1. EMINENT DOMAIN IN NORTH CAROLINA
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SUPERIOR COURT JUDGES’ CONFERENCE Summer 2004
Francis Rasberry
&
Emmett Boney Haywood
11/11/2018 4:31 AM
Superior Court Judges Conference – PowerPoint Presentation v. 7 (no photos)

2. EMINENT DOMAIN IN NORTH CAROLINA
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EMINENT DOMAIN IN NORTH CAROLINA
Part I: Condemnation Procedure & Fundamentals
1. Condemnation and the Constitutions
2. Two Main N.C. Condemnation Methods
3. Condemnation Procedure
4. Key Definitions
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3. 1. CONDENMATION AND THE CONSTITUTIONS
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1. CONDENMATION AND THE CONSTITUTIONS
5TH Amendment to U.S. Constitution:
“No person shall be… deprived of life, liberty, or property, without due process of law…”
“nor shall private property be taken for public use, without just compensation”
5th Amendment applicable to States through 14th Amendment. See Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 231 (1984).
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4. 1. CONDENMATION AND THE CONSTITUTIONS
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1. CONDENMATION AND THE CONSTITUTIONS
N.C. Constitution Art. I, § 19:
“No person shall be… disseized of his freehold, … or in any manner deprived of his life, liberty, or property, but by the law of the land.”
Guarantees that just compensation be paid for land taken for a public purpose. See Lea Co. v. Board of Transp., 308 N.C. 603 (1983).
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5. 2. TWO MAIN N.C. CONDEMNATION METHODS
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2. TWO MAIN N.C. CONDEMNATION METHODS
Chapter 40A:
Article 2 – Private Condemnors
Article 3 – Local Public Condemnors
Chapter 136:
Department of Transportation
Department of Administration
Certain Municipalities and State agencies
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6. 2. TWO MAIN N.C. CONDEMNATION METHODS
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2. TWO MAIN N.C. CONDEMNATION METHODS
Measure of Damages under Chapter 40A – N.C. Gen. Stat. § 40A-64:
Total Take – Fair Market Value of Property Taken
Partial Take –
(ii) FMV of Property Taken
Greater of
; or
(i) Difference in Before and After FMV
Value of remainder “shall reflect increases or decreases in value caused by the proposed project” and “the time the damage or benefit caused by the proposed improvement or project will be actually realized.” See N.C. Gen. Stat. § 40A-66.
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7. 2. TWO MAIN N.C. CONDEMNATION METHODS
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2. TWO MAIN N.C. CONDEMNATION METHODS
Measure of Damages under Chapter 136 – N.C. Gen. Stat. § :
Total Take – Fair Market Value of Property Taken
Partial Take –
Offset by General or Special Benefits
Difference in Before and After FMV
Distinction between general and special benefits no longer important when § (1) applies. See Board of Transp. v. Rand, 299 N.C. 476, 479 (1980).
Difference between Chapter 40A and Chapter 136 measures of damages does not violate N.C. Constitution’s Equal Protection Clause. See Dept. of Transp. v. Rowe, 353 N.C. 671 (2001).
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8. 2. TWO MAIN N.C. CONDEMNATION METHODS
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2. TWO MAIN N.C. CONDEMNATION METHODS
Lost Business Profits Generally Not Compensable:
Dept. of Transp. v. Fleming, 112 N.C. App. 580 (1993):
Damages may be based on lost rents, but not on lost business profits…
Unless there are no comparable sales or rentals in the area (i.e., subject property is unique) and income is directly attributable to the land….
E.g., a dairy farm. See City of Statesville v. Cloaninger, 106 N.C. App. 10 (1992).
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9. 3. CONDEMNATION PROCEDURE
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3. CONDEMNATION PROCEDURE
Procedure for Public Condemnors:
Condemnor’s pre-filing activities – Appraisals, Offer to Purchase, Relocation Assistance, etc.
Complaint & dec. of taking, memo of action, and deposit
Withdrawal of deposit (and its effect)
Answer (12 months or 120 days)
Survey map due within 90 days of answer
Discovery & Mediation
§ 40A-47 / § Hearing- all issues other than damages
Jury trial on the issue of damages
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10. KEY DEFINITIONS Common Condemnation Terms: Inverse Condemnation
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KEY DEFINITIONS
Common Condemnation Terms:
Inverse Condemnation
Right of Way
Controlled Access (“C/A”)
Permanent Drainage Easement (“PDE”)
Permanent Utility Easement (“PUE”)
Slope Easement
Temporary Construction Easement (“TCE”)
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11. LEADING NORTH CAROLINA CASES
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LEADING NORTH CAROLINA CASES
Must Read:
Barnes v. Highway Commission, 250 N.C. 378 (1959)
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12. EMINENT DOMAIN IN NORTH CAROLINA
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EMINENT DOMAIN IN NORTH CAROLINA
Part II: Frequent Condemnation Issues
1. What constitutes the Subject Property?
2. What valuation testimony is admissible?
3. What constitutes a comparable and admissible sale?
4. How do the condemnation and the public project affect the subject property’s before and after values?
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13. EMINENT DOMAIN IN NORTH CAROLINA
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EMINENT DOMAIN IN NORTH CAROLINA
Part II: Frequent Condemnation Issues
5. What exhibits are admissible?
6. Who has the burden of proving what facts?
7. What costs and fees are allowed?
8. How do inverse condemnation actions differ from standard condemnation actions?
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14. 1. DEFINING THE SUBJECT PROPERTY
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1. DEFINING THE SUBJECT PROPERTY
Court to use Three Unities to Define Subject Property :
See Barnes at 384.
Substantial Unity of Ownership
Physical Unity
Given Greatest Emphasis
Unity of Use –
But respective importance of each factor depends on the facts
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15. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Expert Testimony Generally:
Parties frequently offer expert testimony through real estate appraisers.
N.C. Rule Evid. 702(a) (2004):
“expert by knowledge, skill, experience, training, or education.”
“scientific, technical or other specialized knowledge”
“assist the trier of fact”
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16. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Expert Testimony Must Be Reliable:
Federal trial courts to act as gatekeepers as to reliability of expert testimony. See Fed. Rule. Evid. 702 (2000); Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); Khumo Tire Co. v. Carmichael, 526 U.S. 137 (1999); General Electric Co. v. Joiner, 522 U.S. 136 (1997).
North Carolina trial courts must also act as gatekeepers, but degree of inquiry varies with novelty of expert’s technique or method. See State v. Bullard, 312 N.C. 129 (1984); State v. Pennington, 327 N.C. 89 (1990); State v. Goode, 341 N.C. 513 (1995); Taylor v. Abernathy, 149 N.C. App. 263 (2002).
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17. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Expert Testimony Must Be Reliable:
But technique or method does not have to be scientifically proven, just needs to be reliable. See Taylor at 239.
“[N]othing in Daubert or Goode requires that the trial court redetermine in every case the reliability of a particular field of specialized knowledge consistently accepted as reliable by our courts, absent some new evidence calling that reliability into question….” Id.
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18. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
NC Condemnation Cases – Determining Factors for
Sufficiently Valid, Reliable Testimony Expert Testimony:
Court may take judicial notice of reliability of established technique. See Bullard at 148; Goode at 527.
Methodology does not have to be “scientific,” just reliable. See Taylor at 239.
Expert does not have to be real estate appraiser to testify. See N.C. Gen. Stat. § 93E-1-3(f)(3) (2004).
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19. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
NC Condemnation Cases – Determining Factors for
Sufficiently Valid, Reliable Testimony Expert Testimony:
Expert’s Background. See Bullard at 151; Pennington at 98.
Established Technique. See Pennington at 98; Taylor at 273.
Expert’s Independent Research. See Pennington at 98.
Technique Published and Subject to Peer Review (probably). See Daubert is Alive and Well in North Carolina; Daubert.
Technique Properly Applied. See Taylor at 273.
Use of Exhibits. See Bullard at 153; Pennington at 98.
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20. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Expert Witness to be Given Wide Latitude:
Wide latitude on bases for opinions on value (not hearsay). See State Highway Comm’n. v. Conrad, 263 N.C. 394, (1965).
Wide latitude on calculations and formulating and explaining bases for opinions on value. See Department of Transp. v. Tilley, 136 N.C. App. 370, 375, disc. rev. denied, 351 N.C. 640, cert. denied, 531 U.S. 878 (2000).
Error to exclude comparable sales solely because they occurred after the taking. See Tilley at 378.
Not abuse of discretion to allow testimony about listing prices to set ceiling on value. See City of Wilson v. Hawley, 156 N.C. App. 609, 615 (2003).
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21. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Qualified Lay Witnesses may Testify to Value:
Witness does not have to be an appraiser. See City of Burlington v. Staley, 77 N.C. App. 175 (1985).
“[W]itnesses who are qualified to speak from experience and observation.” Lambreth v. Thomasville, 179 N.C. 452, 456 (1920).
Must be familiar with subject property and property values. See City of Burlington v. Staley, 77 N.C. App. 175 (1985).
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22. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Qualified Lay Witnesses may Testify to Value:
Owner – unless it affirmatively appears that he or she does not know the value. See Responsible Citizens v. City of Asheville, 308 N.C. 255, 271 (1983).
Local developer. See Duke Power Co. v. Ladd, 24 N.C. App. 83 (1974).
Neighboring farmers. See Myers v. Charlotte, 146 N.C. 246 (1907).
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23. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Highest & Best Use:
“In its condition on the day of the taking, what was the value of the land for the highest and best use to which it would be put by owners possessed of prudence, wisdom, and adequate means?” Johnson at 24.
“The owner is entitled to compensation for the highest and most profitable use for which the property is adaptable in the reasonably near future ” Piedmont Triad Reg’l. Water Auth. v. Sumner Hills, Inc., 353 N.C. 343, 347 (2001).
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24. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Highest & Best Use:
Highest & Best Use Defined:
Legally permissible;
Physically possible;
Financially feasible; and
Maximally productive.
Probability of rezoning or issuance of permit for nonconforming use may be considered. See Barnes at 391; Northgate v. Highway Commission, 265 N.C. 209, 212 (1965).
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25. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Three Standard Appraisal Approaches:
See Redevelopment Comm'n. of High Point v. Roll, 273 N.C. 368 (1968).
Cost Approach
Sales Comparison (Market) Approach
Income Approach
But Expert to be given wide latitude and not restricted to before, after, and difference formula. See Tilley at 375.
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26. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Cross-Examination:
“It would seem that utmost freedom of cross-examination with reference to sales and sales prices in the vicinity should be accorded the landowner, subject to the right and duty of the presiding judge to exercise his sound discretion in controlling the nature and scope of the cross-examination in the interest of justice and in confining the testimony within the rules of competency, relevancy and materiality.” Barnes at 397.
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27. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Cross-Examination Rules–
Duke Power Co. v. Winebarger, 300 N.C. 57 (1980):
(1) Price paid at voluntary sales of similar land is admissible as independent evidence of subject property’s value, if not too remote in time. See Winebarger at 65.
(2) “Conversely, where a particular property is markedly dissimilar to the property at issue, the sales price of the former may not be introduced or alluded to in any manner which suggests to the jury that it has a bearing on the estimation of the value of the latter.” See Winebarger at 66.
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28. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Cross-Examination Rules–
Duke Power Co. v. Winebarger, 300 N.C. 57 (1980):
(3) “Where a witness has been offered to testify to the value of the property directly in issue, the scope of that witness' knowledge of the values and sales prices of dissimilar properties in the area may be cross-examined for the limited purposes of impeachment to test his credibility and expertise.” Id.
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29. 2. EXPERT AND LAY WITNESS TESTIMONY
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2. EXPERT AND LAY WITNESS TESTIMONY
Cross-Examination Rules–
Duke Power Co. v. Winebarger, 300 N.C. 57 (1980):
(4) But improper to cross on specific values of noncomparable properties. See id.
If witness does not know or cannot remember value of noncomparable property, that line of inquiry stops. See Id.
If witness does know the value, lawyer may ask about the value “only when the trial judge determines in his discretion that the impeachment value of a specific answer outweighs the possibility of confusing the jury with collateral issues.” Id. at But cross-examiner must take answer as given. See id.
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3. COMPARABLE SALES
Frequent Issues:
Size does not (necessarily) matter. See Johnson at 21.
Per lot valuation of undeveloped property generally prohibited as too speculative. See Barnes at 390; but see Town of Hillsborough v. Crabtree, 143 NC App 707 (2001).
Offers to buy or sell generally are not admissible. See Canton v. Harris, 177 N.C. 10 (1919).
But List Prices are Admissible as Upper Limit of Value. See Hawley at 615.
Sales to Potential Condemnors are Not Admissible. See Johnson at 40.
Condemnation Settlements are Not Admissible. See Barnes at 395.
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31. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
Before Value –
Scope of the Project Rule:
Scope of the project rules bar evidence of Condemnation Bloom or Blight (increases and decreases in subject property’s before value because of the project itself).
Before value shall not reflect an increase or decrease due to condemnation. See N.C. Gen. Stat. § 40A-63 (2004).
Before value does not change because of (1) proposed project;
(2) probability that subject property would be acquired for project; or (3) condemnation proceeding itself. See N.C. Gen. Stat. § 40A-65(a) (2003).
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32. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
Before Value –
Piedmont Triad Reg'l. Water Auth. v. Unger, 154 N.C. App. 589 (2002):
Value of subject property does not include a decrease in value because of an ordinance passed by an agency other than the condemnor, where the ordinance was caused by the purpose for which the land was condemned.
Held, N.C. Gen. Stat. § 40A-65 (2003) does not require the condemning entity and the zoning entity to be unified.
Held, Landowners could introduce evidence of the value of subject property before ordinance was enacted.
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33. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
Before Value –
Condemnation Blight:
Proposed Condemnation Chills Growth and Market Values in the Area
Indirectly Depresses the Subject Property’s value
Skews Fair Market Value that would exist in an Open Market
“Since a property-owner cannot capitalize under the statute on any increase in the property's value due to the reasonable likelihood that it will be acquired, the condemnor likewise cannot take advantage of any resulting decrease in the property due to the threat of condemnation.” See Raleigh-Durham Airport Auth. v. King, 75 N.C. App. 57, 62 (1985).
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34. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
After Value:
“The fair market value of the remainder immediately after the taking contemplates the project in its completed state and any damage to the remainder due to the user to which the part appropriated may, or probably will, be put.” Board of Transp. v. Brown, 34 N.C. App. 266, 268 (1977).
See also N.C. Gen. Stat. § 40A-66.
Inconvenience during construction is not compensable in eminent domain because it does not relate to fair market value on the date of taking. See Metropolitan Sewage Dist. Of Buncombe County v. Trueblood, 64 N.C. App. 690, 694, cert. denied, 311 N.C. 402 (1983).
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35. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE –
Taking and Project Impacts:
After Value
Direct and Indirect Impacts – density, setbacks, off-street parking
“Project-Linkage”
Proximity, noise, visual
Required SHOD buffer
Other land use non-conformities
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36. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
After Value –
Noise, Fumes, and Loss of View after Project Construction :
Not compensable as separate items of damage
But relevant to show diminution in over-all fair market value
Must be specific to subject property
See Board of Transp. v. Brown, 34 N.C. App. 266 (1977), aff’d., 296 N.C. 250 (1978); Gallimore v. State Highway and Public Works Commission, 241 N.C. 350, 355 (1955); R.R. v. Mfg. Co., 169 N.C. 156, 168 (1915).
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37. 4. CONDEMNATION’S EFFECT ON VALUE
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4. CONDEMNATION’S EFFECT ON VALUE
After Value –
Medians, Changes in Access, and Changes in Grade:
Taking all direct access is compensable. See Department of Transp. v. Harkey, 308 N.C. 148, 155 (1983).
Police power allows State to restrict access to “reasonable and proper points.” Highway Comm’n. v. Yarborough, 6 N.C. App. 294 (1969).
Generally, installation of median and circuity of travel is not a taking, and, thus not compensable. See City of Fayetteville v. M.M. Fowler, Inc., 122 N.C. App. 478, 480, disc. rev. denied, 344 N.C. 435 (1996).
But Landowner has right to reasonable access. See State Highway Comm’n. v. Nuckles, 271 N.C. 1 (1967);
Question of degree. See Yarborough at 302.
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38. 5. EXHIBITS Exhibits in Condemnation Cases:
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5. EXHIBITS
Exhibits in Condemnation Cases:
Subdivision plats may be admissible to show subject property is capable of subdivision and development, but must not be misleading and cannot invite jury to value undeveloped subject property on per lot basis. See Barnes at 387, 388, ; but see Crabtree, 143 NC App 707 (2001).
Photographs during construction generally not admissible, because not relevant to valuation. See Metropolitan Sewage Dist. Of Buncombe County v. Trueblood, 64 N.C. App. 690, 694, cert. denied, 311 N.C. 402 (1983).
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6. BURDEN OF PROOF
Direct Condemnation:
Condemnor must prove that it has the right to take the private property. See 5 Nichols §18.02[2][a].
Landowner must prove the value of the property taken or damaged. See Board of Transp. v. Brown, 34 N.C. App. 266, 269 (partial taking); City of Statesville v. Anderson, 245 N.C. 208, 212 (1956); Duke Power Co. v. Ribet, 25 N.C. App. 87 (1975).
But evidence of the deposit is not competent to prove damages. See N.C. Gen. Stat. §§ 40A-48(d) and (d) (2004).
Condemnor must prove the value of general and special benefits. See Bd. of Transp. v. Rand, 299 N.C. 476, 480 (1980).
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40. 6. BURDEN OF PROOF Inverse Condemnation:
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Inverse Condemnation:
Landowner bears burden of proving condemnor has taken his private property without paying just compensation. See 5 Nichols §18.02[2][a]; see also Finch v. City of Durham, 325 N.C. 352 (1989); LeFevers v. City of Lenoir, 267 N.C. 79 (1966).
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41. 7. COSTS AND FEES Standard Costs and Fees in Condemnations:
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7. COSTS AND FEES
Standard
Costs and Fees in Condemnations:
N.C. Gen. Stat. § (2002) requires DOT to pay all costs taxed by Court, but does not enumerate taxable costs relevant to most standard condemnation cases.
Defendant given judgment can recover costs in real property actions. See N.C. Gen. Stat. §§ 6-1, 6-18, and 6-19 (2004).
Relevant recoverable costs are limited to expert witness fees (subpoena required) and deposition costs and are within the Court’s discretion. But they do not include costs for appraisals, maps, and trial exhibits. See Dept. of Transp. v. Charlotte Area Manufactured Housing, Inc., 160 N.C. App. 461 (2003); N.C. Gen. Stat. §§ 7A-305(d)(1) (2002), 7A-320 (2002); State v. Johnson, 282 N.C. 1, 28 (1972).
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42. 7. COSTS AND FEES Inverse Abandoned Proceedings:
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7. COSTS AND FEES
Inverse
Abandoned Proceedings:
Costs and Fees in Condemnations & :
& Final Judgment Denying Acquisition by Condemnation:
N.C. Gen. Stat. § (2002) specifies costs recoverable in the Court’s discretion:
Condemnor pays prevailing Owner reasonable costs, disbursements, and expenses,
Including reasonable attorney fees, appraisal, and engineering fees.
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8. INVERSE CONDEMNATION
Difference between Standard and Inverse Condemnations:
Taking of land or compensable interest without filing suit and declaration of taking. See N.C. Gen. Stat. § (2004).
Owner has 24 months from later of taking or project completion to file complaint and record a memorandum of action with the register of deeds.
Inverse as Counterclaim to Direct Condemnation Action
Inverse Distinguished from Damages to Remainder. See City of Raleigh v. Hollingsworth, 96 N.C. App. 260 (1989), cert. denied, 326 N.C. 363 (1990).
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44. EMINENT DOMAIN IN NORTH CAROLINA
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EMINENT DOMAIN IN NORTH CAROLINA
Parting Quotation:
“In short, everything which affects the value of the property taken in relation to the entire property affected must be considered, for compensation must be full and complete. But all the factors affecting value must be considered only with respect to their effect upon the fair market value of the property, as of the time immediately before and immediately after the taking in the then state of the property taken as a whole.” Barnes at 389.
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45. _________________________
CONTACT INFORMATION AND MATERIALS
Francis Rasberry
Emmett Boney Haywood
City of Raleigh
1 Exchange Plaza
Raleigh, NC 27602
(919)
3700 National Drive, Suite 112
Raleigh, NC 27612
(919)
Download this Presentation and Supporting Cases, Statutes & Rules or
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