tag: North Carolina Land Use Litigator: November 2014

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Monday, November 24, 2014, 3:22 PM

Asheville, North Carolina Looks At Short-Term Rentals and Zoning, Fees

Thanks to the internet, is this a golden age of direct-to-consumer, everyday necessities like living quarters -- think AirBnB or Couchsurfing -- to transportation -- think Uber and Lyft?  Is laundry next?  What about eating?  And is this the next generation of internet-brokered person-to-person deals, beyond the eBays and Craigslists?

In Asheville, a tourist destination among the unrivaled western North Carolina mountains, the present issue is the short-term residential rental, even rising to the level of national news.  It's reported that the City had been looking at least since 2013 at zoning and fees and other regulatory approaches to short-term rentals, of which AirBnB is a purveyor.   Short-term rentals for less than 30 days time, in a structure separate from the primary residence (say, a detached garage or an apartment), is illegal in most parts of Asheville, we understand; renting a room in one's home for less than 30 days is legal under certain conditions.  

It's reported that a draft study from a City-retained consultant, released today, recommends that the City "limit" the number of short-term rentals in the City and charge fees of the owners.

We'll pass on the study when we can locate a copy.

"We'll need to share the bathroom and tell people we're dating.  
You know, to comply with the zoning laws.  Enjoy your stay."

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.    

Wednesday, November 19, 2014, 11:37 AM

N.C. Appellate Court Speaks On Attorney Fee Recovery Law Applicable to Local Governments

In 2011, the North Carolina General Assembly enacted the following statute allowing payment of attorney fees in the face of certain local government acts:
In any action in which a city or county is a party, upon a finding by the court that the city or county acted outside the scope of its legal authority, the court may award reasonable attorneys' fees and costs to the party who successfully challenged the city's or county's action, provided that if the court also finds that the city's or county's action was an abuse of its discretion, the court shall award attorneys' fees and costs.
NCGS 6-21.7.  The statute is relatively new, and has not received much attention at all from the courts.

Yesterday, however, the North Carolina Court of Appeals upheld an award of attorney fees against Orange County, North Carolina.  The case is Phillips v. Orange County Health Department, No. COA13-1463 (November 18, 2014).

While not the central holding of the case -- the central holding is that the County was preempted by State law from regulating plaintiff's wastewater discharge system -- the attorney fee holding is the most interesting aspect to me.

The trial court awarded fees pursuant to NCGS 1-263, the State's Declaratory Judgment Act.  The trial court does not appear to have relied on NCGS 6-21.7 in rendering its award.

The appellate court, however, recites the language of NCGS 1-263 -- "the court may make such award of costs as may seem equitable and just" -- but it also recites the language of NCGS 6-21.7 in affirming the award.  What's more, the issue is whether the County's regulations and actions pursuant to its regulations were preempted by State law.  Thus, is the award pursuant to NCGS 1-263, or is it pursuant to NCGS 6-21.7?  Is the appellate court's invocation of NCGS 6-21.7 dicta?  If the Phillips Court's invocation of NCGS 6-21.7 is not dicta, is a local government preemption case to be viewed as one in which the local government "acted outside the scope of its legal authority" or "abused its discretion" such that attorney fees might be recoverable?

We think the courts will continue to explore the boundaries of this attorney fee provision.

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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Tuesday, November 18, 2014, 3:05 PM

N.C. Court of Appeals Construes Zoning Provision Excluding All "Unidentified" Uses

Today, the North Carolina Court of Appeals issued a decision giving legal operation to the common, catchall zoning ordinance provision stating that “[u]ses not specifically listed in the Table of Permitted Uses are prohibited.”  The case is Byrd v. Franklin County, No. COA13-1457 (November 18, 2014).

At its core, the issues are (1) whether a shooting range is permitted on petitioners' property because it is not an identified use in the County's zoning ordinance, or (2) whether a shooting range is permitted as a "special use" pursuant to a quasi-judicial special use permit as a "Grounds and Facilities for Open Air Games and Sporting Events", or (3) whether the shooting range is prohibited on petitioners' property because it is not listed as a regulated use in the County's zoning ordinance and the zoning ordinance contains a provision that any "“[u]ses not specifically listed in the Table [] are prohibited.”

Ultimately, the Court agrees with the petitioner that the shooting range use is not a "Grounds and Facilities for Open Air Games and Sporting Events", and, thus, petitioner does not need a special use permit to operate.  But, critically, the Court also disagrees with petitioner that an unidentified use is not regulated by the County's zoning ordinance because of the "catchall" provision.  The Court's conclusion:
We believe that the UDO is unambiguous in prohibiting shooting ranges in the County. UDO section 6-1 states that “[u]ses not specifically listed in the Table of Permitted Uses are prohibited.” Based on a “fair and reasonable construction” of this language, the County clearly recognized that it could not list every conceivable way that property could be used, and, therefore, it sought to provide that any use not listed would be prohibited unless and until any said use not listed was added to the UDO through an amendment thereto approved by the Board of Commissioners. Otherwise, landowners would be allowed to operate a shooting range or any other use not specifically listed in the Table anywhere in the County.
The Court of Appeals distinguishes a recent case -- Land v. Village of Wesley Chapel -- which also involved a shooting range and which allowed the shooting range as a permitted use.  The Byrd Court believes the difference between the zoning ordinance in Franklin County and the zoning ordinance in the Village of Wesley Chapel is significant and distinguishing, in that the Wesley Chapel zoning law contains these provisions:  “those uses that are listed shall be interpreted liberally to include other uses that have similar impacts to the listed use,” and that “uses that are not listed [] and that do not have impacts that are similar to those of the listed uses are prohibited”.

On this note, we're reminded by John Cooke -- another editor of this blog -- of Judge Tyson's analysis in Robins v. Town of Hillsborough, 176 N.C. App. 1 (2006) , rev'd on other grounds, 361 N.C. 193 (2007): "Courts in other jurisdictions require a municipality to demonstrate a much greater substantial relationship between the ordinance and the public welfare where a total prohibition of a lawful activity is involved rather than an ordinance which merely confines a use to a particular district."

In Byrd's wake, are we left with the understanding that despite the admonition of Yancey v. Heafner, 268 N.C. 263 (1966) -- from which Byrd quotes -- that "[z]oning regulations are in derogation of common law rights and they cannot be construed to include or exclude by implication that which is not clearly [within] their express terms", a use not identified in a zoning ordinance may be prohibited entirely from locating in a jurisdiction if the ordinance contains a provision that “[u]ses not specifically listed in the Table of Permitted Uses are prohibited”?

We'll see, as Judge Hunter's dissent affords an opportunity for the Supreme Court to review the issue.

"Ah, but "pigs" are not the same as "pigs in party hats", when it comes to zoning parlours."

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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Wednesday, November 12, 2014, 10:44 AM

Commercial Landlord Citing Lease Terms to Prevent Stores from Closing on Thanksgiving Day

It's rare that an ordinary commercial lease term can make national news, at least indirectly.

Some higher-profile stores are bucking the Holiday trend this year and refusing to open on Thanksgiving day.  Costco, Lowe's Home Improvement Centers, Nordstrom, DSW and Marshall's -- notably, representing an array of retailer species from big box to home improvement to specialty to clothing -- have each announced publicly that it will not open on Thanksgiving day.

This is a noble position, to some.

However, many commercial retail leases contain clauses requiring that the tenant remain open and continuously operate during business hours, with only certain exceptions.  These clauses serve at least one important purpose to the landlord and to the other tenants in the shopping center: if stores are mostly closed, or closed in large part, shopping mall traffic will of course reduce.  The less traffic, the fewer customers to spend, which is catastrophic for all stakeholders in a shopping center.  Makes sense, right?

These clauses are otherwise uninteresting, nationally.  But what happens if a store wants to close its doors on a given day to commemorate an event, a Holiday, or honor a notion?

As to the continuous operation clauses in leases, if Thanksgiving day is not an exception, or if the hours of operation are specified on that major shopping day, the tenant who chooses to close on Thanksgiving day could face repercussions at the hand of a landlord.

Just such a thing is happening in New York, apparently.  It seems an upstate mall is threatening to fine any of it retail tenants, presumably pursuant to a lease term, that do not open on Thanksgiving day.  The mall is taking its lumps, but we'd wager that it has the contractual right --  in the lease -- to do what it is doing, generally.

"Bah-reach of the lease Humbug."

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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Tuesday, November 11, 2014, 3:58 PM

Womble Carlyle Land Use Video Series: The Interpretation of Zoning Laws

The latest installment of the Womble Carlyle Land Use Video Series is available here.

In this episode, John and Mike discuss the seemingly simple but decidedly important world of the the interpretation of zoning laws.  Want to build your project?  Better get that proper interpretation. Didn't get the interpretation you like?  Better appeal it.  Not sure if you have an actual interpretation?  Better be certain, lest timeframes will run or decisions will change.

Some of the questions we'll "hit on" in this episode include:

--Why is interpretation of zoning laws important to landowners, business owners and developers
--Who is responsible for interpreting zoning laws?
--What is the difference between a casual and formal interpretation of a zoning law?
--Why seek a formal interpretation?
--Should you involve a lawyer when seeking a formal interpretation of a zoning law?
--What rule would you select as the most important rule of the interpretation of zoning laws?
--Why is this rule so important?
--Do you have other means to change the interpretation of a zoning law?


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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

Dominion Resources Sending "Final" Requests for Permission to Survey Land for 550-Mile Pipeline

We've blogged in the past about the efforts of Dominion Resources, Inc. to construct a natural gas pipeline from West Virginia, through Virginia, leading to southern North Carolina.  We've also blogged about the anticipated steps that would occur in those efforts, including attempts to survey properties included within the 550-mile pipeline's anticipated path.

Well, it appears that a number of property owners are refusing, or at least refusing consent as to, Dominion Resources, Inc.'s request for permission to come upon land and conduct surveys of those properties.  As a result, according to Raleigh's News and Observer, Dominion Resources, Inc. announced it sent letters to 226 land owners, including North Carolina and Virginia landowners, to give those owners one last clear chance to "cooperate" in survey efforts.  The letters are signed by Dominion Resources, Inc.'s lawyers.  Refusal beyond this point, according to reports, will cause Dominion Resources, Inc. to seek "court orders to gain entry onto the properties to conduct survey work."

It's also worth noting that, according to Dominion Resources, Inc., the vast majority of landowners -- reported as "70 percent of landowners along the route" -- from whom survey permission has been sought have not tried to prevent Dominion from surveying land.

What will refusing consent accomplish, from the standpoint of the landowner?  Not much.  But that's what makes this interesting.  It brings to light the degree of work involved in projects of this size and this scale, whether on the side of those looking to permit, locate, construct and employ the pipeline to those looking to stop it at each stage.  

This is already a big fight, and will continue that way.  We know Dominion Resources, Inc. and its partners anticipate as much; do the landowners?

"A little to the left.  A little more.  Ok, there.  Whose house is that?"

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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Monday, November 10, 2014, 1:53 PM

New York Times Reports On North Carolina Laws and Broadband Systems

The New York Times reported this weekend about the efforts to bring high-speed internet to communities, the state and local laws that govern or attempt to govern those efforts, and the practical outcome of the combination of those laws and efforts.
In North Carolina, as in 18 other states, state laws limit municipalities from building or expanding high-speed Internet service networks.  The reason behind those laws, supporters say, is to limit taxpayer exposure to projects that at times fail and for which there may be little demand.  But Tom Wheeler, the Federal Communications chairman, says providing access to broadband Internet is in the public interest,  And for that reason, he says, the commission can override those state laws -- setting off a heated debate about the federal commission's authority over states and about whether local governments or private companies should provide the service.
***
Supporters of the North Carolina law say it promotes broadband expansion, as long as private companies are put on a level playing field with public entities -- being allowed the same access to telephone poles, for example.  The law is also intended to keep taxpayers from being stuck with a bill for a failing network.  In North Carolina, as in many other states, the law says a broadband system cannot be subsidized with revenue from other utilities.  North Carolina also requires municipalities to hold a special election to approve such projects.  Wilson[, North Carolina's] system, which was built before the law, was simply approved by its City Council.
The report is interesting for as much it says about a kind of home rule ("The federal government should stay away from state laws and issues of local concern; it cannot preempt everything.  Also, State laws should stay away from local issues.") to as much as it says about fiscal views ("Tax dollars for espn.com?  That's crazy.") to as much as it says about whether the internet is a service like fast food or a hotel, a public utility (as believed by the President) like electricity or gas, or a government service like roads and schools.

The article can be accessed here.


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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

Tuesday, November 4, 2014, 2:36 PM

The 'Rents: NCDOT Is Looking to Charge Rents, While Residential Tenants Are Denied Class Certification to Collect Rent Deposits

We've been quiet these past few weeks but the world has not been.  We'd like to talk today about two entirely unrelated but fascinatingly fun topics: (1) the North Carolina Department of Transportation's ("NCDOT") idea to create or increase certain fees and charge rents for use of its right-of-ways, which abound throughout the Old North State and (2) an attempted creation of a plaintiff class in a lawsuit against "various real estate entities which provide rental housing, largely to a college student population" over alleged violations of the North Carolina Tenant Security Deposit Act. 

NCDOT Fee Increases and Rents
We'll start with the NCDOT.  Essentially, we're seeing reports in Raleigh that the Department is looking for different and creative ways to further "defray operating costs".  According the The News and Observer, while North Carolinians and drivers therethrough pay "one of the nation's highest gasoline taxes to take care of roads and bridges", those tax dollars are also a "subsidy" to the developers, public utilities, outdoor advertisers (um, "billboarders"?) and other businesses that pay "little or nothing" for essential services -- like field inspections, engineer reviews, permit review and issuance, oversize and overweight transportation regulation.  NCDOT is looking to "shift the burden to businesses" employing these services.  

In that vein, NCDOT is looking to increase fees for certain services -- driveway permits ($50 to $200), subdivision plat and plan review and inspection (free to no longer free), traffic impact analysis (free to volume-based payment plan), outdoor advertising permits ($120 new or $60 renewal to $240 new or $120 renewal), encroachments review and inspection (free to no longer free).  

Also according to reports, NCDOT is also looking at the possibility of charging rent for certain uses of its right-of-ways, which are vast: higher fees for logo signs at closed access road exits, new lease fees for public utilities, and special leases for cellphone micro-towers. 

Government is getting squeezed, and necessity is the mother of invention.  We'll see if these inventions take flight and, if so, how successfully.

Residential Tenancy Class Certification Over Rent Deposits
In a quietly-decided case out of the North Carolina Court of Appeals, a panel affirmed the denial of class certification to a group of residential tenants over alleged violations of the North Carolina Tenant Security Deposit Act.  We're talking about Neil v. Kuester Real Estate Services, Inc., No. COA14-513 (November 4, 2014)

Essentially, the proposed class of residential tenants argued that "common questions of law and fact exist[ing] to all members" of the proposed class, including the remedy to all members -- a full refund of rental deposits -- "predominate over any questions that affect only individual" tenants.  

The Court of Appeals, however, determined otherwise.  Noting that the trial court must have "abused its discretion" to warrant reversal on the denial of class certification, the Court of Appeals set the standard for certifying a class action:  
Class actions should be permitted where they are likely to serve useful purposes such as preventing a multiplicity of suits or inconsistent results. The usefulness of the class action device must be balanced, however, against inefficiency or other drawbacks. The trial court has broad discretion in this regard and is not limited to consideration of matters expressly set forth in Rule 23 or in [our case law].
The Court of Appeals concluded that the plaintiffs are not qualified for class certification because plaintiffs "would not be entitled to an automatic full refund, but rather, would only be entitled to a refund of any amounts withheld from their security deposits for a use not permitted by the [North Carolina Tenant Security Deposit Act]."  In other words, the Court wisely reasoned that not all withholding of deposit dollars is violative of the Act, and to hold otherwise would deprive defendants of a full and fair hearing to which they are entitled.  The Court continued: "Determination of the appropriate amount of each Plaintiff’s refund would require individual trials, thus rendering class action an inferior method for the adjudication of Plaintiffs’ claims."

Class certification is oftentimes seen as a pseudo-dispositive issue, in that it will not put a legal end to a lawsuit but it will likely put a practical end to a lawsuit.  The conventional wisdom among those seeking class certification is that if the seekers can all join together or join "the others" together in one suit, with the economies of scale, we stand an easier road to success.  

Is this a significant loss for the residential tenant protections created by the North Carolina Tenant Security Deposit Act?  Probably not.  But it is worth thinking about.

"I don't know what you did to that carpet, but it'll cost one mont-, er, $4750.00, to repair."

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

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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