tag: North Carolina Land Use Litigator: North Carolina Court of Appeals Rules On Importance of Administrative Remedies and the Limits of Rule 11 Sanctions

Tuesday, December 21, 2010, 4:38 PM

North Carolina Court of Appeals Rules On Importance of Administrative Remedies and the Limits of Rule 11 Sanctions


Just this week, the Court of Appeals celebrated the holiday season with a tribute to the administrative process and by carefully outlining the oft-overused weapon of Rule 11 sanctions. All this, a victory for a local government, and a partridge in a pear tree.

The case -- Barris v. Town of Long Beach -- boasts a pretty Byzantine procedural history, which we'll attempt to spell out in a linear fashion. Our academic history may have included math and logic courses. And disappointing athletics.

Facts
--The Barris family owns a piece of property in Oak Island, North Carolina.

--The Barris property abuts the property at issue, which is located on the western edge of West Yacht Drive and at the dead end of Oak Island Drive. In the photo accompanying this blog, the property at issue is, in the most artful sense, the barren patch of sand.

--The Barris family owns a non-exclusive easement over the barren patch of sand for purposes of ingress, egress, and regress. Yes, the Barrises posses all the -esses.

--The Town of Oak Island has tried in the past to to "improve" this barren patch. As a result, in 2002, the Barrises filed suit.

--In 2003, the Superior Court granted partial summary judgment in the Barrises favor "affirm[ing the Barris'] easement rights and ordered the Town to remove the park-like area" in the barren patch. We'll call this "the first order."

--The Town gave timely notice of appeal, which the Court of Appeals dismissed a year later with prejudice. As a result, the Town "removed the park."

--In early 2005, the Town applied to the North Carolina Department of Natural Resources (DENR) for a Coastal Area Management Act (CAMA) permit to build within the non-exclusive easement. The application included a site plan, which we'll call the "first site plan."

--Alongside the Barris' objection, which referenced the 2003 first order from the Superior Court, DENR denied the Town's CAMA permit application. The Town filed a motion to modify the first order, as well as an appeal of the DENR decision. The Superior Court denied the Town's motion.

--In late 2005, after a jury trial on a lone question, the Burrises were awarded $36,501.00 as compensation for the Town's "wrongful obstruction and interference with [the Burris'] right of access." The Superior Court also taxed the Town with costs and attorneys fees.

--The Town appealed the verdict and filed a petition for writ of certiorari. The petition and the appeal were both dismissed, the latter with prejudice and including an award of fees, costs, and imposing Rule 11 sanctions.

--In 2008, the Town again applied with DENR for a CAMA permit, an application that included a "second site plan." The Burrises objected, contending the first site plan and second site plan were identical. The Superior Court agreed, granting the Burrises motion to enforce the prior Court orders, to award fees and costs, and to impose monetary sanctions.

--The Town again appealed.

Holding
You'd think that after all the courthouse beatings, the poor Town would only get it again. Not so.

In a victory for the principal of the exhaustion of remedies, the Court of Appeals first noted that the Superior Court erred by exercising jurisdiction over "a permit issue properly governed by administrative law." In other words, the Superior Court had no business enforcing prior orders as to the second site plan when the administrative process exists precisely because those agencies (in this case, DENR) "posses the expertise in determining whether or not the issues presented by the Town's second site plan were identical to [the first site plan] the trial court previously had examined." The Court vacated the trial court's application of "res judicata, collateral estoppel, judicial estoppel, and law of the case doctrine," concluding that the second site plan "should have been examined first by DENR."

The Court also vacated the award of Rule 11 sanctions against the Town. First, the Court took issue with the fact that the trial court considered a site plan to be an "other paper of a party" as that Rule provides: "Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record ...." N.C.G.S. 1A-1, Rule 11(a). Perhaps an abuse of process claim would have fared better? Probably not. Following on the Court's analysis as to the expertise inherent in the administrative process, the Court also determined that "justiciable issues" existed as to whether the first site plan and the second site plan were "materially different." If DENR makes such a ruling, should the Barrises revisit this type of claim? We'll see.

Mike Thelen is a lawyer in Womble Carlyle's Real Estate Litigation practice group. He regularly represents a wide variety of clients in land use and land development issues, from local governments to businesses, in both state and federal venues throughout North Carolina.

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