DEPARTMENT OF TRANSPORTATION,
Plaintiff,
v
.
AIRLIE PARK, INC., and DON PENDLETON and NATIONSBANK OF NORTH
CAROLINA, N.A.,
Defendants.
Attorney General Roy Cooper, by Assistant Attorney General J.
Bruce McKinney, for plaintiff appellee.
Robinson, Bradshaw & Hinson, P.A., by Mark W. Merritt, Blake
W. Thomas, and Angelique R. Vincent.
TIMMONS-GOODSON, Judge.
Airlie Park, Inc. (“defendant”) appeals from an order of the
trial court determining that certain parcels of real property owned
by defendant did not constitute one unified tract for purposes of
condemnation by the North Carolina Department of Transportation
(“plaintiff”). For the reasons stated herein, we affirm the order
of the trial court.
The facts and procedural history of the instant case are as
follows: Defendant is a North Carolina corporation, organized and
incorporated by David Clark, Sr. (“Clark”) in Lincoln County, North
Carolina, for the purpose of land acquisition and investment.
Under Clark's direction, defendant acquired a 35.65-acre tract of
land in Lincoln County on 17 February 1993. On 25 October 1999,plaintiff filed a condemnation action against defendant, seeking to
condemn the 35.65-acre tract.
On 17 December 2001, defendant filed a “Motion to Determine
Interest and Area Taken by Condemnation” pursuant to section 136-
108 of the North Carolina General Statutes. In its motion,
defendant argued that the condemned parcel was part of a larger
unified tract of land owned by defendant that should be included in
plaintiff's condemnation action. In support of its motion,
defendant filed several affidavits attesting to the fact that,
before his death in 1997, Clark directed and was the sole
shareholder of several corporations, including defendant
corporation and a second corporation, Catawba Springs Land Company,
Inc. (“Catawba”). The affidavits further averred that the
condemned parcel owned by defendant had once belonged to Catawba
before it transferred its interest in the property to defendant in
1993. At the time plaintiff filed its condemnation action, Catawba
owned a 107.65-acre tract of land adjacent to the condemned
property. According to defendant, Clark intended to develop both
of these properties, along with a third, 52.74-acre tract of land
also owned by defendant, into a single industrial park. The
properties were never so developed, however, and ownership of the
three parcels remained divided between defendant and Catawba.
Defendant's motion came before the trial court on 11 February
2002, at which time the trial court made the following pertinent
findings of fact:
1. The parcel of land in the present case is
titled in the name of Airlie Park, Inc.
2. One additional parcel listed by the
defendants which they requested in their
motion to be deemed a part of the property
taken is a 107.65 acre tract title[d] to
Catawba Springs Land Company Inc., which abuts
the parcel named above.
3. Another parcel which defendants moved to
be included in the area taken is a 52.74 acre
tract of land titled to Airlie Park, Inc.,
which abuts the parcel titled to Catawba
Springs, but is not contiguous with the
original Airlie Park Inc. parcel as described
by the Department of Transportation on the
plat or map filed in this case on or about the
27th day of September 2000.
4. Airlie Park Inc. and Catawba Springs Land
Company, Inc., are two distinct corporations,
and therefore, two separate entities.
Based on these findings, the trial court concluded that the three
parcels described in defendant's motion did not constitute a single
tract for purposes of condemnation, as they possessed neither unity
of ownership nor physical unity. The trial court entered an order
determining that the interest and area taken by plaintiff in its
condemnation action included only the original 35.65-acre tract.
From this order, defendant appeals.
_____________________________________________________
The primary issue on appeal is whether the trial court erred
in determining that the three parcels of land were separate for
purposes of condemnation. After careful consideration, we affirm
the order of the trial court.
We first note that, although the order from which defendant
appeals is not a final determination of all of the issues between
the parties and is thus interlocutory, defendant's appeal isnevertheless properly before this Court. Section 136-108 of the
North Carolina General Statutes requires parties to a condemnation
proceeding to resolve all issues other than damages at a hearing as
follows:
After the filing of the plat, the judge, upon
motion and 10 days' notice by either the
Department of Transportation or the owner,
shall, either in or out of term, hear and
determine any and all issues raised by the
pleadings other than the issue of damages,
including, but not limited to, if
controverted, questions of necessary and
proper parties, title to the land, interest
taken, and area taken.
N.C. Gen. Stat. § 136-108 (2001). Orders from a condemnation
hearing concerning title and area taken are “vital preliminary
issues” that must be immediately appealed pursuant to section 1-277
of the General Statutes, which permits interlocutory appeals of
determinations affecting substantial rights.
See Dep't of Transp.
v. Rowe, 351 N.C. 172, 176, 521 S.E.2d 707, 709 (1999); Highway
Commission v. Nuckles, 271 N.C. 1, 14, 155 S.E.2d 772, 784 (1967).
Because defendant's present appeal specifically contests the trial
court's determination of the area affected by the taking, which is
a “vital preliminary issue,” such appeal is properly before this Court.
Defendant argues that the trial court erred in determining
that the three disputed tracts of land were not unified for
purposes of condemnation. Section 40A-67 of the North Carolina
General Statutes provides that, “[f]or the purpose of determining
compensation under this Article, all contiguous tracts of land that
are in the same ownership and are being used as an integrated
economic unit shall be treated as if the combined tracts constitutea single tract.” N.C. Gen. Stat. § 40A-67 (2001). “This statute
is a codification of a portion of the common law of condemnation
known as the 'unity rule.'” Town of Hillsborough v. Crabtree, 143
N.C. App. 707, 711, 547 S.E.2d 139, 141, disc. review denied, 354
N.C. 75, 553 S.E.2d 213 (2001);
City of Winston-Salem v. Yarbrough
,
117 N.C. App. 340, 344, 451 S.E.2d 358, 362 (1994),
disc. reviews
denied
, 340 N.C. 110, 260, 456 S.E.2d 311, 519 (1995). The “unity
rule” was articulated by our Supreme Court in
Barnes v. Highway
Commission, 250 N.C. 378, 109 S.E.2d 219 (1959), as follows:
There is no single rule or principle
established for determining the unity of lands
for the purpose of awarding damages or
offsetting benefits in eminent domain cases.
The factors most generally emphasized are
unity of ownership, physical unity and unity
of use. Under certain circumstances the
presence of all these unities is not
essential. The respective importance of these
factors depends upon the factual situations in
individual cases. Usually unity of use is
given greatest emphasis.
The parcels claimed as a single tract must be
owned by the same party or parties. It is not
a requisite for unity of ownership that a
party have the same quantity or quality of
interest or estate in all parts of the tract.
But where there are tenants in common, one or
more of the tenants must own some interest and
estate in the entire tract.
Under some
circumstances the fact that the land is
acquired in a single transaction will
strengthen the claim of unity. But the fact
that the land was acquired in small parcels at
different times does not necessarily render
the parcels separate and independent.
However, there must be a substantial unity of
ownership. Different owners of adjoining
parcels may not unite them as one tract, nor
may an owner of one tract unite with his land
adjoining tracts of other owners for the
purpose of showing thereby greater damages.
Id. at 384, 109 S.E.2d at 224-25 (citations omitted) (emphasis
added).
Although Barnes sets forth unity of ownership as only one of
three factors in the unity test, Barnes clearly requires that some
type of unity of ownership be established, however tenuous, in
order to declare separate parcels of land united for purposes of
condemnation. Our Supreme Court reaffirmed this requirement in
Board of Transportation v. Martin, 296 N.C. 20, 249 S.E.2d 390
(1978), in which the Court stated that, “[a]bsent unity of
ownership, . . . two parcels of land cannot be regarded as a single
tract for the purpose of determining a condemnation award.” Id. at
26, 249 S.E.2d at 395. Appellate decisions following Barnes have
consistently required some evidence of unity of ownership in order
to establish unity of land. See, e.g., Martin, 296 N.C. at 28, 249
S.E.2d at 396 (holding that “a parcel of land owned by an
individual and an adjacent parcel of land owned by a corporation of
which that individual is the sole or principal shareholder cannot
be treated as a unified tract for the purpose of assessing
condemnation damages”); Dept. of Transportation v. Nelson Co., 127
N.C. App. 365, 367, 489 S.E.2d 449, 450 (1997) (applying Barnes and
holding that unity of ownership was present between two parcels of
property owned by partnership members); Yarbrough, 117 N.C. App. at
345, 451 S.E.2d at 362 (reviewing Barnes and holding that the
inchoate dower interest between spouses was sufficient to provide
a husband and wife with “some quality of interest” in the other's
property to establish substantial unity of ownership between twotracts of land). Defendant has cited no authority, nor have we
discovered any case in which unity of land was established without
some grounds for unity of ownership.
The evidence before the trial court in the instant matter
tended to show that the three disputed parcels of land are owned by
two corporations, namely defendant and Catawba. Defendant argues
that, as the two corporations were directed by Clark before his
death, and as he was the sole shareholder in both corporations,
substantial unity of ownership existed between the three parcels.
We disagree.
A corporation is treated as an entity separate from its
stockholder or stockholders under all ordinary circumstances. See,
e.g., Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330
(1985) (describing the general rule of a corporation as a distinct
legal entity and the primary exception from that rule, the doctrine
of “piercing the corporate veil”); Huski-Bilt, Inc. v. Trust Co.,
271 N.C. 662, 669-70, 157 S.E.2d 352, 358 (1967) (reciting the
general rule); Nelson Co., 127 N.C. App. at 367, 489 S.E.2d at 450
(noting that a corporation is a “legal entity, totally separate
from the individual shareholder”). Although certain exceptions to
the general rule exist under some circumstances, “[a] corporation's
separate and independent existence is not to be disregarded
lightly.” Russell M. Robinson, II, Robinson on North Carolina
Corporation Law, § 2.10 (7th ed. 2002). Courts will only “pierce
the corporate veil” where applying the corporate fiction would
“'defeat public convenience, justify wrong, protect fraud or defendcrime.'” Martin, 296 N.C. at 28, 249 S.E.2d at 395 (quoting Sams
v. Redevelopment Authority, 431 Pa. 240, 244, 244 A.2d 779, 781
(1968)). In such cases, “'[t]hose who are responsible for the
existence of the corporation are . . . prevented [by the courts]
from using its separate existence to accomplish an unconscionable
result.'” Id. at 27, 249 S.E.2d at 395 (quoting Jonas v. State, 19
Wis.2d 638, 644, 121 N.W.2d 235, 238-39 (1963)).
In the present case, defendant asks the Court to disregard the
corporate enterprise, which was voluntarily formed by Clark in
order to enjoy the advantages flowing from its existence as a
separate entity, in order to receive increased damages as a result
of the present condemnation proceedings. See Martin, 296 N.C. at
27-28, 249 S.E.2d at 395. This is known as “reverse piercing,”
“an argument that is rarely sustained.” Robinson at § 2.10(1).
As previously noted, the Martin Court expressly held “that a
parcel of land owned by an individual and an adjacent parcel of
land owned by a corporation of which that individual is the sole or
principal shareholder cannot be treated as a unified tract for the
purpose of assessing condemnation damages.” Martin, 296 N.C. at
28, 249 S.E.2d at 396 (emphasis added). Defendant's attempts to
distinguish Martin on a factual basis are unpersuasive in light of
Martin's unequivocal holding. Defendant further argues that “the
Martin Court's broad statements regarding unity of ownership were
unnecessary and are not binding precedent.” We fail to perceive
how our Supreme Court's direct resolution of this issue can be
anything other than binding precedent. Moreover, defendant hasadvanced no persuasive grounds for the application of the doctrine
of piercing the corporate veil. The evidence before the trial
court tended to show that Clark was an attorney, as well as a
seasoned and highly successful land developer. “Where persons have
deliberately adopted the corporate form to secure its advantages,
they will not be allowed to disregard the existence of the
corporate entity when it is to their benefit to do so.” Martin,
296 N.C. at 29, 249 S.E.2d at 396.
Because the three parcels were owned by two separate
corporations, which were distinct legal entities, we agree with the
trial court's conclusion that unity of ownership did not exist on
the date of the taking. Because no grounds for mutual ownership
existed, defendant failed to establish unity of land. See N.C.
Gen. Stat. § 40A-67 (requiring “same ownership” in order for
separate parcels of land to be treated as a single tract); Barnes,
250 N.C. at 384, 109 S.E.2d at 225 (“Different owners of adjoining
parcels may not unite them as one tract, nor may an owner of one
tract unite with his land adjoining tracts of other owners for the
purpose of showing thereby greater damages.”).
Given the lack of unity of ownership between the three
parcels, no physical unity existed between the two parcels owned by
defendant. The two parcels owned by defendant are completely
separated by the 107.65-acre tract owned by Catawba. With neither
unity of ownership nor physical unity, we conclude that the trial
court did not err in determining that “[t]he three parcels
described in defendants' motion do not constitute one tract for thepurposes of condemnation.” We therefore affirm the order of the
trial court.
Affirmed.
Judges TYSON and LEVINSON concur.
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