North Carolina Municipal Attorney’s Summer Conference
Asheville, August 6, 2010
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Inverse Condemnation – History
and Nature of Action
“A taking without formal exercise of eminent
domain” Charlotte v. Spratt
 “Device to force government to exercise e.d.”
Smith vs. Charlotte
 Taking = “actual interference or disturbance of
property rights resulting in injuries not merely
consequential or incidental.” Adams
 Damage must “grow out of the ownership of
property and be substantial enough to reduce
market value.” Long v. Charlotte

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Action lies only against entity with E.D. powers
Galloway
 Inverse Condemnation action requires injury to
property of an essentially permanent nature.
 Burden of proof is on the land owner. Penn
Central
 Intent to condemn is of no consequence. In Re:
Sioux Tribe
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Fundamental Constitutional Rights
Basis of Action
From the U.S. Constitution, Fifth
Amendment “…nor shall private property be
taken for public use without just
compensation.”
 There is no “Takings Clause” in N.C.
Constitution.
 N.C. Constitution Article 1, Section 19 –
“Law of the Land Clause” guarantees no
taking without compensation

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N.C. Statutory Framework – Inverse
Condemnation against Local
Government

Actions against local government condemnors
G.S. 40A – 51: “Remedy where no declaration of
taking filed…”
 See Article 3, Chapter 40A, GS40A – 40 through 40A
– 70.

Actions against the State, usually NCDOT, but a
few cities GS 136-111: “Remedy where no
declaration of taking filed…”
 See Article 9, Chapter 136, G.S. 136 – 103 through
136 – 121.1
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Attorneys’ Fees
No attorneys’ fees in “regular”
condemnation actions. McNeely
 Attorney’s fees available to successful
inverse claimants.

 (Hidden in) G.S. 40A-8 and G.S. 136-119 Costs
and Appeal
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Major Categories of Inverse
Taking
There is a wide variety of government actions
that may support claim “in inverse.”
 “Workable rules” are elusive.
 Szypszak: 1) “Interweaving and distortion of
property and tort law concepts”
2) “Artificial interpretation of
eminent domain provisions”
3) “Untidy compilations of legal
theory”
 It is useful to break down inverse claims into
three main categories:

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Three Categories
1. Direct Physical Appropriation/Expropriation
(“Normal” government activity without proper
paperwork)
2. Physical Intrusion/Interference
(Noise, smoke, odor, flooding)
3. Non-physical, “Regulatory” Takings
(Confiscatory zoning, permit denial precluding
economic use, development moratoria,
unreasonable exactions, regulations “going too
far”)
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1. Direct Expropriation – De Facto
Condemnation

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Actual physical entry always a taking. Terminal
Warehouse Corp.
Denial of all access a compensable taking.
Preliminary, temporary entries for surveys etc.
not a taking. Herndon; G.S. 40A-11, 136-111.
Excess taking arising in conventional action
(inverse by counterclaim). Bragg
Damage to remainder ≠ inverse taking.
Hollingsworth, Pearce
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2. Physical Intrusion/Interference
(Flooding, noise, smoke, odor, etc.)
Delineating the boundary between “normal
annoyances” and compensable deprivations.
 Flooding analogizes best to appropriation of
property. Lea Co., Warehouse Corp.
 Nuisance – like activities may be found to
constitute inverse taking. Edwards v.
Raleigh
 “Permanent servitude” having discernable
effect on market value vs. single, tortious
act. Bynum

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3. Regulatory Takings
(Non-physical appropriation by
government action)
Takings traditionally required physical
occupation.
 Ultimately S. Ct. recognized that “regulation can
effect a taking.” San Diego Gas and Electric
 Early Taking cases focused on regulating
“nuisance-like” activities. (No property right in
noxious activity). Parker
 More recently “going too far” analysis.

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3. Regulatory Takings

U.S. Supreme Court decisions:

Pennsylvania Coal (1922) – regulations may “go too far.”
Penn Central (1978) – balancing, ends-means test.
First English Evangelical Lutheran (1987) – prohibition
against all development in flood area a taking.
Lucas v. S.C. Coastal Comm. (1992) – the “categorical
rule.”
City of Monterey v. Del Monte Dunes (1999)
Sierra-Tahoe Preservation Council (2002) – a
development moratorium is not a taking under facts of
the case.

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N.C. Regulatory Takings Cases
Schmidt v. Fayetteville (1983) – Property
value loss insufficient.
 Helms v. Charlotte (1961) – Zoning is
confiscatory and a taking if all economic
uses of property are prohibited.
 Finch v. Durham (1989) – Zoning
regulations dramatically reducing value of
property upheld.
 Responsible Citizens v. Asheville (1983) –
Floodplain zoning not a taking.

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Exactions and Dedications

U.S. Supreme Court, in Nolan and Dolan,
required “rational nexus” and “rough
proportionality” between exaction and
development impact.
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N.C. Exactions Cases
Riverbirch Assoc. v. Raleigh (1990) –
requirement to dedicate open space/parkland
as a condition of development approval
upheld.
 Batch v. Chapel Hill (1989) – parkway
dedication requirement as condition of
subdivision approval not sufficiently
“proportional” to impact/service burden of
the development.

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Exclusivity of Inverse Remedy
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Trespass and nuisance superseded by G.S. 40A51. McAdoo
Negligence claims preserved. Howell v.
Lumberton
Action to invalidate regulation still viable.
Frank, A-S-P Assoc. v. Raleigh
Sec. 1983 action for constitutional infringement
under color of state law. Rodgers, 4th Cir.
Land use disputes still “local.”
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Statute of Limitations
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G.S. 40A-51 (136-111) requires action within
later of 24 months of taking, or “project
completion.”
Project may be segmented. McAdoo
Regulatory takings – statute runs upon
adoption/effective date.
Two-year stat. period tantamount to title. Smith
“Law of prescriptive easements irrelevant.”
(Lawrence)
Courts sympathetic to landowner claims in light
of two-year bar. Hoyle
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(Flood and Stormwater Cases)

Howell v. Lumberton 144 N.C. App. 695
(2001)
 Negligence claimed in storm drain maintenance
 40 A-51 Inverse not preemptive of negligence
action.
 Most recent damage was within three year
statute.
 Permit issuance = licensee duty owned.
19
Tate v. NCDOT 176 N.C. App. 530
(2006)
Undersized drain in highway flooded P’s
house during Hurricane Floyd.
 Dismissal of inverse action did not preclude
IC action in negligence, and no res judicata.
 G.S. 40 A-51 did not preclude IC action.

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Lakeview Condo Assoc. v. Pinehurst
(2007)

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Silt passing through street culvert filled P’s
pond.
Dismissal of nuisance and trespass action,
negligence action remained.
Not necessary for town to cause the silt or own
the drainage way.
“Reasonable use doctrine” – no defense.
Town has duty to take reasonable measures to
reduce silt passing through its street culvert.
21
Asheville Sports Properties v. Asheville
683 S.E.2d 217 (2009)
Negligence claim for sinkhole damage.
 Private drainage line on private property
collapsed.
 Interconnections with City drainage system
above and below not sufficient to find
“adoption.”

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First Gaston Bank of N.C. v. Hickory
___ N.C. App. ___ (2010)

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Private drainage line collapsed, destroying
structure—inverse and negligence claimed.
City controlled upstream and downstream
connection points.
City issued repair permits to fix line.
City’s approval of upstream developments,
resulting in increased drainage flows—no basis
for negligence.
No duty to analyze and design drainage systems
for anticipated private development.
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(Statute of Limitation – Related Cases)
Stahr v. NCDOT (NCCOA – 2010)
(Unpublished)
Road improvements caused severe erosion on p’s
property.
 Repairs attempted; State gave up on repairs.
 Insufficient findings of fact that statute had run.
 Statute construed to “favor landowners’ property
rights claims.”

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De Hart v. NCDOT 195 N.C. App.
417 (2009)
Inverse action for “too steep” driveway
contrary to consent judgment stipulation.
 No inverse taking as no actual, permanent
invasion for public use.
 Sole remedy in contract breach, and barred
by statute of limitations.

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Peach v. High Point __N.C.
App.__ (2009)
Failure to connect new sewer main to residence
caused sewage backup and total loss of
use/value.
 Inverse action allowed in addition to negligence
action.
 Generalized, not repairable, permanent damages
= market value diminution.
 G.S. 40A-51: Statute of Limitations construed
to favor landowner (date of contractor’s return
to repair omission).

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Town of Red Springs v. Williams
163 N.C. App. 358 (2004)
Town built sewer line on D’s property
without easement.
 Exclusive remedy of owner was in inverse.
 Statute had run – owner had a ten-year
opportunity to file action.
 Two years = good title

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(Odds and Ends Cases)
City of Charlotte v. Long 175 N.C.
App. 750 (2006)
Post-judgment septic field mitigation, with
owner’s consent, not an inverse taking.
 No public appropriation.
 Did not “necessarily flow from the project.”

28
6214 S. Blvd. Holdings LLC v. Charlotte
(NCCOA 2006, Unpublished)

Mere “planning and plotting” for light rail
project, even if impairs ability to lease property,
not an inverse taking.
29
Charlotte v. BMJ of Charlotte
___ N.C. ___ (COA 2009)
Railroad easement quitclaimed by N&SRR
to Charlotte for light rail use
 P claimed inverse from diminished access to
property.
 Non-use by railroad—no abandonment.
 Use and conversion to light rail not an
“overburdening.”

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Frances Austin Ptnshp. v. High Point
177 N.C. App. 753 (2006)
Leaving old sewer pipe in ground after
abandonment not a taking.
 Abandonment may be unilateral and without
consequence.
 City not required to pay twice for the
easement.

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Al-Nasara v. Cleveland County
(N.C. App. 2010) (Unpublished)
P sued county in inverse for demolishing
cited building without proper statutory
notice.
 While building code enforcement is a
governmental function, and purchased
insurance excluded inverse coverage,
sovereign immunity is inapplicable to
inverse condemnation claims.

32
Wilfong v. NCDOT
194 N.C. App. 816 (2009)
Another DOT “too steep” driveway case,
following R/W settlement.
 Interlocutory order finding P was entitled to
compensation at G.S. 136-108 preliminary
issues hearing.
 Not immediately appealable without
showing substantial right was at stake.

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T-Wol Acquisition Co. v. Durham
Housing Authority (NCCOA 2006,
Unpublished)
P sued housing authority in trespass and inverse
over disputed title.
 Inverse condemnation was the sole remedy.
 Requirement for certificate of convenience and
necessity procedural matter only and no defense
to authority’s having e.d. power.

34
Natl. RR Museum and Hall of Fame v.
Hamlet (NCCOA #08-356, Unpublished
2009)
P sued town over demolition of headquarters
building; anticipated leasing rehabilitated depot;
lease not consummated.
 Remedy of breach of contract and fraud
dismissed.
 No inverse taking, as plaintiff had not complied
with G.S. 40A-51 by failure to file and record
memo of action.

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Cary Creek Ltd. Ptnshp. v. Cary
(N.C. App. 2010)
Dec. action challenging stream buffer rules
and, alternatively, action in inverse.
 So long as appeal from variance denial and
declaratory judgment are not finally
determined, no inverse condemnation action
possible.
 No subject matter jurisdiction—inverse
dismissed.

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