Court to decide if billboard company can seek DOT damages for rejected permits

The North Carolina Court of Appeals will decide whether a billboard company can seek damages, attorneys’ fees, and court costs from the state Department of Transportation in a permit dispute. The court heard oral arguments Tuesday in the case.

A trial judge issued an order last summer forcing the DOT to issue Grey Outdoor four permits for billboards on US 70 in Newport. But the judge rejected the company’s request for damages and other compensation.

DOT eventually issued the permits. Yet the dispute continues as Grey Outdoor continues to seek compensation.

“This is not necessarily a billboard case,” argued Craig Justus, Grey’s lawyer. “This is about fundamental property rights. When the government basically says I’m disregarding the law because I don’t like it or I think it needs to be extended, there’s pathways for them to do that — not through administration and implementation from a cubicle, but by regulating through creating regulation.”

“They can’t just extend or modify,” Justus said. “How dangerous of a principle that is.”

DOT initially denied the permits based on the prospective billboards’ location near the Croatan National Forest. While state law limits billboards near state and national parks, it does not apply to a national forest.

The department believed that applying the same limits to a national forest fit with the law’s intent, “to enhance and promote the natural and scenic beauty of the state highways within North Carolina,” argued state Assistant Attorney General Jessica Price, who represented DOT.

“We at the time did not see it to be completely unreasonable or unfathomable that a national forest where you can camp, hike, bike, and fish … which are similar to a national or state park … We did not see it as an unreasonable interpretation to seek an extension and/or modification of the law to include a national forest,” Price said.

“Simply just saying something is too pretty, the General Assembly must have meant for us to get this authority to extend it, is not law,” Justus argued.   

DOT accepted the trial judge’s ruling on the permits but disputed Grey Outdoor’s argument for compensation. “There is no constitutional right or fundamental property right to a permit for the construction of a billboard,” Price said.

Judge Allegra Collins asked Justus whether the decision about damages ultimately asked the court to determine “just how right you were.” Collins asked Price what “guardrails” would stop DOT from straying from the law in the future if the court does not allow Grey to seek damages.

Judge Toby Hampson also mentioned guardrails. “What are the guardrails here, if we’re looking at this as a damages claim, so we’re not put in the slippery-slope position that any time a government agency denies a permit, they are automatically at risk for compensatory damages?” Hampson asked.

Judge Donna Stroud pushed back on DOT’s argument about the billboard company’s right to a permit.

“Obviously, you don’t necessarily have a right to a permit,” Stroud said. “However, in this case, they did have a right to the permit. That’s kind of the problem, right? It turns out under the statute they did have a right to the permit.”

Wake County Judge Hoyt Tessener issued a June 2024 order granting Grey Outdoor four billboard permits. He rejected the company’s request for damages and court costs.

“The right of property, including its free use and enjoyment, is ‘as old as our state’ and it is a fundamental right of all citizens,” Grey Outdoor’s lawyers wrote in a Jan. 17 brief. “Neither the legislature nor any state agency ‘exercising delegated police powers may arbitrarily and capriciously restrict an owner’s right to use his property for a lawful purpose.’”

NC Gen. Stat. §136-129.2 “sets separation requirements between new billboards and well-known places such as National or State parks that the legislature deemed deserving of extra protection,” the billboard company’s court filing added. “The Controlling Statute contains a finite list of these known places but plainly omits National Forests.”

“It is a bedrock principle of our government that changes in law must come from elected representatives in government,” Grey Outdoor’s lawyers argued. “Courts or agencies cannot under the ‘guise of construction’ usurp that role.”

“In this case, the defendants, believing themselves better situated to determine public policy than the legislature, denied plaintiffs’ applications for state permits to erect four billboards in Carteret County due to proximity to the Croatan National Forest without a cogent rationale as to how the Controlling Statute was violated,” the court filing continued. “The trial court ultimately held that the Controlling Statute was clear in excluding a national forest and that the defendants exceeded their authority and exercised arbitrary power. The defendants did not appeal this aspect of the lower court’s ruling.”

“While the state permits were ordered to be issued, the trial court denied plaintiff’s request for damages, fees and costs,” the filing explained. “The right to use and enjoy property in North Carolina is a natural right and not a privilege bestowed by the government. Issuing permits long after the battle had begun does not restore the past deprivation of rights and account for plaintiff’s uncontested damages. The trial court erred in its judicial ‘duty’ to protect Grey’s property rights.”

DOT lawyers urged the Appeals Court to uphold the portion of Tessener’s decision dealing with damages.

“Grey claims they are entitled to damages because there was a constitutional taking, when the NCDOT et. al denied their application for four permits to construct four billboards,” according to a March 24 brief. “However, NCDOT et. al argues there was no taking, because the right to construct a billboard is not a constitutionally protected property interest and that the regulation of billboards is a constitutionally valid exercise of police power entrusted to NCDOT.”

“Additionally, the State contends that with over 80,000 miles of roads within the North Carolina State Highway System, Grey had ample opportunities to apply for and construct billboards at numerous other locations, instead Grey chose a location that – at the time – NCDOT believed should be protected under N.C. Gen. Stat. §136–129.2, because of the National Forest’s recreational and scenic value,” the court filing continued.

There is no deadline for an Appeals Court decision.