Dep't of Transp. v. Schad

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA13-1302 NORTH CAROLINA COURT OF APPEALS Filed: 4 June 2014 DEPARTMENT OF TRANSPORTATION, Plaintiff, v. Stanly County No. 11 CVS 809; 11 CVS 845 GUS SCHAD, Defendant. Appeal by plaintiff from order entered 1 July 2013 by Judge Kevin M. Bridges in Stanly County Superior Court. Heard in the Court of Appeals 10 April 2014. Attorney General Roy Cooper, by Assistant Attorney General Mary S. Mercer, for plaintiff-appellant. Singletary & Webster, P.C., by H. Earl Singletary, Jr., for defendant-appellee. HUNTER, JR., Robert N., Judge. Plaintiff North Carolina Department of Transportation ( DOT ) appeals from an interlocutory order permitting Gus Schad ( Defendant ) to present evidence in a condemnation action valuing the land affected by the taking as a subdivision with individual lots. DOT contends that Defendant s land is an imaginary subdivision pursuant to Barnes v. N.C. State Highway -2Comm n, 250 N.C. 378, 109 S.E.2d 219 (1959), and that, as such, the jury should only hear evidence valuing Defendant s property as one undeveloped tract of land. nature of affects a However, DOT s appeal, substantial for the jurisdictional DOT right following argument Despite the interlocutory claims the warranting reasons, and trial our we court s immediate order review. disagree with DOT s appeal dismiss DOT s as interlocutory. I. Factual & Procedural History On 11 and 18 July 2011, DOT filed complaints, declarations of taking, and notices of deposit Court condemning real Stanly County Airport.1 property in Stanly County owned by Defendant Superior near the On 6 March 2012, Defendant filed answers in both cases wherein Defendant described the property affected by the takings as Industrial Park. a subdivision entitled Stanly Airport Defendant also alleged that the deposits made by DOT were inadequate and requested jury trials on the issue of just compensation. orders 1 disbursing That DOT s same day, deposits in the trial both court entered cases $56,800 and The complaint filed on 11 July 2011 was designated as 11 CVS 809. The complaint filed on 18 July 2011 was designated as 11 CVS 845. -3$83,000, respectively as credits against just compensation determinations obtained by Defendant in future proceedings. On 1 April 2013, DOT moved for a hearing pursuant to N.C. Gen. Stat. § 136-108 (2013) to determine any and all issues raised by the pleadings other than the issue of damages. stipulation combined of for the parties, hearing. On both 11 actions April 2013, filed DOT by DOT filed a By were plat pursuant to N.C. Gen. Stat. § 136-106 (2013) identifying the property and areas taken in both actions. motion was heard on 15 April 2013. DOT s Section 108 Evidence presented at the hearing tended to show the following. Defendant acquired the land at issue by purchases made in 1987 and 1988. Defendant purchased the property in order to develop it into an industrial park at the Stanly County Airport. When Defendant purchased rural/agricultural. the property, it was zoned as Subsequently, however, Defendant applied for and obtained a light industrial zoning classification for the property. In 1993, Defendant had a survey performed and a subdivision plat map drawn dividing the property into 47 individual lots. On 17 December 1993, Defendant filed the plat map, labeled Stanly County Airport Industrial Park, in the Stanly County -4Registry. In addition to designating the individual lots, the plat map has roads laid out and indicates the placement of onehalf inch rebar individual lot. but they have with plastic caps on each corner of each The roads have not been paved on the property, been cut by a bulldozer performed some grading work on the roads. and Defendant has Defendant built a spec building on one of the lots. On 18 February 1998, Defendant recorded a Declaration of Covenants, Conditions and Restrictions for Airport Industrial Park with the Stanly County Register of Deeds. The document defines the covenants, conditions, restrictions, reservations, and easements subdivision. benefiting and burdening each lot within the The trial court found as fact that these covenants were still in effect at the time of the taking.2 Evidence Defendant taking. 2 sold presented three at lots the in hearing the also subdivision revealed prior to that the One lot was sold in March 1998 to a private citizen, Paragraph 19 of the declaration states that it will continue in full force and effect until January 1, 2010, at which time it shall automatically expire, unless extended by the affirmative vote of those owning a majority of the acreage within the property. At the automatic expiration date, Defendant was still the majority owner of the acreage within the property. On cross-examination, Defendant indicated that, because the takings took place in July 2011, the covenants would have expired before the July 2011 takings. On redirect, Defendant stated that he, as the majority owner, considered the covenants still in effect. -5and two additional lots were sold to the State of North Carolina in December 2001. In August 2005, Defendant transferred 1.04 acres to the City of Albemarle, which placed two large generators on the property for industrial use. property advertising Industrial Park. Commission worked marketed the the The with property The City also placed a sign on the subdivision Stanly County Defendant as the as Prime Economic prior state s a to first the Power Development taking industrial and park specifically designed to attract new industrial customers with the need for reliable, uninterruptible electric power. As a result were of this marketing, soil and environmental tests performed on part of the property and a 200,000 square-foot padready site was developed that is ready for a prospective buyer to build upon. In 2008, DOT contacted Defendant about his property for the first time to discuss the State s plan for a road project near the airport. agreement, Defendant subsequently signed a right of entry and DOT initiated proceedings in July 2011. the present condemnation Defendant stated that the State s plans for the road project had set him back several years in moving forward with his plans for the park. -6Based on the foregoing and other evidence presented at the hearing, the trial court entered a written order on 1 July 2013 that characterized the property affected by the taking follows: 20. The taking by [DOT] was a taking of individual lots located in the subdivision shown in Plat Book 16, Page 8, Stanly County Registry as the Stanly County Airport Industrial Park and not vacant real property by the acre. The trial court concluded: 6. That [Defendant s] actions were taken pursuant to his plan to develop the Stanly County Airport Industrial Park and not in anticipation of a just compensation condemnation proceeding. 7. That [Defendant s] plans to develop the industrial park were adversely affected by [DOT s] plan to build a road through his property. 8. That it would be unfair and unreasonable for [DOT] to hinder the development of [Defendant s] property and then prevail on its conclusion that the property was not an actual, existing subdivision. 9. Based on the facts of this case, [Defendant] should be allowed to present evidence to the jury regarding the value of each individual lot affected by the taking. . . . . [Defendant], at the time of trial before the jury, shall be permitted to present evidence of the value of each individual lot as -7immediately before the taking herein and [D]efendant shall be permitted to present evidence of the value of each individual lot immediately after the taking by [DOT]. DOT filed timely notice of appeal from the trial court s order. II. Jurisdiction On appeal, DOT contends that the trial court erred in its order by regarding taking. permitting Defendant the of value each to present individual evidence lot at affected trial by the In DOT s view, the property being condemned should be valued as one undeveloped tract of vacant land because, pursuant to Barnes, the property is an imaginary subdivision and not an accomplished fact. See Barnes, 250 N.C. at 388 89, 109 S.E.2d at 227 28 (stating that the value to be placed on land taken under the right of eminent domain must not be speculative or based on imaginary situations and that it is not proper for the jury . . . to consider an undeveloped tract of land as though a subdivision thereon is an accomplished fact ); see also Town of Hillsborough v. Crabtree, 143 N.C. App. 707, 709 10, 547 S.E.2d 139, 140 41 (2001) (discussing and applying the rule in Barnes). However, before this Court can reach the merits of DOT s contention, we must determine if this Court has jurisdiction to hear DOT s interlocutory appeal. See Dep t of Transp. v. -8Olinger, 172 N.C. App. 848, 850, 616 S.E.2d 672, 674 75 (2005) ( [I]f an appealing party has no right of appeal, an appellate court on its own motion should dismiss the appeal even though the question of appealability has not been raised by the parties themselves. (quotation marks and citation omitted) (alteration in original)). immediately Moreover, DOT argues appealable DOT as believes that the affecting that given trial a the court s order substantial is right. substantial affected, immediate appeal is mandatory, not permissive. right For the following reasons, we hold that no substantial right has been affected by the trial court s order and dismiss DOT s appeal as interlocutory. Our condemnation statutes provide that either party to a condemnation action shall have a right of appeal in the same manner as in any other civil actions. 119 (2013). N.C. Gen. Stat. § 136- Generally, however, there is no right of immediate appeal from an interlocutory order in a civil action. Atl. Coast Conference v. Univ. of Maryland, ___ N.C. App. ___, ___, 751 S.E.2d 612, 615 (2013). An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy. Veazey -9v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). Thus, because the trial court s order merely permitted Defendant to introduce evidence valuing the affected property as a subdivision in a subsequent damages trial, the order did not dispose of the case below and DOT s appeal is interlocutory in nature. However, interlocutory right. an immediate order or appeal judgment which is available affects a from an substantial Sharpe v. Worland, 351 N.C. 159, 162, 522 S.E.2d 577, 579 (1999) (quotation marks omitted); accord N.C. Gen. Stat. §§ 1-277(a), 7A-27(b)(3) (2013). Our Supreme Court has defined a substantial right as a legal right affecting or involving a matter of substance as distinguished from matters of form: a right materially affecting those interests which a [person] is entitled to have preserved and protected by law: a material right. Sharpe, 351 N.C. at 162, 522 S.E.2d at 579 (quotation marks and citation omitted) (alteration in original). Whether an interlocutory ruling affects a substantial right requires consideration of the particular facts of that case and the procedural context in which the order from which appeal is sought was entered. Waters v. Qualified Personnel, Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 343 (1978). Here, the trial -10court s order was entered after a Section 108 hearing. That statute provides: After the filing of the plat, the judge, upon motion and 10 days notice by either the Department of Transportation or the owner, shall, either in or out of term, hear and determine any and all issues raised by the pleadings other than the issue of damages, including, but not limited to, if controverted, questions of necessary and proper parties, title to the land, interest taken, and area taken. N.C. Gen. Stat. § 136-108 (2013). Our Supreme Court has delineated the parameters of the substantial right exception in this context. In N.C. State Highway Comm n v. Nuckles, 271 N.C. 1, 14, 155 S.E.2d 772, 784 (1967), the Court stated that the purpose of a Section 108 hearing is to eliminate from the jury trial any question as to what land [DOT] is condemning and any question as to its title. Accordingly, the Court held that should there be a fundamental error in the judgment resolving these vital preliminary issues, ordinary prudence requires an immediate appeal. Id. Furthermore, in Dep t of Transp. v. Rowe, 351 N.C. 172, 521 S.E.2d 707 (1999), following a jury trial on the issue of just compensation, the Court was presented with the question of whether the former property owners were required to immediately appeal the trial court s pre-trial order unifying their four -11remaining tracts of land for purposes of valuation. 521 S.E.2d at 708. Id. at 173, The Court held that the pre-trial order did not affect a substantial right and that the defendants were not required to immediately appeal. that Nuckles had received Id. expansive The Court acknowledged treatment in determining what issues in a Section 108 hearing affect a substantial right, but explicitly disavowed those cases and limited the holding to questions of title and area taken. 709. Id. at 176, 521 S.E.2d at Thus, the Court reasoned that because the [d]efendants contest[ed] only the unification of the four remaining tracts [and] not what parcel of land is being taken or to whom that land belongs[,] . . . the trial court s order [did] not affect any substantial right warranting immediate review. Id. Furthermore, the Court stated: Although the parties to a condemnation hearing must resolve all issues other than damages at the N.C.G.S. § 136-108 hearing, that statute does not require the parties to appeal those issues before proceeding to the damages trial. Id. at 176, 521 S.E.2d at 710. Here, property DOT contends affected by that the the characterization taking i.e., whether it of is the a subdivision or an undeveloped tract is a vital preliminary issue that must be settled before the question of just compensation is -12presented to the jury. We disagree. Similar to Rowe, Defendant is the undisputed owner of the land affected by the taking and the area being condemned is certain. Accordingly, DOT s contention is without merit.3 Nonetheless, as an alternative basis to invoke our jurisdiction, DOT contends that the existence of easements on the affected property, which were created when Defendant filed the declaration of covenants in 1998, raise questions of title that must be immediately appealed pursuant to Nuckles. See N.C. Dep t Of Transp. v. Stagecoach Vill., 360 N.C. 46, 48, 619 S.E.2d 495, 496 (2005) ( The possible existence of an easement, the basis upon which the trial court ordered joinder of the unit owners, is a question affecting title; therefore, the trial court s order is subject to immediate review. ). While we agree that under the existence of an easement may, certain circumstances, warrant immediate review to resolve an issue of title, that is not the case here. First, Defendant is the undisputed owner of the land that is affected by the taking and subject to the recorded covenants. DOT has not alleged that any other necessary parties should be joined in the instant action 3 We note that our holding on this issue is consistent with an unpublished decision of this Court in N.C. Dep t of Transp. v. Williams, 168 N.C. App. 728, 609 S.E.2d 498, 2005 WL 465557 (2005) (unpublished), which we find persuasive. -13nor challenged Defendant s title. Second, and more fundamentally, the basis of the trial court s order, from which DOT appeals, question. concerns the characterization of the land in The order does not address the issue of additional easement holders whose interests may be affected by the taking. Accordingly, DOT s argument on this point is without merit. Notably, we acknowledge that in Town of Hillsborough, this Court addressed the merits of the issue presented in this case in an interlocutory appeal taken from a pre-trial order. However, that case did not discuss jurisdiction and therefore does not stand for the proposition that DOT s interlocutory appeal affects a substantial right warranting immediate review. Thus, in deciding whether to dismiss DOT s appeal here, we are not constrained by Town of Hillsborough s holding. Cf. In re Civil 37 Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, (1989) ( Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court. ). However, we are bound to our Supreme Court s decision in Rowe. Dunn v. Pate, 334 N.C. 115, 118, 431 S.E.2d 178, 180 (1993) ( [The Court of Appeals] has no authority to overrule decisions of [the] Supreme Court and [has] -14the responsibility to follow those decisions until otherwise ordered by the Supreme Court. (second and third alterations in original) (quotation marks and citation omitted)). Rowe, we hold that a Section characterization of the property substantial right for purposes 108 order Pursuant to concerning the at issue does not affect a of interlocutory appellate review. III. Conclusion For the foregoing reasons, we dismiss DOT s appeal as interlocutory. DISMISSED. Judge STROUD concurs. Judge DILLON concurs in the result in a separate opinion. Report per Rule 30(e). NO. COA13-1302 NORTH CAROLINA COURT OF APPEALS Filed: 3 June 2014 DEPARTMENT OF TRANSPORTATION, Plaintiff, v. Stanly County No. 11 CVS 809; 11 CVS 845 GUS SCHAD, Defendant. DILLON, Judge, concurring in the result. I concur in the result reached by the majority, dismissing the present appeal. I write separately, however, to address what I believe is a point of confusion between the evidentiary ruling made addressed by by the the trial trial court court, and a separate concerning which issue, not lots/land constitute the entire tract pursuant to N.C. Gen. Stat. § 136112(1) (2013) to be evaluated by the jury. Since this matter involves a partial taking, the proper measure of damages is the difference between the fair market value of the entire tract immediately prior to said taking and the fair market value of the remainder immediately after the taking[.] Id. (emphasis added). Identifying which land constitutes the entire tract for purposes of determining just compensation is not a point of -2contention where the partial taking involves the only parcel owned by the landowner. However, this identity of the entire tract can be an issue of contention if the landowner has an interest in a parcel or parcels in addition to the parcel from which the Carolina taking is Department made. of In some such Transportation cases, ( DOT ) the may North seek to include a landowner s adjacent parcel as part of the entire tract, believing that, for example, the new road it is building will increase thereby the reducing value the of amount the of landowner s the just adjacent parcel, compensation award. Conversely, in other cases, the landowner may seek to include an adjacent parcel into the entire tract, believing that the condemner s project will diminish not only the value of the parcel from which the taking is made, but also the value of his adjacent parcel. In any event, our Supreme Court has held that the issue of whether to incorporate a landowner s additional parcel(s) as part of the entire tract is generally a question of law to be resolved by the trial court. Barnes v. Highway Comm n, 250 N.C. 378, 384, 109 S.E.2d 219, 224 (1959); see also DOT v. Fernwood Hill Homeowners Ass n, 185 N.C. App. 633, 638, 649 S.E.2d 433, 436 (2007). In other words, before a jury may properly -3determine the amount of just compensation based on before and after values of the subject property, the trial court generally must first determine which land constitutes the entire tract by considering certain factors, namely unity of ownership, physical unity and unity of use[,] though the presence of all three unities [between the parcels] is not essential [for the parcels to be considered a single tract]. Barnes, 250 N.C. at 384, 109 S.E.2d at 224. The present case involves a partial taking; that is, the DOT condemned approximately ten acres out of the 177 acres owned by Gus Schad ( Defendant ). acres is actually part of Defendant claims that this 177 a 47-lot industrial park that he created in 1993, when he filed a subdivision plat; that prior to the DOT s partial taking, he sold three of the 47 lots; that the 177 acres he owned at the time of the DOT s taking is actually 44 separate lots; and that the ten acres taken by the DOT runs directly through 21 of those 44 lots. The only issue ultimately resolved by the trial court at the Section 108 hearing was an evidentiary issue; that is, the decretal portion of the trial court s order merely orders that Defendant be permitted to present evidence of the value of each individual lot immediately before the taking . . . [and] of the -4value of each individual lot immediately after the taking[.] However, counsel for both parties at oral arguments before this Court suggested that there may be a dispute regarding which land actually constitutes entirely from court s order. the the entire evidentiary tract, issue a different addressed in issue the trial For instance, counsel for the DOT stated that the parties disagreed as to whether the condemnation involved a partial taking of 177 acres (which consists of 44 lots proposed roads) or a partial taking of only 21 lots. when asked whether all 44 lots have been Likewise, affected taking, counsel for Defendant responded, No, your Honor. saying 21 lots have been affected by this taking. and by the We re Likewise, during the Section 108 hearing, counsel for Defendant argued that it should be 21 separate lots [that] we should be allowed to put on evidence for as damages and produced an appraiser who testified that he considered the effect of the taking only on the 21 lots, and not on all 44 lots. The evidentiary ruling made by the trial court allowing Defendant to produce before and after values of lots has no real meaning until the court resolves the conflict if one, in fact, exists tract. concerning which lots/land constitute the entire See id. at 390, 109 S.E.2d at 229 (stating that the -5parties may introduce relevant evidence to aid[] the jury in fixing a fair market value of [the entire tract as well as the remainder] ). If the trial court determines that the entire tract consists of all 177 acres owned by Defendant, then, based upon the evidentiary ruling by the trial court a ruling which cannot be appealed at this time Defendant s evidence for the jury should be based on the before and after values of all 44 lots, as well as the before and after values of any other land that make up the 177 acres4. In such case, opinion of value of the entire tract that is based only on the before and after values of the 21 lots which have been reduced in size by the taking, without any reference to the effect of the taking on the value of the other 23 lots and other land comprising the entire tract, would probably not be relevant. Alternatively, if the trial court determines that the entire tract consists of only the 21 lots which have been reduced in size by the taking, then evidence regarding the change in value of only these 21 lots would be relevant; but evidence regarding any effect on the other 23 lots would not likely be relevant since such evidence would not aid[] the jury in fixing the fair market value of 4 Based on Defendant s 1993 plat, the industrial park includes proposed roads, in addition to the individual lots. -6[either the entire tract as defined by the trial court - or the remainder]. Id. Accordingly, whether there I is, believe in fact, the trial court a dispute as should to what ascertain property constitutes the entire tract, and, if so, rule on that issue before proceeding with a trial to determine the amount of just compensation owed. Further, I do not believe that the trial court s ruling, evidentiary allowing Defendant to introduce evidence of individual lot values, precludes the trial court from exercising its role as gatekeeper to allow the jury to consider other types of valuation evidence which the parties may seek to introduce, individual lot. which do not rely on the value of each Rather, the trial court should allow the jury to consider and weigh any evidence that comports with our Rules of Evidence.

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