent domain.” Kirby II, 368 N.C. at 848, 786 S.E.2d at 921.
Slip op. at 23.
Not willing to take this lying down on remand even after what looked like pretty clear direction from the Supreme Court, the DOT kept arguing no taking. The trial court rejected this approach, concluding that the DOT was judicially estopped from, as the court called it "blow[ing] hot and cold in the same breath." Slip op. at 24. [Sidebar: its bad enough when private litigants bounce all over the place, but it's truly embarrassing when condemnors (who have a duty to seek justice and pay full compensation) do this kind of stuff.]
The court of appeals was having none of it:
Before July 15, 2015, NCDOT admitted in its pleadings Plaintiffs’ allegations that it had recorded the highway corridor map and that this recordation placed restrictions on Plaintiffs’ fundamental property rights for an unlimited period of time. It was this set of facts that established for our Supreme Court that a taking had occurred. See Kirby II, 368 N.C. 847, 786 S.E.2d 919. Pleadings filed after July 15, 2015 denied the allegations of these facts, which makes NCDOT’s subsequent position ‘clearly inconsistent’ with its former position. Additionally, NCDOT’s prior position was accepted by the courts to such an extent that, when this litigation was previously before our Supreme Court, that Court used these facts as the structure under which it found a taking had occurred. Judicial acceptance of NCDOT’s latter inconsistent position does pose a threat to judicial integrity in that it could lead to inconsistent court determinations or the perception that either the first or the second court was misled.
Slip op. at 25-26. Bottom line: the DOT's admission that it recorded the maps, coupled with the Supreme Court's ruling, means that the DOT has admitted it has taken the plaintiffs property. Thus, no sovereign immunity. Thus, no immediate appellate review.
The court also rejected the DOT's argument that separation of powers prohibits a court from ordering the executive branch to make deposits of estimated compensation. No deal held the court: you have taken property, and you have a duty to pay for it. The court concluded by musing that if the DOT was concerned with all this and didn't want to be told by the courts that it has to pay, then it should have thought about it more deeply before it started recording against the properties and limiting their use and development. The DOT can choose which properties to designate and when to do it without any interference from the judiciary, but once it does so, it must live with the consequences imposed by the courts when the executive itself won't do its duty:
The State’s judiciary provides the avenue by which the amount of compensation here will be fixed. While there will be a high monetary price, and conceivably a political price as well, once NCDOT pays just compensation for exercising its eminent domain power, perhaps this will force NCDOT to respect the rights of our individual citizens and not restrict their rights without the ability or willingness to pay.
Slip op. at 29.
Will the DOT get the message and stop digging its heels in, or will it try to take it further up the chain to the N.C. Supreme Court?
Given the DOT's approach thus far, we're betting on the latter. Too bad. In our view, these property owners have suffered long enough.
Beroth Oil Co. v. North Carolina Dep't of Transportation, No. COA17-74 (Nov. 21, 2017)
