A New Game Changer Zoning Case

I published this post last January but my law partners – who won the case – asked me to take it down. Why? Because the other parties asked the N.C. Supreme Court to review the decision and one of the bases for higher review is a case’s significance.

And since I had described this decision as one of the most significant land use decisions in years because it opened the door to completely changing how appointed and elected bodies issue special and conditional use permits, my partners understandably cringed.

Two weeks ago the N.C. Supreme Court declined to hear this case, so I repost the original blog and especially ask you to read the section at the end explaining why the case merits game-changer attention.

The Parties

Little River is the owner of an existing Lee County rock quarry that needed to expand its quarry pit and facility boundary. Carolina Trace is the HOA of a subdivision about a mile from the quarry pit that elected to build near the existing quarry.  It was joined in the action by three other HOAs and several individual neighbors.

Although the hearing was before the Board of Adjustment, the county is the proper party on appeal.

The Facts

Lee County expressly permits rock quarries in RR and RA zoning districts if the quarry applicant can demonstrate by competent, material, and substantial evidence that it meets the standards of a Special Use Permit (SUP).

Lee County has the typical four SUP standards: (1) the use must not materially endanger health or safety; (2) the use must otherwise meet objective zoning ordinance requirements (3) the use must not substantially injure the value of adjoining property; and (4) the use must be generally consistent with the comprehensive plan and in harmony with the area.

As is becoming more common, the hearing occurred over many nights – in this case it took 5 nights over a six-month span. Lawyers represented all parties (including special counsel for the Board), and the lawyers generally agreed on the procedures the board would follow.

Little River had experts to demonstrate that it met most of the standards and used other forms of evidentiary presentations where experts were not needed. Interestingly, the HOAs were deep-pocketed and hired their own experts, something that is not common.

After 5 nights, the Board of Adjustment denied the SUP. Little River appealed to superior court.  The HOAs and others moved to intervene, and Little River consented, but with an express reservation of right to challenge the standing of the HOAs.

The superior court upheld the county’s denial, so Little River appealed to the Court of Appeals, which was a very good move.

The Court’s Decision

The Court of Appeals, through Judge John Tyson’s pen, reversed the superior court. As he did in his previously authored cases Dellinger v. Lincoln County and Innovative 55 v. Robeson County, Judge Tyson began his analysis with the prima facie case – did the applicant meet its initial burden of presenting competent, material, and substantial evidence tending to show that it met all SUP standards? If so, then it would have presented a prima facie case of entitlement to the permit.

He (and Judges Hunter and Stroud) concluded that the applicant did meet its burden, and that the HOAs failed to present competent, material and substantial evidence that it failed to meet any one of the standards.

As Judge Tyson reminds us (he mentions it twice), the applicant’s initial burden is a burden of persuasion. It is not a burden of proof.

And he cited one of his favorite cases (and mine), Woodhouse v. Bd. of Commissioners, on two key points, the first being that the applicant need not anticipate and address every conceivable objection to the proposed use.  Trust me that opponents will raise every “but what if” imaginable, and the Woodhouse standard is a helpful defense.

He also reminds us that “whole record review” is broader than looking for evidence to support the board’s decision. A reviewing court should look at all the evidence, including evidence contrary to the board’s decision.

But let’s look at how the court analyzed each standard.

Standing.  Little River challenged the HOAs’ and individual neighbors’ standing.  Except for some unique facts, it actually might have won on that point by demonstrating that the HOAs and others were not “aggrieved parties.”  After all, Judge Stroud, who authored the often-discussed Cherry v. Wiesner case, presided over this panel of judges. However, (1) the local ordinance provided for wide open participation before the board, and (2) Little River’s legal counsel consented to the HOAs’ intervention. The court dismissed the standing challenge on these bases, not on whether neighbors were aggrieved. (A noteworthy point: Little River consented to the HOAs’ intervention while expressly reserving the right to challenge standing in superior court. I would have appreciated more detailed reasoning from the Court).

Health and safety. I have argued for years that the SUP health and safety standard cannot be addressed by a local board on matters that are heavily regulated and pre-empted by state and federal law except to say that they are pre-empted.  The Little River Court does not use the term “pre-emption” but it essentially reaches the conclusion that the matters related to groundwater, surface water, air, blasting, etc. are all expressly regulated by state and federal agencies that have pre-emptied the field of lower governmental regulation.

I’ve been waiting for the right case to walk into my office for years – the case where the Court of Appeals says with finality that lay members of local government boards may not insert themselves in matters handled through state permitting by regulatory officials specifically trained to implement and oversee matters of environmental health and safety. This case opens the door a bit wider. (More on this point below)

Meeting Ordinance Standards.  First, I’ve said for years that this standard has no place in quasi-judicial decision-making.  It’s an objective, not subjective, standard.  It’s a determination that staff, not board members, are trained to make.

But more importantly, and without doing research, this is the first case I’m aware of where a court distinguishes between SUP requirements and the requirements later needed for a building permit or any other permit that is “an entirely separate process.” I battle boards on this issue more often than I’d like, and this court highlighted the distinction and clearly got it right.

Property values.  The court correctly followed the zoning ordinance standard – will the use substantially injure adjoining or abutting properties – noting that evidence of harm to homes in the HOA was immaterial because none of those homes adjoin or abut the quarry. (For those who follow these things, I note that this was at least the fourth time the Court of Appeals found the substance and methodology of appraiser Rich Kirkland to be sufficient to meet local ordinance standards).

Harmony. In its second application of the Woodhouse case, the Court found that generalized fears and speculations of lay witnesses could not overcome the legislative determination of harmony previously made by Lee County when it decided that quarries were allowed uses in RA and RR districts.  This legislative presumption of harmony is rebuttable, but the Court did not find that evidence in the record.

It is worth noting that in recent years our appellate courts have dismissed “similarity of use” and subjective appearance as working definitions of “harmony.” (See MCC Outdoor v. Franklinton, Blair Investments v. Roanoke, Innovative 55 v. Robeson County, etc.)

Other Commentary That You Won’t Read Anywhere Else

The lawyer who should be embarrassed. One of the outside counsel for the HOA or County drafted an order for the superior court judge that referred over and over to the Board of Adjustments (plural).  There is no such creature. The board of adjustments (plural) is a colloquial term used by lay people who haven’t read the statute or been to planning school. I wish Judge Tyson had said “(sic)” after each quoted misuse of the term from the lower court’s order.

And everybody has pet peeves. I also admit to minor cringing when the “board of adjustment,” the correct statutory term, is called the “zoning board of adjustment,” making the term “zoning” in this context the most useless and redundant term in land use law.

Lawyer-drafted rules. I’ve been in more multi-night hearings than I can remember, and in jurisdictions in every corner of the state.  It is always helpful and sometimes necessary for the lawyers to agree upon procedures to assist the local board that is likely experiencing its very first matter with lawyers on both sides and experts and court reporters.  That’s how it was done here, as mentioned by the Court.

Standing and intervention. This case did not analyze the application of Cherry v. Wiesner to participation at the board level other than to say it was inapplicable because the local ordinance provided an open door to participation before the board.  Having to deal regularly with citizens from across town or out-of-county who imagine that they have a dog in the local fight, I’m waiting for is a case that clarifies who can participate locally if the ordinance is silent on that point.  Some level of standing should be required.  Additionally, the court cited Little River’s consent to the HOAs’ intervention at the superior court level as a barrier to later challenge.  Since Little River consented to intervention while preserving the right to challenge standing, I will no longer consent to intervention if standing is a genuine issue.

The panel of judges.  This panel was a pro-development attorney’s appellate dream team, and whoever says that the panel you’re assigned to does not matter has not argued cases on the appellate level.  Judge Stroud, as I noted, wrote the court’s opinion in Cherry v. Wiesner, which raised the bar for judicial participation by neighbors who just don’t like the decision that was made.  Judges Tyson and Hunter have written some of the most important opinions in recent years protecting the rights of private property owners against aggressive, over-stepping, or arbitrary governmental decisions. For example, I could have told attorneys for the HOAs that they needed to be aware of Judge Tyson’s dissent in Dobo v. Wilmington, where he showed disdain for subdivision dwellers in once-rural areas who failed to inform themselves of the uses allowed on surrounding parcels, yet later complained when someone outside the subdivision wanted to expand the use of their property.

And why is this Opinion a Game-Changer for Land Use Cases?

It’s the pre-emption issue. To a great extent, this Court removes from local lay board members the assumed authority to make decisions that are otherwise delegated to state and federal agencies that hire experts who follow and implement the rules that are fully vetted for the protection of health and safety.

Health and safety are the topics on which clients I represent must spend from thousands to tens of thousands of dollars to address various matters at the local level. They are the topics boards often spend days discussing. As illustrated by this case and others, boards still listen to generalized fears raised by adjacent neighbors before they’ll listen to experts or trust state and federal agencies.

Whether it’s a rock quarry or a landfill or a shopping center requiring a 401/404 permit for disturbance of wetlands, Little River v. Lee County – to my reading – is a giant step in the direction of taking pre-empted decision-making out of the hands of local boards. Now all we need is a case where the nullification of pre-empted decision-making is the actual holding of the case.

Fair Disclosure

It is appropriate to note that Little River was represented by my firm, Smith Moore Leatherwood. Although I was present for oral arguments (I had the previous case on the docket) I had nothing to do with this case, which was ably handled by Gray Styers and Karen Kemerait in our Raleigh office, with assistance from our crackerjack appellate team.

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