BLOGS: North Carolina Land Use Litigator

Friday, May 20, 2016, 1:45 PM

The Problem of Wearing Two Caps Simultaneously – Part I

A favorite teaching tactic in legal ethic courses is putting on and taking off different caps to illustrate the different roles lawyers play in various relationships.  This “on again/off again” routine demonstrates that the ethical rules are different depending upon which cap the attorney is wearing.

Occasionally, a teacher wears two different caps stacked on top of each other.  The teacher’s point is that lawyers look bad and make serious mistakes when they wear two caps simultaneously.  This principle can apply to governments too.

In the recent case of Town of Beech Mountain v. Genesis Wildlife Sanctuary, 2016WL2646664 (May 10, 2016), the North Carolina Court of Appeals encountered a local government wearing two caps simultaneously.  By wearing two different caps stacked on top of each other, the Town of Beech Mountain’s (Town) actions looked bad - it lost the breach of lease claim it asserted against Genesis Wildlife Sanctuary (GWS) and lost GWS’s claim for violation of GWS’s substantive due process rights. 

In Part I, we review the breach of lease claim and in a future Part 2, we will review the substantial due process claim.  
 Town of Beech Mountain v. Genesis Wildlife Sanctuary
1. The Facts
In 1999, the Town formed a 30-year lease with GWS, leasing less than an acre of land adjacent to Buckeye Lake (the “Lease”).   Buckeye Lake (the “Lake”) was the Town’s source of drinking water.  The use of the land leased to GWS was expressly restricted:

To the construction, operation and maintenance of an education center that educates the general public as to how people and wildlife may peacefully co-exist.  It is understood and agreed to by the parties that the Lessee may from time to time house wildlife upon the premises…. Further, the Lessee shall not use or knowingly permit any part of the Leased Premises to be used for any purpose which violates any law.

GWS used the leased premises for the restricted uses and constructed several structures on the leased land for these uses. 

In 2008, the Town’s policy concerning use of the Lake evolved and the Town decided to use the Lake for recreational purposes, in addition to it serving as the Town’s drinking water supply.  Because water supply lakes are subject to state water regulations, the Town received encouragement from state officials to adopt a municipal ordinance to protect the Lake’s water quality. 

In early 2009, the Town adopted a Lake protection ordinance that provided:

No animals can be caged or housed within 200 feet of the Buckeye Lake, or within 2000 feet of any stream that drains into Buckeye Lake.

At trial, evidence showed that the Town’s governing board understood and expected the new ordinance to eliminate GWS’s ability to house animals on the leased land. 

For the next three years, the Town and GWS communicated regarding GWS’s compliance with the ordinance and in March 2012, the Town sent notice of breach of the Lease to GWS, filed a summary ejection action in April 2012 and obtained a judgment of ejectment in May 2012.

GWS appealed the judgment of ejection to Superior Court and filed a number of counterclaims, including a claim that the Town had violated GWS substantive due process rights. 

The Superior Court entered summary judgment in favor of GWS on the Town’s breach of lease claim.  The jury heard evidence regarding GWS’s claim that the Town had violated GWS’s substantive due process rights and returned a damage verdict in favor of GWS of $211,142.10. 

The Town appealed both the rulings to the North Carolina Court of Appeals.  A majority of the Court of Appeals affirmed the Superior Court’s judgment in favor of GWS on the Town’s breach of lease claim, found no error in the substantive due process trial and upheld the damage verdict. 

2. The Court of Appeals' Analysis of the Town's Claim of Breach of Lease 
The majority of the Court of Appeals noted that lease forfeitures are not favored, use restrictions in leases are construed against landlords and use restrictions must be explicit and unambiguous.  Applying these principles, the majority concluded that the restriction prevented GWS “from using the leased property for an illegal purpose.” Beech Mountain p. 5 (emphasis by the Court).    “[T]he purpose of constructing, operating and maintaining a wildlife refuge and educational center “…does not violate any law.” Id.  Accordingly, GWS did not breach the Lease.

Judge Dillon dissented from the majority’s analysis and holding.  Giving the restriction a plain reading, Judge Dillon concluded that the restriction allowed the Town “to declare a default where a tenant purposefully persists in violating zoning, setback, building or other ordinances in the use of the landlord’s property.  Beech Mountain, p. 18 (Emphasis by Judge Dillon).  Accordingly, Judge Dillon would reverse summary judgment in favor of GWS.
Commentary

1. Zoning laws and use restrictions in leases are both restrictions on the use of land.  The underlying rule of construction applicable to all land use restrictions is strict construction of the restriction in favor of the free use of land.
2. In Beech Mountain, the Court of Appeals encountered an unusual situation where a local government wears two caps simultaneously.  Originally, acting in a proprietary role, the Town leased land and restricted use of the leased land to an educational center permitting animals to be housed.  Thereafter, acting in a legislative role, the Town prohibited caging or housing of animals in a general area that included the land leased by GWS.  When a government wears two different and inconsistent caps simultaneously, problems arise:
·   When the Lease was made, the Town’s zoning laws became part of the Lease.   While a government possesses legislative discretion to change law, it cannot take away a vested contractual right.  Recently, the North Carolina Supreme Court applied this rule in the case of teachers. See here.

·    On the other hand, when municipality affirmatively promised, acting in a proprietary role, a tenant a right to use property inconsistent with the municipality’s existing zoning laws, the tenant cannot compel the municipality to perform its contractual duty.  See, Lewis v. City of Washington, 63 N.C. App. 552(1983), affirmed in part, reverse in part, 309 N.C. 818 (1983).  
3. The Lease did not contain an express covenant of quiet enjoyment.  Nevertheless, North Carolina law implies a covenant of quiet enjoyment in every lease.  Through this covenant, the landlord promises his tenant that the tenant will enjoy quiet and peaceful use of leased land free from disturbance by a landlord.
Although GWS did not sue the Town for breach of the Lease, it would seem problematic for a government-landlord to adopt and enforce new laws that interfere with its tenant's use of leased land without violating the implied covenant of quiet enjoyment.

4. Zoning laws regulating zoning, setback, building or other ordinances adopted after a use has been established on land do not typically render the use illegal.  Instead, existing uses are typically treated as a lawful nonconformity. 

Thursday, May 5, 2016, 12:25 PM

Searching for the Heart of the Doctrine of Vested Rights Part II

On July 7, 2015, we posted “Searching for the Heart of the Doctrine of Vested Rights.”(See here) In that post, we compared a Court of Appeals’ decision in a public school teachers’ vested rights case with a decision of the North Carolina Supreme Court in a land use vested rights case.  We asked - “What might be the organizing principle of the doctrine of vested rights?” and concluded that fairness was the heart of the Doctrine of Vested Rights.

On April 15, 2016, a unanimous North Carolina Supreme Court affirmed and modified the Court of Appeals’ decision in the teachers’ vested rights case.  We continue our search for the heart of the Doctrine of Vested Rights by comparing and contrasting the teachers’ case with land use cases.    

Essential Ingredients

Unfairness can be an abstraction or a personal feeling, but the law demands more than philosophy or passion.  The essential ingredients in every vested rights case is (1) a right (2) protected by the federal or state constitutions.

Searching for these essential ingredients triggered an important dialogue among Appellate Division judges and justices in the teachers’ case.  The question was:  When does a statute itself create a contract between the State of North Carolina and public employees – a constitutionally protected property right?  The North Carolina Supreme Court concluded that unless the repealed statute contained promissory language like “contract” or “agreement”, no contract was created.  Because the repealed teachers’ statute lacked such language, the statute itself could not supply the essential ingredients for vested rights.

But, as Justice Edmunds wrote for the Court “[the] analysis does not end here.”  If teachers made contracts in reliance upon the repealed law, then a protected property right exists which the new law cannot take away easily. (Limited instances exist where a protected right can be taken – the heart of the Doctrine of Vested Rights is fairness and fairness requires balancing interests).

Comparing Cases

Land use vested rights cases possess some similarities to the teachers’ case.  In both species of cases, the intended consequences of a repealed law caused private citizens to take important steps permitted by it.  For teachers, they stayed in North Carolina, did a good job and gained tenure-like status through a contract.   In land use cases, property owners plan and design uses and buildings permitted by the repealed law. 

Nevertheless, important differences exist.  In land use cases, a protected property interest is always present – the property owner’s land—and a statute containing promissory language never exists.   Consequently, the principal focus in these cases is the extent of steps and activities taken by a property owner in order to enjoy the benefits of the repealed law.  In other words, is retroactive application of the new law to activities already in progress unfair in a constitutional sense?

The Wobble of Land Use Vested Rights

Legal scholars attempt to organize existing land use vested rights decisions into categories, perhaps with the hope of predicting outcomes in new cases.  Ironically, studying past cases confirm that the future is uncertain. 

Nevertheless, early vested rights cases can be instructive as to the sources of uncertainty.  In one early case, the property owner was developing his property and the development did not require a building permit.  Thereafter, the local government adopted its first zoning ordinance and stopped the property owner from completing the development and using his property.  The Court held that the property owner possessed a vested right to complete the development and use his property despite the new law. 

Today, a tall stack of pancaking regulations applies to any significant proposed development.  Within the stack, you are likely to find a variety of pancakes administered by multiple governments at all levels of government – local, state and federal.  The property owner cannot enjoy his property for his intended, use until all permits and approvals required by the entire stack have been secured.   The question now is, how many and what variety of pancaking regulations must the property owner have satisfied to possess a vested right to complete his plan of development and enjoy his property?  

Unfortunately, the answer is not simple or predictable.  Every development is different.  Every local jurisdiction is different and regulations overlap differently. 

The point is not to empathize with property owners and developers.  The complexity of the development process means only the smartest and most diligent folks succeed—competition is limited and the risks and rewards are substantial.

Instead, the point is that discerning unfairness in a constitutional sense in land use cases is complex and evolving.  As long as the stack grows taller, land use vested rights will continue to wobble.  


Friday, April 22, 2016, 11:14 AM

According to the Right and Good of Ancient Law



Introduction


“You don’t know what you don’t know” is a popular catchphrase.  So, do you know what a “betterment” is and how the law of betterments operates?

 Land use law has ancient roots.  Sometimes, a case requires an appellate court to write a 21st century opinion explaining and summarizing ancient legal concepts and law.  These opinions provide an important service to the practicing bar because they remind lawyers of legal principles which they may have heard, but do not fully appreciate.  Unless you know these ancient roots, you don’t know what you don’t know.

A Primer on the Law of Betterments
In the case of Harris v. Gilchrist,  ___N.C. App. ___, ___ S.E. 2d. __ 2016WL787933 (March 1, 2016), the North Carolina Court of Appeals applies the law of betterments to two classes of defendants.  In Harris, the defendants had been non-owner occupants, but later became tenants in common with the plaintiffs.  The Court of Appeals’ opinion discusses the law of betterments and explains the reasons for this law applying differently to these two classes of defendants.  As such, Harris is a modern primer on the law of betterments.

Facts

The defendants were non-owner occupants who believed they owned land, built a house on the land, resided in the house and paid property taxes and insurance.  When the true owner died and the deed by which the defendants claimed ownership of the land was declared void, the defendants became tenants in common with the plaintiffs.  

Several of the tenants in common filed a petition for partition of the property by sale.  After the property was sold, the trial court entered an order allowing a betterment allowance for the house and reimbursement of taxes and insurance in favor of the defendants.  The trial court denied the plaintiffs’ request that they recover three (3) years of rent from the defendants. The plaintiffs appealed the trial court’s order to the North Carolina Court of Appeals. 

Decision

In a clearly written opinion by Judge Dillon, the Court of Appeals affirms in part and reverses in part the trial court’s order.  The Court of Appeals explains the law of betterments as it applies to two classes of defendants—non-owner occupiers and tenants in common.

·         A betterment is a permanent improvement affixed to land owned by others.   

o   Under the equitable doctrine of ex aequo et bono (“according to the right and good”), a tenant in common who made a “betterment” to real property owned by other tenants in common was entitled to an allowance.

o   By statute adopted in 1871, the General Assembly extended “the right and good” of equity to non-owner occupants holding land under color of title that the non-owner occupant believed to be good title.  Under the statute, a betterment is exclusively a defensive right arising in a proceeding where the true owner of the land invokes the court’s powers to secure possession of the land.  A betterment allowance is intended to compensate a person who has mistakenly made permanent improvements, in good faith, to the land the occupier did not own.

·         Under the statute, the amount of the allowance equals the lesser of either (1) the costs of the betterment or (2) the incremental increase in value of the land caused by the betterment.  The incremental increase in value is the difference in the value of the land with the permanent improvement minus the value of the land without the permanent improvement (land value with permanent improvement – land value without the permanent improvement = incremental increase in value). 

·         Balancing the scales of justice requires consideration of the rent which would have been due to the true owner:

o   A tenant in common who occupied the land is not liable for rent so long as the tenant has not prevented the other tenants from accessing the land. 

o   A non-owner occupant possesses no land rights and owes three (3) years of the fair market rent accruing before the true owner filed a legal action seeking possession of the land.  Rent accruing more than three (3) years after the filing of the owner’s action is only an offset to a betterment allowance.

·         Balancing the scales of justice requires consideration of contributions made by the person who made the betterment:

o   A tenant in common is entitled to reimbursement for paying taxes and insurance assessed against property owned by tenants in common.

o   A non-owner occupier is not entitled to reimbursement for paying taxes and insurance assessed against another person’s property.

Comments
1. With modern surveying exactitude, it is rare in the 21st century for a person to build an improvement on another person’s property because of a defective survey.   But, people do mistakenly assume that they own property.   In those situations, betterments may be their only relief for investing hundreds of thousands of dollars on another person’s land.

2.  Harris illustrates broader and more important lessons:  
a.      First, the law is deep and wide.   Law, the body of legal rules, principles, and doctrines, has developed to administer justice “according to the right and good.”  While the legal system is imperfect, most times injustices arise from the imperfections of people operating in the system – not the system itself. 

b.      Second, when you encounter a case which seems unfair, then, most likely, you have not thought deeply enough about the facts or researched diligently enough to find the exact law which fits the unique facts of the case. As Harris illustrates legal rules, principles, and doctrines are nuanced and a single factual difference may completely alter the outcome of a case.

Bottom line:  When you don’t know what you don’t know, you cannot blame the legal system.



Friday, April 8, 2016, 9:03 AM

The Business of Water Service


If you turn a water faucet handle, you expect that clean water to pour forth.  If you flush a toilet, you expect waste to disappear.  If these are your expectations, you are likely a business customer of a local government. 

 There are two significant water service cases pending in the North Carolina Supreme Court.  North Carolina Supreme Court decisions are controlling and decisions in these cases may change water service business practices in North Carolina. 

We posted an earlier entry about one of these cases. See here  In 2013, the General Assembly transferred the assets and obligations of the City of Asheville’s 100 year-old drinking water system to a regional sewer district, which had never operated a drinking water system.  However, the General Assembly made no provision for the employees experienced in operating the system to continue operating it.

If the North Carolina Supreme Court decides this transfer law is valid, then a majority vote at the General Assembly can dissolve any local government drinking water or sewage disposal company and transfer its assets and operations to a company chosen by the General Assembly.

In today’s post, we discuss another water service case pending in the North Carolina Supreme Court.  This case involves who pays for water services.  A homebuilder contends that the Town of Carthage (the “Town”) cannot assess a water service fee against a person selling lots to home buyers because the seller is not consuming the services.  If the North Carolina Supreme Court agrees with the homebuilder, water costs will increase for consumers, such as homeowners, and water services may not grow to serve new development.

The North Carolina Supreme Court has scheduled oral argument for both cases on May 17, 2016.

Background

A legendary phrase in jurisprudence is Lord Coke’s “Note the distinction.”  When you hear the phrase, you have a queasy feeling.  Your analysis is perfectly logical – and perfectly wrong. 

A basic distinction in North Carolina local government law is that North Carolina local governments discharge governmental activities and engage in proprietary activities. 

A governmental activity is regulating public conduct, such as adopting land development regulations or providing services, such as public schools, jails, and social services. Everybody has the right to use these services. 

A propriety activity is operating a business, such as providing water services.  Only people who pay for the service have a right to use it.  
Quality Built Homes, Inc. v. Town Carthage

      A.     The Facts

Under the Town’s laws, a “water impact fee” must be paid at the time a customer taps into the system or a development permit is issued within the system’s area, whichever occurs first.  Final subdivision plat approval is a development permit under Town law. 

Quality Built Homes, Inc. (homebuilder) paid the impact fees, sold all lots in its subdivision and sued the Town for a refund, interest and attorney fees.  The homebuilder alleged that the Town “was not specifically authorized by law to charge and collect impact fees for water and sewer”, the Town “has illegally collected water and sewer fees.” and “was using the impact fees …to offset the expense of maintaining its entire water system.” Quality Built Homes v. Town of Carthage, __ N.C. App. __, 776 S.E. 2d 897(2015)(unpublished), p. 1.  At that point, the Town was supplying water and sewer services to homebuilder’s former customers, the homeowners residing in the homebuilder’s development. 

The Town denied the homebuilder’s allegations and asserted the affirmative defenses of statute of limitations, and waiver or estoppel through acceptance of the benefits.  The trial court entered summary judgment in favor of Town and the homebuilder appealed to the North Carolina Court of Appeals. 

    B.   The Court of Appeals’ Decision    

    After reviewing plaintiff’s contentions, the public enterprise statutes, and North Carolina Supreme Court case law, the North Carolina Court of Appeals affirmed the trial court’s judgment and concluded that the Town was authorized to charge impact fees “that are necessary to ensure the continued quality of water and sewer services in the face of development.”  Quality Built, p. 4.  As for using these fees for maintenance, the Court of Appeals concluded that the plaintiff had not identified any authority prohibiting the use of revenue generated from these fees for maintenance, and therefore the Court of Appeals overruled the plaintiff’s claim that the Town “has acted ultra vires in collecting its water and sewer impact fees.”  Quality Built, p. 5.

   C.     The North Carolina Supreme Court and the Homebuilder’s Theory

The homebuilder asked the North Carolina Supreme Court to review the Court of Appeal’s decision and the North Carolina Supreme Court accepted the case for review.

The homebuilder’s legal theory is: (1) local governments only possess those powers granted by the North Carolina General Assembly, (2) the public enterprise statutes do not use the term “impact fees” and only enable fees “for the use of or the services furnished by” a public enterprise, (3) this language is clear, unambiguous and cannot be broadly construed to include or imply authority to charge impact fees, (4) homebuilder was charged for services to be furnished and (5) this fee is not unauthorized by the General Assembly, illegal and ultra vires.  

The homebuilder finds support for its theory in two North Carolina Supreme Court decisions where homebuilders have won making similar arguments.  In Smith Chapel Baptist Church v. City of Durham, 350 N.C. 805 (1999), the North Carolina Supreme Court  held that charging stormwater fees for purposes other than stormwater drainage systems was unauthorized.  In Lanvale Properties v. County of Cabarrus, 366 N.C. 142 (2012), the North Carolina Supreme Court held that charging zoning fees to subsidize new school construction was not authorized by the General Assembly.
Comments
   1.  Note the distinction: zoning and subdivision enabling statutes do not authorize charging fees; public enterprise enabling statutes authorize a broad array of fees (“rents, rates, fees, charges and penalties”) assessed in the business discretion of local governments operating public enterprises.  Setting rates for a public enterprise is a “propriety function… limited only by statute or contractual agreement.” Smith Chapel Baptist Church, 350 NC 805, 815.  Public enterprise statutes do not forbid charging “impact fees.”
   a.  It is unsurprising that the term “impact fee” does not appear in the first sentence of N.C.G.S. 160A-314(a). This 45 year-old sentence has not been modified since it was adopted in 1971.  The term “impact fee” did not appear in a recorded case arising in North Carolina until 1988, 17 years later.  In fact, neither a North Carolina appellate court decision nor the General Assembly has defined the term “impact fee.”  So, the real question “is what did the General Assembly mean by ‘use of … any public enterprise?’” 

   b.  The General Assembly did not limit "use" by adopting a definition.  Customers buying new homes in residential subdivisions expect water and sewer services.  To satisfy these expectations, homebuilders must either build water service systems or represent that there is a third party provider.  Drilling wells and building septic systems consumes land, reducing the number and/or size of homes a homebuilder can sell and raising the homebuilder's construction costs.  Moreover, some land, because of poor soils, cannot support wells and septic systems.  Because the Town could serve the new subdivision, the homebuilder avoided these costs and risks and satisfied its customers' expectations.  The homebuilder used the availability of the Town's water services to sell homes.  The General Assembly understood this fact in 1971, and this fact continues today.

   c.  Of course, in some circumstances water service fees are unreasonable.  See e.g. Point South Properties v. Cape Fear Public Utility Authority, __ N.C. App. __, 778 S.E.2d 284 (2015) (refunds due to developer where property is served by another provider and defendant had no plans to serve the property). See here 

   Here, Quality Homes paid the fees and sold all of its product and wants fees refunded – a double benefit.

   2. Justice Huskins, a former Justice of the North Carolina Supreme Court, was fond of saying that he wanted to know the “the meat in the coconut” – not the hard shell of abstract legal analysis.

  a. Homebuilding is an important business.  Fees are passed along to homebuyers and advocating forhousing affordability is a laudable cause.  Unfortunately, in some circles, when a fee is labeled “impact fee”, the attitude is “game on.”

   b. If the North Carolina Supreme Court adopts the homebuilder’s position, only current consumers of water services will pay for water service businesses.
                  i.   While housing prices might decrease, the cost of home ownership is likely to increase. 

                 ii.  Why should current consumers pay for extensions or enlargement of water service systems?                 In fact, how could local governments charge fees to current customers for extensions or                       enlargements of water systems to serve new development?  Existing customers are not                         consuming these water services.

 3. When you note the distinction between governmental and proprietary activities, the General Assembly’s plan is self-evident: Local governments possess discretion to manage their businesses.  If a company uses a water service to its economic advantage, the local government may assess a reasonable and non-discriminatory fee.  How a business spends its revenue to support its business is a discretionary business decision.

After all, water service is a propriety activity. 





   
    










Thursday, March 24, 2016, 5:46 PM

The Ready-Made Suit of Standing

Chief Superior Court Judge James H. Pou Bailey informed lawyers - “Justice under the law is like buying a suit off the rack.  It doesn’t fit anybody perfectly, but it fits a lot of people fairly well.”

Sometimes, an unpublished opinion contains informative illustrations.  Although it is not controlling legal authority and citation to it is disfavored, an unpublished opinion provides typical examples – how the already-made suit of justice under the law fits a situation. 

In our last blog post, we discussed Cherry v. Wiesner, a published North Carolina C ourt of Appeal’s opinion.  In Cherry, the North Carolina Court of Appeals affirmed dismissal of an appeal brought by a neighbor living across the street from the alleged misapplication of historic district rules because she failed to allege standing.  In that blog post, we suggested that a newly-made limited suit for standing might be appropriate for property located in historic districts because historic district zoning laws regulate the appearances of building exteriors.  Specifically, we suggested that consideration of the arguments for and  against the court crafting a newly-made limited suit for standing in historic districts was worthy of consideration because the answer affected all properties in historic districts, and would provide the definitive rule applicable to these special districts. 

Two weeks after publishing Cherry, the North Carolina Court of Appeals decided another standing case involving a challenge by an adjacent property owner where none of the property was located in a historic property district.  In Sugar Mountain Ski Resort v. Village of Sugar Mountain (2016 WL 791132)(March 1, 2016)(Unpublished) the North Carolina Court of Appeals affirmed the Superior Court’s denial of a motion to dismiss the appeal for lack of standing.  The Court of Appeals concluded that the adjacent property owner had alleged standing and showed special damages.  

In other words, the adjacent property owner’s pleading and evidence in Sugar Mountain fit the ready-made suit of standing.

Sugar Mountain Resort v. Village of Sugar Mountain and Round Boys, LLC

Facts
Round Boys LLC (RB) purchased a house located on a slope adjacent to Sugar Mountain Resort’s (SMR) ski slopes.  The house’s deck was less than 2½ feet from SMR’s property line and violated the existing setback requirement of the Village of Sugar Mountain (VSM).  However, the deck had been allowed to remain because it had been built prior to VSM’s adoption of its zoning ordinance. 

RB demolished a portion of the non-conforming deck and simultaneously applied for a variance to expand further into the setback by building new construction.  At the hearings held by the Board of Adjustment (Board) considering RB’s variance request, RB agreed to restrict its new construction to remain within the footprint of the original encroachment.  Based upon this agreement, the Board concluded that no variance was required and approved issuance of a Zoning Compliance Permit. 

SMR appealed the Board’s decision to Superior Court, and filed a motion in Superior Court requesting a temporary restraining order and preliminary injunction (Injunctive relief) to halt construction in the setback until SMR’s appeal was decided.  In its petition for writ of certiorari, SMR alleged:
Petitioner has standing…in that it is the owner of property that is adjacent to property which is the subject of the Board’s Order being appealed by this Petition and will suffer special damages as a result of the Board’s Order in that the Board’s Order allows additional construction and improvements to real property adjacent to a ski slope and within the prohibited [setback] area of the Village and the additional construction and improvements have the potential to affect safety and to create a damage to the general health, safety and welfare of the Village.   Sugar Mountain, p.4 (Emphasis by the Court).

Two surveys showing the location of pre-existing and new construction in the setback were in the record.  In support of its motion for injunctive relief, SMR proffered an affidavit signed by its manager stating in more detail the facts supporting SMR’s allegation of special damages.  SMR’s manager stated that the construction of the new improvements “would potentially interfere with skiing operations,” and the new structure added in the setback area “itself could pose an increased risk to the general safety and welfare of the public.”

Asserting that SMR lacked standing, RB filed a motion to dismiss SMR’s appeal. The Superior Court denied RB’s motion and remanded the case to the Board because the Board had “failed to make findings of fact or conclusions of law in the [Board’s] order so that [the superior court could] properly perform its function.”  RB appealed the Superior Court’s denial of its motion to dismiss for lack of standing to the North Carolina Court of Appeals.

Decision

After reviewing SMR’s pleading, the surveys and SMR’s manager’s affidavit, the Court of Appeals concluded that SMR had “sufficiently alleged (1) that the improvements that the Board allowed were unlawful… in that they were located ‘within the prohibited [setback] area’ and (2) that the resort would suffer ‘special damages’ in the form of interfering with skiing operations and reducing the safety of the resort’s ski slopes for members of the public who are guests and patrons of the resort.”  Sugar Mountain p.5.

In reaching this conclusion, the Court rejected two legal arguments proffered by RB.  First, RB contended that the proposed improvements would not alter the existing setback or increase or alter the pre-existing nonconformity.  Therefore, SMR could not suffer special damages.  As for this argument, the Court reviewed the record and noted that RB’s variance application proposed an expansion of the home and construction within 2 1/2 feet of the property line.  In other words, while the record was unclear, there was evidence prepared by RB that seemed to contradict RB’s first legal argument.

In its second argument, RB contended that the Board’s determination that the proposed improvements would not increase the footprint of the structure conclusively established that the proposed improvements were lawful uses.  The Court of Appeals rejected this argument emphatically.  The Court observed that “were we to accept the owner’s reasoning, no zoning board decision finding a requested use to be ‘permitted’ could ever be questioned, no matter how erroneous the board’s determination might actually be.”  Sugar Mountain p.4.
Comments

1.  Sugar Mountain illustrates the importance of standing.  When a party considers appealing a governmental land use decision that which entitles a use on another owner’s property, an essential first step is identifying the (1) illegal use permitted by the decision and (2) the special damages arising from this illegal use.  
2.  The concept of standing is quite simple.  At the point a party invokes the jurisdiction of a court by filing a case, the party must show to the court at that time and continuously thereafter during the entire proceeding that the dispute practically matters. 

In Sugar Mountain, the record showed that determining whether the Board’s decision was erroneous mattered practically.  An erroneous decision would allow an illegal use on adjacent property and “special damages in the form of interfering with skiing operations and reducing the safety of the resort’s ski slopes for members of the public who were guests and patrons of the resort” could flow from the illegal use.  The case fit the already-made suit of standing.










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