Dep't of Transp. v. Schad ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute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
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Comm’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. Despite the interlocutory
nature of DOT’s appeal, DOT claims the trial court’s order
affects a substantial right warranting our immediate review.
However, for the following reasons, we disagree with DOT’s
jurisdictional argument and dismiss DOT’s appeal as
interlocutory.
I. Factual & Procedural History
On 11 and 18 July 2011, DOT filed complaints, declarations
of taking, and notices of deposit in Stanly County Superior
Court condemning real property owned by Defendant near the
Stanly County Airport.1 On 6 March 2012, Defendant filed answers
in both cases wherein Defendant described the property affected
by the takings as a subdivision entitled “Stanly Airport
Industrial Park.” Defendant also alleged that the deposits made
by DOT were inadequate and requested jury trials on the issue of
just compensation. That same day, the trial court entered
orders disbursing DOT’s deposits in both cases—$56,800 and
1
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.
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$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. By
stipulation of the parties, both actions filed by DOT were
combined for hearing. On 11 April 2013, DOT filed a plat
pursuant to N.C. Gen. Stat. § 136-106 (2013) identifying the
property and areas taken in both actions. DOT’s Section 108
motion was heard on 15 April 2013. 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 the property, it was zoned as
“rural/agricultural.” 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
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Registry. In addition to designating the individual lots, the
plat map has roads laid out and indicates the placement of one-
half inch rebar with plastic caps on each corner of each
individual lot. The roads have not been paved on the property,
but they have been “cut” by a bulldozer and Defendant has
performed some grading work on the roads. 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 benefiting and burdening each lot within the
subdivision. The trial court found as fact that these covenants
were still in effect at the time of the taking.2
Evidence presented at the hearing also revealed that
Defendant sold three lots in the subdivision prior to the
taking. One lot was sold in March 1998 to a private citizen,
2
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.
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and 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. The City also placed a sign on the
property advertising the subdivision as a “Prime Power
Industrial Park.” The Stanly County Economic Development
Commission worked with Defendant prior to the taking and
marketed the property as “the state’s first industrial park
specifically designed to attract new industrial customers with
the need for reliable, uninterruptible electric power.” As a
result of this marketing, soil and environmental tests were
performed on part of the property and a 200,000 square-foot pad-
ready 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. Defendant subsequently signed a right of entry
agreement, and DOT initiated the present condemnation
proceedings in July 2011. 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.”
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Based 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 as
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
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immediately 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 permitting Defendant to present evidence at trial
regarding the value of each individual lot affected by the
taking. 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.
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Olinger, 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)). DOT argues that the trial court’s order is
immediately appealable as affecting a substantial right.
Moreover, DOT believes that given the substantial right
affected, immediate appeal is mandatory, not permissive. 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.” N.C. Gen. Stat. § 136-
119 (2013). 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
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v. 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, an “immediate appeal is available from an
interlocutory order or judgment which affects a substantial
right.” 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
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court’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
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remaining tracts of land for purposes of valuation. Id. at 173,
521 S.E.2d at 708. The Court held that the pre-trial order did
not affect a substantial right and that the defendants were not
required to immediately appeal. Id. The Court acknowledged
that Nuckles had received expansive 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.” Id. at 176, 521 S.E.2d at
709. 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, DOT contends that the characterization of the
property affected by the taking—i.e., whether it is a
subdivision or an undeveloped tract—is a vital preliminary issue
that must be settled before the question of just compensation is
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presented 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 the existence of an easement may, under 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.
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nor challenged Defendant’s title. Second, and more
fundamentally, the basis of the trial court’s order, from which
DOT appeals, concerns the characterization of the land in
question. 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 Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (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]
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the responsibility to follow those decisions until otherwise
ordered by the Supreme Court.” (second and third alterations in
original) (quotation marks and citation omitted)). Pursuant to
Rowe, we hold that a Section 108 order concerning the
characterization of the property at issue does not affect a
substantial right for purposes 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 by the trial court and a separate issue, not
addressed by the trial court, concerning which lots/land
constitute the “entire tract” pursuant to N.C. Gen. Stat. § 136-
112(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
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contention 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 taking is made. In some such cases, the North
Carolina Department of Transportation (“DOT”) may 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 the value of the landowner’s adjacent parcel,
thereby reducing the amount of the just 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
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determine 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”). Defendant claims that this 177
acres is actually part of 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
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value 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 the “entire tract,” a different issue
entirely from the evidentiary issue addressed in the trial
court’s order. 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 and
proposed roads) or a partial taking of only 21 lots. Likewise,
when asked whether all 44 lots “have been affected by the
taking, counsel for Defendant responded, “No, your Honor. We’re
saying 21 lots have been affected by this taking.” 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 – concerning which lots/land constitute the “entire
tract.” See id. at 390, 109 S.E.2d at 229 (stating that the
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parties 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.
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[either the entire tract – as defined by the trial court - or
the remainder].” Id.Accordingly, I believe the trial court should ascertain
whether there is, in fact, a dispute as to what 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 evidentiary ruling, 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, which do not rely on the value of each
individual lot. Rather, the trial court should allow the jury
to consider and weigh any evidence that comports with our Rules
of Evidence.