Some businesses aren’t perceived as being good neighbors. High on that list would be adult entertainment establishments. The state’s second highest court recently overturned a lower-court ruling denying such a proposed Raleigh club a special-use permit.
The appeals court found that several nearby business owners had not adequately established that the club would specifically harm their business or reduce their property values.
PRS Partners, LLC and RPS Holdings, LLC (Respondents) applied in November 2005 to operate a “[Gentlemen’s]/Topless Adult Upscale Establishment” at a site on Mt. Herman Road in Raleigh. The Raleigh Board of Adjustment held a hearing on the application, and determined that the proposed strip club was entitled to a special-use permit.
A group of neighboring business owners challenged the issuing of the permit. In an order issued Sept. 12, 2006, Superior Court Judge Narley Cashwell ruled that the permit had been improperly issued. PRS Partners and Holdings then sought review of Cashwell’s decision before the state’s second highest court.
At issue in the appeal was whether the business owners had legal standing to challenge issuance of the special-use permit. North Carolina law allows only an “aggrieved party” to seek court review of a zoning decision. If the person objecting to the decision does not meet the legal definition of an “aggrieved party”, the state’s courts lack jurisdiction and cannot review the zoning decision.
Key to whether one is an aggrieved party is that they must suffer some harm distinct from the community as a whole. The state’s appellate courts have previously held that such “special damages” are an absolute necessity for seeking court review.
And that, the Court of Appeals found, was the problem with the business owners’ challenge.
“In the present case, Petitioners did not sufficiently allege ‘aggrieved party’ status,” Judge Linda McGee wrote for the Court of Appeals in overturning the lower-court ruling against the permit. McGee further noted that even assuming that the business owners had sufficiently alleged that they were ‘aggrieved parties’, the evidence they presented at trial was inadequate to support that classification.
At the board hearing, LaMarr Bunn, a licensed landscape architect and a licensed real estate broker, testified that parking and storm-water plans for the proposed club would be inadequate. He also noted that two similar clubs generate a high volume of 911 calls for police assistance.
One of the business owners, Barbara Glover Mangum, expressed her general concerns about the same issues.
The only specific evidence of decreased property value from the club related to a 15-acre property directly across the street. The owner of that property was not among those challenging the issuance of the permit.
The Court of Appeals found the lack of a specific harm to the complaining business particularly significant.
“…In the present case, Petitioners did not present any evidence that the value of their properties would decrease as a result of the issuance of the special use permit, or that they would suffer damages distinct from the rest of the community,” McGee wrote in finding the evidence of special damages lacking and rejecting the challenge.
“Moreover, the evidence presented by Petitioners at the hearing was too general and speculative to support a finding that “an injury ‘has resulted or will result from [the] zoning action.’”
Those objecting to the club also contended that Raleigh City Code provides special protections to adjoining property owners that apply without a specific showing of harm. The Court of Appeals noted that these provisions have nothing to do with whether one is an “aggrieved party.”
N.C. Court of Appeals decisions are controlling interpretations of state law unless over-ruled by the N.C. Supreme Court. Because the ruling by the three-judge panel of the appeals court was unanimous, the high court is not required to take the case should the business owners appeal.
The case is Mangum v. Raleigh Board of Adjustment, (06-1587).
Michael Lowrey is an associate editor of Carolina Journal.