Posted by: Patricia Salkin | February 19, 2020

NC Appeals Court Finds Change in Ownership Did Not Constitute a Change in Use

This post was authored by Matthew Loeser, Esq.
Starlites Tech Corp.’s owner and president Maurice Raynor operated multiple electronic gaming businesses. Raynor also served as the president of M, M & K Developments, Inc. (“MM&K”). In 2011, Danny D. Fulp conveyed the property located at 11652 U.S. 220 Highway, Stoneville, North Carolina, to MM&K. In 2014, Rockingham County issued a zoning permit to MM&K, enabling it to “operate a sweepstakes business” in accordance with the County’s Unified Development Ordinance. The permit designated MM&K as the owner of the property, and “Starlite Technologies” as the applicant and occupant. Later in 2014, the County amended the Ordinance, and set forth permit requirements that “severely restricted the general operation of sweepstakes businesses in the county. In 2015, MM&K conveyed the Property to Starlites. Soon thereafter, articles of dissolution were filed for Starlites Technology, Inc. and MM&K. Following MM&K’s dissolution, no application was filed to amend the original zoning permit issued to MM&K to indicate that the property had been conveyed to Starlites.
In 2016, Officer Ben Curry of the Rockingham County Code Enforcement Division received a complaint about the property and determined that the business constituted a development without a permit. Officer Curry issued notices of violation to Starlites on 21 November 2016, 9 December 2016, and 3 January 2017. Starlites appealed the initial notice of violation to the Rockingham County Board of Adjustment. The Board entered an order denying Starlites’ appeal, holding: that Starlites’ business operation violated the County’s amended Ordinance, that Starlites failed to obtain a special use permit, and that Starlites was not exempt from the requirement to obtain a special use permit. The Superior Court affirmed the Board’s order and dismissed Starlites’ appeal.
On appeal, Starlites argued that section 13-4(f) of the amended Ordinance constituted a “grandfather clause,” allowing a prior permissible nonconforming use to continue so long as said use was not discontinued for a period of one year. The record reflected that about four months before the amended Ordinance was enacted, Rockingham County issued a zoning permit allowing MM&K to operate a sweepstakes business on the property, in compliance with the County’s then-existing Ordinance. Raynor, president of MM&K and owner and president of Starlites Technology, Inc., testified that he dissolved both entities “when the sweepstakes was officially … not allowed to operate anymore according to the State.” When a member of the Board asked Raynor whether Raynor had changed the type of business conducted, Raynor replied that the business was “still underneath the same promotional—getting promotional items. Still using the desktop computers. Everything was still the same. It’s just a different kind of format they made.”
Based on this testimony, the court found that the Board improperly concluded that under the provisions of the amended Ordinance, the change in ownership constituted a change in use. As such, the court held Starlites was required to amend its zoning permit in order to legally continue the same use of the property.
Starlites Tech Corp. v. Rockingham County, 2020 WL 768837 (NC App. 2/18/2020)


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