Commercial Zoning

Your Ad Here: Zoning Condition May Not Be the Taking a Billboard Owner Believes It to Be

For my money, billboard cases are some of the most interesting in the land use context.  They can bring with them free speech issues, eminent domain issues, zoning issues, lease issues and environmental issues, all in the same story.  It’s true.  It’s a northeastern diner menu of legal problems–lobster, pancakes, souflaki, monte cristo sandwiches, beef wellington.  You name it.

In a recent billboard case decided by the North Carolina Court of Appeals, the Court confronted a mix of lease, eminent domain and zoning issues.

The Facts
For some 45 years, until its removal in 2008, a billboard stood on a main thoroughfare in the City of Wake Forest, North Carolina.  The content of the billboard is not at issue.

In 1978, Plaintiff acquired the billboard and leased the land on which the billboard stood pursuant to a lease agreement.  In 1996, The Mason Group acquired the land on which the billboard stood.

In 2005, Plaintiff contacted The Mason Group about purchasing a permanent easement on the land “to ‘insure the life of [its] business by protecting [its] signs, while at the same time providing a windfall lump sum payment to [The Mason Group].”  About a year later, in 2006, The Mason Group responded to the easement offer explaining that it had already entered into a purchase contract with Regency Realty Group, Inc. for the land, “and thus had no authority to negotiate a permanent easement agreement.”  In that letter to Plaintiff, The Mason Group responded that the billboard “will be required to be removed by the City of Wake Forest as a condition of site plan approval for a shopping center.”

Before acquiring the property from The Mason Group, Regency applied for and received a special use permit from the City to build a shopping center on the land.  One condition of the special use permit:  “The existing billboard is to be removed as soon as possible with no new lease or extension allowed.”  This is the key.  Regency notified Plaintiff of this condition.  Regency acquired the property in January 2008.

On September 15, 2008, Plaintiff removed the billboard.

The Lawsuit
Plaintiff brought suit against the City alleging (1) it was entitled to just compensation pursuant to N.C.G.S. 136-131.1 for the removal of its sign pursuant to the special use permit and (2) the City had effected a taking without just compensation entitling Plainitff to damages pursuant to 42 U.S.C. 1983.

The Trial Court Decision
The trial court awarded summary judgment to Plaintiff, concluding that the City ” had ’caused’ the removal of Plaintiff’s billboard by conditioning the [special use permit] upon the billboard’s removal” and that the City had “effected a taking without just compensation by denying Plaintiff the economically viable use of its property.”

The Appellate Court Decision
On appeal, the Court reversed the trial court’s award of summary judgment. 

The Court concluded that competing affidavits revealed an issue of fact as to whether the condition included within the special use permit was the sole reason the billboard went the way of Tiger Woods’ hopes at 19 major golf championships.  It seems Regency, the new landowner, gave the City an affidavit stating that Regency “had no intention of entering into a long-term lease with [Plainitff] after the lease with The Mason Group was to expire,” which was enough to meet Plaintiff’s affidavit testimony that the permit condition was “the only reason” Plaintiff couldn’t obtain a new lease or an extension of its existing lease.

Yep, it seems the new landowner threw the City its support in the City’s efforts to fend Plaintiff’s challenge.  Judicial opinions, of course, do not always reveal the true color of the story.  But, I bet this is a pretty good one in terms of the dealings between the City, Plaintiff and Regency. 

In any event, the Court ruled, the “cause” of Plainitff’s heartburn and injury is for the jury to decide.  

See?  Leases, eminent domain, zoning laws, civil rights, behind-the-scenes drama.  That makes for good reading.  Well, it does for me, anyway.

Mike Thelen is a lawyer in Womble, Carlyle’s Real Estate and Land Use Litigation practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

Categories: Commercial Zoning

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