News: CJ Exclusives

State Supreme Court Rules in Raleigh Zoning Dispute

High court ruling overturns trial-court decision in topless club dispute

In a potential significant ruling, the N.C. Supreme Court has overturned a lower-court decision about the standards necessary to challenge the issuance of a zoning permit.

The case involves several Raleigh businesses challenging a special-use permit issued for the construction of an “adult entertainment” establishment. The high court held that the business could challenge the issuance of the permit even though they had not demonstrated that the opening of the adult establishment actually would affect 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 conducted 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 issuance 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 the issuance of the special-use permit. N.C. 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 distinctive 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.

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 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 evidence of special damages lacking and rejecting the challenge.

The N.C. Supreme Court acts

In a decision issued in December, the N.C. Supreme Court saw the matter differently, with six of the seven justices finding that the allegations rose to the level of “special damages.”

“These allegations and testimony were sufficient to demonstrate special damages to these property owners separate and apart from the damage the community as a whole might suffer,” Justice Edward Brady wrote for the high court.

“We cannot agree with respondent’s arguments and the dissent’s contention that allegations of vandalism, safety concerns, littering, trespass, and parking overflow from the proposed business to adjacent or nearby lots fail to establish that the value of petitioners’ properties would be adversely affected or that petitioners would be unable to enjoy the use of their properties.”

Justice Patricia Timmons-Goodson strongly dissented from the majority holding, contending that her colleagues had misapplied longstanding precedent and that their decision “unnecessarily relaxes the requirements for standing.”

Timmons-Goodson noted that for nearly 40 years under N.C. law, “a reduction in property value has been an essential element of standing.” This contrasts with many other states, which have established a lower standard for nearby property owners to challenge the issuance of a permit.

“North Carolina’s more stringent rule on standing is appropriate in light of the fundamental right of an owner to lawfully use and enjoy his property without undue restrictions,” she wrote.

In her view, the allegations of damages were simply too vague, as they did not show diminished property values, for standing under state law.

The case is Mangum v. Raleigh Board of Adjustment, (613PA07). (Download a pdf file of the opinion from this site.)

Michael Lowrey is an associate editor of Carolina Journal.