Title: Chapel Hill Title & Abstract Co. v. Town of Chapel Hill Bd. of Adjust.
Citation: 362 N.C. 649
Docket Number: 275A08
State: north-carolina
Issuer: north-carolina Supreme Court
Date: December 12, 2008

CHAPEL HILL TITLE AND ABSTRACT COMPANY, INC., and JONATHAN STARR
and wife, LINDSAY STARR, Petitioners v. TOWN OF CHAPEL HILL and
the TOWN OF CHAPEL HILL BOARD OF ADJUSTMENT, Respondents v.
ROBERT B. FERRIER, HANSON R. MALPASS, and wife, BETSY J. MALPASS,
Respondent-Intervenors
No. 275A08 
FILED: 12 DECEMBER 2008
Zoning--variance--conservation district plus restrictive covenants--no legally reasonable
use
A board of adjustment erred by denying a request for a variance where a Resource
Conservation District ordinance prohibited construction on 78.5% of the property and restrictive
covenants prevented construction on the remainder.  The language of the ordinance requires a
variance if the owner is left with no legally reasonable use, and instructs the board of adjustment
to consider the actual state in which the property is found when determining that question.  A
prior building permit that can never be used does not rebut the presumption of no legally
reasonable use.
Justice BRADY concurring.
Appeal pursuant to N.C.G.S. § 7A-30(2) from the
decision of a divided panel of the Court of Appeals, 190 N.C.
App. ___, 660 S.E.2d 667 (2008), reversing and remanding an order
entered on 25 July 2007 by Judge Kenneth C. Titus in Superior
Court, Orange County.  Heard in the Supreme Court 14 October
2008.
The Brough Law Firm, by Michael B. Brough, for 
petitioner-appellants.
Northen Blue, LLP, by David M. Rooks and Samantha H.
Cabe, for respondent-appellees.
Poyner & Spruill LLP, by Robin Tatum Currin and Andrew
J. Petesch, for respondent-intervenor-appellees. 
HUDSON, Justice.
In 2004 petitioners Chapel Hill Title and Abstract
Company and Jonathan and Lindsay Starr sought a variance from
respondents Town of Chapel Hill and its Board of Adjustment to
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construct a home in Chapel Hill on a vacant lot zoned for
residential use.  Because 78.5% of the property in question falls
within a “Resource Conservation District” (RCD), unless
petitioners receive a variance, the lot is subject to an
ordinance that generally prohibits construction in such RCD
areas.  Moreover, restrictive covenants that also apply to the
lot likewise prevented petitioners from building on the portion
of the lot not subject to the RCD ordinance.  After a protracted
legal battle among the parties, including a first appeal to and
remand by the Court of Appeals, the Board of Adjustment denied
the variance on 30 January 2007.
The Superior Court of Orange County granted
petitioners’ writ of certiorari to review the Board’s decision
and allowed respondent-intervenors, who own homes in the
immediate vicinity of the subject property, to intervene in the
action.  On 25 July 2007, the trial court entered an order
reversing the Board’s decision and remanding the matter with
instructions “to issue the requested variance.”  Respondents and
respondent-intervenors appealed to the Court of Appeals, which
reversed the trial court in a 20 May 2008 divided opinion and
remanded with instructions to reinstate the Board’s resolution
denying the variance.  Chapel Hill Title & Abstract Co., Inc. v.
Town of Chapel Hill, ___ N.C. App. ___, ___, 660 S.E.2d 667, 673
(2008).  Based on the dissent in the Court of Appeals,
petitioners appealed to this Court.
Petitioners challenge two conclusions of law made in
the Board’s denial of their request for a variance and
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subsequently upheld by the Court of Appeals:  (1) Because
petitioner Chapel Hill Title obtained a building permit in
December 2002 to construct a residence on the lot in a location
wholly outside the RCD, the operation of the RCD ordinance is not
responsible for petitioners having no legally reasonable use of
the property; and (2) because petitioners were aware of the RCD
ordinance and other limitations when they purchased the property,
any hardship is self-created and does not arise out of
application of the ordinance.  The Town of Chapel Hill conceded
in oral arguments before this Court that if petitioners could not
build at all without the variance, denial of the variance would
result in “extreme hardship” to petitioners.  As such, we need
not consider the arguments offered as to the rule applicable to a
self-created hardship.  Instead, we address only the issue of
whether petitioners are left with “no legally reasonable use” of
their property.
At the outset, we look to the pertinent language of the
RCD ordinance itself to determine when a variance must be
granted:
3.6.3
Resource Conservation District
(j)
Variances in the Resource
Conservation District
(1)
Application
An owner of property who alleges
that the provisions of the
Resource Conservation District
leave no legally reasonable use
of the property may apply to the
Board of Adjustment for a
variance. . . . 
(2)
Required Findings
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A.
The review of the Board of
Adjustment shall extend to
the entire zoning lot that
includes area within the
Resource Conservation
District.  The Board of
Adjustment shall grant a
variance, subject to the
protections of this
Article, if it finds:
(1.) That the provisions of
this Article leave an
owner no legally
reasonable use of the
portion of the zoning
lot outside of the
regulatory floodplain;
and
(2.) That a failure to
grant the variance
would result in
extreme hardship.
B.
In making such findings,
the Board of Adjustment
shall consider the uses
available to the owner of
the entire zoning lot that
includes area within the
Resource Conservation
District.
. . . .
(7)
Presumption
. . . [A] showing that the
portion of the Resource
Conservation District outside of
a regulatory floodplain overlays
more than seventy-five percent
(75%) of the area of a zoning
lot, shall establish a
rebuttable presumption that the
Resource Conservation District
leaves the owner no legally
reasonable use of the zoning lot
outside of the regulatory
floodplain.  Such presumption
may be rebutted by substantial
evidence before the Board of
Adjustment.
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Chapel Hill, N.C., Land Use Management Ordinance art. 3.6.3
(2004) (titled “Resource Conservation District”).
According to the Board and the Court of Appeals
majority below, although petitioners were entitled to the
rebuttable presumption of “no legally reasonable use” because
78.5% of the property in question falls within an RCD, that
presumption was rebutted by the building permit granted to
petitioner Chapel Hill Title in 2002.  Thus, “the provisions of
this Article,” namely, the operation of the RCD ordinance alone,
did not leave petitioners with “no legally reasonable use” of the
property.  Id. (emphasis added).  Nevertheless, due to
restrictive covenants to which the property is also subject,
petitioner Chapel Hill Title was enjoined in April 2003 from
using that building permit to construct a residence outside the
RCD area of the lot in question.  
The central question we address is whether the Board
should consider the operation of the RCD ordinance independently,
or in conjunction with, the effect of the private restrictive
covenants, when determining if petitioners are entitled to a
variance.  We find the plain language of the ordinance itself to
provide the answer, to wit:  “In making such findings [as to
legally reasonable use and extreme hardship], the Board of
Adjustment shall consider the uses available to the owner of the
entire zoning lot that includes area within the Resource
Conservation District.”  Id. (emphasis added).  Thus, the
variance language of the ordinance instructs the Board to
consider the actual state in which the property is found--
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including both its physical and legal conditions--and how those
conditions interact with the RCD ordinance, when determining if a
variance is necessary to leave an owner with a “legally
reasonable use” of the property.
Here, petitioners are clearly prevented by restrictive
covenants from constructing a home on the 21.5% of the property
that falls outside of the RCD ordinance; as such, they have no
reasonable “uses available” to them of that portion of the lot. 
Likewise, because more than seventy-five percent of the property
is subject to the ordinance, petitioners have shown they are
entitled to rely on the rebuttable presumption of “no legally
reasonable use” of the property.  This presumption is not
rebutted by a building permit that was issued but can never be
used.  
We find that the Board of Adjustment failed to properly
consider “the uses available” to petitioners of the entire lot
when determining that the 2002 building permit issued to
petitioner Chapel Hill Title rebutted the presumption that
petitioners were left with “no legally reasonable use” under the
operation of the RCD variance.  We therefore conclude that the
Board erred by denying petitioners’ request for a variance. 
Accordingly, we reverse the Court of Appeals and remand to that
court with instructions to remand to the trial court to reinstate
its original order to remand to the Board of Adjustment with
instructions to issue the requested variance to petitioners.
REVERSED AND REMANDED.
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Justice BRADY concurring.
While I concur in the Court’s opinion, I write
separately to emphasize the importance of property rights and the
duty the government has to compensate individuals when it chooses
to take land for public use.  I believe that respondents’ denial
of petitioners’ request for a variance not only violates the
provisions of the Chapel Hill Resource Conservation District
Ordinance (RCD Ordinance) because of respondents’ failure to
consider the effect of the restrictive covenants on the subject
property, but I also believe that the denial results in a de
facto taking, which requires respondents to provide just
compensation for petitioners’ land.  As Justice Harlan aptly
stated over a century ago:  “Due protection of the rights of
property has been regarded as a vital principle of republican
institutions.”  Chicago, Burlington & Quincy R.R. Co. v. Chicago,
166 U.S. 226, 235-36 (1897).  This historic right can be traced
to the very earliest of our laws, and the courts have an
important responsibility to steadfastly protect against its
erosion.  
The legal protection of private property rights dates
back to the Magna Carta, which declares:  “No free-man shall be
seized, or imprisoned, or dispossessed, . . . excepting by the
legal judgment of his peers, or by the laws of the land.”  Boyd
C. Barrington, The Magna Charta and Other Great Charters of
England sec. 39, at 239 (1900) (emphasis added).  In his
Commentaries on the Laws of England, William Blackstone wrote
that “[an] absolute right, inherent in every Englishman, is that
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of property:  which consists in the free use, enjoyment, and
disposal of all his acquisitions, without any control or
diminution, save only by the laws of the land.”  William
Blackstone, 1 Commentaries sec. III, at *138.  
The Founders drew on these principles when drafting the
Bill of Rights.  The Fifth Amendment to the Constitution of the
United States, applied to the States through the Fourteenth
Amendment, provides in pertinent part:  “No person shall . . . be
deprived of life, liberty, or property, without due process of
law; nor shall private property be taken for public use without
just compensation.”  U.S. Const. amend. V.  In North Carolina,
the requirement that government provide just compensation for a
taking of private property is implicit in our state constitution. 
This Court has recognized 
the fundamental right to just compensation
as so grounded in natural law and justice
that it is part of the fundamental law of
this State, and imposes upon a governmental
agency taking private property for public
use a correlative duty to make just
compensation to the owner of the property
taken.  This principle is considered in
North Carolina as an integral part of “the
law of the land” within the meaning of
Article I, Section 19 of our State
Constitution.  
Long v. City of Charlotte, 306 N.C. 187, 196, 293 S.E.2d 101,
107-08 (1982) (citations omitted).  
Not all government use or regulation of private land
requires a payment of just compensation; a valid exercise of the
government’s police power to promote public welfare does not
offend constitutional property rights and is not a taking. 
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Determining what qualifies as a valid government regulation, as
opposed to an unconstitutional taking, is a complicated task, and
the Supreme Court of the United States has admitted that such a
determination cannot be reduced to one formula or bright line
test.  Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224
(1986).  Rather, courts must rely on “ad hoc, factual inquiries
into the circumstances of each particular case” to ascertain if
Fifth Amendment principles are violated.  Id. (citations
omitted).  However, the Supreme Court has provided guidance on
critical factors to consider in any takings analysis.  There are
three factors that have “‘particular significance’” in these
inquiries:  “(1) ‘the economic impact of the regulation on the
claimant’; (2) ‘the extent to which the regulation has interfered
with distinct investment-backed expectations’; and (3) ‘the
character of the governmental action.’” 475 U.S. at 225 (quoting
Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124
(1978)).
In the instant case, the economic impact of the RCD
Ordinance is determinative in deciding whether its application to
the property amounts to a taking.  If the effect of a government
regulation “denies all economically beneficial or productive use
of land,” then a taking has occurred and compensation must be
given to the owner, regardless of the intent of the regulation or
how favorably it affects public welfare.  Lucas v. S.C. Coastal
Council, 505 U.S. 1003, 1015 (1992) (citations omitted). 
There is no question that regulating the use and
quality of the town’s water resources is within the scope of
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respondents’ police power.  Protection of the public water supply
is necessary and essential to the health and welfare of the
citizens of Chapel Hill.  However, the noble purpose of the RCD
Ordinance does not grant respondents immunity from the Fifth
Amendment to the United States Constitution or the Constitution
of North Carolina.  This Court has indicated on numerous
occasions that a “zoning ordinance would be deemed ‘unreasonable
and confiscatory,’ as applied to a particular piece of property,
if the owner of the affected property was deprived of all
‘practical’ use of the property and the property was rendered of
no ‘reasonable value.’” Responsible Citizens v. City of
Asheville, 308 N.C. 255, 264, 302 S.E.2d 204, 210 (1983) (quoting
Helms v. City of Charlotte, 255 N.C. 647, 653, 657, 122 S.E.2d
817, 822, 825 (1961)); see also Finch v. City of Durham, 325 N.C.
352, 364, 384 S.E.2d 8, 15 (1989) (“[T]he test for determining
whether a taking has occurred in the context of a rezoning is
whether the property as rezoned has a practical use and a
reasonable value.” (citations omitted)).
The RCD Ordinance depletes petitioners’ property of all
reasonable use and economic value.  It is undisputed that
petitioners cannot develop their property in any residential
capacity without violating either the restrictive covenants
imposed on the land in 1959 or the RCD Ordinance adopted by the
Town of Chapel Hill in the mid-1980s.  The restrictive covenants
at issue “run with the land,” and this Court has ruled that such
restrictions are interests in property.  See City of Raleigh v.
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1  In Edwards, the City sought to erect a water tower on a
lot in violation of the private restrictive covenants previously
imposed on the property.  235 N.C. at 674, 71 S.E.2d at 398-99. 
This Court ruled that if restrictive covenants were violated by
the government for public use, persons with interests in those
covenants were entitled to just compensation for the taking of
those property rights.  Id. at 677-79, 71 S.E.2d at 400-02.
Edwards, 235 N.C. 671, 678-79, 71 S.E.2d 396, 402 (1952).1 
Petitioners have previously been enjoined from building a
residence in violation of these covenants.  The RCD Ordinance as
enacted renders 78.5% of petitioners’ property undevelopable. 
Respondents argue that petitioners’ remaining property outside
the scope of the RCD Ordinance is still developable, yet they
fail to consider the effect of the restrictive covenants that run
with the land.  The restrictive covenants cannot be separated
from the parcel, and thus, respondents must evaluate the land as
they find it in their consideration of petitioners’ variance
request.  When the restrictive covenants are properly evaluated,
it is clear that application of the RCD Ordinance has deprived
petitioners of all “economically beneficial or productive use” of
the property.  See Lucas, 505 U.S. at 1015.  As a result of the
RCD Ordinance, petitioners are left with no developable property. 
Thus, the wooded residential lot, which measures slightly over a
half acre, has been depleted of all practical use and reasonable
value.  If respondents’ denial of petitioners’ variance request
stands, then the RCD Ordinance, as applied to the property,
amounts to a taking and just compensation must be paid. 
To comply with the laws of this State and the
Constitution of the United States, respondents must either grant
petitioners a variance or justly compensate petitioners for the
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taking of the property.  Otherwise, respondents’ actions amount
to an unconstitutional taking of private property in violation of
the United States Constitution and Article I, Section 19 of the
North Carolina Constitution.