BLOGS: North Carolina Land Use Litigator

Wednesday, May 20, 2015, 4:01 PM

N.C. Court of Appeals Speaks On "Violations" of Residential Rental Agreement Act

The North Carolina Court of Appeals reversed a trial court decision, rendered in the wake of a bench trial (i.e., tried without a jury), wherein the trial court held that a residential landlord violated the North Carolina Residential Rental Agreement Act (the "RRAA") -- N.C.G.S. Chapter 42, sections 38 to 44 -- for failing to provide a rental residence with an operating smoke alarm or an operating carbon monoxide alarm.

The case is Stikeleather Realty and Investment Co. v. Broadway, No. COA14-1136 (May 19, 2015).

The RRAA does require that residential landlords "[p]rovide operable smoke alarms[]" and "[p]rovide a minimum of one operable carbon monoxide alarm per rental unit per level".  N.C.G.S. 42-42(a)(5), (7).  No one appeared to dispute that the residence at issue did not have an "operable smoke alarm" or an "operable carbon monoxide alarm".  However, no one appears to dispute that tenant did not suffer any injury as a result of the landlord's failings in this regard, either.

Tenant Broadway sought, and was awarded by the trial court, rental abatement for landlord's violation of these provisions of the RRAA.  The Court of Appeals reversed the trial court as to the violation of the RRAA and as to the award of rental abatement.  The Court of Appeals addressed each point separately.

First, the Court concludes that a violation of the letter of the RRAA is not, ipso facto without more, a violation of the RRAA.  The Court:

First, as to the alleged breach of the implied warranty of habitability, it is true the RRAA imposed upon Plaintiff-Landlord a duty to verify the property had an operable smoke alarm and carbon monoxide alarm once it became the new property owner and manager on 26 June 2013. However, the trial court never made any specific findings of the ultimate facts essential to conclude that Plaintiff-Landlord violated the RRAA. For instance, the trial court failed to make any findings as to the current applicable building and housing codes and which, if any, of the codes were violated. Nor did the trial court make any findings as to how verifying the operability of an alarm would put or keep the premises in a fit and habitable condition, or how doing so would keep the safety of the premises. Not only did the trial court fail to make findings of whether Plaintiff-Landlord knew or had reason to know the alarm provided by Mr. Kluth was not new or in good or safe working order, but also it made no findings as to how failing to verify the operability of an alarm rendered the premises unfit for human habitation, or how this unfitness devalued the fair rental value of the property such that Defendant-Tenant should be entitled to rent abatement.

Second, the Court concludes that even if there is a violation of the RRAA, rental abatement is not a proper remedy unless the tenant suffers actual damages:

Second, as to the award of rent abatement, the trial court did not articulate its rationale with any specificity in declaring how Plaintiff-Landlord’s alleged failure to verify the property had an operable smoke alarm and carbon monoxide alarm— without more—entitles Defendant-Tenant to a restitutionary remedy such as rent abatement. The trial court made no finding that the premises was uninhabitable during the period in which Defendant-Tenant paid rent. There was no finding that the premises was unfit or of the value of the premises in its “uninhabitable” state. Without a finding that the property was unfit for human habitation, or of the fair rental value of the property in its unwarranted condition as required by our case law, an award of rent abatement cannot be sustained.

The Court of Appeals rests its conclusions on that which is "lacking" from the "specific findings of the ultimate facts", of course.  And that makes sense, as the appellate standard of review as to judgment after a bench trial is "whether there is competent evidence to support the trial court’s findings of fact and whether the findings support the conclusions of law and ensuing judgment". Judicial findings of fact and conclusions, as well as appellate standards, are as important as the actual facts, the actual law in litigating an issue.

But more interesting to us is how the Court views the RRAA.  Has it been weakened by this decision?  Will the General Assembly respond with nondiscretionary penalty provisions?  We'll see.  Whatever the case, it seems landlords have a little breathing room.


Would you want one of these in your home?

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Friday, May 8, 2015, 2:35 PM

Guests Laura DeVivo and Angel Sams Explain the N.C. General Assembly's Recently-Concluded and Critical "Crossover" Period

The "crossover" period has just ended in the North Carolina General Assembly, which is an inflection point for pending bills in each session.  Here with a wonderful explanation of what "crossover" means, both technically and practically, are my colleagues, Womble Carlyle lobbyists Laura DeVivo and Angel Sams.  Angel and Laura have their own excellent blog on our Firm's website, Keeping Up With Jones Street.  It's informative, entertaining, and strategically critical.

Laura and Angel, have at it:

Crossover is a nutty time on Jones Street where the House and Senate are killing themselves to pass their bills to the other chamber to beat a made-up deadline.  It is actually a date in the House Rules by which certain Senate Bills must be received by the House and a date in the Senate Rules by which certain House Bills must be received by the Senate.  The Rules are adopted in a resolution by the respective chamber at the beginning of each legislative session.  The House and Senate Rules agreed on the date, April 30, 2015 in this case. 

Generally the bills subject to crossover deal with substantive policy with no impact on state appropriations and/or don’t contain new taxes or fees.  The crossover rule is interpreted by the leadership in every case but is fairly consistently applied.  Bills that contain a new tax or fee, a state appropriation, handle redistricting matters or adjournment resolutions are not subject to crossover.  Many bills subject to appropriations are rolled into the state budget, and those containing new fees and taxes end up in omnibus bills on the subject.  Bills that are subject to crossover but are not received by the other chamber by the crossover deadline are dead for the remainder of the biennium.

Both crossover rules are below:

SENATE RULE 41. Crossover bill deadline. – In order to be eligible for consideration by the Senate during the 2015 or 2016 Regular Sessions of the 2015 General Assembly, all House bills other than (i) those required to be referred to the Committee on Finance or the Committee on Appropriations/Base Budget by Rule 42, (ii) those establishing districts for Congress or State or local entities, or (iii) adjournment resolutions must be received and read on the floor of the Senate as a message from the House no later than Thursday, May 7, 2015, provided that a message from the House received by the next legislative day stating that a bill has passed its third reading and is being engrossed shall comply with the requirements of this rule and provided that the House accepts Senate bills ordered engrossed on the next legislative day.  [The Senate Rule date was amended by a later resolution to April 30th.]

HOUSE RULE 31.1(h)  - In order to be eligible for consideration by the House during the first Regular Session, all Senate bills other than finance or appropriations bills that would be required to be re-referred to the Appropriations or Finance Committee under Rule 38 or adjournment resolutions must be received and read on the floor of the House as a message from the Senate no later than Thursday, April 30, 2015; provided that a message from the Senate received by the next legislative day stating that a bill has passed its third reading and is being engrossed shall comply with the requirements of this subsection and provided that the Senate has a similar rule.


Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Proposed State Constitutional Amendment Regarding Eminent Domain Powers Supported By House, Readies for Senate Vote

We blogged in the past here about House Bill 3 pending in the North Carolina General Assembly, which is entitled: "AN ACT TO AMEND THE NORTH CAROLINA CONSTITUTION TO PROHIBIT CONDEMNATION OF PRIVATE PROPERTY EXCEPT FOR A PUBLIC USE, TO PROVIDE FOR THE PAYMENT OF JUST COMPENSATION WITH RIGHT OF TRIAL BY JURY IN ALL CONDEMNATION CASES, AND TO MAKE SIMILAR STATUTORY CHANGES."

The Bill's title should give you a sense of its contents.  If you'd like to know more, you can view the Bill in its current form or you can revisit our prior piece from January of this year.  The legislative staff provides its own summary here.

What makes things a little more interesting is the N.C. Court of Appeals recent decision in Town of Matthews v. Wright, which we blogged about here.  In Wright, the Court of Appeals reiterated that a taking by a local government must be for both a public use and a public benefit; the Town could not show a public benefit, and thus improperly exercised its eminent domain powers.  If the test is conjunctive rather than disjunctive as between "public use" and "public benefit", as the Wright case reminds is true in a local government context, does the amendment proposed by HB 3 removing "public benefit" from the private condemnor calculus actually remove one prong of/obstacle to condemnation?  In other words, in the wake of HB 3 should it become law and as the courts read the laws, will a private condemnor need show ONLY "public use" rather than BOTH "public use" and "public benefit"?  We're not so sure that is the intended outcome by the drafters of and supporters of HB 3, who likely believe the test to be "disjunctive" or, at least, do not want the taking power to be made "easier" for the potential condemnors.

Since we blogged at the time of its introduction, House Bill 3 passed the House in February by a 113-5 count.  It currently sits in the Senate Rules Committee.  The Bill -- which would allow a ballot measure to amend the State constitution -- must make it out of the Senate.  We'll see if it does.  If so, the measure would appear on the May 2016 ballot.

Stay tuned.

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Thursday, May 7, 2015, 1:04 PM

Proposed Law Before N.C. General Assembly Would Overhaul State's Billboard and Outdoor Advertising Laws

Filed March 17, 2015, Senate Bill 320 (linked) proposes significant revisions to State laws governing billboards and outdoor advertising.  In this post, we review some of the changes that would result from Senate Bill 320 in its current form.

Local governments, lessors to billboard companies and billboard companies, alike, will want to take notice.

Policy Language
SB 320 would add new, strong policy language to existing N.C.G.S. 136-127, which sets the tone of the proposed changes in SB 320.  SB 320 declares outdoor advertising and billboards "an integral part" of commerce "that must be allowed to exist and operate", and requires the "preservation" and "fostering" of outdoor advertising and billboards.  You can see where these proposed changes are headed. 

Local Ordinances
NCDOT could no longer deny a billboard permit application because the outdoor advertising or billboard does not comply with local development regulations, nor could NCDOT deny a billboard permit for a location outside a commercial or industrial area pursuant to the "customary use" doctrine. The "customary use doctrine" is defined as: "Compliance with the specific outdoor advertising standards for size, lighting, and spacing in areas zoned industrial or commercial under authority of State law or in unzoned industrial or commercial areas, as the standards and areas are described and defined in the agreement dated January 7, 1972, as amended, and entered into between the State and the United States Department of Transportation under G.S. 136-138 to implement the provisions of the federal Highway Beautification Act of 1965." 

SB 320 would add N.C.G.S. 136-131.2(c) and (d).  Pursuant to these new provisions, neither the NCDOT nor a local government could deny the ability of an existing billboard to relocate to a more visible area in the same municipality or county, even if the proposed relocation area has significant tree cover.  

The bill prohibits local governments from regulating the maintenance, alteration, relocation or reconstruction of an existing billboard, even if the billboard is a nonconformity, without payment of just compensation.  The "maintenance, alteration, relocation or reconstruction" provision allows existing billboards to add a sign face if single sided, add a "changeable" face, increase height to eighty (80) feet, convert from wooden poles to metal poles, and convert from bipole to monopole.  

Just Compensation
New requirements and criteria would be added to existing N.C.G.S. 136-131, which would be used to determine the amount of just compensation for the removal of a billboard.  Payment must be made not just for the value of the real property, which is the current law:  "[Compensation] [s]hall be limited to the fair market value at the time of the taking of the outdoor advertising owner's interest in the real property on which the outdoor advertising is located and such value shall include the value of the outdoor advertising."  Under this proposed law, compensation would extend to other factors including, but not limited to, "income generated by the rental of advertising space", the value of the billboard permit, and the "ability to relocate" the billboard or outdoor advertising sign.

The new law would also add N.C.G.S. 160A-199(d1), which requires that a local government pay just compensation where billboard removal is a condition of a development approval: "No city may condition the grant of any development approval on the removal of off-premises outdoor advertising without the payment of monetary compensation as prescribed by this section. For purposes of this section, the term "development approval" includes approval for rezoning, variances, building permits, and permits authorized by quasi-judicial proceedings."

Design/Signface
SB 320 excludes "embellishments or extended advertising" from the definition of "sign face", which will allow larger signs than is currently permitted under State law.

Vegetation 
A unique concern to billboard and outdoor advertising companies, vegetation removal regulations also get an overhaul under the proposed bill.  SB 320 expands the area that may be cleared for increased sign visibility from the area only including "along acceleration or deceleration ramps" (current N.C.G.S. 136-133.1(a1)) to the significantly more broad reach of "within gores, medians, or other areas of the primary highway system"(new N.C.G.S. 136-133.1(a1)).  New billboard owners would no longer have to wait two (2) years for a vegetation clearing permit, which is the current system.  Under the proposed paradigm and new N.C.G.S. 136-133.2(b), owners "may" be issued a permit immediately.  In addition, selective vegetation removal permits would be good for three (3) years under the proposed law, increasing from the one (1) year window currently in place under N.C.G.S. 136-133.4(b).

Time for Approval or Denial of Permit Application
SB 320 would add N.C.G.S. 136-133.5(h).  NCDOT would be required to decide all new billboard permit applications within thirty (30) days, or the permit application is automatically approved.   
We will follow this SB 320 to see if it becomes law.  

"Fire Charlie Weis."

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Wednesday, April 22, 2015, 4:00 PM

What is Done is Done – and Cannot be Undone



Lady Macbeth tells her troubled husband, “What is done is done” and later says to herself “and cannot be undone.”  This is the outcome in Hillcrest Property, LLP v. Pasco County, 754 F. 3d 1279 (11th Cir 2014) and apparently the United States Supreme Court accepted it when the Court declined to review Hillcrest on April 21, 2015.
The Case
In 2001, Hillcrest purchased 16.5 acres of property in Pasco County.  Four years later, in 2005, Pasco County adopted The Right of Way Preservation Ordinance (the “Ordinance”).  Generally, the Ordinance requires dedication of right of way shown on officially adopted maps and tables in order to secure a development permit.  The Ordinance contains provisions permitting waivers when the required dedication is not roughly proportional or variances in hardship situations.  The burden lies with the landowner to prove entitlement to relief. 
Hillcrest submitted a preliminary site plan seeking a development permit in 2006.  From 2006 to 2010, Hillcrest, Pasco County and later Florida’s Department of Transportation engaged in a series of submittals of site plans, rejection of site plans, and negotiations regarding Hillcrest’s dedication of right of way.  Ultimately, Hillcrest made the required dedications and its preliminary site plan and construction plan was approved.  During this four year process, Hillcrest submitted written reservation of its rights to contest the exaction.
Hillcrest filed its lawsuit in 2010 challenging the exaction road right of way alleging violations of  its right to due process, to equal protection, to access to courts and to a jury trial and other state claims.  The federal district court entered judgment in favor of Pasco County on all claims except Hillcrest’s substantive due process as-applied claim and  substantive due process facial claim.  For Hillcrest’s facial claim, the district court entered summary judgment in favor of Hillcrest and issued a permanent injunction against enforcement of the Ordinance.  Pasco County appealed. 
The Eleventh Circuit Court of Appeals reversed.  The Eleventh Circuit held that a facial substantive due process claim brought pursuit to 42 U.S.C. § 1983 accrues (i.e. the time for bringing the claim begins) on the date the government adopts the law - not when Hillcrest applied for a development approval.  To reach this conclusion, the court extends takings law to apply to facial substantive due process claims and followed two cases decided by other federal circuits. 
Based upon precedent, the Eleventh Circuit reasoned that statute of limitation for a facial substantive due process claim brought pursuant to 42 U.S.C. § 1983 is the state statute of limitations for personal injury claims.  In Florida, the state statute of limitations for personal injury claims is four years.  Accordingly, Hillcrest’s claim of a facial violation of Substantial Due Process accrued in 2005 and expired in 2009, a year before Hillcrest filed its lawsuit.  Thus, under law, “What is done is done” and “cannot be undone.”
Hillcrest’s as-applied substantive due process claim remains pending in federal district court, and the outcome of the entire case is uncertain. 
Observations
In Hillcrest, two courts came to diametrically opposed conclusions.  The federal district court concluded that the period for bringing a facial substantive due process claim began when the Ordinance was applied to Hillcrest – when Hillcrest applied for a development permit in 2006.  On the other hand, the Eleventh Circuit reasoned that Hillcrest’s injury in a facial claim occurred when the Ordinance was adopted in 2005 and became applicable to Hillcrest’s property.   
Rules of statutes of limitations should be clear, but for land use controversies, statutes of limitations are complex, uncertain and evolving.  Litigants tend to focus the substantive elements of claims and available evidence.  Frequently, matters like statutes of limitation and appropriate remedies are considered too late, if at all. 
Of course, Hillcrest faced a practical dilemma.  Hillcrest would have had to sued Pasco County by 2009 to preserve its facial substantive due process claim - at the time Hillcrest was seeking a permit.  On the other hand, there were many other actors making important decisions who did not challenge the Ordinance.  A judgment finding that the Ordinance was, on its face, unenforceable unsettles transactions and occurrences well beyond Hillcrest’s property and development plan.  Perhaps, in that situation what is done is done and cannot be undone.
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