NC Appeals Court Holds Claims to Vested Rights and Violation of 42 U.S.C. § 1983 Were Not Barred By Sovereign Immunity nor Failure To Exhaust Administrative Remedies

Plaintiffs are five companies and three individuals who own property in the Swan Beach Subdivision in Currituck County. They filed a complaint against the County of Currituck, the Currituck Board of Commissioners, and the commissioners themselves in their official capacities. They alleged that they have common law vested rights to develop commercial uses on their property, and raised claims of laches, “easement rights” to commercially develop their property, state constitutional violations, and violations of federal equal protection and due process under 42 U.S.C. § 1983. Plaintiffs appeal from the district court’s order dismissing their complaint for declaratory judgment regarding vested rights they claimed to develop their property commercially, for violations of constitutional rights under 42 U.S.C. § 1983, and for violation of Article V, Section 2 of the North Carolina Constitution.

The Court of Appeals found that where the interpretation of the ordinance is not at issue, the ordinance prohibits the property owner’s intended use, and the property owner is claiming a common law vested right to such a nonconforming use, the only claim is a constitutional one. In such a case, plaintiffs are not required to first exhaust the procedures before the board of adjustment. Here, plaintiffs specifically alleged that the meaning of the UDO was not in dispute and that their desired use was not allowed under the ordinance and the court therefore concluded that plaintiffs were not required to exhaust administrative remedies before the Currituck County Board of Adjustment in order to bring the present civil action. Accordingly this court found that the trial court erred in dismissing plaintiffs’ vested rights claim under Rule 12(b)(1) for failure to exhaust administrative remedies.

The Court of Appeals also found that the plaintiffs’ § 1983 claims may not be dismissed for failure to exhaust administrative remedies. While claims for violation of procedural due process may be subject to exhaustion requirements, substantive constitutional claims are not. Since plaintiffs’ claims were founded on substantive due process and equal protection, they were not required to exhaust any administrative process to bring these claims. Thus the court held that the trial court erred in dismissing plaintiffs’ claims under 42 U.S.C. § 1983 because the claims were not barred by sovereign immunity or failure to exhaust administrative remedies.

Swan Beach Corolla, LLC v County of Currituck, 2013 WL 2937073 (NC App. 7/1/2014)

The opinion can be accessed at: http://caselaw.findlaw.com/nc-court-of-appeals/1671718.html