The North Carolina Supreme Court has delivered a significant ruling concerning when property owners must seek compensation for development restrictions imposed by the now-repealed Roadway Corridor Official Map Act (Map Act). In a case involving William T. Sanders and the North Carolina Department of Transportation (NCDOT), the Court held that if NCDOT initiates a direct condemnation action covering a property, the owner must raise any existing Map Act claims during that proceeding or risk forfeiting the right to sue later via an inverse condemnation action.
The decision effectively reverses a Court of Appeals ruling, centering on the interplay between North Carolina’s eminent domain statutes, specifically N.C.G.S. § 136-106 (requiring relevant defenses in condemnation answers) and N.C.G.S. § 136-111 (governing inverse condemnation claims).
The Map Act Restrictions and Prior Takings
The dispute stems from corridor maps NCDOT recorded in 1992 and 2006 for the Fayetteville Outer Loop project. These maps placed restrictions on Mr. Sanders’ property, limiting development and subdivision unless NCDOT approved an administrative process—a mechanism previously found by the Supreme Court in *Kirby* to constitute a taking.
NCDOT initiated two direct condemnation actions affecting Sanders’ land: one in 2002 and another in 2010. Both actions resulted in settlements via consent judgments, compensating Sanders for the acreage physically taken in fee simple or for easements. Crucially, neither the 2002 nor the 2010 complaints mentioned the ongoing Map Act restrictions.
In 2018, after the General Assembly repealed the Map Act maps, Sanders sued NCDOT in an inverse condemnation action under N.C.G.S. § 136-111. He argued that the previous settlements did not cover the damages caused by the Map Act restrictions themselves, which continued to encumber portions of his land until the maps were repealed.
Lower Courts Split on Timing
The trial court initially sided partly with Sanders, ruling that while *res judicata* barred claims for the land already taken in the direct actions, Sanders could pursue inverse condemnation for the remaining 28.041 acres still burdened by the Map Act restrictions after the 2010 taking.
The Court of Appeals affirmed this, focusing on the distinction between the interests taken in the direct actions (fee simple or easements) and the separate interest represented by the Map Act encumbrances. The appellate court reasoned that because the Map Act restrictions were independent interests, the twelve-month window under N.C.G.S. § 136-107 (for answering a direct condemnation) did not bar Sanders’ later claim for those specific restrictions under N.C.G.S. § 136-111.
The Supreme Court’s Interpretation of Eminent Domain Statutes
The Supreme Court, however, disagreed with the lower courts, finding that NCDOT’s statutory framework required Sanders to consolidate his claims.
Justice Allen, writing for the Court, emphasized that the goal is to ascertain legislative intent by examining the statutory language together. The Court focused heavily on N.C.G.S. § 136-106, which governs how property owners must respond when NCDOT files a complaint and declaration of taking. An owner served with such a complaint must file an answer within twelve months, which must include “such affirmative defenses or matters as are pertinent to the action.”
The central question became: Were the Map Act restrictions “pertinent to” the 2010 direct action?
The Court concluded they were. When calculating damages for a partial taking under N.C.G.S. § 136-112(1), the measure is the difference between the fair market value of the *entire tract* before the taking and the value of the *remainder* after the taking.
Since the Map Act restrictions negatively impacted the fair market value of Sanders’ property both immediately before and after the 2010 taking, the Court reasoned that any competent valuation required considering those encumbrances. Therefore, the restrictions were “pertinent to” the calculation of just compensation in the 2010 proceeding.
“It follows that a court could not have properly determined plaintiff’s damages in the 2010 direct action without taking those restrictions into account,” the opinion stated. Because Sanders failed to raise these pertinent matters in a timely answer to the 2010 action, he could not later seek compensation for them through an inverse condemnation suit under § 136-111.
The Court distinguished Sanders’ situation from prior cases like *Lea Company*, where a property owner was allowed a separate suit for damages (flooding) that occurred *after* the direct condemnation action was settled. In contrast, the Map Act restrictions were already in place and well-known to Sanders long before the 2010 filing, making them ripe for inclusion in that proceeding.
By reversing the Court of Appeals, the Supreme Court solidifies the principle that property owners must use the direct condemnation process to resolve all related compensation issues for the entire tract when the state initiates formal eminent domain proceedings.
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