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North Carolina Municipal Attorney’s Summer Conference Asheville, August 6, 2010 1.

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Presentation on theme: "North Carolina Municipal Attorney’s Summer Conference Asheville, August 6, 2010 1."— Presentation transcript:

1 North Carolina Municipal Attorney’s Summer Conference Asheville, August 6,

2 Inverse Condemnation – History and Nature of Action  “A taking without formal exercise of eminent domain” Charlotte v. Spratt  “Device to force government to exercise e.d.” Smith vs. Charlotte  Taking = “actual interference or disturbance of property rights resulting in injuries not merely consequential or incidental.” Adams  Damage must “grow out of the ownership of property and be substantial enough to reduce market value.” Long v. Charlotte 2

3  Action lies only against entity with E.D. powers Galloway  Inverse Condemnation action requires injury to property of an essentially permanent nature.  Burden of proof is on the land owner. Penn Central  Intent to condemn is of no consequence. In Re: Sioux Tribe 3

4 Fundamental Constitutional Rights Basis of Action  From the U.S. Constitution, Fifth Amendment “…nor shall private property be taken for public use without just compensation.”  There is no “Takings Clause” in N.C. Constitution.  N.C. Constitution Article 1, Section 19 – “Law of the Land Clause” guarantees no taking without compensation 4

5 N.C. Statutory Framework – Inverse Condemnation against Local Government  Actions against local government condemnors G.S. 40A – 51: “Remedy where no declaration of taking filed…” See Article 3, Chapter 40A, GS40A – 40 through 40A – 70.  Actions against the State, usually NCDOT, but a few cities GS : “Remedy where no declaration of taking filed…” See Article 9, Chapter 136, G.S. 136 – 103 through 136 –

6 Attorneys’ Fees  No attorneys’ fees in “regular” condemnation actions. McNeely  Attorney’s fees available to successful inverse claimants. (Hidden in) G.S. 40A-8 and G.S Costs and Appeal 6

7 Major Categories of Inverse Taking  There is a wide variety of government actions that may support claim “in inverse.”  “Workable rules” are elusive.  Szypszak: 1) “Interweaving and distortion of property and tort law concepts” 2) “Artificial interpretation of eminent domain provisions” 3) “Untidy compilations of legal theory”  It is useful to break down inverse claims into three main categories: 7

8 Three Categories 1. Direct Physical Appropriation/Expropriation (“Normal” government activity without proper paperwork) 2. Physical Intrusion/Interference (Noise, smoke, odor, flooding) 3. Non-physical, “Regulatory” Takings (Confiscatory zoning, permit denial precluding economic use, development moratoria, unreasonable exactions, regulations “going too far”) 8

9 1. Direct Expropriation – De Facto Condemnation  Actual physical entry always a taking. Terminal Warehouse Corp.  Denial of all access a compensable taking.  Preliminary, temporary entries for surveys etc. not a taking. Herndon; G.S. 40A-11,  Excess taking arising in conventional action (inverse by counterclaim). Bragg  Damage to remainder ≠ inverse taking. Hollingsworth, Pearce 9

10 2. Physical Intrusion/Interference (Flooding, noise, smoke, odor, etc.)  Delineating the boundary between “normal annoyances” and compensable deprivations.  Flooding analogizes best to appropriation of property. Lea Co., Warehouse Corp.  Nuisance – like activities may be found to constitute inverse taking. Edwards v. Raleigh  “Permanent servitude” having discernable effect on market value vs. single, tortious act. Bynum 10

11 3. Regulatory Takings (Non-physical appropriation by government action)  Takings traditionally required physical occupation.  Ultimately S. Ct. recognized that “regulation can effect a taking.” San Diego Gas and Electric  Early Taking cases focused on regulating “nuisance-like” activities. (No property right in noxious activity). Parker  More recently “going too far” analysis. 11

12 3. Regulatory Takings  U.S. Supreme Court decisions :  Pennsylvania Coal (1922) – regulations may “go too far.”  Penn Central (1978) – balancing, ends-means test.  First English Evangelical Lutheran (1987) – prohibition against all development in flood area a taking.  Lucas v. S.C. Coastal Comm. (1992) – the “categorical rule.”  City of Monterey v. Del Monte Dunes (1999)  Sierra-Tahoe Preservation Council (2002) – a development moratorium is not a taking under facts of the case. 12

13 N.C. Regulatory Takings Cases  Schmidt v. Fayetteville (1983) – Property value loss insufficient.  Helms v. Charlotte (1961) – Zoning is confiscatory and a taking if all economic uses of property are prohibited.  Finch v. Durham (1989) – Zoning regulations dramatically reducing value of property upheld.  Responsible Citizens v. Asheville (1983) – Floodplain zoning not a taking. 13

14 Exactions and Dedications  U.S. Supreme Court, in Nolan and Dolan, required “rational nexus” and “rough proportionality” between exaction and development impact. 14

15 N.C. Exactions Cases  Riverbirch Assoc. v. Raleigh (1990) – requirement to dedicate open space/parkland as a condition of development approval upheld.  Batch v. Chapel Hill (1989) – parkway dedication requirement as condition of subdivision approval not sufficiently “proportional” to impact/service burden of the development. 15

16 Exclusivity of Inverse Remedy  Trespass and nuisance superseded by G.S. 40A- 51. McAdoo  Negligence claims preserved. Howell v. Lumberton  Action to invalidate regulation still viable. Frank, A-S-P Assoc. v. Raleigh  Sec action for constitutional infringement under color of state law. Rodgers, 4 th Cir.  Land use disputes still “local.” 16

17 Statute of Limitations  G.S. 40A-51 ( ) requires action within later of 24 months of taking, or “project completion.”  Project may be segmented. McAdoo  Regulatory takings – statute runs upon adoption/effective date.  Two-year stat. period tantamount to title. Smith  “Law of prescriptive easements irrelevant.” (Lawrence)  Courts sympathetic to landowner claims in light of two-year bar. Hoyle 17

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19 (Flood and Stormwater Cases)  Howell v. Lumberton 144 N.C. App. 695 (2001) Negligence claimed in storm drain maintenance 40 A-51 Inverse not preemptive of negligence action. Most recent damage was within three year statute. Permit issuance = licensee duty owned. 19

20 Tate v. NCDOT 176 N.C. App. 530 (2006)  Undersized drain in highway flooded P’s house during Hurricane Floyd.  Dismissal of inverse action did not preclude IC action in negligence, and no res judicata.  G.S. 40 A-51 did not preclude IC action. 20

21 Lakeview Condo Assoc. v. Pinehurst (2007)  Silt passing through street culvert filled P’s pond.  Dismissal of nuisance and trespass action, negligence action remained.  Not necessary for town to cause the silt or own the drainage way.  “Reasonable use doctrine” – no defense.  Town has duty to take reasonable measures to reduce silt passing through its street culvert. 21

22 Asheville Sports Properties v. Asheville 683 S.E.2d 217 (2009)  Negligence claim for sinkhole damage.  Private drainage line on private property collapsed.  Interconnections with City drainage system above and below not sufficient to find “adoption.” 22

23 First Gaston Bank of N.C. v. Hickory ___ N.C. App. ___ (2010)  Private drainage line collapsed, destroying structure—inverse and negligence claimed.  City controlled upstream and downstream connection points.  City issued repair permits to fix line.  City’s approval of upstream developments, resulting in increased drainage flows—no basis for negligence.  No duty to analyze and design drainage systems for anticipated private development. 23

24 (Statute of Limitation – Related Cases) Stahr v. NCDOT (NCCOA – 2010) (Unpublished)  Road improvements caused severe erosion on p’s property.  Repairs attempted; State gave up on repairs.  Insufficient findings of fact that statute had run.  Statute construed to “favor landowners’ property rights claims.” 24

25 De Hart v. NCDOT 195 N.C. App. 417 (2009)  Inverse action for “too steep” driveway contrary to consent judgment stipulation.  No inverse taking as no actual, permanent invasion for public use.  Sole remedy in contract breach, and barred by statute of limitations. 25

26 Peach v. High Point __N.C. App.__ (2009)  Failure to connect new sewer main to residence caused sewage backup and total loss of use/value.  Inverse action allowed in addition to negligence action.  Generalized, not repairable, permanent damages = market value diminution.  G.S. 40A-51: Statute of Limitations construed to favor landowner (date of contractor’s return to repair omission). 26

27 Town of Red Springs v. Williams 163 N.C. App. 358 (2004)  Town built sewer line on D’s property without easement.  Exclusive remedy of owner was in inverse.  Statute had run – owner had a ten-year opportunity to file action.  Two years = good title 27

28 (Odds and Ends Cases) City of Charlotte v. Long 175 N.C. App. 750 (2006)  Post-judgment septic field mitigation, with owner’s consent, not an inverse taking.  No public appropriation.  Did not “necessarily flow from the project.” 28

29 6214 S. Blvd. Holdings LLC v. Charlotte (NCCOA 2006, Unpublished)  Mere “planning and plotting” for light rail project, even if impairs ability to lease property, not an inverse taking. 29

30 Charlotte v. BMJ of Charlotte ___ N.C. ___ (COA 2009)  Railroad easement quitclaimed by N&SRR to Charlotte for light rail use  P claimed inverse from diminished access to property.  Non-use by railroad—no abandonment.  Use and conversion to light rail not an “overburdening.” 30

31 Frances Austin Ptnshp. v. High Point 177 N.C. App. 753 (2006)  Leaving old sewer pipe in ground after abandonment not a taking.  Abandonment may be unilateral and without consequence.  City not required to pay twice for the easement. 31

32 Al-Nasara v. Cleveland County (N.C. App. 2010) (Unpublished)  P sued county in inverse for demolishing cited building without proper statutory notice.  While building code enforcement is a governmental function, and purchased insurance excluded inverse coverage, sovereign immunity is inapplicable to inverse condemnation claims. 32

33 Wilfong v. NCDOT 194 N.C. App. 816 (2009)  Another DOT “too steep” driveway case, following R/W settlement.  Interlocutory order finding P was entitled to compensation at G.S preliminary issues hearing.  Not immediately appealable without showing substantial right was at stake. 33

34 T-Wol Acquisition Co. v. Durham Housing Authority (NCCOA 2006, Unpublished)  P sued housing authority in trespass and inverse over disputed title.  Inverse condemnation was the sole remedy.  Requirement for certificate of convenience and necessity procedural matter only and no defense to authority’s having e.d. power. 34

35 Natl. RR Museum and Hall of Fame v. Hamlet (NCCOA #08-356, Unpublished 2009)  P sued town over demolition of headquarters building; anticipated leasing rehabilitated depot; lease not consummated.  Remedy of breach of contract and fraud dismissed.  No inverse taking, as plaintiff had not complied with G.S. 40A-51 by failure to file and record memo of action. 35

36 Cary Creek Ltd. Ptnshp. v. Cary (N.C. App. 2010)  Dec. action challenging stream buffer rules and, alternatively, action in inverse.  So long as appeal from variance denial and declaratory judgment are not finally determined, no inverse condemnation action possible.  No subject matter jurisdiction—inverse dismissed. 36


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