Members of the land use bar and city/county planning communities have anxiously awaited the N.C. Supreme Court’s review of Hest Technologies v. State of North Carolina involving what is popularly called video poker or video sweepstakes.  The case was appealed from the Court of Appeals, which found such displays to be protected speech.

             Full and complete disclosure: My law firm has represented and did represent Hest Technologies in this case, although I personally was not involved.  Nor am I my law firm’s spokesman on this matter.  Therefore, I’ll only provide a couple of comments that have nothing to do with the Court’s reasoning.

             If you’ve followed this in the press, video sweepstakes have been targeted for different reasons by citizens who lean both left and right of center.  Those who lean right on social issues (as opposed to rightward on property rights issues) perceive it to be gambling.  Those who lean left see it as an undesirable use which should not be allowed in certain communities or neighborhoods.  To them, it is a zoning and land use issue, and they look to government to ban or limit their allowed locations.

             The statute that was challenged, however, was not a land use statute but a statute which made video sweepstakes a criminal offense.

             The case was authored by Justice Robin Hudson who, by most folks’ assessment, does not lean to the political right.  And whether you lean left or right, most court observers will tell you she’s one of the smartest lawyers to don a judge’s robe in the past few decades. The case is worth reading if only to see how she opened the opinion to set the stage for the Court’s decision.

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             On the same day the N.C. Supreme Court supported a developer’s need for a driveway permit over NCDOT’s whimsical requirement that the developer first build a $3 million bridge to carry traffic from 60 homes, the High Court issued yet another opinion supporting private property rights in an inverse condemnation case brought in Guilford County.

             The second case, discussed below, involved governmental impoundment of water for Randleman Reservoir to the detriment of downstream hydroelectric companies whose property was diminished by loss of certain riparian rights to water flow in the Deep River. 

             The science here is easy to explain: a hydroelectric power plant, by definition, requires water to generate electricity.  Take away the water and you cripple the plant’s ability to generate electricity. 

             Technically, the Supreme Court did not write an opinion.  Rather, it granted discretionary review to Piedmont Triad Regional Water Authority (PTRWA) after PTRWA lost in the Court of Appeals.  After reading briefs and hearing arguments, the Court merely stated “Discretionary review improvidently granted,” leaving the COA opinion to stand.  Here is the link to the now-binding COA opinion in L&S Water Power, et. al. v. PTRWA.

             Sidebar: My first argument before the N.C. Supreme Court was defending a COA victory in Ball v. Randolph County. I wasn’t asked a single question by a single justice and left feeling empty.  The Court’s decision was that review was “improvidently granted.”  But a win is a win.  You need the wins to balance the times when fortune smiles at opposing parties instead. If you’re in the game long enough, wins and losses will be many. End sidebar.

 The Facts

             Randleman Reservoir was planned and built to serve the long-term water needs of Greensboro, High Point, Jamestown, Archdale and Randleman.  It is a good project and sorely needed.

             Each time PTRWA took somebody’s farm or home so their land could be flooded, it had to pay them just compensation, a specific requirement of the Fifth Amendment of the U.S. Constitution.

             When PTRWA filled up Randleman Reservoir it diverted 30.5 million gallons a day from the Deep River Basin.  Of course, it had to get the Environmental Management Commission’s permission to do it.  Plaintiffs claimed that the loss of 30.5 million gallons per day had a detrimental effect on their power plants.  They sued PTRWA in an inverse condemnation action claiming that their riparian rights were taken away by governmental action and that they deserved compensation.

             PTRWA claimed two things of note: (1) that because it had been granted regulatory permission to divert water away from the Deep River it had no duty to compensate the plant owners; and (2) the plant owners had no property interests in the water.

 The Law

             “Riparian rights are vested property rights that arise out of ownership of land bounded or traversed by navigable water.”  For example, a beef cattle farmer (like my dad) has riparian rights to serve his cattle from the creeks and one river that naturally flow across his farm.

             In most states water can be diverted from its natural course.  However, if the diversion is unreasonable and causes substantial damage to downstream owners, then the downstream owners must be compensated.

 The Opinion

             The Court of Appeals   held that being granted regulatory permission to exercise eminent domain does not relieve a government of its “constitutional mandate to compensate those whose property is taken.”

             “The EMC certificate [to divert water to another basin] only authorizes the defendant the right to exercise eminent domain by diverting waters and does not concern plaintiffs’ right to compensation.”

             Perhaps more importantly, the reasonable use rule, the Court said, applied only to private owners who divert water.  “Where the interference with surface waters is effected by [a governmental] entity, the principle of reasonable use . . . is superseded by the constitutional mandate that ‘[w]hen private property is taken for public use, just compensation must be paid.’”

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            This past week the N.C. Supreme Court issued a long-awaited opinion in which basic property rights prevailed over a state agency with seemingly unlimited authority. The case is High Rock Lake Partners v. NCDOT.  Justice Paul Newby’s concise opinion is easy to follow and worth the read.

 The Facts

             High Rock Lake Partners’ predecessor purchased 188 acres on an attractive peninsula jutting into High Rock Lake in Davidson County.  To get on or off the peninsula you had to cross railroad tracks that separated the peninsula from the world beyond. The tracks were ¼ mile from the would-be subdivision’s entrance. 

             NCDOT, which already has broad powers to control most aspects of the state highway system, agreed to give the developer a driveway permit as long as the developer got permission from both Norfolk Southern and N.C. Railroad (which already had said “no”) AND built a bridge over the tracks (estimated to cost at least $3 million) to handle the traffic from the 60 planned homes.  To quote humorist Dave Barry, “I am NOT making this up.”

             Initially the DOT District Engineer just denied the permit because the railroads protested.  The developer appealed that decision to the Division Engineer, who granted the permit but added the conditions that (1) the developer had to widen the railroad crossing by ten feet (2) acquire the necessary right of way (3) obtain all licenses and approvals from NCRR and NSR and (4) substantially widen one-quarter mile of the state road on the subdivision side of the tracks.

             The developer then appealed to the “Driveway Permit Appeals Committee,” arguing that NCDOT lacked statutory authority to make these demands.  The Appeals Committee upheld the Division Engineer.  Rather than give up, the developer – whose legal counsel had an unwavering belief that such demands were beyond statutory authority – pursued the case into superior court, where, again, NCDOT prevailed.

             The developer then appealed to the Court of Appeals, which upheld the superior court.  But they believed they were right and refused to give up.  The developer petitioned the Supreme Court for permission to climb the last rung of the judicial ladder. Permission was granted.

             For more detailed facts and commentary on why the Court of Appeals opinion was in error, you can read my previous blog post, which was aptly titled “At the Intersection of Arrogance and Unbridled Power.” (Railroads = arrogance; NCDOT = unbridled power). And also this post, titled “On Leviathan’s Trail.”

             In short, my complaint with the COA opinion was this: when statutes provide both general and specific powers to engage in a certain activity, the specific delegation of power controls. Ignoring an honored canon of statutory construction, the COA chose the general power, proclaiming that NCDOT “shall exercise complete and permanent control over such roads and highways.” (The COA opinion’s italics, not mine).

             Wrong choice, said the Supreme Court this past Friday.

 The Supreme Court Opinion

             Justice Newby described NCDOT’s broad powers but stated “The DOT is not, however, omnipotent; our General Assembly has extensively defined and limited DOT’s authority through the enactment of numerous other statutes.”

            He also wrote that the Driveway Permit Statute was written to balance an owner’s right of access and the public’s interest in a safe highway system (Quoting a 1964 case: “The owner of land abutting a highway has a right beyond that which is enjoyed by the general public, a special right of easement in the highway for access purposes.”)

             The Court had limited patience (as I did) with the Court of Appeals’ decision to elevate the Driveway Statute’s general power provision over the section where the delegation of power was specifically enumerated.  Rather, it looked at the clear language of the specific delegation and held that this section did not authorize NCDOT to mandate substantial offsite improvements and require the applicant to seek the permission from a third party whose discretion was not checked by any governmental agency and who was free to make arbitrary decisions in the extension or withholding of its permission.

            “To do otherwise would harm the common law property rights that this Court has a duty to protect,” said the Court.

             “In conclusion, the Driveway Permit Statute is a narrow grant of power under which NCDOT may regulate only certain aspects of driveway connections and require applicants to complete only certain improvements.  The conditions placed on High Rock’s driveway permit are not authorized under the plain language of that statute.  Thus we hold that DOT exceeded its statutory authority.  Accordingly, the decision of the Court of Appeals is reversed . . .”

             When I announced in this blog that the Supreme Court had agreed to hear this case, I said this:

        “If the decision is broadly written, this case could delineate what the NCDOT’s statutory powers are and are not.  If narrowly written, the case’s impact could be limited to the parties and controversy before the Court.  In either case, few issues are more important to a democratic society than the limits we place on governmental powers.”

            I appreciate Justice Newby’s chastisement of the unlimited powers bestowed upon NCDOT by the Court of Appeals panel below: “not omnipotent.” How often must we relearn the same lesson: the unchecked power of government anywhere and by anybody can and will be abused?

 Prediction:  Because this opinion was broadly written, you will soon see this case cited many times in a variety of contexts as citizens battle governmental agencies over the use of statutory powers.

             Sidebar: A special comment for the many non-attorneys who have become regular readers of this blog.  This opinion is a textbook example of clear, concise and logical legal writing.  My third time through I read it solely to study the prose.  End sidebar.

 Who Has to Pay the Lawyer?

             Litigation isn’t about debating abstract principles of law, although such occurs in the process.  Litigation is an expensive, time-consuming and often grueling way to resolve disputes that have no other resolution. In this case, the high court did High Rock Lake Partners a favor.  It found that NCDOT violated the “plain language” of the statute. 

             Why is that important? Because G.S. 6-19.1 opens a pathway back into court for the prevailing party in an agency appeal to request attorneys fees.  Under the statute, the fees must be paid from the agency’s operating budget, and this is only fair.  Citizens have to dig deep into personal fortunes to cover the costs of litigation.  Agency heads deciding whether to appeal have no disincentive.  Their attorneys’ fees are paid for by you and me.

             I assume High Rock Lake Partners will seek full reimbursement. Its attorney, Craig Justus, did an outstanding job. 

 Postscript – How Did this Case Reach the N.C. Supreme Court?

             No litigant can appeal to the highest court just because he, she or it wants to. Getting there requires a combination of good lawyering, a client with patience and an ability to pay legal fees, an interesting case that lower courts have handled questionably, and luck.

             Let’s focus for a moment on where High Rock Lake Partners was lucky.

             Appellants who lose in the Court of Appeals on a split (2-1) decision can appeal to the N.C. Supreme Court by right.  But if the COA three-judge panel is unanimous, then the appellant must seek permission to be heard by the high court through what is called a “petition for discretionary review.”  And the Supreme Court is quite stingy on which cases it decides to hear.

             Petitions for Discretionary Review are randomly assigned to each of the Court’s six associate justices.  Each justice reads the assigned petition, determines whether it meets specific statutory criteria for a second appellate review, and returns to the Court to make a case for which decisions need further consideration. 

             In this case, by luck, the justice who received the random assignment was Barbara Jackson.  Justice Jackson has a real estate background and has already authored several opinions as a COA judge and Supreme Court justice establishing her as anything but an apologist for broad and expansive governmental power.  Two cases come quickly to mind, both involving APFOs (Union Landowners and Lanvale, which I promise I will eventually write about).

             If you enter Justice Jackson’s courtroom representing a governmental entity whose authority has been challenged, you can rely on her to ask you a simple and polite question: “can you please show me where the legislature granted this power?”

             I’ve never been privy to internal court memos or discussions involving discretionary review.  But I am sure that there was a point in that process when Justice Jackson explained to her colleagues why they should review this case further.

 And a Post-Post Script

             Before publishing this post I spent my early Sunday morning communicating with editors of the Land Use Law Quarterly about an article that discusses the “free use of land” principle adopted in many cases (including this one).  Summarized, the principle is this: if the ordinance is ambiguous, you interpret it in favor of the free use of property.

             In my email this morning, I noted that this theory had origins in decades when most counties were not zoned and we were just getting used to zoning in cities. If you read High Rock, you’ll notice that the cases Justice Newby cites which discuss this principle are early 20th century cases.

             I also added this point in my morning’s email, and it’s a point I don’t recall seeing in a published opinion. Before a court adopts a “free use of land” posture, the plaintiff must first establish a plausible argument that the statute or ordinance could reasonably be interpreted to include the use proposed.  Somewhere, sometime, someday I hope that a court will articulate what I believe is an obvious but unstated point.

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            Last week the N.C. Court of Appeals issued an opinion that ends a long-fought battle between two eastern North Carolina governments, a battle that has pre-occupied the media, the public, and elected officials for 2½ years. The case is Morgan, et. al. v. Nash County.

             Full and complete disclosure: I was privileged to serve as lead counsel for Nash County, the prevailing party.  You may interpret my post and any perceived biases through that filter.

 What was this case about?

             This case asks whether the City of Wilson (in Wilson County) had standing to claim that Nash County engaged in illegal “contract zoning” when it rezoned land for a chicken processing facility. The opinion also explains why this was not contract zoning.

             But there was an intensity among the groundswell of citizen opponents that was disconnected from Wilson’s sole claim that its drinking water supply would be affected, and much of that intensity focused on the groups and nationalities that might be lured to the area to work at the facility.  That focus will be the subject of a future blog post, and I’ll give you actual quotes from lawsuit depositions.

 The History

             In mid-2010, the N.C. Department of Commerce approached the local economic development agency (Gateway Partnership) about a Mississippi company named Sanderson Farms.  Sanderson was looking at several locations for a mid-Atlantic processing facility.  It would create 1100 new jobs, many of them above the county median wage.

             Gateway Partnership, in turn, approached Nash County to determine if it was interested in 1100 new jobs and an investment exceeding $100 million.  Remember that this was mid-2010 when job losses and unemployment were at unsustainable levels.  Of course Nash was interested.

             Thus began an all-hands-on-deck effort to be the county that Sanderson selected.  One of Sanderson’s criteria was land already rezoned for the processing plant, its supporting hatchery and its wastewater sprayfields, each to be in separate yet proximate locations.

             The various tracts fell into place.  A hatchery site was located.  Because this was a bona fide agricultural use, no rezoning was required.  Seven hundred acres were found for sprayfields which would use standard “land application” to treat the plant’s wastewater. The land was already zoned AG, and sprayfields were allowed in that district. All of these sites were within Nash County.

             Approximately 147 acres was then found for the plant itself.  However, because chicken processing is an industrial function, this site had to be zoned for heavy industry.

             Sidebar: This battle was fought through three separate lawsuits and more than a dozen public hearings. This history is somewhat abbreviated, but the essential facts are here.  End sidebar

 What was Wilson’s Alleged Injury?

             Wilson claimed, without any valid supporting evidence, that the sprayfields would contaminate its water supply with nutrients. Its reservoir was approximately ten miles from the sprayfields. 

             The sprayfield wastewater would have originated at the processing facility where it would be drained to a large, covered lagoon.  After settlement of solid particles, the water would then be piped to a second lagoon where more settlement and treatment would take place. Before being piped to the sprayfields six miles away it would undergo ultraviolet treatment to kill most remaining bacteria.  The wastewater would then be sprayed onto soil planted in Bermuda hay grass which absorbs water and nutrients quickly.

             But this is not the process that Wilson’s expert studied, nor are they the facts understood by the public.

             Wilson presented the trial court a “study” which it alleged “proved” the damage to Wilson’s water supply.  However, in the 30+ pages in this “study,” not one paragraph was dedicated to describing or studying the actual process proposed to be used by Sanderson Farms or the chemical content of this highly treated wastewater.  There was no description of the efficacy of ultraviolet treatment or any discussion of the effectiveness of a particular soil or this particular grass to absorb or treat the wastewater.

             Rather, the “study” described in great detail the environmental dangers posed when swine lagoons – full of swine manure – overflow into rivers and streams; of the dangers posed  by cattle manure in fields upstream from waterways; of the dangers created when chicken carcasses are buried (or tossed without burial) on chicken farms; and it regurgitated the conclusions of all sorts of studies from other states related to direct contact between animal waste and water supplies, none of which had anything to do with Sanderson’s treatment process.

             If all you ask is whether uncontrolled agricultural nutrients (mainly nitrogen) are bad for water quality, the answer is easy.  And that is what the “expert” asked and answered.  But the question whether Sanderson’s treatment process works was never considered by Wilson or its consultant. Why?  Because the answer would not have been legally or politically convenient.

             If you listened to the public (which spoke through letters to the editor, at hearings, and in depositions), there was widespread misunderstanding that chicken manure and blood and body parts would be directly sprayed on the sprayfields. 

             At any rate, Nash County purchased the property and proceeded to rezone the property that it now owned.  Wilson and surrounding property owners sued.

             Sidebar: There actually were two rezonings.  Wilson and 34 individual property owners, many who lived over two miles away, filed suit after the first one alleging technical irregularities.  Rather than fight that case, Nash simple rezoned the land a second time that procedurally was textbook perfect. That case is the one the court heard and recently decided. End sidebar.

 Did Wilson have Standing to Sue Nash County?

             Before a court can hear any dispute it must have jurisdiction.  One of the questions asked to determine whether a court has what is called “subject matter jurisdiction” is whether the plaintiff – the party who files the lawsuit – has a right to be in court at all.  Were they in fact injured by the government’s decision?

             The first legal skirmish in a zoning case is often whether the plaintiff has standing – a point Nash County fought vigorously as to the City of Wilson, whose municipal boundary is, at its closest point, 3½ miles from the rezoned property, and whose reservoir was 10 miles from the sprayfields.

             This opinion was authored by Judge Robert C. Hunter (from Marion), whose recent opinion in Fort v. Cumberland County was one of the most interesting – and correct – decisions on standing in several years.  In this case, Judge Hunter answered a new question: can someone have a justiciable injury resulting from an activity that might occur on land that was not rezoned (the sprayfields) but which activity would not take place except for a rezoning of land somewhere else (the processing plant). 

             The court said “no standing” based on both a traditional zoning analysis (how close are you to the rezoned property?) and a standard environmental case analysis (are your potential injuries “actual and imminent” or merely “conjectural or hypothetical”?).  The trial court used the latter analysis.

             The court noted that that Wilson’s boundaries were 3½ miles away from the rezoned property and dispensed with the matter quickly, finding Wilson to be too far away for its injuries to be “direct and adverse.”

             The court then held that injury from the sprayfields was too conjectural and hypothetical.  In order to establish injury, the court would have to assume that the wastewater would not be treated (in contravention of the facts) and that the sprayfields would not be properly permitted according to environmental regulations or properly monitored by DENR (in contravention of the law). 

             But the court did find that neighbors who lived adjacent to the rezoned property had standing, so it proceeded to answer the big question: was this rezoning illegal because it was “contract zoning?”

 Was this “contract zoning?”

 

            No.  But here’s why.

             A board of commissioners is a legislative body acting in a legislative capacity when it rezones property.  As such, it cannot limit its legislative powers through a contract. (Yes, counties may enter contracts, but in general rezoning cases they cannot).

             Two N.C. Supreme Court cases from the early 1970s (Allred and Blades) described “contract zoning” as a city council’s failure to consider all possible uses when changing a property’s zoning map designation.  Later cases described it as a bilateral contract – a “meeting of the minds” – between the property owner and the council or commission.

             The court correctly noted that (1) all uses of the rezoned tract were included in the staff report; (2) all uses were presented in writing and read aloud by staff at the hearing; (3) several of the other uses were noted by board members at the hearing; (4) the county attorney instructed the board that the rezoning was for all 205 uses allowed in an HI district; and (5) board members stated in affidavits that they considered all uses. 

             Wilson, in its brief, tried to convince the court that it was all a ruse.  Nash, on the other hand, openly admitted that it was courting Sanderson as an end user of the site, but Sanderson had yet to complete its due diligence, and the property was too valuable to be used by right for farming or low density housing.  Thus, whether Sanderson chose to come or not, Nash wanted the land zoned for heavy industry.

             As to whether there was a bilateral contract, the court noted that Nash County owned the property and was the applicant and could not enter into a contract with itself.  Also, as noted at the hearing by Nash County Attorney, Vince Durham, Sanderson Farms had no legal right through option or otherwise to buy this land, and the county had no legal obligation to sell it to Sanderson.

 Epilogue

             Approximately two weeks before this decision was published, Sanderson Farms announced that it had had enough litigation delay and was moving to another location.  But there were plaintiff neighbors who opposed any industrial use, so the case did not become moot.

             I predict that Nash will not soon forget how a neighboring government tried to control its land use and industry recruitment decisions, especially as to how it recruits 1100 jobs in a poor economy.  Wilson, of course, will claim that Nash County was threatening Wilson’s water supply.  My response is simple: show me a real study that asked the relevant question and studied the relevant facts and I’ll listen.

             Finally, I interpret much of the hysteria among opponents – even Wilson officials – as a fear that “others” who are “not us” would enter Nash County and surrounding areas in high numbers. But that post follows.

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            Last week the Court of Appeals published an opinion (MNC Holdings v. Town of Matthews) that analyzed how to interpret poorly written zoning ordinances, especially when a citizen’s property and rights are on the line. 

             Full and complete disclosure: I was lead counsel for the prevailing party.   I have strong opinions about the underlying facts that I will do my best to temper. However, when you don the armor of the zealous advocate, moderation and neutral observation are often sacrificed.

 Facts

             MNC Holdings owns a medical waste incinerator in the Town of Matthews.  Such businesses exist because we need them. You may think otherwise, but only until your child has cancer and needs chemotherapy, and you realize that something must be done with the waste product.

             MNC’s plant existed peacefully near other industrial uses, adjacent to a railroad, and on land zoned for heavy industry until 1991 when the Town of Matthews extended its municipal boundaries and made the plant an involuntary municipal citizen.  Matthews then zoned the facility for residential use and adopted a Table of Permitted Uses that intentionally did not allow medical waste incinerators. 

             Matthews also adopted a zoning ordinance with labyrinthine rules governing nonconforming uses that strictly limited the circumstances under which a nonconforming use could be repaired or expanded.

             In other words, Matthews used its statutory powers to annex this business against its will, and then proceeded to take away its right to make structural alterations and to expand.  Over the next 20 years the town and its citizens took other actions to make it difficult for this lawful and necessary industry to survive and treated it like a pariah.

 What does it mean to be a nonconforming use?

             There are book chapters and lengthy law review articles that attempt to answer this question, but I’ll give you the abridged version in three short paragraphs.

             Cities and counties must have the ability to adopt and revise their zoning ordinances and to change the designation of zoning districts.  However, if your business lawfully existed at the time the law changed – or if you had spent substantial funds to construct your business in reliance on a permit the government had issued – then your rights to continue your use are “vested.”  Vested uses are also called “legal but nonconforming uses.” 

             They are also called “grandfathered” uses, and the laws that have developed around these concepts protect property owners from the strong but unfair hand of government.

             But here’s an interesting rub.  Local governments are free to adopt their own ordinances that define how nonconforming uses will be treated. Accordingly, the local zoning code can be as important as common law principles in understanding a citizen’s rights.

 The Matthews Ordinance

             Matthews adopted a zoning ordinance that said nonconforming uses are disfavored and that their eventual elimination was a goal. However, it adopted several exceptions to this rule, and one of those exceptions pertained to one’s right to make structural alterations when “required by law.”

             As you might imagine from the preceding wind up pitch, the laws regulating medical waste incinerators changed.  In 2009, the EPA adopted tougher air quality rules that required such facilities to make substantial upgrades to meet the new standards.  The same rules were then adopted by the State of North Carolina and Mecklenburg County.  All facilities had until 2014 to comply.

             Matthews then petitioned the county to change the timeline for MNC, requiring it to comply with the rules by 2012, two years ahead of schedule.  The county complied.  MNC’s response was simply to expedite the equipment modifications.

             However, to MNC’s surprise, the town did not consider mandatory rules promulgated by federal, state and county authorities to be legal requirements that triggered the exception  allowed by ordinance (i.e. “required by law”).  After petitioning to require MNC’s expedited compliance, Matthews then denied MNC’s right to make the legally mandated alterations.

             Sidebar:  The zoning administrator actually cited a different ordinance provision to support his decision that MNC could not make the necessary alterations (he said it was a “nonconforming structure”), but after MNC appealed his interpretation to the Board of Adjustment, town attorneys decided they could better defend on another ordinance provision, so the zoning administrator changed his opinion and adopted as his ruling the provision preferred by legal counsel.  End Sidebar.

             At the risk of undue repetition I’ll say this again.  The town successfully petitioned to have the new rules applied to MNC two years ahead of schedule while denying it the right to make the alterations required.  How the heavy staff of governmental power feels to you depends on whether you’re the one swinging that staff or the one being hit.

 What did the Ordinance Say?

             The ordinance provision that was considered first by the Board of Adjustment, then by the Superior Court, and then by the Court of Appeals reads as follows:

             “No structural alterations are allowed to any structure containing a nonconforming use except for those required by law or an order from the office or agent authorized by the Board of Commissioners to issue building permits to ensure the safety of the structure.”

             Matthews claimed it read this ordinance to mean that one can make structural alterations only when – as provided in the second clause – it is necessary to ensure the safety of the structure.

             MNC, on the other hand, whose interpretation was favored by a superior court judge and a unanimous court of appeals panel, read this ordinance as having two clauses and two types of exceptions. One, your alterations are “required by law” or two, they are necessary to ensure the safety of the structure.

 What did the Court Say?

             There are 15 judges on the N.C. Court of Appeals.  They work in randomly assigned panels of three judges per case, with one judge assigned to write the panel’s opinion.  While some judges have tendencies (e.g. to be stricter in criminal appeals), the common factor, from an historical perspective, is that North Carolina has attracted excellent appellate judges.

             In this case, the opinion of the three judges was written by Judge Robert N. Hunter (from Greensboro).  Although I think most panels would have reached the same decision, Judge Hunter has built a reputation as a judge who is sensitive to and wary of the strong arm of government and as a judge who respects rights inherent in the ownership of private property.

             Two of his opinions where abuses of power stepped a bit too hard on property owners’ rights come quickly to mind: the Amward Homes case out of Cary and Morris Communications v. Bessemer City, where Judge Hunter’s dissent enabled the petitioner to reach the N.C. Supreme Court, which held in petitioner’s favor in what is now a commonly cited case.

             In the present case, Judge Hunter noted that the court’s analysis of a Board of Adjustment decision begins with two questions.  The first question is always whether the trial used the correct standard of review – de novo versus “whole record” – and then if the court used the correct standard of review it looks to see if it did so correctly.  However, this was an easy analysis:  a board of adjustment’s interpretation of a zoning ordinance is always a legal question subject to de novo review.

             Sidebar:  As a general rule, lawyers prefer to argue cases where the standard is de novo rather than “whole record.”  Courts are not required to defer to boards on legal questions (de novo) but are required to defer when the standard is “whole record.”  End sidebar.

             Judge Hunter then stated, in sum, that there are two ways of interpreting this ordinance provision: the “plain meaning” standard and the “intent” standard.  Both of them favor MNC. 

             Those standards are easy to describe.  Courts first look to the plain meaning of an ordinance.  If the meaning is clear, then courts look no further.  However, if an ordinance is ambiguous, courts look to the ordinance’s intent.  Since the trial court looked at intent, the appellate must as well.

             In this case, the zoning ordinance’s intent was to create an exception to the rule that property owners could not make structural alterations to nonconforming uses, and that exception pertained to situations when state or federal law required certain alterations to be made.

             And since zoning ordinances are legalized forms of interference with private property rights, exemptions or exceptions written into the ordinances are to be liberally construed in favor of the property owner.

 Editorial Comment

             Yes, I strongly believe there was, in this case, a distinct pattern of abusive use of governmental power. However, an exhaustive public records request and tough cross-examination at the Board of Adjustment hearing led me to conclude that the administrator who made the initial interpretation was not responsible for the long series of actions against MNC and that he was a man of integrity who was doing the best job he could. 

             Also, I learned long ago that you don’t vilify your opposing counsel, even though they are defending actions you feel were wrong on many levels.  Such was the case here, where the opposing attorneys were smart, prepared and aggressive. 

             I make that point for one reason.  One of our defenses – which we had an obligation to our client to raise – was that Matthews’ legal counsel had improperly served notice of appeal by email, thus depriving the court of jurisdiction to hear the case.  The court acknowledged that this rule was violated but decided that the proper course of action was to deny our motion to dismiss based on a technical rule violation in order to reach the matter on its merits.  A lawyer who denies ever having made procedural errors is deceiving you.  I’ve made many myself and will likely make more. While the MNC legal team continues to hold the position that the rule violation denied the court jurisdiction, I’m glad for opposing counsel’s sake that the court overlooked her infraction.

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            Swing state voters in 2012 – including the good people of North Carolina – got a taste of what it’s like to live in Iowa and New Hampshire every four years, and for most folks in my generation it wasn’t fun.  You see, folks my age still use land lines to make phone calls and to keep up with friends and family.

             If you showed up on anybody’s demographic radar screen, you received barrages of robo-calls, robo-polls and occasional live person “polls” on your land line. I put “polls” in quotes because callers want you to think that your opinion will be reflected in the next Rasmussen or CBS temperature read of the nation’s electorate.  Instead, you’re probably just being pegged as unlikely to vote, certain to vote for a particular candidate, or uncertain but persuadable.

             Based on your answers, you’ll receive specific mailings or future robo-calls, and if you’re certain and for their candidate, you’ll be called to get out and vote.

             I didn’t get a single such call on my cell phone. 

             Friends and co-workers everywhere commented on the harassment.  You probably did too. Some let their answering machine fill up and ignored the kitchen or living room phone when it rang.  (I, on the other hand, was interested in how somebody thought they could manipulate my opinions,  and being a political junkie, enjoyed listening and learning about the many things I was supposed to fear about Romney or Obama, with anti-Obama calls outnumbering anti-Romney calls 3 to 1).

             So here’s my prediction, and it’s from a crystal ball that seems clearer than usual. In all 2012 swing states – in particular, Ohio – land lines will be dropped or discontinued at a rate far exceeding the states that were deep blue or red. 

             How is this related to land use?  Cell phones will replace those land lines, and more cell phones means more towers.

             So, if anybody asks you what’s on the political horizon in 2016, tell them it’ll be dotted with more cell towers than ever.

             And tell them you heard it here first.

 Next up

             Next up is a quick commentary on a case I handled that was reported by the Court of Appeals this morning.  And . . . then Lanvale.

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            Law is not unlike archery.  You can hit the bullseye, the third ring, or miss the target altogether.  In my recent post on the Morrisville cell tower case (American Tower v. Town of Morrisville) I thought I had hit the bullseye.

             Subsequently, comments from and discussion with members of the land use bar suggest that my arrow hit close to center but not as close as I had thought.  Allow me to revise my comments.

             The American Tower case offered excellent commentary on an applicant’s duty to make a prima facie case on each standard where the applicant has the burden of proof.  Once an applicant has made a prima facie case on a standard, the burden then shifts to opponents to demonstrate through competent, material and substantial evidence how the applicant has failed to meet the standard.  The Court of Appeals upheld the town council’s finding that American Tower failed to make a prima facie case that the tower would not substantially injure the value of adjoining properties.

            The court relied on a 12 year-old case (SBA v. Asheville) to support the council’s position.  I demurred, arguing 1) that G.S. 160A-393(k) is a statutory override of SBA because itproclaims that opinions of lay witnesses are not competent evidence on how a particular use of land affects the value of adjoining properties, and 2) evidence from an appraiser with MAI credentials should, as a matter of law, constitute a prima facie case.

             Comments on the post from other attorneys have been varied, but none as spirited as my law firm colleague, Dave Neill, who argues that the Board always retains power to decide whether an expert’s evidence is competent, material or substantial.  For example, in this case, the appraiser could have studied stealth towers imperceptible to passersby rather than 200 foot monopoles or lattice towers seen from two neighborhoods away. In such cases the board could have found that his study did not meet basic materiality (relevancy) standards.  And there are other examples, but you get the drift.

             I agree with Dave.  An appraiser’s study should not be considered the establishment of a prima facie case as a matter of law.

             However, as Dave and I agree, a board must be able to identify and articulate with a degree of specificity why such expert’s report is not competent, material or substantial.  If it cannot, then its decision can be challenged as arbitrary and capricious.

             In the present case, I still arrive at the same conclusion as to this appraisal.  An appraiser with MAI credentials is analogous to a chemistry professor with a PhD or a board-certified physician giving his or her opinion on a matter within their field of expertise.

             In SBA, the appraiser studied subdivisions across town, but the city council concluded – based upon what, we don’t know – that a study of a tower closer to the subject property might have produced a different result.  The case provides no reasons cited by the council for concluding that sales of homes adjacent to cell towers are different in one part of town than another.

             The American Tower appraiser studied sales in subdivisions surrounding two other towers within the same county and concluded that the tower had no appreciable impact on values.  An appraiser need not look separately at issues such as curb appeal or whether the tower was there first because home buyers themselves are presumed to consider such factors.  If they did consider such factors, and the factors weighed negatively, comparable sales would reflect those facts.

             To gain better insight, I reached out to my colleagues at Nexsen Pruet who represented American Tower.  Assuming that their recollections are accurate (a point I do not doubt) the council asked the appraiser whether he had considered “curb appeal” as a factor, and his answer was that no appraiser could do that because curb appeal is too subjective to quantify other than through an objective study of comparable sales in neighborhoods with and without towers.

             Thus, the only evidence before the board on that technical point was that curb appeal was not a factor which could have been isolated. 

             As to whether it could be relevant that a tower was built before or after a subdivision was constructed, I’ll give you the answer since they could not recall for sure if the question was asked by the board.  And the answer is that it makes zero difference.  Why?  Because in both cases the question is narrowed to sales after a tower has been constructed.

             I’m reminded of the common retort I heard around the house during my sons’ teenage years: “Well DUH!!”

             The town council also dismissed the appraiser’s report because he “did not attempt to study the effect of possible devaluation of property” (whatever that means) and because he did not benchmark it against the market in general.

             The “effect of possible devaluation of property” is a non-starter because it is not within the standard listed in the zoning ordinance.  And if an MAI appraiser says that his study is sufficient to enable to him draw the conclusion that the use will not substantially injure the value of adjoining properties, it makes no difference if the board wants more or different analyses.  The board should be able to point to evidence from another expert that such factors should have been considered in order for the original appraisal to be deemed insufficient.  The board’s own personal preferences should not be sufficient.

             Was there such expertise available to the town council?  No.  Were there other experts providing testimony? Yes. 

             The city’s own consultant, Rick Edwards, of CityScapes, recommended that the tower be approved. I’ve been in several hearings where Rick was advising the government on my client’s request.  I found him to be reasonable and professional in every case.

 Sorry for the Blog’s Absence!

             This past Thursday I was a guest speaker at the annual meeting of the NC Institute of Transportation Engineers (it might sound boring to you, but it’s a great group with interesting topics) where I bumped into several friends and professional acquaintances.  I was hardly in the door when someone asked why I had not posted on my blog in a while.

             Trust me.  There’s no question that can be taken as a kinder compliment.

             I explained that I’ve been in some pretty intense litigation since August on various matters across the state, and my energy reserves have been shallow.

            So, coming up: A short post on the election’s impact on the telecommunications industry, another post on the prima facie case, and “Lanvale,” one of the most important land use cases this year.  And if another case comes out of the Court of Appeals in the meantime I’ll try to slip it in.  I have three of my own cases pending now.  Win or lose, I’ll comment and interpret.

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            A recent Court of Appeals opinion, American Towers v. Town of Morrisville, simultaneously provides a good road map for interpreting evidence in quasi-judicial proceedings, shows how utterly maddening it can be to practice before local government boards, and illustrates how difficult-to-meet standards can be made impossible-to-meet when interpreted by boards and courts.

             Before we visit the case, a couple of comments about cell towers. In the mid 1990s when only a few people owned mobile phones (many were still permanently mounted in cars and called “car phones”), cell towers were an anomaly.  Neighbors became apoplectic when a cell tower – for which they could discern no use – was proposed to be built anywhere near them.

             Local governments everywhere formed committees to draft cell tower ordinances with the underlying assumption that towers were bad and their cancerous spread had to be limited and controlled.  Fast forward to 2012 when the vast majority of Americans – young, old, rich, poor, urban, suburban – live in a wireless world where it’s the loss of cell coverage, not the tower itself, that challenges our existence.  Wireless networks are almost as necessary to modern life as electricity itself.

             Also, there are two kinds of tower builders.  One is the service provider itself, such as AT&T building a tower because it needs to plug gaps in coverage for AT&T customers.  The other kind is the tower company, like American Towers.  American Towers builds towers and leases tower space to Sprint, AT&T and Verizon.  To this end, it is a real estate developer no different than a company that builds shopping centers and leases store space.

             Disclosure:  I have represented American Towers on at least two occasions, but not recently, and it is not currently a client. I did, however, enjoy working for the company and found its site acquisition person great to work with.

 Facts of the Case

             The Town of Morrisville not only has a mid-nineties ordinance, it also has a mid-nineties mindset.  First, towers are only allowed in industrial zoning districts. This restriction is problematic in itself because more towers are needed when usage increases. Second, an applicant must obtain a special use permit, demonstrating by competent, material and substantial evidence that it meets not only six general findings but also twenty additional findings unique to cell towers. Twenty. Count them.

             American Towers sought to place a tower on a 12 acre tract between Highway 540 and homebuyers who obviously didn’t mind living close to an 8 lane divided highway and adjacent to an industrially zoned district.

             Sidebar: The land is owned by the Kathrine R. Everett Trust. Katherine Everett was the only woman in the UNC Law School class of 1920, graduating first in her class. She was one of the first women admitted to the state bar, and was the first woman to argue and win a case before the North Carolina Supreme Court. End sidebar.

             The town council held a series of four public hearings. Four nights.  Six general and twenty special findings.  For one tower. This only happens when opposition is intense and, usually, excessive.

 Evidence in Quasi-Judicial Proceedings

             Judge Steelman clearly explains how applicants for a special use permit must demonstrate that they meet certain standards by presenting competent, material and substantial evidence.  Whether the evidence rises to that level is a question of law, and courts need not defer to the board’s conclusion

            How the board weighs the evidence is another matter.  Courts will only examine the “whole record” to determine if the evidence was sufficient to meet each finding and, in that process, defer to the board.

 The Appraisal Error

             American Towers hired a certified appraiser with MAI credentials to establish the factual basis upon which he concluded that the tower “will not substantially injure the value of adjoining property.”  Once an applicant establishes a prima facie case, this opinion reminds us, it is entitled to the permit unless an opponent presents competent, material and substantial evidence to the contrary. In this case, a lay opponent attempted to draw conclusions using tax values, which was apparently inadequate because it didn’t factor into the board’s findings.

             The town council, however, found that the MAI appraiser’s report was deficient 1) because he studied subdivisions where the tower was there first, rather than vice versa, and 2) because he didn’t factor in “curb appeal.” 

             The court used a 2000 case (SBA v. City of Asheville) to support the board’s conclusion.  However, relevant portions of SBA v. City of Asheville have been overturned by statute. 

             In 2009, the legislature enacted N.C.G.S. 160A-393.  Subsection (k) provides that “[t]he term “competent evidence,” as used in this subsection, shall not be deemed to include the opinion testimony of lay witnesses as to any of the following: a. The use of property in a particular way would affect the value of other property.”

             Although the lay board did not find the lay witness using random tax values to have presented competent evidence, it proceeded on its own to explain why it felt an appraiser who had earned Appraisal Institute credentials conducted a deficient appraisal while it, the lay board, knew better. 

             The court’s affirmation of the board’s decision raises a serious problem.  The statute’s requirement that this standard must be established by expert testimony is completely nullified if a lay board can insert its lay opinion and reject the expert’s evidence on factors irrelevant to an appraisal that meets all professional standards. 

             N.C.G.S. 160A-393 has a similar requirement for traffic, providing that lay testimony about how a certain use will affect traffic on the roads is incompetent. 

             Not for the sake of American Towers but for every future SUP and CUP applicant in the state and boards of adjustment and governing boards who issue such permits, I sincerely hope that American Towers’ attorney will request a rehearing.  Members of the land use bar are already abuzz at this decision’s implications.

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             In case you haven’t seen the news articles, Harry Potter series author, J.K. Rowling, had to get permission from the Edinburgh City Council to construct a couple of tree houses for her children amidst a deluge of protests from neighbors.  I’ve enjoyed several articles on this guerre du jour because it illustrates how a neighborhood’s reaction to change is a universal dynamic.

             In fairness to the neighbors, it really wasn’t just a couple of tree houses. Ms. Rowling – one of the wealthiest women in Britain outside of the royals themselves – sought to construct for her 7 and 9 year-old children two interconnected, architect-designed, 40’ tall structures that resembled Hogwarts itself. The estimated cost is £250,000. 

             As I post this today, the pound to dollar exchange rate is 1:1.6223, meaning that, in dollars, the cost of these tree houses is $405,575.  Estimated, of course. Unless she adds more secret tunnels or another turreted roof, to which I say “go for it!”

             So what were neighbors’ beefs?  One complained that it would be “out of character with the area” and another complained that it could be seen from the road.  Yet another disingenuously proclaimed that his true concern was for the children’s safety.

             All of this is Hogwarts hogwash.  As a multi-decade veteran of land use wars I’ve learned to interpret the coded language that pervades such public hearings. Often it’s a thinly veiled dislike of racial or ethic groups. Other times it’s fear of change or fear of an outsider’s  “invasion of  turf” that one cannot control.  And then there are the times when it’s about wealth and status and how we attach our fragile egos to the size of our homes, the models of our cars and the ways our geographical surroundings add visual support to our sense of self-importance.

             Which is what I intuit was going on.  Ms. Rowling lives in a 17th c. mansion in an area near other similar structures owned by people who can afford to buy and maintain centuries-old mansions. While neither I nor you live in a community with 17th century mansions, all of us can name “the” neighborhood in our communities whose inhabitants can display their wealth and prestige simply by providing their street address. 

             In a country as old as Scotland, such homes (and castles) have always created an instant status and the type of social access that grants entry to the events that most muggles don’t even know occur.

             Ms. Rowling’s $400,000 tree house battle reminds me of the occasional McMansion” debate in the U.S. where newly-constructed, super-sized homes in pre-existing neighborhoods are criticized for being incongruous.  Incongruous is a fair complaint, but there’s also a hefty dose of neighbors’ egos being bruised when someone of perceived lesser social status creates a permanent, ostentatious and in-your-face neighborhood monument that says “my bank accounts are bigger than yours.”

             The reverse side of this coin has a similar face.  Folks who live in large lot subdivisions will come to hearings to protest vehemently that a newer subdivision is planned next door with lots half the size.  Why?  Because smaller lots mean smaller houses, and smaller houses can be bought by people with lesser means, and part of proving to yourself and to the world that you have made it is moving to a neighborhood that is separate from “those people.”  But if they can now build against your backyard, you’ve suddenly been pulled a couple of rungs back down that ladder you’ve been struggling so hard to climb.

             But we can’t talk about losing the outward badges of our success in public hearings, so we talk about loss of property values, traffic and stormwater runoff as surrogate issues.

             J.K. Rowling has changed world history — you can debate the degree if you wish — by providing a vocabulary and characters and concepts and references that have become a common cultural idiom for at least two generations of the world’s consumers.  (The four fastest selling books in world history are the last four books in the Harry Potter series).  I predict that the Harry Potter phenomenon of our time in history will be taught centuries from now the same way we study Greek literature and Chaucer.

             And I predict that after all of us are gone those same tree houses will one day become tourist stops.  Then the neighbors can complain about the traffic.

Next up

Later this week I’ll post a case law update on how the Court of Appeals denied a cell tower in Morrisville, a case which illustrates key aspects of quasi-judicial hearings.  And after that, stay tuned for my assessment of the Lanvale Properties APFO case that was recently decided by the N.C. Supreme Court.  Lanvale could be the most important land use case decided this year.

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            LeviathanLi-VAYH-uh thuhn – (1) “Anything of immense size and power, as a huge, oceangoing ship. (2) The title of Thomas Hobbes’ 1651 philosophical work which asserts that a strong central government is the only means of averting social chaos and civil war.”

            Thomas Hobbes, meet the North Carolina Supreme Court, which heard arguments last week on whether NCDOT – one of our strong, central agencies with immense size and power – has plenary powers to control not only roadways but also who can develop land, and to exercise those expansive powers without practical limitation or appeal, including the right to delegate its powers to third parties who answer to nobody.

            I’ve written about High Rock Lake Partners v. NCDOT on two occasions.  The facts, distilled, are these.  A developer wanted to build a mere 60 homes at the tip of a peninsula along High Rock Lake in Davidson County.  There were no safety issues related to traffic entering the state road on the peninsula.  Zero.

             But one-quarter mile away, far from the entrance governed by the NCDOT driveway permit, the state road crossed railroad tracks.  NCDOT essentially delegated its permit approval powers to Norfolk Southern and North Carolina Railroad – third parties who do not answer to the citizens of this state – to decide whether these 60 homes could be built.  Actually, the railroads didn’t say the homes could not be built.  Rather, they said the developer would have to build a bridge estimated to cost at least $3 million for the privilege of crossing their tracks.

             For a 60-home development, I call that a veto.

             Rather than looking to the specific powers delegated to this agency, the Court of Appeals referred to the general powers of the agency, which are expansive and seemingly without check.

             In my first blog post I wrote this:

             “The developer pointed out that N.C. Gen. Stat. §136-18(29) (the statute that allows NCDOT to establish its own policies and adopt rules concerning driveway connections and the conditions that can be imposed) was not written broadly enough to encompass this situation where third parties are allowed to require $3 million in off-site improvements.  The developer broke down each phrase of this statute and pointed out that none of them applied.

             The court’s reply, boiled to its essence, was that the developer was right about the specific powers enumerated in N.C. Gen. Stat. §136-18(29).  It did not govern this situation.  But instead of finding for the developer the court determined that the appropriate way to resolve the issue was to look to the “general powers” sections in the statute. (And general powers are always broadly defined).

             One of those general powers is listed in N.C. Gen. Stat. §136-93 (“No opening . . . shall be made in any State Road . . . except with . . . a written permit from [NCDOT] or its duly authorized officers, who shall exercise complete and permanent control over such roads and highways . . .”

             “Complete . . . control.”  This stings.  Instead of looking for a way to carefully delineate the power of one of the state’s largest agencies, the court found, instead, a way to bless the agency’s unbridled power.  And the emphasis in the quote above?  It’s not mine.  It was done by the court.”

            So the question remains.  Will NCDOT’s powers become even broader and more expansive, interpreted to allow it to delegate its powers to non-governmental entities?  Or will Leviathan’s size be limited to what the General Assembly specifically enabled it to do?

             NCDOT is a good agency.  I support it. We need it.  But abused power is abused power.  The agency should be careful about what is asks the court to do.  The prevailing political zeitgeist, as embodied in the current General Assembly, could lead to numerous revisions of NCDOT’s enabling legislation.

             Stay tuned for more.

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