NO. COA02-516
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NORTH CAROLINA COURT OF APPEALS
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Filed: 4 March 2003
UNITED STATES COLD STORAGE, INC.
Petitioner,
v
.
CITY OF LUMBERTON,
Respondent.
Appeal by petitioner from judgment entered 9 January 2002 by
Judge E. Lynn Johnson in Robeson County Superior Court. Heard in
the Court of Appeals 8 January 2003.
The Brough Law Firm, by Robert E. Hornik, Jr., for petitioner-
appellant.
Holt, York, McDarris & High, L.L.P., by Charles F. McDarris,
and Lumberton City Attorney Albert M. Benshoff, for
respondent-appellee.
MARTIN, Judge.
Petitioner United States Cold Storage (“USCS”) appeals from an
order and judgment denying its petition challenging an involuntary
annexation ordinance adopted by respondent City of Lumberton
(“Lumberton”).
The record indicates that USCS owns an unsubdivided 133-acre
tract of land in Robeson County, approximately 28.5 acres of which
is occupied by a cold storage facility for food products and
supporting facilities such as loading docks, a parking area, a
railroad spur line, and a pond. This improved portion of the tract
is partially surrounded by a fence and the remaining acres of the
tract are primarily vacant, containing only power lines and
railroad easements and having been leased out continuously foragricultural purposes. The tract is located at the southeast
corner of the intersection of Kenny Biggs Road and Starlite Drive,
with the improved portion fronting onto Kenny Biggs Road.
In October and November 1998, the Lumberton City Council (“the
Council”) passed a resolution of intent and adopted an annexation
report to annex a 255-acre area that included USCS's entire 133-
acre tract. This plan was subsequently altered on 22 February 1999
when the Council “re-adopted as amended” a revised annexation
report proposing an annexation of an area that would include a
smaller portion of USCS's property, but still all of the 28.5-acre
improved area. On the same date, the Council adopted the ordinance
to annex the proposed area. USCS filed a petition challenging this
ordinance (“the 1999 ordinance”) on 23 March 1999, contending,
inter alia, that the area to be annexed did not qualify under the
pertinent statutes for annexation.
On 20 July 2000, Superior Court Judge Gregory A. Weeks, after
hearing evidence, entered an order in which he determined the
annexation ordinance did not meet the statutory requirements for
involuntary annexation and remanded the ordinance to Lumberton with
specific directives. The order provided, inter alia:
the area to be annexed pursuant to the
Annexation Ordinance is not “an area developed
for urban purposes” as defined in [G.S.] §
160A-48(c)(3), in that 28. acres of [USCS's]
property is used for commercial purposes and
the remaining acreage of [USCS's] property is
vacant for the purpose of determining
compliance with [G.S.] § 160A-48(c)(3).
Based on this finding, Judge Weeks ordered that as part of amending
or reformulating the ordinance: the area to be annexed be re-defined to meet
the definition of an “area developed for urban
purposes” as defined in [G.S.] § 160A-48(c)(3)
and that only the portion of [USCS's] property
used for commercial purposes may be considered
“commercial” in order to determine compliance
with [G.S.] § 160A-48(c)(3).
In addition, Judge Weeks ordered Lumberton to conduct another
public hearing on any revised ordinance after providing adequate
public notice. Finally, the order provided:
that upon the Respondent's failure to take
action in accordance with this Order within
three months of Respondent's receipt of this
Order, the Petitioner may submit an Order to
show cause as to why the Annexation challenged
herein should be deemed null, void, and of no
effect.
Lumberton did not appeal from Judge Weeks' order. On 8
September 2000, Lumberton adopted a document entitled “2000
Annexation Study” and set a public hearing for 9 October 2000
regarding annexation of the area outlined in the study. USCS
alleges that it did not receive notice of the new annexation study
or the public hearing from Lumberton, although USCS did learn of
the hearing and was able to attend. The study proposed annexation
of a 61.59-acre area that included about 57 acres of USCS's
property, including the approximately 28-acre improved portion of
the property. On 19 October 2000, the Council adopted an ordinance
(“the 2000 ordinance”) annexing the area described in the study.
USCS filed a petition challenging the new ordinance on various
grounds on 17 November 2000.
USCS's petition challenging the 2000 ordinance was heard on 25
June 2001 by Superior Court Judge E. Lynn Johnson. Each sidesubmitted evidence tending to support its respective assertion that
the unimproved approximately 29-acre portion of USCS's property
included in the annexation area either was or was not in commercial
use so as to qualify the area for annexation under G.S. § 160A-
48(c)(3). Judge Johnson determined that the 2000 ordinance did not
violate G.S. § 160A-48(c)(3) and denied USCS's petition. In
particular, he found:
The commercial property used by Cold Storage
encompasses not only the land their building
sits on (28. acres, as acknowledged by Judge
Weeks) but also the area directly behind the
property that includes the power lines and the
railroad easement (30. acres) because those
areas actively support [USCS's] commercial
enterprise.
It is from this order and judgment that USCS now appeals.
_____________________________________
On appeal, USCS argues (1) the trial court erred in
disregarding Judge Weeks' earlier finding with respect to the
portion of USCS's property in use for commercial purposes and
allowing re-litigation of the issue of qualification of the
annexation area under G.S. § 160A-48(c)(3), (2) that even if it was
not error to disregard Judge Weeks' finding, the trial court erred
in determining that the annexation area qualified under G.S. §
160A-48(c)(3), and (3) the trial court erred in finding that
Lumberton gave USCS adequate notice of the 9 October 2000 hearing.
The provisions of Chapter 160A, Article 4A, Part III,
governing annexation of land by cities of 5000 or more, are
applicable here. The parties agree that G.S. § 160A-48, as in
effect on 21 October 1998, the date the Resolution of Intent forthe 1999 ordinance was adopted, controls the analysis of both the
1999 and 2000 ordinances in this case.
(See footnote 1)
The statute provides
criteria for determining what areas are eligible for annexation:
(a) A municipal governing board may extend the
municipal corporate limits to include any area
(1) Which meets the general standards of
subsection (b), and
(2) Every part of which meets the
requirements of either subsection
(c) or subsection (d).
N.C. Gen. Stat. § 160A-48(a) (1998). Qualification of the
annexation areas under both the 1999 and 2000 ordinances under
subsection (b) of the statute is not in dispute. Moreover, in its
annexation reports, Lumberton did not seek to qualify the areas
under subsection (d), but rather only under subdivision (3) of
subsection (c), which states:
(c) Part or all of the area to be annexed must
be developed for urban purposes. An area
developed for urban purposes is defined as any
area which meets any one of the following
standards:
(3) Is so developed that at least sixty
percent (60%) of the total number of
lots and tracts in the area at the
time of annexation are used for
residential, commercial, industrial,
institutional, or governmental
purposes, and is subdivided into
lots and tracts such that at least
sixty percent (60%) of the total
acreage, not counting the acreage
used at the time of annexation for
commercial, . . . purposes, consists
of lots and tracts five acres or
less in size . . . .
N.C. Gen. Stat. § 160A-48(c)(3) (1998). The two requirements of
G.S. § 160A-48(c)(3) have come to be known as the “use test” and
the “subdivision test.”
See, e.g., Food Town Stores, Inc. v.
Salisbury, 300 N.C. 21, 35, 265 S.E.2d 123, 132 (1980).
USCS challenged both the 1999 and 2000 ordinances on the
grounds that the annexation areas did not meet the subdivision test
because only approximately 28 acres of USCS's land is in use for
commercial purposes and the remaining USCS acres are vacant and
unsubdivided. Judge Weeks agreed with USCS in reviewing the 1999
ordinance and made a finding to that effect. USCS argues that in
reviewing the 2000 ordinance, Judge Johnson should have applied
Judge Weeks' finding under the doctrine of collateral estoppel.
The doctrine of collateral estoppel “'is
designed to prevent repetitious lawsuits over
matters which have once been decided and which
have remained substantially static, factually
and legally.'” . . . In order for collateral
estoppel to be applicable, certain
requirements must be met. The elements of
collateral estoppel, as stated by our Supreme
Court, are as follows: (1) a prior suit
resulting in a final judgment on the merits;
(2) identical issues involved; (3) the issue
was actually litigated in the prior suit and
necessary to the judgment; and (4) the issue
was actually determined.
McDonald v. Skeen, 152 N.C. App. 228, 230, 567 S.E.2d 209, 211,
disc. review denied, 356 N.C. 437, 571 S.E.2d 221 (2002) (citations
omitted). In the context of collateral estoppel, North Carolina
follows the rule of mutuality, which requires “not only that issues
be identical but that parties be identical or in privity with
parties to the prior judgment.”
Tar Landing Villas Owners' Assoc.
v. Town of Atlantic Beach, 64 N.C. App. 239, 242, 307 S.E.2d 181,184 (1983),
disc. review denied, 310 N.C. 156, 311 S.E.2d 296
(1984).
Lumberton contends, and Judge Johnson agreed, that Judge
Weeks' finding that “28.” acres of USCS's property was used for
commercial purposes did not mean that only 28 acres, give or take
an acre, was in use for commercial purposes. Rather, Lumberton
asserts that Judge Weeks' use of the “.” symbol denoted a great
degree of flexibility. Based on this interpretation, Lumberton
argues that the directive to Lumberton to “re-define” the area to
be annexed to meet the definition of an “area developed for urban
purposes” under G.S. § 160A-48(c)(3), when read together with the
following directive stating that “pursuant to [G.S.] § 160A-48(e)
[Lumberton] may use natural topographic features or streets or
setbacks from topographic features or streets as boundaries of the
area to be annexed,” authorized Lumberton on remand to draw new
boundary lines that encompassed more of USCS's property than the
approximately 28 improved acres and classify the additional acres
as in use for commercial purposes.
Lumberton explains its “re-definition” of the area to be
annexed by pointing to the affidavit of its surveyor, George T.
Paris. In his affidavit, Mr. Paris states that because there were
no natural topographical features within the USCS property, the new
boundary lines were based on an 800-foot setback from Starlite
Drive and an extension of the already existing city limit of
Lumberton that bordered part of USCS's property. As these new
lines encompassed 29 acres of USCS property outside the 28 improvedacres, Lumberton then asserts that the 2.2 acres of power line and
railroad easements present within the 29 acres support
classification of these acres as “in use for commercial purposes.”
In his order with respect to the 2000 ordinance, Judge Johnson
expressly “acknowledge[d] that Judge Weeks decided as fact that
28+/- acres of the USCS property was commercial. This Court
further notes that Lumberton was directed [by the] Order to
determine the exact area that is used by USCS for commercial
purposes.” Based on this understanding of Judge Weeks' order,
Judge Johnson entertained further litigation on the issue of
whether the 29 acres of USCS's property outside the improved 28
acres was in use for commercial purposes and made additional
findings reflecting acceptance of Lumberton's “re-definition” of
the area to be annexed. We believe this interpretation of Judge
Weeks' order was in error.
In his order, Judge Weeks found not only that the “28.”
improved acres were in use for commercial purposes, but that the
“remaining acreage . . . is vacant for the purpose of determining
compliance with [G.S.] § 160A-48(c)(3).” It is also important to
note that as part of ordering Lumberton to “re-define” the area to
be annexed, Judge Weeks ordered that “only the portion of [USCS's]
property used for commercial purposes may be considered
'commercial' in order to determine compliance with [G.S.] § 160A-
48(c)(3).” We interpret this language as a finding that the 1999
ordinance did not meet the mandatory provisions of G.S. § 160A-
48(a) nor (c), and an order of remand, pursuant to G.S. § 160A-50(g)(2), “for amendment of the boundaries to conform to [those]
provisions.” N.C. Gen. Stat. § 160A-50(g)(2) (1998). The order
that “the area to be annexed be re-defined” was an instruction to
re-draw the boundaries of the area to exclude the vacant acres that
frustrated compliance with G.S. § 160A-48(c)(3). Given the
unequivocal nature of Judge Weeks' division of USCS's property into
commercial and “vacant” portions and his order that only the
commercial portion be used on remand to determine compliance with
G.S. § 160A-48(c)(3), the use of a “.” symbol and statement
permitting the use of topographical features, streets, or setbacks
therefrom as boundaries for the revised annexation area cannot be
construed as a license to attempt to re-classify the vacant acres.
We hold Judge Weeks' order was a final determination on the
merits regarding the 1999 ordinance, including a final
determination of the classification of the unimproved acres of
USCS's property as vacant and not in use for commercial purposes.
The other elements of collateral estoppel do not appear to be in
dispute. The trial court obviously wished to give effect to Judge
Weeks' order, but simply misinterpreted it. Because the
approximately 29 undeveloped acres of USCS's property included in
the area to be annexed by the 2000 ordinance have previously been
adjudicated “vacant,” not in use for commercial or other designated
purposes, and unsubdivided, we hold that the trial court erred in
concluding that the area to be annexed by the 2000 ordinance met
the subdivision test of G.S. § 160A-48(c)(3) and thus upholding the
ordinance as valid. Due to our holding on this issue, we need notaddress USCS's second argument.
Lastly, this Court must determine whether to declare the
ordinance null and void or to remand it. USCS argued at trial and
on appeal that Lumberton failed to provide USCS with adequate
notice of the 9 October 2000 public hearing in violation of G.S. §
160A-49(b)(3), which states in pertinent part:
notice shall be mailed at least four weeks
prior to date of the hearing by first class
mail, postage prepaid to the owners as shown
by the tax records of the county of all
freehold interests in real property located
within the area to be annexed.
N.C. Gen. Stat. § 160A-49(b)(3) (1998). USCS also contends that
Lumberton's failure to give USCS notice of the hearing was a
violation of Judge Weeks' order. Based on these alleged
violations, USCS asserts that the trial court erred in failing to
declare the ordinance null and void.
Under G.S. § 160A-50(g)(1), a trial court reviewing an
annexation ordinance may “[r]emand the ordinance to the municipal
governing board for further proceedings if procedural
irregularities are found to have materially prejudiced the
substantive rights of any of the petitioners.” N.C. Gen. Stat. §
160A-50(g)(1) (1998). In addition, “if any municipality shall fail
to take action in accordance with [a] court's instructions upon
remand within three months from receipt of [the order], the
annexation proceeding shall be deemed null and void.” N.C. Gen.
Stat. § 160A-50(g) (1998).
Judge Weeks' order contains instructions to comply with G.S.
§ 160A-49(b)(2) and (c), public notice provisions Judge Weeks found Lumberton to have violated. USCS does not allege that
Lumberton failed to comply with these or any other procedural
instructions in the order. Assuming,
arguendo, that any
“procedural irregularities” did occur that may have prejudiced
USCS's substantive rights, the remedy under G.S. § 160A-50(g)(1)
would have been a remand to the Council. Therefore, the trial
court did not err in failing to declare the ordinance null and void
on these bases.
USCS also argues that this Court should declare the ordinance
null and void because it “still” does not comply with G.S. § 160A-
48(c)(3) in violation of Judge Weeks' order. In our review, we
believe the more appropriate remedy, in light of Lumberton's
attempt, though based upon a misinterpretation of Judge Weeks'
order, to comply with such order within the three month period
allowed, would be to remand the matter “for amendment of the
boundaries to conform to the provisions of G.S. 160A-48.” N.C.
Gen. Stat. § 160A-50(g)(2) (1998). The trial court's order and
judgment are reversed and this matter is remanded to the superior
court for entry of an order remanding the ordinance to the Council
for further proceedings in accordance with this opinion.
Reversed and remanded.
Judges HUDSON and STEELMAN concur.
Footnote: 1