NO. COA13-1272

NORTH CAROLINA COURT OF APPEALS

Filed: 1 July 2014

SWAN BEACH COROLLA, L.L.C., OCEAN 

ASSOCIATES, LP, LITTLE NECK 

TOWERS, L.L.C., GERALD FRIEDMAN, 

NANCY FRIEDMAN, CHARLES S. 

FRIEDMAN, TIL MORNING, LLC, and 

SECOND STAR, L.L.C.,

Plaintiffs,

v. Currituck County

No. 12-CVS-334

COUNTY OF CURRITUCK; THE CURRITUCK 

COUNTY BOARD OF COMMISSIONERS; and 

JOHN D. RORER, MARION GILBERT, O. 

VANCE AYDLETT, JR., H.M. PETREY, 

J. OWEN ETHERIDGE, PAUL MARTIN, 

and S. PAUL O’NEAL as members of 

the CURRITUCK COUNTY BOARD OF 

COMMISSIONERS,

Defendants.

Appeal by plaintiffs from Order entered 24 July 2013 by 

Judge Wayland J. Sermons in Superior Court, Currituck County. 

Heard in the Court of Appeals 24 April 2014.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, 

L.L.P., by Lacy H. Reaves and J. Mitchell Armbruster, for 

plaintiffs-appellants.

County of Currituck, by Donald I. McRee, Jr., for 

defendants-appellees.

STROUD, Judge.
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Plaintiffs appeal from an order entered 24 July 2013 

dismissing their complaint for declaratory judgment regarding 

vested rights they claimed to develop their property 

commercially, for violations of constitutional rights under 42 

U.S.C. § 1983, and for violation of Article V, Section 2 of the 

North Carolina Constitution. We reverse in part, affirm in part, 

and remand for further proceedings.

I. Background

Plaintiffs are five companies and three individuals who own 

property in the Swan Beach Subdivision in Currituck County. On 6 

July 2012, they filed a complaint against the County of 

Currituck, the Currituck Board of Commissioners, and the 

commissioners themselves in their official capacities. 

Plaintiff Ocean Associates was the original developer of the 

land and the other plaintiffs purchased their land from it.

1

They alleged that they have common law vested rights to develop 

commercial uses on their property. They also raised claims of 

laches, “easement rights” to commercially develop their 

property, state constitutional violations, and violations of 

federal equal protection and due process under 42 U.S.C. § 1983.

 

1 The precise nature of the relationship between Ocean Associates 

and the other plaintiffs is not clear from the complaint. 
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According to the complaint, plaintiff Ocean Associates, LP,

purchased approximately 1400 acres of property in the Carova 

Beach area of Currituck County in 1966 to develop a residential 

subdivision along with related commercial services.2 In 1969, 

Ocean Associates created and recorded a plat indicating that it 

intended to divide the property into residential and business 

lots. At the time, Currituck County had no applicable zoning 

ordinance. However, the County asked Ocean Associates to refrain 

from developing the business lots until the residential lots 

were sufficiently occupied. After filing the plat, Ocean 

Associates began to prepare both the residential and business 

lots for development. They spent $425,050.00 on services such as 

surveying, land geosciences, general engineering, road grading, 

canal digging, dune building, filling lots, evacuating ditches, 

and landscaping. This infrastructure would serve both the 

business and residential lots. 

In 1971, Currituck County adopted a zoning ordinance. The 

1971 ordinance designated plaintiffs’ property as RA-20. The RA20 district allowed for low density residential and agricultural 

uses with only limited business uses. Plaintiffs allege that 

 

2 Because this case comes to us on a motion to dismiss, all of 

the following facts are from the complaint; we express no 

opinion as to their veracity.
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they did not know that the zoning of their property had changed. 

In 1975, the County enacted a new zoning ordinance. This 

ordinance zoned plaintiffs’ property in a similar manner to the 

previous ordinance. Plaintiffs believed that the County would 

still permit them to develop their property for commercial uses 

because the County had allowed other property owners to do the 

same.

In 1989, Currituck County enacted a Unified Development 

Ordinance (UDO). The UDO zoned plaintiffs’ property RO2, which 

does not allow business uses except for marinas, campgrounds, 

outdoor recreational facilities, and small professional offices. 

The business and commercial uses intended by plaintiffs would 

not be permitted under this ordinance. Nevertheless, plaintiffs 

continued to believe that they would be allowed to commercially 

develop their property. 

In 2004, plaintiffs decided to move forward with 

development of the business lots because the density of the 

residential lots had finally become sufficient to support such 

use. They wanted to build a convenience store, real estate 

offices, a post office, and a restaurant. Around September 2004, 

the County informed plaintiffs that such uses would not be 

permitted. Plaintiffs asserted that they had vested rights to 
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use their property in this manner, but the County disagreed, 

asserting that the UDO barred such uses. Over the next three 

years, plaintiffs then attempted to convince the County to 

rezone their property so that they could develop their property 

for business uses. The parties agreed that such uses would not 

be permitted on their property under the UDO.

Plaintiffs allege that despite the County’s assertion that 

the UDO prohibits business development in the RO2 district, the 

County has permitted other businesses to operate in the area.

They alleged that the County treated plaintiffs differently

without a rational basis, or because the individual plaintiffs

are Jewish.

On 12 September 2012, defendants filed a motion to dismiss 

for lack of subject matter jurisdiction under Rule 12(b)(1) and 

failure to state a claim under Rule 12(b)(6). Defendants argued 

that plaintiffs failed to exhaust applicable administrative 

remedies and that they are protected by sovereign, governmental, 

and legislative immunity. They further argued that plaintiffs’

complaint is barred by the applicable statutes of limitations.

Plaintiffs filed an amended complaint on 13 February 2013. 

The amended complaint added an allegation that the County 

adopted a zoning ordinance in 1968, but that there was no map 
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accompanying the ordinance and that their property was not zoned 

at that time. The amended complaint also added a claim under 

Article V, Section 2 of the North Carolina Constitution. 

Plaintiffs alleged that the County had taxed their property as 

business property since 1969, so its failure to permit 

plaintiffs to develop their property for business uses 

contravenes the requirement of taxation by uniform rule.

Defendants then filed an amended motion to dismiss and an 

amended brief in support of their motion. The motion was heard 

by the superior court on 20 May 2013. By order entered 24 July 

2013, the superior court allowed defendants’ 12(b)(1) motion to 

dismiss for failure to exhaust administrative remedies and their 

12(b)(6) motion for failure to state a claim, though it did not 

specify a reason. Plaintiffs timely appealed to this Court.

II. Standard of Review

Defendants moved to dismiss plaintiffs’ complaint for lack 

of subject matter jurisdiction under N.C. Gen. Stat. § 1A-1, 

Rule 12(b)(1)(2011) and for failure to state a claim under N.C. 

Gen. Stat. § 1A-1, Rule 12(b)(6)(2011).

Rule 12(b)(1) permits a party to contest, by 

motion, the jurisdiction of the trial court 

over the subject matter in controversy. We 

review Rule 12(b)(1) motions to dismiss for 

lack of subject matter jurisdiction de novo 

and may consider matters outside the 
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pleadings. Pursuant to the de novo standard 

of review, the court considers the matter 

anew and freely substitutes its own judgment 

for that of the trial court.

Trivette v. Yount, ___ N.C. App. ___, ___, 720 S.E.2d 732, 735 

(2011) (citations, quotation marks, brackets, and italics 

omitted).

The standard of review of an order granting 

a 12(b)(6) motion is whether the complaint 

states a claim for which relief can be 

granted under some legal theory when the 

complaint is liberally construed and all the 

allegations included therein are taken as 

true. On a motion to dismiss, the 

complaint’s material factual allegations are 

taken as true. Dismissal is proper when one 

of the following three conditions is 

satisfied: (1) the complaint on its face 

reveals that no law supports the plaintiff’s 

claim; (2) the complaint on its face reveals 

the absence of facts sufficient to make a 

good claim; or (3) the complaint discloses 

some fact that necessarily defeats the 

plaintiff’s claim. On appeal of a 12(b)(6) 

motion to dismiss, this Court conducts a de 

novo review of the pleadings to determine 

their legal sufficiency and to determine 

whether the trial court’s ruling on the 

motion to dismiss was correct.

Podrebarac v. Horack, Talley, Pharr, & Lowndes, P.A., ___ N.C. 

App. ___, ___, 752 S.E.2d 661, 663-64 (2013) (citation and 

quotation marks omitted).

III. Common Law Vested Rights Claim
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Plaintiffs argue that the trial court erred in dismissing 

their common law vested rights claim under Rule 12(b)(1) for 

failure to exhaust administrative remedies. Defendants counter 

that even if it was error to dismiss under Rule 12(b)(1), 

dismissal was proper under Rule 12(b)(6). We hold that 

plaintiffs did not fail to exhaust administrative remedies and 

that their common law vested rights claim was sufficiently pled 

to survive a motion to dismiss under either Rule 12(b)(1) or 

Rule 12(b)(6).

A. Exhaustion of Administrative Remedies

“As a general rule, where the legislature has provided by 

statute an effective administrative remedy, that remedy is 

exclusive and its relief must be exhausted before recourse may 

be had to the courts.” Presnell v. Pell, 298 N.C. 715, 721, 260 

S.E.2d 611, 615 (1979). “If a plaintiff has failed to exhaust 

its administrative remedies, the court lacks subject matter 

jurisdiction and the action must be dismissed.” Justice for 

Animals, Inc. v. Robeson County, 164 N.C. App. 366, 369, 595 

S.E.2d 773, 775 (2004). Nevertheless, “a party need not exhaust 

an administrative remedy where the remedy is inadequate.” 

Affordable Care, Inc. v. North Carolina State Bd. of Dental 

Examiners, 153 N.C. App. 527, 534, 571 S.E.2d 52, 58 (2002).
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Facts justifying avoidance of administrative procedure must be 

pled in the complaint. Id. at 534, 571 S.E.2d at 58.

“The [administrative] remedy is considered inadequate 

unless it is calculated to give relief more or less commensurate 

with the claim.” Jackson for Jackson v. North Carolina Dept. of 

Human Resources, 131 N.C. App. 179, 186, 505 S.E.2d 899, 904

(1998) (citation and quotation marks omitted), disc. rev. 

denied, 350 N.C. 594, 537 S.E.2d 213 (1999). Generally,

constitutional claims are not subject to administrative 

remedies, so failure to pursue such remedies is not fatal to 

those claims. See Meads v N.C. Dep’t of Agric., 349 N.C. 656,

670, 509 S.E.2d 165, 174 (1988); Hardy ex rel. Hardy v. Beaufort 

County Bd. of Educ., 200 N.C. App. 403, 409, 683 S.E.2d 774, 779

(2009).

3

Here, plaintiffs specifically pled that they were not 

required to exhaust administrative remedies and that the 

administrative remedies are inadequate. Nevertheless, we must 

consider whether the facts as pled justify failure to exhaust 

administrative procedures. We hold that plaintiffs sufficiently 

 

3 Exhaustion may be required for procedural due process claims.

See Edward Valves, Inc. v. Wake County, 343 N.C. 426, 435, 471 

S.E.2d 342, 347 (1996), cert. denied, 519 U.S. 1112, 136 L.Ed. 

2d 839 (1997); Copper ex rel. Copper v. Denlinger, 363 N.C. 784,

788, 688 S.E.2d 426, 428 (2010).
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pled futility because the Currituck County Board of Adjustment

would not be authorized to hear plaintiffs’ common law vested 

rights claim.

The ‘vested rights’ doctrine has evolved as 

a constitutional limitation on the state’s 

exercise of its police power to restrict an 

individual’s use of private property by the 

enactment of zoning ordinances. A 

determination of the ‘vested rights’ issue 

requires resolution of questions of fact, 

including reasonableness of reliance, 

existence of good or bad faith, and 

substantiality of expenditures.

Huntington Properties, LLC v. Currituck County, 153 N.C. App. 

218, 226, 569 S.E.2d 695, 701 (2002) (citations, quotation 

marks, and brackets omitted).

“In reviewing the determination of an administrative 

enforcement officer pursuant to N.C. Gen. Stat. § 160A-388, a 

board of adjustment sits in a ‘quasi-judicial capacity’ and has 

only the authority it is granted under that statute.” Dobo v. 

Zoning Bd. of Adjustment of City of Wilmington, 149 N.C. App. 

701, 706, 562 S.E.2d 108, 111 (2002), rev’d in part on other 

grounds, 356 N.C. 656, 576 S.E.2d 324 (2003). N.C. Gen. Stat. § 

160A-388(b) (2011) authorizes boards of adjustment to “hear and 

decide special and conditional use permits, requests for 

variances, and appeals of decisions of administrative officials 

charged with enforcement of the ordinance.” Its role is solely 
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related to the interpretation of the ordinances and deciding 

whether to grant a variance from those ordinances. See Godfrey 

v. Zoning Bd. of Adjustment of Union County, 317 N.C. 51, 63,

344 S.E.2d 272, 279 (1986). Boards of adjustment do not have the 

authority to adjudicate constitutional claims. Id.; Dobo, 149 

N.C. App. at 706, 562 S.E.2d at 111.

Some common law vested rights cases have been appealed from 

boards of adjustment4; others have been brought as civil actions

without prior administrative proceedings.5 These cases do not 

announce a clear rule for the proper method to pursue a vested 

rights claim. Nevertheless, a rule can be inferred from the 

appellate courts’ treatment of those cases and the statutory 

authority of boards of adjustment discussed above. Our Supreme 

Court has differentiated between interpretations of zoning 

ordinances, which are properly considered by boards of 

adjustment, and constitutional challenges, which are not. See 

 

4 See, e.g., Application of Campsites Unlimited, Inc., 287 N.C. 

493, 215 S.E.2d 73 (1975), Browning-Ferris Industries Of South 

Atlantic, Inc. v. Guilford County Bd. of Adjustment, 126 N.C. 

App. 168, 484 S.E.2d 411 (1997), Kirkpatrick v. Village Council 

for Village of Pinehurst, 138 N.C. App. 79, 530 S.E.2d 338 

(2000).

5 See, e.g., Town of Hillsborough v. Smith, 276 N.C. 48, 170 

S.E.2d 904 (1969), Russell v. Guilford County, 100 N.C. App. 

541, 397 S.E.2d 335 (1990), MLC Automotive, LLC v. Town of 

Southern Pines, 207 N.C. App. 555, 702 S.E.2d 68 (2010), disc. 

rev. denied, 365 N.C. 211, 710 S.E.2d 2 (2011).
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Batch v. Town of Chapel Hill, 326 N.C. 1, 11, 387 S.E.2d 655, 

661-62 (holding that it was error to join a claim concerning the 

interpretation of development ordinances with constitutional

challenges thereto), cert. denied, 496 U.S. 931, 110 L.Ed. 2d 

651 (1990). We have noted that where interpretation of an 

ordinance is involved the property owner should follow the 

administrative procedure of seeking permission for a 

nonconforming use from the board of adjustment. See Huntington 

Properties, LLC, 153 N.C. App. at 227, 569 S.E.2d at 702; see 

also Kirkpatrick, 138 N.C. App. at 87-88, 530 S.E.2d at 343-44 

(considering a common law vested rights claim in a case first 

brought to the board of adjustment, along with issues concerning 

interpretation of the ordinances). However, the discretion of a

board of adjustment is not unlimited. Its “power to ‘determine 

and vary’ is limited to such variations and modifications as are 

in harmony with the general purpose and intent of the ordinance 

and do no violence to its spirit.” Lee v. Board of Adjustment of 

City of Rocky Mount, 226 N.C. 107, 111, 37 S.E.2d 128, 132

(1946). A plaintiff is not required to request that the board of 

adjustment issue a variance that it does not have the authority 

to issue. See Smith, 276 N.C. at 57, 170 S.E.2d at 911.
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Where the interpretation of the ordinance is not at issue, 

the ordinance prohibits the property owner’s intended use, and 

the property owner is claiming a common law vested right to such 

a nonconforming use, the only claim is a constitutional one. In 

such a case, plaintiffs are not required to first exhaust the 

procedures before the board of adjustment. Here, as in Smith, 

plaintiffs’ “contention is that they have a legal right to 

build, which right the city cannot take from them and for which 

no permit is authorized by the ordinance. . . . [T]he law does 

not require them to make a vain trip to the City Hall before 

exercising it.” Id. at 57, 170 S.E.2d at 911. Plaintiffs 

specifically alleged that the meaning of the UDO was not in 

dispute and that their desired use was not allowed under the 

ordinance.

Therefore, we conclude that plaintiffs were not required to 

exhaust administrative remedies before the Currituck County 

Board of Adjustment in order to bring the present civil action.

The trial court erred in dismissing plaintiffs’ vested rights 

claim under Rule 12(b)(1) for failure to exhaust administrative 

remedies.

B. Sufficiency of Claim
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Next, we must consider whether plaintiffs’ common law 

vested rights claim was sufficiently pled to state a cause of 

action. We hold that plaintiffs sufficiently pled their common 

law vested rights claim to survive a motion to dismiss.6

A party’s common law right to develop and/or 

construct vests when: (1) the party has 

made, prior to the [enactment or] amendment 

of a zoning ordinance, expenditures or 

incurred contractual obligations substantial 

in amount, incidental to or as part of the 

acquisition of the building site or the 

construction or equipment of the proposed 

building; (2) the obligations and/or 

expenditures are incurred in good faith; (3) 

the obligations and/or expenditures were 

made in reasonable reliance on and after the 

issuance of a valid building permit, if such 

permit is required, authorizing the use 

requested by the party; and (4) the amended 

ordinance is a detriment to the party.

Browning-Ferris, 126 N.C. App. at 171-72, 484 S.E.2d at 414 

(citations and quotation marks omitted).

“[W]hen a property owner makes expenditures in the absence 

of zoning . . . , subsequent changes in the zoning of the 

property may not prohibit the resulting nonconforming use.” 

Finch v. City of Durham, 325 N.C. 352, 366, 384 S.E.2d 8, 16 

(1989). A property owner need not rely on the existence of a 

permit authorizing construction if none was required at the time 

 

6 This case involves only common law vested rights; plaintiffs do 

not assert statutory vested rights under N.C. Gen. Stat. § 160A385.1.
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the expenditures were made. MLC Automotive, LLC, 207 N.C. App. 

at 565, 702 S.E.2d at 75. “To acquire such vested property 

right[s] it is sufficient that, prior to the . . . enactment of 

the zoning ordinance and with the requisite good faith, he make 

a substantial beginning of construction and incur therein 

substantial expense.” Campsites Unlimited, 287 N.C. at 501, 215 

S.E.2d at 78 (citation and quotation marks omitted). “A party 

acts in good faith reliance when it has an honest belief that 

the nonconforming use would not violate declared public policy.” 

Kirkpatrick, 138 N.C. App. at 87, 530 S.E.2d at 343 (citation, 

quotation marks, and brackets omitted).

As we are considering a 12(b)(6) motion to dismiss, we must 

assume that the facts alleged by plaintiffs are true and 

liberally construe the complaint. Mosteller v. Duke Energy 

Corp., 207 N.C. App. 1, 11, 698 S.E.2d 424, 431 (2010), disc. 

rev. denied, 365 N.C. 211, 710 S.E.2d 38 (2011). The relevant

allegations are as follows:

In 1966, plaintiffs or their predecessors in interest 

acquired approximately 1400 acres of property in Currituck 

County. The property was not then zoned and commercial 

development was allowed. In June 1966, the County adopted a 

“Subdivision Ordinance.” On 2 September 1969, consistent with 
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this ordinance, Plaintiff Ocean Associates recorded a plat 

showing 577 residential lots and six business areas on the 

property. Such commercial uses were permitted in that area at 

the time. The County asked that the commercial development not 

begin until there was sufficient residential density in the area 

to support the businesses and plaintiffs agreed. Plaintiffs 

began development in 1969. Between 1968 and 1971, plaintiffs 

spent approximately $425,050.00 to prepare both the residential 

and the business lots. These expenditures included general 

engineering, land geosciences, road grading, canal digging, dune 

building, lot filling, evacuating ditches, landscaping, and 

surveying. Plaintiffs would not have expended these funds “but 

for the fact that business and commercial uses were permitted on 

the Property under County law . . . .” In the early 1970s, 

plaintiffs completed the infrastructure that would serve both 

the business and residential lots.

In October 1971, Currituck County adopted a zoning 

ordinance and prepared a map. The map seemed to designate the

property as “RA-20.” The RA-20 district permitted mostly low 

density residential and agricultural uses, with only limited 

business or commercial uses. The County adopted a second zoning 

ordinance in 1975, which seemed to continue designating 
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plaintiffs’ property as RA-20. The County assured property 

owners that subdivisions approved prior to adoption of these 

ordinances would continue to be allowed. 

In 1989, the County adopted a UDO, which is still in 

effect. Although unclear, plaintiffs’ property was apparently 

zoned RO2. The RO2 district allows only limited business uses. 

Plaintiffs’ planned uses for the property are not allowed under 

the UDO. Plaintiffs moved forward with further development of 

the business lots in 2004. The County informed plaintiffs that 

their intended uses were not permitted under the UDO and denied 

that plaintiffs had any vested rights to use their property in 

that manner.

Taking these facts as true, we hold that plaintiffs 

sufficiently pled their claim for common law vested rights to 

survive a motion to dismiss. Plaintiffs have alleged that their 

property was not zoned at the time they made their expenditures 

to prepare the business lots. They have alleged that this use 

was lawful at the time the expenditures were made and that the 

expenditures were made in good faith reliance on that fact. They 

have alleged that they expended over $400,000 on the 

development. They allege that they are prejudiced by the zoning 
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ordinance because their intended commercial use would not be 

permitted under the ordinance.

In Campsites Unlimited, our Supreme Court held that the 

property owners had a vested right because they made substantial 

expenditures in reliance on the lack of zoning. 287 N.C. at 502, 

215 S.E.2d at 78. In that case, the property owners had cleared 

and constructed roadways and staked out lots. Id. The alleged 

construction activities here were at least as substantial as 

those in Campsites Unlimited, if not more. Plaintiffs’ clearing 

of the lots, canal digging, dune building, and road grading were 

intended to prepare the site for development. Cf. Russell, 100 

N.C. App. at 545, 397 S.E.2d at 337 (holding that the 

plaintiff’s expenditures were not substantial where there was 

“no evidence of ground breaking, tree clearing or anything else 

done to prepare the site for development”). We conclude that 

these expenditures were “substantial.”

Additionally, taking the allegations of the complaint as 

true, plaintiffs’ reliance on the lawfulness of their project 

was in good faith. The required “good faith” 

is not present when the landowner, with 

knowledge that the adoption of a zoning 

ordinance is imminent and that, if adopted, 

it will forbid his proposed construction and 

use of the land, hastens, in a race with the 

town commissioners, to make expenditures or 
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incur obligations before the town can take 

its contemplated action so as to avoid what 

would otherwise be the effect of the 

ordinance upon him.

Campsites Unlimited, 287 N.C. at 503, 215 S.E.2d at 79 (citation 

and quotation marks omitted).

Here, plaintiffs filed plats indicating business 

development before any zoning ordinance was in place. There is 

no indication that they were aware of any plans to zone their 

property such that business development would not be allowed.

Cf. id. The face of the complaint does not reveal that 

plaintiffs failed to acquire any other permits required to begin 

construction. Cf. Browning-Ferris, 126 N.C. App. at 172, 484 

S.E.2d at 414. Indeed, plaintiffs have alleged that the County 

was aware of their plans and condoned them.

In sum, plaintiffs’ allegations, if true, show that they 

have made substantial expenditures in good faith reliance on the 

lack of zoning at the time the expenditures were made. We 

conclude that plaintiffs have sufficiently pled a common law 

vested rights claim. Accordingly, we hold that the trial court 

erred in allowing defendants’ motion to dismiss under Rule 

12(b)(6).7

 

7 There was a question raised at oral arguments concerning 

whether the plaintiffs other than Ocean Associates could bring a 
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IV. Equal Protection and Due Process § 1983 Claims

Plaintiffs next argue that the trial court erred in 

dismissing their equal protection and substantive due process 

claims under 42 U.S.C. § 1983 (2006) for failure to exhaust 

administrative remedies and sovereign immunity.8 Although the 

basis for its decision is not clear from the trial court’s 

order, defendants moved to dismiss plaintiffs’ § 1983 claims on 

the basis of failure to exhaust administrative remedies, 

sovereign immunity, and legislative immunity. Defendants did not 

argue at the motion hearing that the § 1983 claim was improperly 

pled or that the claims would be barred by the statute of 

limitations. On appeal, defendants do not argue that they are 

immune.

“To state a claim under 42 U.S.C. § 1983, a plaintiff must 

show that [a person], acting under color of law, has ‘subjected 

[him] to the deprivation of any rights, privileges, or 

immunities secured by the Constitution and laws.’” Copper, 363 

 

vested rights claim as successors in interest even though they 

did not actually expend the funds themselves. The individuals 

involved with the property are apparently the same, but the 

corporate forms have changed. This issue was not raised in the 

pleadings, briefed by the parties, or addressed by the trial 

court, so we express no opinion on that question. 

8 Defendants did not argue to the trial court and do not argue on 

appeal that plaintiffs failed to allege any element of these 

claims. 
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N.C. at 789, 688 S.E.2d at 429 (quoting 42 U.S.C. § 1983 

(2006)). “[A] municipality is a ‘person’ within the meaning of 

section 1983.” Moore v. City of Creedmoor, 345 N.C. 356, 365,

481 S.E.2d 14, 20 (1997).

Plaintiffs alleged that the County has allowed other 

similarly situated property owners to operate businesses in the 

zoning districts that prohibit commercial buildings while 

denying plaintiffs the opportunity to do the same. They have 

alleged that the County treated them differently because they 

are Jewish. Moreover, plaintiffs allege that the County’s

decision to treat them differently was arbitrary and without any 

rational relationship to a valid governmental objective. They 

allege that they have been damaged by this discrimination 

because they have lost income they could have received from the 

commercial development of their property. All of the claims 

were brought against the County itself and the individual County 

Commissioners in their official capacity.

First, plaintiffs’ § 1983 claims may not be dismissed for

failure to exhaust administrative remedies. While claims for 

violation of procedural due process may be subject to exhaustion 

requirements, Copper, 363 N.C. at 789-90, at 688 S.E.2d at 430, 

substantive constitutional claims are not, Edward Valves, Inc., 
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343 N.C. at 435, 471 S.E.2d at 347. Here, plaintiffs’ claims are 

founded on substantive due process and equal protection. They 

were not required to exhaust any administrative process to bring 

these claims. See Edward Valves, Inc., 343 N.C. at 435, 471 

S.E.2d at 347.

Second, defendants are not protected from § 1983 claims on 

the basis of sovereign immunity. Corum v. University of North 

Carolina Through Bd. of Governors, 330 N.C. 761, 772, 413 S.E.2d 

276, 283 (“[S]overeign immunity alleged under state law is not a 

permissible defense to section 1983 actions.”), disc. rev. 

denied, 506 U.S. 985, 121 L.Ed. 2d 431 (1992); Glenn-Robinson v. 

Acker, 140 N.C. App. 606, 627, 538 S.E.2d 601, 616 (2000)

(noting that “a municipal entity has no claim to immunity in a 

section 1983 suit” (citation and quotation marks omitted)), 

disc. rev. denied, 353 N.C. 372, 547 S.E.2d 811 (2001). Indeed, 

defendants do not argue on appeal that they are immune from suit

under § 1983. 

Finally, defendants argue that plaintiffs’ § 1983 claim is 

barred by the statute of limitations concerning challenges to 

zoning ordinances. Plaintiffs urge us not to consider this 

argument since it was not raised below. Defendants did argue in 

their brief to the trial court that the statute of limitation 
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barred plaintiffs’ § 1983 claims, but only “[t]o the extent 

Plaintiffs[’] due process and equal protection claims are a 

based on” a lack of notice of the amendments to the zoning 

ordinances. But plaintiffs’ § 1983 claims are not based on any 

notice issue. Plaintiffs specifically alleged in their amended 

complaint that they are not “attacking a defect in the ordinance 

adoption process . . . .” Defendants apparently recognized this 

fact as they did not argue at the motions hearing that the 

statute of limitations would require dismissal of these claims. 

Moreover, it is not clear that they ever received a ruling from 

the trial court on this issue. Therefore, they have not 

preserved this issue for our review and we will not address it. 

N.C.R. App. P. 10(a)(1); Lovelace v. City of Shelby, 153 N.C.

App. 378, 384, 570 S.E.2d 136, 140 (declining to address an 

appellee’s argument that was not raised below), disc. rev. 

denied, 356 N.C. 437, 572 S.E.2d 785 (2002).

We hold that the trial court erred in dismissing 

plaintiffs’ claims under 42 U.S.C. § 1983 because the claims are 

not barred by sovereign immunity or failure to exhaust 

administrative remedies. Therefore, we reverse the portion of 

the trial court’s order dismissing these claims.

V. Tax Claim
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Plaintiffs finally argue that the trial court erred in 

dismissing their claim under Article V, Section 2(2) of the 

North Carolina Constitution. We disagree.

Plaintiffs alleged that defendant violated Article V, 

Section 2(2) of the North Carolina Constitution by refusing to 

allow business development on property that it has classified 

for tax purposes as business property. The North Carolina 

Constitution “requires that taxation must be imposed by a 

uniform rule.” HED, Inc. v. Powers, 84 N.C. App. 292, 294, 352 

S.E.2d 265, 266, disc. rev. denied, 319 N.C. 458, 356 S.E.2d 4

(1987). That requirement is met “if the rate is uniform 

throughout each taxing authority’s jurisdiction.” State ex rel. 

Dyer v. City of Leaksville, 275 N.C. 41, 49, 165 S.E.2d 201, 206 

(1969).

Here, plaintiffs do not actually challenge the tax 

classification or the uniformity of the tax rules. Indeed, they 

assert that the tax classification of their property as business 

property is entirely accurate. They have not alleged that

defendants tax such property in a non-uniform manner. At best, 

the tax classification of plaintiffs’ property might be relevant 

to the “good faith” element of their vested rights claim. But 

their allegations are insufficient to state a claim under 
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Article V, Section 2 of the North Carolina Constitution.

Therefore, we affirm the trial court’s dismissal of this claim.

VI. Conclusion

For the foregoing reasons, we conclude that the trial court 

erred in dismissing plaintiffs’ vested rights claim and their § 

1983 claims, but that it properly dismissed plaintiffs’ tax 

claim. Therefore, we reverse those portions of the trial court’s 

order dismissing the vested rights and § 1983 claims, affirm the 

portion dismissing the tax claim, and remand for further 

proceedings.

REVERSED, in part; AFFIRMED, in part; and REMANDED.

Judges HUNTER, JR., Robert N. and DILLON concur.