Dep't of Transp. v. Bloomsbury Est.

Opinions

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

[do not modify or remove this line]

No. COA21-323

Filed: [do not modify or remove this line]

Wake County, No. 15 CVS 9786

DEPARTMENT OF TRANSPORTATION, Plaintiff,

v.

BLOOMSBURY ESTATES, LLC; BLOOMSBURY ESTATES CONDOMINIUM HOMEOWNERS ASSOCIATION, INC., Defendants.

Appeal by defendant Bloomsbury Estates Condominium Homeowners

Association, Inc. from order entered 3 March 2021 by Judge Vinston M. Rozier, Jr. in

Wake County Superior Court. Heard in the Court of Appeals 11 January 2022.

Thomas, Ferguson & Beskind, LLP, by Jay H. Ferguson, for defendant-appellee Bloomsbury Estates, LLC.

Law Firm Carolinas, by T. Keith Black and Harmony W. Taylor, for defendantappellant Bloomsbury Estates Condominium Homeowners Association, Inc.

TYSON, Judge.

¶1 Bloomsbury Estates Condominium Homeowners Association, Inc. (“the

Association”) appeals from an order of the trial court distributing settlement

proceeds. We reverse in part, affirm in part, and remand.

I. Background

¶2 Bloomsbury Estates is a residential condominium complex located in Raleigh.

Opinion of the Court

The Association is the unit owners’ association established under N.C. Gen. Stat. §

47C (2021). Bloomsbury, LLC created Bloomsbury Estates by filing a Declaration of

Condominium (“Declaration”) in the Wake County Registry at book 136211, page

2702 on 13 July 2009.

A. Phased Development Rights

¶3 Under the terms of the Declaration, Bloomsbury, LLC planned to develop

Bloomsbury Estates in two phases (“Phase I” and “Phase II”). Phase I was

constructed with fifty-six units contained within a multi-story building. Phase II was

to include the construction of six additional units in the Phase I building and the

construction of a new building containing up to eighty-five units. Prior to filing the

Declaration, Bloomsbury, LLC had submitted a site plan for the construction of a 110-

unit condominium complex consisting of two seven-story buildings. The site plan was

approved by the City of Raleigh on 25 July 2006.

¶4 Section 8 of the Declaration addressed the right to construct Phase II,

providing, inter alia: “[Bloomsbury, LLC] reserves the following special declarant

rights for the property: (a) To complete, within five years of the recordation of this

Declaration of Condominium, any and all improvements indicated on the plats and

plans, up to a maximum of 140 units.”

¶5 Bloomsbury, LLC assigned its declarant rights in a written assignment to

Bloomsbury Estates, LLC (“Developer”) which was recorded on 25 May 2011 in the

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Wake County Registry at book 14356, page 2386. Developer amended the Declaration

five times. The Fifth Amendment to the Bloomsbury Estates Declaration of

Condominium (“Fifth Amendment”) was recorded on 8 March 2013, in the Wake

County Registry at book 15176, page 1399. The Fifth Amendment extended the time

in which Developer could construct Phase II until 13 July 2017.

B. DOT Condemnation

¶6 Phase I was completed and all of the individual units had been sold to third

parties by 27 July 2015. On that date, the North Carolina Department of

Transportation (“DOT”) filed a declaration of taking and notice of deposit against the

Association, Developer, and Wake County (“DOT Action”). DOT named Wake County

as a defendant in the DOT Action because of a purported lien for unpaid ad valorem

taxes Wake County had asserted upon Bloomsbury Estates’ property. DOT sought to

acquire a portion of the Association’s common area lying outside of the building

constructed in Phase I for the construction of Raleigh’s Union Station.

¶7 The DOT Action sought a fee simple taking of the property. The construction

plans for the Raleigh Union Station also required a temporary construction easement

over other portions of Bloomsbury Estates’ property. The temporary construction

easement remained in place until the Raleigh Union Station project was completed

around 13 September 2017. The use of the easement purportedly made it impossible

for Developer to proceed with construction of Phase II within the Fifth Amendment’s

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deadline of 13 July 2017.

¶8 While the DOT Action was pending, Developer filed a civil complaint in Wake

County on 7 December 2015, docketed as 15 CVS 16076. On 27 May 2016, Developer

filed an amended complaint against the Association and the individual unit owners.

Developer asserted a claim for an anticipatory breach of contract based upon the

representations the Association was allegedly repudiating Developer’s right to

develop and construct Phase II until 13 July 2017.

¶9 Developer’s action also sought a declaratory judgment concluding it had

retained the right to develop and construct Phase II. Developer also sought to reform

the Declaration to extend the time to develop Phase II by an amount of time force

majeure equal to the delay caused by the DOT’s temporary construction easement.

¶ 10 On 29 July 2016, the Association filed its response in 15 CVS 16076, which

contained a motion to strike, motions to dismiss, an answer, affirmative defenses, and

counterclaims, asserting:

(1) the time limit expired within which development rights shall have been exercised pursuant to the Declaration and North Carolina law, and the time limit cannot be extended as a matter of North Carolina law, (2) the [Fifth A]mendment was not consented to by the requisite number of unit owners, (3) the [Fifth A]mendment was not signed by the requisite number of unit owners, (4) the amendment was not consented to by mortgage holders, (5) the Amended Complaint fails to allege a distinct, unequivocal and absolute refusal to perform a whole contract or a covenant going to the whole consideration of a contract, (6) unit

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owners’ property subject at any time to any development rights pursuant to plats and plans has been taken in whole or in part, (7) any development rights in unit owners’ property terminated or ceased, (8) the Court cannot reform a void instrument, (9) the Amended Complaint fails to allege mistake, or any proper, affirmative grounds for judicial reformation of a written instrument, (10) a taking of unit owners’ property was reasonably foreseeable, (11) the Court cannot make a new amendment or Declaration, (12) the Court cannot make an illegal amendment or Declaration, (13) the New LLC elected the remedy of damages.

¶ 11 While the DOT Action was pending, the Association filed a civil complaint on

31 December 2016, docketed as 16 CVS 15136 against Developer and another entity,

Sammie, LLC, alleging twelve causes of action including, inter alia, a declaratory

judgment action to determine Developer’s rights to develop Phase II in Bloomsbury

Estates and to quiet title. The Association’s claims asserted in 16 CVS 15136 remain

pending for trial in Wake County Superior Court.

¶ 12 On 21 June 2017, all parties to the DOT Action entered into a consent

judgment which resolved the total amount of just compensation owed by DOT. The

consent judgment did not address the apportionment of the just compensation as

between Developer and the Association.

¶ 13 Developer filed a motion for partial summary judgment in 15 CVS 16076 on 3

July 2017, invoking the one-year statute of limitations articulated in N.C. Gen. Stat.

§ 47C-2-117(b) (2021) (“[N]o action to challenge the validity of an amendment adopted

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by the [condominium] association pursuant to this section or pursuant to G.S. 47C-1-

5(a)(8) may be brought more than one year after the amendment is recorded.”).

¶ 14 Following a hearing, the trial court entered an order allowing Developer’s

motion for partial summary judgment by finding the one-year statute of limitations

in N.C. Gen. Stat. § 47C-2-117(b) barred the Association from challenging the validity

of the Fifth Amendment. The Association filed a notice of appeal in 15 CVS 16076 to

this Court on 29 September 2017, and then voluntarily withdrew its appeal on 5

January 2018.

¶ 15 The remaining issues in 15 CVS 16076 are pending trial in Wake County

Superior Court. By order entered 4 December 2020, the issues in 15 CVS 16076 and

16 CVS 15136 were consolidated for trial. That consolidation order was not appealed.

¶ 16 Developer filed a motion on 16 January 2018 pursuant to N.C. Gen. Stat. §

136-108 in the DOT Action. See N.C. Gen. Stat. § 136-108 (2021) (“After the filing of

the plat, the judge, upon motion and 10 days’ notice by either the Department of

Transportation or the owner, shall, either in or out of term, hear and determine any

and all issues raised by the pleadings other than the issue of damages, including, but

not limited to, if controverted, questions of necessary and proper parties, title to the

land, interest taken, and area taken.”). Developer asserted that the validity of the

Fifth Amendment had already been determined by the 29 September 2017 Order in

15 CVS 16076. Developer further asserted the Association was prohibited by the

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doctrines of issue preclusion and collateral estoppel from re-litigating the validity of

the Fifth Amendment.

¶ 17 On 11 April 2018, the trial court entered an order on Developer’s 16 January

2018 motion. The order found: “the [Association] is precluded from re-litigating the

issue of the validity of the Fifth Amendment and it is further ordered that the Fifth

Amendment is valid, and the parties are bound by the rights and obligations

contained therein.” The Association appealed. This Court dismissed the appeal as

interlocutory since the Association did not assert a substantial right, which was

affected by the 11 April 2018 order. See DOT v. Bloomsbury Estates, LLC, 264 N.C.

App. 249, 823 S.E.2d 694, 2019 WL 1040367, at *6. (2019) (unpublished).

¶ 18 Developer and the Association sought appraisals. Developer’s appraisal,

performed by Integra Realty Resources and M. Scott Smith, MAI dated 24 June 2019

valued the lot before the DOT taking at $3,860,000 and $1,100,000 after the taking.

The Association’s appraisal, performed by Catherine Edmond, MAI and Hector

Ingram, MAI, dated 12 November 2019 valued the lot at $3,350,000 before the taking

and $910,000 after the taking. This appraisal also laid out the compensation for both

Phase I and Phase II in three scenarios (“Scenario One,” “Scenario Two,” and

“Scenario Three”). The appraisal allocated the compensation for Phase I as

$1,510,000 and Phase II as $2,440,000 with total compensation as $3,950,000.

¶ 19 In Scenario One, Developer had lost all rights to develop Phase II and the

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entire compensation was paid to the Association. In Scenario Two, Developer had

the right to develop Phase II, but it lost the right as a result of the temporary

construction easement. Developer was allocated $3,350,000 and the Association was

allocated $600,000. In Scenario Three, Developer continues to hold the right to

develop Phase II, but as “an interest with a diminished value.” Developer was

allocated $2,440,000, the difference between the value before the taking and after the

taking, and the Association was allocated $1,510,000.

¶ 20 The Association filed a motion to consolidate the DOT Action, 15 CVS 16076,

and 16 CVS 15136 on 26 November 2019. Developer filed a motion for summary

judgment on 13 July 2020.

¶ 21 Following a hearing on 20 July 2020, the trial court entered an order granting

summary judgment in favor of the Association and consolidating the DOT Action, 15

CVS 16076, and 16 CVS 15136. The order also granted summary judgment pursuant

to Scenario Two in the Association’s appraisal. On 26 August 2020, the Association

filed a motion to amend the summary judgment order and/or for reconsideration of

the motion for summary judgment order pursuant to N.C. Gen. Stat. § 1A-1, Rules 59

and 60 (2021). The trial court entered an order on 4 December 2020 granting the

motion to amend in part by only consolidating the actions in 15 CVS 16076 and 16

CVS 15136 and not consolidating the DOT Action.

¶ 22 The trial court entered an order and final judgment on 3 March 2021. In the

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order, the trial court valued the interest in the property and found Developer was

entitled to $3,350,000 and the Association was entitled to $600,000. The trial court

further found Developer and the Association had incurred $894,897.75 in attorney’s

fees. The trial court apportioned the attorney’s fees using the same percentage as the

valuation and allocated $758,963.91 to Developer and $135,934.97 to the Association.

The trial court further found property taxes paid to Wake County on behalf of

Developer were $71,466.87.

¶ 23 The trial court apportioned the $779,050 deposit by the DOT using the same

percentage as the valuation and attorney’s fees and apportioned $660,713.29 to

Developer. The trial court determined the sum to calculate the amount of

prejudgment interest by deducting Developer’s pro-rated portion of the deposit of

$660,713.29 from the total damages of 3,350,000 to total $2,689,286.71. The trial

court determined the prejudgment interest due Developer totaled $409,655.73.

¶ 24 The trial court further determined the total damages due Developer by adding

the interest in the property, $3,350,000, and the prejudgment interest, $409,655.73

to total $3,759,655.73.

¶ 25 The trial court also found N.C. Gen. Stat. 47C-1-107 (2021) required Developer

to be fully compensated before distributing to the Association. The trial court

deducted from Developer’s total damages and prejudgment interest of $3,759,655.73,

the prorated portion of Developer’s legal fees and expenses of $758,963.91 and the

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property taxes paid on behalf of Developer of $71,466.87 to award $2,929,224.95 to

Developer. The trial court awarded the Association $54,410.43. The trial court

ordered the law firm of Cranfill, Sumner & Hartzog LLP to disperse $2,929,224.95 to

Developer and $54,410.43 to the Association. The Association appealed.

II. Jurisdiction

¶ 26 Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b)(1) (2021).

III. Issues

¶ 27 The Association argues the trial court erred in granting summary judgment

and failing to consolidate the DOT Action with 15 CVS 16076 and 16 CVS 15136.

IV. 3 March 2021 Order

A. Standard of Review

¶ 28 North Carolina Rule of Civil Procedure 56(c) allows a moving party to obtain

summary judgment upon demonstrating “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits” show they are

“entitled to a judgment as a matter of law” and “there is no genuine issue as to any

material fact.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2021).

¶ 29 A material fact is one supported by evidence that would “persuade a reasonable

mind to accept a conclusion.” Liberty Mut. Ins. Co. v. Pennington, 356 N.C. 571, 579,

573 S.E.2d 118, 124 (2002) (citation omitted). “An issue is material if the facts alleged

would . . . affect the result of the action[.]” Koontz v. City of Winston-Salem, 280 N.C.

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513, 518, 186 S.E.2d 897, 901 (1972). When reviewing the evidence at summary

judgment: “[a]ll inferences of fact from the proofs offered at the hearing must be

drawn against the movant and in favor of the party opposing the motion.” Boudreau

v. Baughman, 322 N.C. 331, 343, 368 S.E.2d 849, 858 (1988) (citation omitted).

¶ 30 “The party moving for summary judgment bears the burden of establishing

that there is no triable issue of material fact.” DeWitt v. Eveready Battery Co., 355

N.C. 672, 681, 565 S.E.2d 140, 146 (2002) (citation omitted). “This burden may be

met by proving that an essential element of the opposing party’s claim is nonexistent,

or by showing through discovery that the opposing party cannot produce evidence to

support an essential element of his claim or cannot surmount an affirmative defense

which would bar the claim.” Id. (citation and internal quotation marks omitted).

¶ 31 On appeal, “[t]he standard of review for summary judgment is de novo.” Forbis

v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007) (citation omitted).

B. Analysis

¶ 32 The Association argues the trial court erred in granting summary judgment

and apportioning the DOT’s award and asserts genuine issues of material fact exist

in Developer’s rights to construct Phase II following the expiration of the development

period allowed in the Fifth Amendment. The facts surrounding the claims in 15 CVS

16076 and 16 CVS 15136 govern the apportionment of the settlement funds in the

DOT Action. These material facts must be resolved before the DOT’s consented-to

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settlement proceeds can be apportioned and dispersed by Cranfill, Sumner & Hartzog

LLP.

¶ 33 The valuations of Developer’s and the Association’s claims to the settlement

proceeds involve opinions of value by appraisers. A jury should be allowed to

determine the credibility of each appraiser and examine their opinions of value. See

Thompson v. Bradley, 142 N.C. App. 636, 642, 544 S.E.2d 258, 262 (2001) (holding

jury should be allowed to consider the credibility of accident reconstruction expert).

¶ 34 We reverse the trial court’s entry of summary judgment and remand for further

proceedings. Because we reverse the judgment and remand, we need not reach the

Association’s other issues raised on appeal concerning the calculation and

distribution of DOT settlement funds.

V. The Association’s Motion to Consolidate

A. Standard of Review

¶ 35 North Carolina Rule of Civil Procedure 42 provides:

When actions involving a common question of law or fact are pending in one division of the court, the judge may order a joint hearing or trial of any or all the matters in issue in the actions; he may order all the actions consolidated; and he may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

N.C. Gen. Stat. § 1A-1, Rule 42(a) (2021).

¶ 36 “Whether or not consolidation of cases for trial, where permissible, will be

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ordered is in the discretion of the court.” Phelps v. McCotter, 252 N.C. 66, 66, 112

S.E.2d 736, 737 (1960) (per curiam) (citations omitted). An appellant “must not only

show a clear abuse of discretion by the trial court in denying its motion, but must also

show injury or prejudice arising therefrom.” Barrier Geotechnical Contractors, Inc.

v. Radford Quarries of Boone, Inc., 184 N.C. App. 741, 744, 646 S.E.2d 840, 841 (2007)

(citations and internal quotation marks omitted).

B. Analysis

¶ 37 The DOT Action, and the issues in 15 CVS 16076 and 16 CVS 15136 share a

common nucleus of basic facts. These three cases share common legal issues. The

claims asserted in 15 CVS 16076 and 16 CVS 15136 were consolidated. The issues

asserted in 15 CVS 16076 and 16 CVS 15136 can be fully litigated and resolved, while

the distribution of the consented-to funds from the DOT Action can be completed

following final judgments in the combined cases. See Kanoy v. Hinshaw, 273 N.C.

418, 424, 160 S.E.2d 296, 301 (1968) (“[I]t is the rule in this jurisdiction that when

cases are consolidated for trial, although it becomes necessary to make only one

record, the cases remain separate suits and retain their distinctiveness throughout

the trial and appellate proceedings.”) (citations omitted); see also Pack v. Newman,

232 N.C. 397, 400-01, 61 S.E.2d 90, 92 (1950) (consolidated suits “did not become one

action. They remained separate suits.”)(citation omitted).

¶ 38 The Association cannot show “injury or prejudice” arising out of the trial court’s

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denial of their motion to consolidate the DOT Action, 15 CVS 16076, and 16 CVS

15136. The trial court did not abuse it discretion in denying the motion to consolidate

the DOT action with the other two previously consolidated actions. This portion of

the trial court’s order is affirmed.

VI. Conclusion

¶ 39 Viewed in the light most favorable to the Association and giving it the benefit

of any disputed inferences, Developer was not entitled to summary judgment and the

allocation of funds based upon disputed facts in the appraisals. These genuine issues

of material fact preclude and survive Developer’s motion for summary judgment.

¶ 40 The trial court did not abuse its discretion in denying the Association’s motion

to consolidate the DOT action with the remaining actions. The property taken and

valuation of the takings issues in the DOT action have been resolved and reduced to

a sum certain by stipulation and consent of the parties. This amount is subject to the

adjudication and allocation of the Developer’s and the Association’s rights in the

remaining consolidated actions.

¶ 41 The trial court’s amended orders are reversed in part on summary judgment

for Developer and allocation of funds, affirmed in part on consolidation, and

remanded for further proceedings or trial.

REVERSED IN PART, AFFIRMED IN PART, AND REMANDED.

Chief Judge STROUD and Judge GORE concur.

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