Title: State v. May
Citation: N/A
Docket Number: 510PA13
State: north-carolina
Issuer: north-carolina Supreme Court
Date: June 11, 2015

NO. COA12-1163 
NORTH CAROLINA COURT OF APPEALS 
Filed: 3 September 2013 
 
 
TOWN OF MIDLAND, 
Plaintiff, 
 
 
 
 
v. 
 
Cabarrus County 
No. 09 CVS 523 
No. 09 CVS 524 
DARRYL KEITH WAYNE, Trustee  
or any successors in trust,  
under the Darryl Keith Wayne 
Revocable Trust Agreement,  
and any Amendments thereto,  
dated February 23, 2007, 
Defendant. 
 
 
 
 
Appeal by Plaintiff and cross-appeal by Defendant from 
orders entered 23 March 2012 and 7 June 2012 by Judge C.W. Bragg 
in Cabarrus County Superior Court.  Heard in the Court of 
Appeals 27 March 2013. 
 
Hartsell & Williams, P.A., by Christy E. Wilhelm and Andrew 
T. Cornelius, for Plaintiff.  
 
Vanderventer Black, LLP, by Norman Shearin, David P. 
Ferrell, and Ashley P. Holmes, for Defendant.   
 
 
DILLON, Judge. 
 
In February 2009, Plaintiff Town of Midland (the “Town”) 
filed two actions to condemn portions of two adjacent tracts of 
land (the “Wayne Tracts”) owned by Defendant, Darryl Keith 
Wayne, Trustee of the Darryl Keith Wayne Revocable Trust 
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(“Defendant”).  On 2 December 2011, the trial court held a 
hearing pursuant to N.C. Gen. Stat. § 40A-47 (2011), to consider 
all issues relating to the taking other than compensation.  The 
trial court subsequently entered various orders regarding the 
matters raised at the hearing, which are the subject of this 
appeal. 
I. 
Background 
The Wayne Tracts, which consist of approximately 90 acres 
of land, form the southern portion of a tract containing 250 
acres of land assembled by Mr. Wayne for the purpose of 
developing a residential subdivision known as Park Creek.  (The 
entire 250-acre assemblage is hereinafter referred to as “the 
Property.”)  The northern portion of the Property consisted of 
several tracts which were held in the name of Park Creek, LLC, 
in which Mr. Wayne was a member.   
On 19 June 1997, the Cabarrus County Planning and Zoning 
Commission approved a customized development plan (the “1997 
Plan”) for the Property.  The 1997 Plan gave Mr. Wayne the right 
to develop residential lots on the Property within certain 
parameters so long as it remained in force.   
By 2009, the first two phases of lots within the Park Creek 
subdivision, which were located on the northern portion of the 
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Property, had been substantially developed and sold. However, 
the Wayne Tracts and one tract owned by Park Creek, LLC, 
remained largely undeveloped.   
In February 2009, the Town commenced these actions for the 
purpose of taking an interest in a small portion - approximately 
three acres - of the two Wayne Tracts for an easement in which 
to construct a natural gas pipeline and a fiber optic line.  
(The easement within the Wayne Tracts is hereinafter referred to 
as “the Easement.”)  The Town did not name Park Creek, LLC, as a 
party or identify its tract in the taking since the Easement did 
not include any portion of the tract owned by Park Creek, LLC.   
In September 2009, a contractor employed by the Town drove 
vehicles and equipment and maintained construction staging areas 
on portions of the Wayne Tracts outside of the Easement for a 
period of time during construction.   
In the fall of 2011, Defendant filed a counterclaim for 
inverse 
condemnation 
in 
each 
action 
claiming 
that 
the 
contractor’s actions constituted a temporary taking of portions 
of the Wayne Tracts outside the Easement and that Defendant was 
entitled “to be paid just compensation for the taking of [the 
Wayne Tracts].”  
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Also in the fall of 2011, Park Creek, LLC, moved to 
intervene in the condemnation actions, claiming that the Town 
had inversely condemned its tract by adversely impacting its 
rights to develop it in accordance with the 1997 Plan.  This 
motion, however, was denied by the trial court after a hearing 
on 25 October 2011.     
In November 2011, the trial court held a hearing, pursuant 
to N.C. Gen. Stat. § 40A-47, to consider all issues other than 
damages.  Subsequently, the trial court entered two orders on 23 
March 2012, which were amended by orders entered on 7 June 2012.  
In these orders the trial court concluded that (1) an inverse 
condemnation had occurred with respect to the Wayne Tracts 
outside the Easement and (2) there was no unity of ownership 
between the Wayne Tracts and the tract owned by Park Creek, LLC.  
From these orders, the Town appeals; and Defendant cross-
appeals.   
Preliminarily, we note the orders are interlocutory, with 
the issue of damages remaining unresolved.  However, we have 
held that a trial court’s determination that an inverse 
condemnation has occurred affects a substantial right and is, 
therefore, immediately appealable.  City of Winston-Salem v. 
Ferrell, 79 N.C. App. 103, 107, 338 S.E.2d 794, 797 (1986). 
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II. 
Analysis 
In reviewing the Town’s appeal and Defendant’s cross-appeal 
from the trial court’s orders, our standard of review is whether 
the findings of fact are supported by competent evidence and 
whether the findings of fact support the conclusions of law.  
Conclusions of law are reviewed de novo.  See id. at 111, 338 
S.E.2d at 799.  We address each appeal separately below.   
A: The Town’s Appeal 
The 
Town 
challenges 
the 
trial 
court’s 
determination 
regarding 
Defendant’s 
inverse 
condemnation 
counterclaims.  
Additionally, the Town argues that the trial court erred by 
relying upon the opinion of Defendant’s expert.   
 
In these actions, the Town filed actions to condemn the 
Easement.  In its orders, however, the trial court determined 
that the Town had inversely condemned the Wayne Tracts outside 
the Easement in two ways.  First, the trial court determined 
that the Town had temporarily taken portions of the Wayne Tracts 
outside the Easement through the actions of its contractor 
during the construction of the pipeline and fiber optic line.  
Second, the trial court determined that the Town’s condemnation 
of the Easement “ha[s] denied [Defendant] of all practical uses 
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of the Wayne Tracts, resulting in a regulatory taking of the 
Wayne Tracts.”  We address each challenge below. 
1. Temporary Taking 
The Town argues that the trial court erred in concluding 
that the actions by its contractor in using portions of the 
Wayne Tracts outside the Easement constituted an inverse taking.  
We disagree. 
In this case, the trial court found that the Town’s 
contractor drove vehicles and equipment, built a road and 
cleared and maintained construction staging areas, all on 
portions of the Wayne Tracts outside the Easement.  The findings 
in this case are similar to the facts in Ferrell in which “[t]he 
contractor entered upon defendants’ land, graded and gravelled a 
roadway outside the areas identified as areas to be acquired by 
the City, and began to haul pipe into the construction site[;] 
[t]he contractor used a second area outside the identified 
easements to store pipes and equipment.”  Id. at 105, 338 S.E.2d 
at 795.  In Ferrell, we held that the trial court, “as the trier 
of fact, could find from the . . . evidence that the 
contractor’s use of the roadway over defendants’ property was 
essential to provide access to the City’s sewer outfall 
construction site, that such use thus necessarily flowed from 
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the construction of the improvement in keeping with the design 
of the condemnor, and that it thus resulted in an appropriation 
of land outside the easements.”  Id. at 112, 338 S.E.2d at 800.  
As in Ferrell, the trial court, here, essentially found the 
contractor’s use of portions of the Wayne Tracts outside the 
Easement was essential to the construction.  Specifically, in 
its 7 June 2012 order, the trial court made finding of fact 
number 10, which stated as follows:  
10. The dimensions, size, and location of 
the easements acquired and the location of 
an existing pipeline were such that the 
Town’s contractor was forced to enter areas 
of the Wayne Tracts outside such easements. 
The said easements were not large enough or 
so situated to accommodate both the piles of 
dirt generated by excavations required for 
the installation of the pipeline and other 
construction 
activities 
necessitated 
by 
plans for the Project. 
 
After thorough review of the evidence in this case, we conclude 
that there was substantial evidence to support the trial court’s 
findings on this issue, including the ultimate finding quoted 
above.  Defendant offered the testimony of Alan Goodman, who 
testified, inter alia, that the area within the Easement was 
impassable at times during construction making it necessary for 
the contractor to utilize land outside the Easement.  Further, 
Defendant also offered a number of photographs purportedly 
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showing that the Easement was impassable.  Accordingly, the 
Town’s argument is overruled.     
2:  Regulatory Taking 
The Town next argues that the trial court erred by 
concluding that the Town’s taking of the Easement constituted a 
regulatory taking of the Wayne Tracts in their entirety.  We 
agree.  
There are “two categories of regulatory action that require 
a finding of a compensable taking: regulations that compel 
physical invasions of property and regulations that deny an 
owner 
all 
economically 
beneficial 
or 
productive 
use 
of 
property.”  King by & Through Warren v. North Carolina Dep’t of 
Env't., Health & Natural Resources, 125 N.C. App. 379, 385, 481 
S.E.2d 330, 333, disc. review denied, 346 N.C. 280, 487 S.E.2d 
548 (1997).  In the case, sub judice, the trial court concluded 
that a regulatory taking occurred based on the second category 
set out in King.  Specifically, the trial court concluded in its 
June 2012 order as follows:   
18. The 
Town’s 
condemnations 
in 
[these 
actions] 
have 
denied 
[Defendant] 
all 
practical 
uses 
of 
the 
Wayne 
Tracts, 
resulting in a regulatory taking of the 
Wayne Tracts. 
 
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This conclusion is based on a series of findings in which the 
trial court determined that Defendant had a vested right to 
develop lots on the Wayne Tracts in accordance with the 1997 
Plan; that because of the Town’s condemnation of the Easement, 
“it is no longer economically feasible for [Defendant] to 
construct roads on the Wayne Tracts in accordance with the 
[1997] Plan”; and that “[c]onsequently, [Defendant] has been 
deprived of all practical uses of the Wayne Tracts.”  In other 
words, the trial court concluded that the Wayne Tracts have no 
practical use based on a finding that Defendant might no longer 
be able to develop them in a particular way. 
 
Our Supreme Court has stated in such cases that “the test 
for determining whether a taking has occurred . . . is whether 
the property . . . has a practical use and a reasonable value.”  
Finch v. City of Durham, 325 N.C. 352, 364, 384 S.E.2d 8, 15 
reh’g denied, 325 N.C. 714, 388 S.E.2d 452 (1989) (citation 
omitted).  However, “a taking does not occur simply because 
government action deprives an owner of previously available 
property rights.”  Id. at 366, 384 S.E.2d at 16 (citation 
omitted).   
 
We do not believe that the trial court’s conclusion that a 
regulatory taking by the Town of the Wayne Tracts in their 
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entirety is supported by the trial court’s findings.  The trial 
court made no findings to support a conclusion that the Wayne 
Tracts, which include approximately 87 acres outside the three-
acre Easement, have no “practical use . . . or reasonable 
value.”  The trial court did not find that the Wayne Tracts 
could not be developed residentially at all.  Rather, the trial 
court found that “[a]ny major changes or amendments to the 
[1997] Plan such as the elimination of roads will also render 
the [1997] Plan ineffective, eliminating [Defendant’s] vested 
rights in the Plan, and requiring [Defendant] to submit a new 
plan for approval by Cabarrus County[,]” which suggests that the 
Wayne Tracts could still be developed for residential use, 
though not in accordance with the 1997 Plan.  Therefore, the 
trial court’s findings do not support Defendant’s claim for 
inverse condemnation of the Wayne Tracts in their entirety based 
on a regulatory taking.   
Our holding does not prevent Defendant from presenting 
evidence at a subsequent trial on damages with respect to an 
inability to develop the Wayne Tracts in accordance with the 
1997 Plan.  Such evidence could be determined to be competent to 
show the diminution in value of the Wayne Tracts resulting from 
the taking of the Easement.   
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Defendant argues that its inverse condemnation claim should 
be sustained, in any event, based on the trial court’s finding 
that it had a “vested right” in the 1997 Plan, because the Town 
did not specifically identify in its complaint that this “vested 
right” was being taken.  Generally, a property owner may have a 
justified inverse condemnation claim in the event that it loses 
a vested right as a result of a government action where the 
government has not filed a declaration of taking.  N.C. Gen. 
Stat. § 40A-51(a) provides that “[i]f property has been taken . 
. . and no complaint containing a declaration of taking has been 
filed[,] the owner of the property . . . may initiate an action 
to seek compensation for the taking.”  Id.   
However, here, the Town did file complaints identifying the 
“property [it] sought to acquire” as required by N.C. Gen. Stat. 
§ 40A-20, which was a portion of the Wayne Tracts.  Chapter 40A 
provides that one measure of damages where only a partial taking 
of a tract occurs is “the amount by which the fair market value 
of the entire tract immediately before the taking exceeds the 
fair market value of the remainder immediately after the 
taking[.]”  N.C. Gen. Stat. § 40A-64(b)(i) (2011).  Our Supreme 
Court stated in Board of Transportation v. Jones that where a 
condemner has taken a portion of a tract, “evidence regarding 
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the adverse effects of the condemnation on the remaining 
property is admissible, but such effects ‘are not separate items 
of damages, recoverable as such, but are relevant only as 
circumstances tending to show a diminution in the over-all fair 
market value of the property.’” 297 N.C. 436, 439, 255 S.E.2d 
185, 187-88 (1979) (quoting Gallimore v. Commission, 241 N.C. 
350, 355, 85 S.E.2d 392, 396 (1955)).1  Defendant is not entitled 
to additional compensation, beyond the diminution in value as 
provided in N.C. Gen. Stat. §40A-64, based on the loss of the 
right to develop the property in a certain way.2  Therefore, 
where the Town has filed a complaint which will entitle 
Defendant to compensation based on the diminution in value of 
the Wayne Tracts caused by the taking of the Easement, an 
inverse condemnation action by Defendant seeking additional 
                     
1 The other cases cited by Defendant regarding a regulatory 
taking are inapposite.  For instance, Defendant cites Raleigh v. 
Hollingsworth in which a property owner filed a counterclaim for 
inverse condemnation.  96 N.C. App. 260, 385 S.E.2d 513 (1989). 
Our Court sustained a finding that an inverse condemnation had 
occurred; however, the property owner did not allege that the 
condemnor had taken additional rights in the property the 
condemnor had not identified in its notice of taking.  Rather, 
the property owner alleged that the condemnor took another 
separate tract in addition to the tract identified in the notice 
of taking.  Id.  
2 Based on our holding, it is not necessary for us to decide 
whether Defendant’s right to develop the Wayne Tracts in 
accordance with the 1997 Plan constitutes a “vested right.”  
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damages resulting in the loss of its vested rights cannot be 
sustained.     
3: Expert Witness Opinion Testimony 
 
The Town argues that the trial court erred in relying upon 
the speculative opinion testimony of Richard Flowe, Defendant’s 
expert witness, in concluding that the Town’s taking of the 
Easement resulted in a regulatory taking of the Wayne Tracts in 
their entirety.  Specifically, the Town argues that Mr. Flowe’s 
testimony was based on a map showing a hypothetical development 
plan and not on a review of the 1997 Plan.  However, our 
decision in subsection 2 above renders this argument moot.   
B: Defendant’s Cross-Appeal 
1: Unity of Ownership 
 
In Defendant’s sole argument on cross-appeal, he contends 
the trial court erred by concluding that no unity of ownership 
existed between Park Creek, LLC, and Defendant.  We disagree. 
 
Pursuant to N.C. Gen. Stat. § 40A-67, “all contiguous 
tracts of land that are in the same ownership and are being used 
as an integrated economic unit shall be treated as if the 
combined tracts constitute a single tract.”  Id.   
In this case, the facts are not in dispute.  Mr. Wayne 
testified that he was the majority shareholder of Park Creek, 
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LLC, owning 75% of its property.  Mr. Wayne also testified that 
he is the record owner of the Wayne Tracts as Trustee of the 
Darryl Keith Wayne Trust.  Our Supreme Court has held that 
“[a]bsent unity of ownership . . . two parcels of land cannot be 
regarded as a single tract for purposes of determining a 
condemnation award.”   Board of Transp. v. Martin, 296 N.C. 20, 
26, 249 S.E.2d 390, 395 (1978) (emphasis added).  Further, the 
Martin Court held that “a parcel of land owned by an individual 
and an adjacent parcel of land owned by a corporation of which 
that individual is the sole or principal shareholder cannot be 
treated as a unified tract for the purpose of assessing 
condemnation damages.”    Id. at 28, 249 S.E.2d at 396.  Based 
on Martin, we conclude the trial court did not err in finding 
and concluding that there was no unity of ownership between the 
Wayne Tracts owned by Mr. Wayne and the tract owned by a 
separate limited liability company. 
Defendant argues that Martin is not controlling because it 
is a limited liability company and not a corporation, citing 
City of Winston-Salem v. Yarbrough, 117 N.C. App. 340, 451 
S.E.2d 358 (1994); D.O.T. v. Nelson Co., 127 N.C. App. 365, 489 
S.E.2d 449 (1997); and D.O.T. v. Fernwood Hill Townhome 
Homeowners’ Ass’n, 185 N.C. App. 663, 649 S.E.2d 433 (2007).  
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However, none of these cases involve a situation in which a 
limited liability company owns one tract and one of its members 
has ownership in an adjacent tract.   
In Yarbrough, supra, we found that there was unity of 
ownership between a tract owned by a husband and an adjacent 
tract owned by his wife.  We based this holding on the wife’s 
inchoate right of dower in the husband’s land; and, accordingly, 
the wife held “some quality” of interest in both tracts.  
Yarbrough, supra.   
In Nelson Co., supra, we held unity of ownership may exist 
between two adjacent tracts owned by separate partnerships where 
some of the general partners were the same.  In so holding, we 
stated that “each general partner has an ownership interest in 
partnership property along with the other partners[,]” relying 
on N.C. Gen. Stat. § 59-55(a) (1996).  Id. at 367, 489 S.E.2d at 
450. 
Finally, in Fernwood Hill Townhome Homeowners’ Ass’n, 
supra, we held that there was        unity of ownership between 
the common areas owned by a homeowner’s association and the 
individual townhomes.  In so holding, we noted that the owners 
of the individual townhomes also each possessed an easement over 
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the common areas, thus creating a unity of ownership.  Id. at 
640, 649 S.E.2d at 438.   
However, unlike the individuals in Yarbrough, Nelson Co., 
and Fernwood Hill Townhome Homeowners’ Ass’n, Mr. Wayne, 
individually, has no interest in the tract owned by Park Creek, 
LLC.  Rather, he merely owns an interest in the limited 
liability company which owns the tract.  The Martin Court 
reasoned that a corporation and its shareholders are to be 
treated differently for purposes of determining whether unity of 
ownership exists based on the fact that a “corporation is an 
entity distinct from its shareholders which own it. . . .  Where 
persons have deliberately adopted the corporate form to secure 
its advantages, they will not be allowed to disregard the 
existence of the corporate entity when it is in their benefit to 
do so.”  Id. at 28-29, 249 S.E.2d at 395 (citations omitted).  
We 
believe 
that 
this 
reasoning 
equally 
applies 
to 
the 
relationship between a limited liability partner and its 
members.  Unlike a general partnership, a corporation and a 
limited liability company are each established by its owners, in 
part, “to secure [the] advantage[]” of a shield from the 
liabilities of the entity.  Defendant cannot now ask this Court 
to disregard the entity.  Defendant argues, however, that we 
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should treat a limited liability company like a general 
partnership, rather than like a corporation, for purposes of 
determining unity of ownership because both entities are taxed 
similarly.  However, this argument is unconvincing; subchapter S 
corporations and partnerships are also taxed similarly.   
III:  Conclusion 
 
For the foregoing reasons, we conclude the trial court did 
not err in ruling there was an inverse taking with regard the 
parking of construction vehicles and the temporary construction 
of a road on the Wayne Tracts outside of the Easement condemned 
by the Town’s contractor.  However, we hold that the trial court 
erred in concluding that there was a regulatory taking of the 
Wayne Tracts in their entirety.  Lastly, regarding Defendant’s 
cross-appeal, we affirm the trial court’s ruling concerning the 
question of unity of ownership.  Accordingly, we remand this 
matter to the trial court for a determination of damages with 
respect to both the Town’s taking as described in its notice of 
taking to be calculated pursuant to N.C. Gen. Stat. §40A-46 and 
the temporary taking of portions of the Wayne Tracts outside the 
Easement by the Town’s contractor.   
AFFIRMED, in part; REVERSED and REMANDED, in part. 
Judge CALABRIA and Judge ERVIN concur.