Court Opinion

ID: 6725162
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:02:43.937086+00
Date Added: 2024-06-11T16:01:36.142963
License: Public Domain

Justice NEWBY
dissenting in part and concurring in part.
The issue in this case is whether the trial court applied the correct legal analysis under North Carolina Rule of Civil Procedure 23 in denying plaintiffs’ motion for class certification. A class exists when the named and unnamed members each have an interest in either the same issue of law or of fact, and that issue predominates over issues affecting only individual class members. Plaintiffs allege the recordation of the corridor maps and accompanying restrictions resulted in a *348taking of certain fundamental property rights of all the proposed class members. Because the government action was not for the safety and welfare of the public, the correct takings analysis is whether the corridor maps’ restrictions substantially interfere with the rights of the owners of the affected properties. Thus, for purposes of Rule 23, the trial court should have decided whether the issue of substantial impairment of the property rights of all the owners subject to the corridor maps predominates over issues affecting only individuals. Because the trial court’s order failed to apply this approach, the matter should be remanded to the trial court for reconsideration in light of the correct legal standard. If the trial court finds that a class exists, it should then exercise its discretion to consider whether class action is a superior method of adjudicating these claims.
The majority refuses to articulate the correct legal analysis to be applied, yet summarily declares that this group of landowners, all similarly affected by the corridor maps’ blanket restrictions, do not share common issues of law or fact. A class exists when individuals have a common interest in law, yet the majority’s approach prohibits the trial court from identifying the applicable law. The majority wrongly equates specifying the correct legal standard in a takings claim to a premature analysis of the substantive merits. But, how can a trial court know whether a common issue of law exists if prohibited from considering the applicable law? As done by both the trial court and the Court of Appeals and as our precedent requires, recognizing the law to be applied is a fundamental step in determining the existence of a class. The majority incorrectly assumes the takings inquiry is not a consideration for class certification, but is reserved for the damages phase of trial. Moreover, the majority’s approach focuses exclusively on the unique nature of real property, arguably promulgating a per se rule that will bar class actions for claims of inverse condemnation. Most troubling, despite these uniform restrictions affecting the same fundamental property rights, the majority emphasizes that the trial court may employ differing tests to determine whether each owner has suffered a taking, thereby endorsing disparate treatment of the same fundamental property rights. See Beroth Oil Co. v. NCDOT,_N.C._,_,_S.E.2d_,_(2014) (stating that for each individual property owner the trial court may “use a different test in order to determine whether a taking has occurred”).
Over sixteen years ago, the North Carolina Department of Transportation recorded corridor maps identifying property in the path of the Northern Beltway in Forsyth County. Though some of the *349project’s past delays stem from a federal court order, N.C. Alliance for Transp. Reform, Inc. v. USDOT, 713 F. Supp. 2d 491, 499 (M.D.N.C. 2010), the restrictions imposed by state law never expire, and the majority acknowledges that “NCDOT has stated that no funds are available to begin acquisitions for the next ten years.” Under subsection 136-44.51(a) of our General Statutes, “[a]fter a transportation corridor official map is filed with the register of deeds, no building permit shall be issued for any building or structure or part thereof located within the transportation corridor, nor shall approval of a subdivision ... be granted with respect to property within the transportation corridor.” N.C.G.S. § 136-44.51(a) (2013). By recording a corridor map, DOT is able to foreshadow which properties will eventually be taken for roadway projects and in turn, decrease the future price the State must pay to obtain those affected parcels. According to plaintiffs, these blanket restrictions have rendered all the property within the area undevelopable and unmarketable and have substantially impeded all the owners’ rights to the use and enjoyment of their properties. Specifically, plaintiffs claim this cloud over the Northern Beltway properties prevents all owners from selling or improving their land — fundamental rights of property ownership — thereby drastically decreasing the market value of all affected properties. 1 James A. Webster, Jr., Patrick K. Hetrick & James B. McLaughlin, Jr., Webster’s Real Estate Law in North Carolina §§ 1.02, 1.04 (6th ed. Nov. 2012) [hereinafter Webster’s].
As a result, plaintiffs sought a declaratory judgment, alleging the recordation of the maps resulted in an unlawful “taking by inverse condemnation” and violated their rights under the federal and state constitutions. Plaintiffs moved for class certification under North Carolina Rule of Civil Procedure 23 on behalf of all similarly situated owners of property subject to the recorded corridor maps. The trial court, however, saw the recordation of the maps as an exercise of the State’s police power and applied an ends-means analysis generally reserved for regulatory takings. The trial court concluded that a regulatory taking would only occur when the “interference renders the use of the property impractical and the property itself of no reasonable value.” According to the trial court, common issues of law or fact therefore would not predominate because the ends-means test would have to be applied on a property-by-property basis to determine whether a taking had occurred. Thus, the trial court concluded that “plaintiffs have not defined a ‘class.’ ” Then, assuming arguendo that plaintiffs did define a class, the trial court found that a class action is *350not a superior method of adjudication because “whether a taking has occurred must be determined on a property-by-property basis.” The Court of Appeals applied the same approach, first identifying a legal standard then applying that standard under the framework of Rule 23. Beroth Oil Co. v. NCDOT, _N.C. App. __, _, 725 S.E.2d 651, 659-67 (2012).
While a court’s decision whether to allow a case to proceed as a class action involves a multi-part inquiry, the pivotal issue raised in this case is whether plaintiffs allegations are sufficient to constitute a class. Under Rule 23, a class exists “when the named and unnamed members each have an interest in either the same issue of law or of fact, and that issue predominates over issues affecting only individual class members.” Faulkenbury v. Teachers’ & State Emps.’ Ret. Sys. of N.C., 345 N.C. 683, 697, 483 S.E.2d 422, 431 (1997) (citing Crow v. Citicorp Acceptance Co., 319 N.C. 274, 280, 354 S.E.2d 459, 464 (1987)). When determining whether members have a predominantly common interest, the trial court is to construe Rule 23 liberally and “[t]ak[e] the allegations of the complaint as true.” Crow, 319 N.C. at 280, 281, 354 S.E.2d at 464, 465. “Whether a proper ‘class’ under Rule 23(a) has been alleged is a question of law.” Id. at 280, 354 S.E.2d at 464. Then, “[i]f the prerequisites for a class action are established, it is within the discretion of the trial court as to whether the matter may proceed as a class action.” Faulkenbury, 345 N.C. at 697, 483 S.E.2d at 431; see also Blitz v. Agean, Inc., 197 N.C. App. 296, 300, 677 S.E.2d 1, 5 (2009) (“With these principles in mind, the standard of review applicable to class certification decisions can be succinctly summarized as follows: We review class certification rulings for abuse of discretion. We review de novo the [trial] court’s conclusions of law that informed its decision to deny class certification.” (citations and internal quotation marks omitted)), disc. rev. denied and cert. denied, 363 N.C. 800, 690 S.E.2d 530 (2010). “Class actions should be permitted where they are likely to serve useful purposes such as preventing a multiplicity of suits or inconsistent results.” Crow, 319 N.C. at 284, 354 S.E.2d at 466.
The alleged class here contends the predominant issue of law or fact is whether the recordation of the corridor maps and accompanying blanket restrictions resulted in taking some portion of the owners’ fundamental property rights. To make this determination, unlike the majority, I believe the trial court must apply the correct takings analysis. Only after the correct takings test is established can the trial court determine if common issues of law and fact predominate.
*351To determine which takings test is appropriate in a given case, we must first ascertain whether the government is acting under its police power or under its power of eminent domain. See Barnes v. N.C. State Highway Comm’n, 257 N.C. 507, 514, 126 S.E.2d 732, 737-38 (1962) (“The question of what constitutes a taking is often interwoven with the question of whether a particular act is an exercise of the police power or of the power of eminent domain.” (citation and quotation marks omitted)). When the government exercises the police power, it acts to protect the “public health, safety, morals and general welfare.” A-S-P Assocs. v. City of Raleigh, 298 N.C. 207, 213, 258 S.E.2d 444, 448 (1979) (citations omitted). Under this power of protection, the “unrestricted use or enjoyment” of an owner’s property “is taken from him because his use or enjoyment of such property is injurious to the public welfare.” 1 Julius L. Sackman, Nichols on Eminent Domain § 1.42[2], at 1-203 (rev. 3d ed. 2013) [hereinafter Nichols]) see also Ernst Freund, The Police Power § 511, at 546 (1904) [hereinafter Freund] (“Under the police power, rights of property are impaired not because they become useful or necessary to the public, or because some public advantage can be gained by disregarding them, but because their free exercise is believed to be detrimental to public interests . . . .”). We apply an “ends-means” analysis in cases involving land use restrictions enacted under the State’s police power, meaning we first determine “whether the ends sought, i.e., the object of the legislation, is within the scope of the power,” then consider “whether the means chosen to regulate are reasonable.” Responsible Citizens in Opposition to the Flood Plain Ordinance v. City of Asheville, 308 N.C. 255, 261, 302 S.E.2d 204, 208 (1983).
Under eminent domain, on the other hand, property “is taken from the owner and applied to public use because the use or enjoyment of such property or easement therein is beneficial to the public.” Nichols § 1.42[2], at 1-203; see also Freund § 511, at 546-47 (“[I]t may be said that the state takes property by eminent domain because it is useful to the public, and under the police power because it is harmful, or as Justice Bradley put it, because ‘the property itself is the cause of the public detriment.’ ” (quoting Davidson v. New Orleans, 96 U.S. 97, 107, 24 L. Ed 616, 620 (1877) (Bradley, J., concurring)). A taking by eminent domain for the benefit or advantage of the public occurs when government action causes a “substantial interference with elemental rights growing out of the ownership of the property.” Long v. City of Charlotte, 306 N.C. 187, 199, 293 S.E.2d 101, 109 (1982) (citations omitted). A substantial interference with a single fundamental right inherent with property ownership may be *352sufficient to sustain a takings action; wholesale deprivation of all rights is not required. To recover for such an interference, “the owner must establish not merely an occasional trespass or nuisance, but an interference substantial enough to reduce the market value of his property.” Id. at 200, 293 S.E.2d at 110. A “physical touching of the land is not necessary.” Id. at 199, 293 S.E.2d at 109. When, as here, the State fails to file a complaint declaring its intent to act under the power of eminent domain, an affected property owner “may initiate an action to seek compensation for the taking” in a claim for inverse condemnation. N.C.G.S. § 40A-51 (2013); see also 2 Webster’s § 19.02[1], at 19-10 (“ ‘Inverse condemnation’ is a device which forces a governmental body to exercise its power of condemnation even though it may have no desire to do so.”).
While reducing the cost for the future acquisition of property may be a laudable public policy, that purpose falls under the category of public benefit or advantage rather than public protection. Thus, the trial court erred by applying a test reserved for the preservation of “public health, safety, morals and general welfare.” A-S-PAssocs., 298 N.C. at 213, 258 S.E.2d at 448; see also Freund § 511, at 546-47; Nichols § 1.42[2], at 1-203. Accordingly, the proper takings test in this case is the less stringent substantial interference test. In other words, to determine whether a class exists, the trial court should have weighed whether plaintiffs collectively alleged a common substantial interference with certain property rights of all owners in the Northern Beltway corridor and whether that issue predominates. For purposes of Rule 23, this is a common issue of law or of fact, one which the trial court failed to consider.
We should remand this case to the trial court for it to apply the correct legal standard and then exercise its discretion over the superiority of class action adjudication. See Crow, 319 N.C. at 284, 354 S.E.2d at 466 (“If the prerequisites to a class action are established on remand, the decision whether a class action is superior to other available methods for the adjudication of this controversy continues to be a matter left to the trial court’s discretion.”). Significantly, all seven members of this Court agree that the trial court acted under a misapprehension of existing law by relying on an ends-means analysis at this stage of its Rule 23 inquiry. Beroth,_N.C. at_,_. S.E.2d at _(“[W]e believe that one of the trial court’s fundamental errors was choosing to employ any test to determine the extent of damages suffered by all 800 landowners and whether a taking has occurred at this stage of the proceedings.”). Accordingly, we should no longer review *353the trial court’s order with the same deference the abuse of discretion standard demands. See Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 463, 469, 597 S.E.2d 674, 689, 693 (2004) (noting that the admissibility of expert testimony “is within the sound discretion of the trial court and will only be reversed on appeal for abuse of discretion,” but vacating the judgment of the trial court because the “ ‘judgment appealed from was entered under a misapprehension of the applicable law’ ” (citations omitted)). “Because the trial judge ‘did not have the legal standard [articulated] today to guide him in his consideration of the case,... it is not reasonable to expect him to have applied it without the benefit of this opinion,’ ” and this Court should therefore remand this case so the trial court may reconsider plaintiffs’ motion for class certification under the appropriate legal standard. Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1, 38, 591 S.E.2d 870, 894 (2004) (second alteration in original) (citation omitted); see also Howerton, 358 N.C. at 469, 597 S.E.2d at 693 (“ ‘When the order or judgment appealed from was entered under a misapprehension of the applicable law, the judgment, including the findings of fact and conclusions of law on which the judgment was based, will be vacated and the case remanded for further proceedings.’ ” (citation omitted)); Blitz, 197 N.C. App. at 312, 677 S.E.2d at 11 (“[W]e hold that the trial court’s ruling denying class certification was based upon a misapprehension of law, and thus constituted an abuse of discretion. [W]here a ruling is based upon a misapprehension of the applicable law, the cause will be remanded in order that the matter may be considered in its true legal light.” (second alteration in original) (citations and internal quotation marks omitted)).
The uniqueness and extent of each owner’s damages are of no consequence to the takings issue here. Regardless of the past, present, or planned use of each parcel, certain rights to improve and sell associated with each allegedly have been impaired in the same manner by the same uniform restrictions. The monetary values eventually placed on the rights to improve and sell property do not affect the core question of whether the owners may still exercise those rights. Even the majority concedes that “NCDOT’s generalized actions may be common to all” owners of property subject to the Northern Beltway corridor maps. Thus, if one owner suffered a taking of certain fundamental property rights based upon the corridor maps’ blanket restrictions, all owners suffered a taking.
Admittedly, the extent of damages owed to each owner will vary. But the fact that the owners will “receive recoveries in different *354amounts,” Faulkenbury, 345 N.C. at 698, 483 S.E.2d at 431-32, will not preclude class certification so long as the takings issue predominates. E.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 73 L. Ed. 2d 868 (1982) (holding that the physical intrusion of a cable wire constitutes a taking in a suit brought as a class action); Amen v. City of Dearborn, 718 F.2d 789, 798 (6th Cir. 1983) (holding in a class action “that the City’s deliberate course of conduct caused such substantial damage to plaintiffs’ properties that the properties in effect were actually taken within the meaning of the fifth and fourteenth amendments for which just compensation is due”), cert. denied, 465 U.S. 1101, 80 L. Ed. 2d 127 (1984); Foster v. City of Detroit, Mich., 405 F.2d 138, 146 (6th Cir. 1968) (affirming a lower court’s ruling in a class action takings suit that “there are important common questions of law and fact affecting all members of the class which override the factual differences regarding the damages suffered by each individual,” making “a class action under Rule 23(a)(3) . . . proper in this situation” (citation omitted)); Meighan v. U.S. Sprint Commc’ns Co., 924 S.W.2d 632, 638 (Tenn. 1996) (“It is likewise irrelevant that the case involves property damage. Though often characterized as ‘unique,’ this quality does not foreclose cases involving property damages from Rule 23 procedures. Literally dozens of class actions involving property damages have proceeded in our state and federal courts.” (citations omitted)).
The majority’s contention that plaintiffs’ proposal for a bifurcated trial is “unmanageable” ignores the effect of denying class certification. Under the majority’s reasoning, not only will each owner have to proceed individually on damages, but each will also have to prove that a taking occurred under differing, unarticulated tests. Inevitably this approach will result in disparate treatment of the same fundamental property rights. See High Rock Lake Partners v. NCDOT, 366 N.C. 315, 321, 735 S.E.2d 300, 304 (2012) (noting that this Court has a duty to protect fundamental property rights and that “governmental restrictions on the use of land are construed strictly in favor of the free use of real property” (citation and quotation marks omitted)). Our State now potentially bears the burden of over eight hundred identical takings claims when that issue could easily be resolved for all plaintiffs at one time. This outcome is inconsistent with the objectives of Rule 23 to facilitate “ ‘the efficient resolution of the claims or liabilities of many individuals in a single action’ ” and eliminate “ ‘repetitious litigation and possible inconsistent adjudications.’ ” Crow, *355319 N.C. at 280, 354 S.E.2d at 464 (citation omitted). Consequently, I dissent in part and concur in part.
Justice MARTIN joins in this opinion.