DOT v Stout, (02-79) 08/05/2003

Appeal by defendants from orders entered 26 June 2001 by Judge Melzer A. Morgan, Jr., in Moore County Superior Court. Consolidated for briefing and argument by order dated 2 April 2002 and heard in the Court of Appeals 12 May 2003.

Attorney General Roy Cooper, by Assistant Attorney General Fred Lamar, Assistant Attorney General Lisa C. Glover, and Assistant Attorney General Clinton Hicks, for the North Carolina Department of Transportation.

Moser, Schmidly, Mason & Roose, by Stephen S. Schmidly, and Cunningham, Dedmond, Petersen & Smith, L.L.P., by Marsh Smith, for defendant-appellants.

    EAGLES, Chief Judge.
    Defendants appeal from an interlocutory order granting plaintiff's motion to strike an affirmative defense to a land condemnation action initiated by plaintiff.
    The record tends to establish that Samuel and Kathy Stout (“Stouts”) and Clinton and Kay Peele (“Peeles”) are the named defendants in two separate land condemnation proceedings initiated by the North Carolina Department of Transportation (“NCDOT”). The facts giving rise to these proceedings are virtually identical to those that were the subject of Department of Transportation v. Blue, 147 N.C. App. 596, 556 S.E.2d 609 (2001), disc. review denied, 356 N.C. 434, 572 S.E.2d 428-29 (2002). In Blue the underlying facts were summarized as follows:
        NCDOT has a program for improving transportation, which includes enlarging and constructing highways, known as the Transportation Improvement Program (“TIP”). See G.S. § 143B-350(f)(4). One TIP project, designated TIP R-210, was a transportation project intended to improve portions of United States Highway 1 from south of State Road 1853 near Lakeview, North Carolina, to State Road 1180 near Sanford, North Carolina. Planning for TIP R-210 began in 1989, and funding for the project was to be provided by the State. Throughout the planning process, NCDOT held public hearings and accepted public input on TIP R-210.
        In 1991, NCDOT prepared and published a Draft Environmental Impact Statement (“DEIS”) evaluating the environmental impact of various alternative routes for TIP R-210. Thereafter, on 22 April 1992, NCDOT issued a news release announcing its selection of the route designated “Alternative A” for TIP R-210. Then, on 1 December 1995, NCDOT prepared and published a Final Environmental Impact Statement (“FEIS”), as required by the North Carolina Environmental Policy Act (“NCEPA”), G.S. § 113A-1 et seq., approving the selection of “Alternative A.” Ultimately, on 21 March 1996, the U.S. Federal Highway Administration (“FHWA”) approved NCDOT's selection of “Alternative A” as the “environmentally preferred alternative” and issued a Record of Decision (“ROD”) affirming its approval on that date.
        Defendants each owned property located within the right-of-way of “Alternative A.” After the selection of “Alternative A,” NCDOT entered into negotiations with each defendant in an attempt to agree upon acceptable purchase prices for their parcels of land.

Id. at 598-99, 556 S.E.2d at 614.
    Just as in Blue, when negotiations failed, NCDOT initiated separate condemnation proceedings against each landowner. NCDOT filed its condemnation action against the Peeles (No. 00 CvS 975) in August 2000 and against the Stouts (No. 01 CvS 180) in February 2001. On 6 March 2001, the Stouts and Peeles (collectively “defendants”) filed separate but identical answers to NCDOT's complaint. Within each answer, defendants asserted various affirmative defenses, counterclaimed for monetary, declaratory and injunctive relief, and moved to consolidate the cases for purposes of discovery and hearings.
    By their second affirmative defense, defendants alleged that NCDOT was barred from condemning their land     “because it ha[d] engaged in arbitrary and capricious agency action and ha[d] abused its agency discretion,” in violation of defendants' state and federal constitutional rights. This defense was based on allegations that NCDOT had violated the North Carolina Environmental Policy Act, (NCEPA) in particular, the provisions related to Environmental Impact Statements. Defendants' counterclaim also alleged that “NCDOT ha[d] engaged in arbitrary and capricious conduct, abused agency discretion and failed to comply with NCEPA . . . .”     On 1 May 2001, NCDOT filed a motion to dismiss defendants' counterclaims pursuant to N.C.R. Civ. P. 12(b)(1), 12(b)(2) and 12(b)(6) and a motion to strike defendants' second affirmative defense pursuant to Rule 12(f). On 11 June 2001, prior to the hearing on NCDOT's motions, defendants voluntarily dismissed their counterclaims without prejudice pursuant to N.C.R. Civ. P. 41(a). A hearing was later conducted only on NCDOT's motion to strike defendants' second affirmative defense. During that hearing, defendants conceded that their second defense included the same allegations as their previously dismissed counterclaim. By order dated 26 June 2001, the trial court granted NCDOT's motion to strike defendants' second affirmative defense and certified its ruling for immediate appeal. Defendants appeal.
    We begin by noting that because the order from which this appeal was taken was an order “'made during the pendency of [the] action, which [did] not dispose of the case, but [left] it for further action by the trial court in order to settle and determine the entire controversy[,]'” it is in the nature of an interlocutory order. Blue, 147 N.C. App. at 599-600, 556 S.E.2d at 615 (citation omitted). It is the general rule that there is no right of immediate appeal from an interlocutory order. Id. at 600, S.E.2d at 615. Our rules generally operate to preclude “an appeal 'from an order striking or denying a motion to strike allegations contained in pleadings.'” Faulconer v. Wysong and Miles Co., ___ N.C. App. ___, ___, 574 S.E.2d 688, 690-91 (2002)(citation omitted). There are, however, two exceptions to the general rule prohibitingimmediate appeal of an interlocutory order: (1) when appeal is taken pursuant to N.C.R. Civ. P. 54(b); and (2) when appeal is taken pursuant to G.S. § 1-277 and G.S. § 7A-27(d). Dalton Moran Shook Inc. v. Pitt Development Co., 113 N.C. App. 707, 710, 440 S.E.2d 585, 588 (1994). We address each instance below.
    Under the first exception, Rule 54(b) permits review of otherwise interlocutory orders when: “(1) the action involves multiple claims or multiple parties, (2) the order is 'a final judgment as to one or more but fewer than all of the claims or parties,' and (3) the trial court certifies that 'there is no just reason for delay.'” Yordy v. N.C. Farm Bureau Mutual Insurance Co., 149 N.C. App. 230, 231, 560 S.E.2d 384, 385 (2002)(citation omitted).
    Here, although the first and third requirements are clearly satisfied, the second requirement is not; the trial court's order merely disposed of one of the several affirmative defenses raised by defendants in their answer to plaintiff's complaint. “A defense raised by a defendant in answer to a plaintiff's complaint is not a 'claim' for purposes of Rule 54(b).” Id. Because the order striking defendants' second defense was not a final judgment as to any “claim” or “party,” the second requirement for review under Rule 54(b) is not satisfied. “[A]lthough the trial court purported to certify the case for immediate appeal . . ., this act alone is insufficient where the other requirements of Rule 54(b) are not satisfied.” Id. Accordingly, we hold that under the circumstancesof this case, Rule 54(b) does not provide a basis for immediate appellate review of an order striking a defense.
    Under the second exception, G.S. § 1-277 and G.S. § 7A-27(d) permit immediate review of interlocutory orders when the order: “(1) affects a substantial right, or (2) in effect determines the action and prevents a judgment from which appeal might be taken, or (3) discontinues the action, or (4) grants or refuses a new trial.” Dalton Moran Shook Inc. v. Pitt Development Co., 113 N.C. App. 707, 710, 440 S.E.2d 585, 588 (1994). We initially note that neither the third nor the fourth instances that permit immediate appellate review under this exception are implicated in this case. With respect to the first and second instances, this Court has held that as applied to motions to strike defenses raised in an answer, “orders raising issues of sovereign immunity affect a substantial right sufficient to warrant immediate appellate review.” Blue, 147 N.C. App. at 600, 556 S.E.2d at 615. Moreover, “when a motion to strike an entire further answer or defense is granted, an immediate appeal is available since such motion is in substance a demurrer.” Faulconer, ___ N.C. App. at ___, 574 S.E.2d at 691. However, after careful review of the records and briefs, we conclude that neither circumstance applies to this case.
    Here, the issue of sovereign immunity was not raised in conjunction with the State's motion to strike defendants' second affirmative defense. The State's motion to strike was grounded on contentions that the assertion of the defense was “irrelevant and immaterial” to the condemnation action, barred under the NorthCarolina Administrative Procedure Act, barred by the statute of limitations and the doctrine of laches, and “contrary to the function and purpose of the eminent domain powers . . . .” The trial court, agreeing with the State, grounded its order granting the State's motion to strike on the same bases. Since the issue of sovereign immunity was not raised by the order, no substantial right sufficient to warrant immediate review is implicated.
    Furthermore, the trial court's order was not in substance a demurrer. In Faulconer v. Wysong and Miles Co., ___ N.C. App. ___, 574 S.E.2d 688 (2002), the defendant filed an answer admitting the material allegations of the plaintiff's complaint, but asserted three affirmative defenses. Plaintiff then moved to strike all of defendant's affirmative defenses on grounds that defendant had failed to set forth sufficient factual allegations to constitute a defense. Id. at ___, 574 S.E.2d at 690. The trial court granted plaintiff's motion and struck all three of defendant's affirmative defenses. This Court held that the subsequent appeal was properly taken because the trial court's order effectively entered judgment against defendant. Id. at ___, 574 S.E.2d at 691.
    Unlike Faulconer, the trial court's order here did not strike defendants' entire answer or defense. Defendants denied the material allegations of the complaint and asserted more than one affirmative defense. Because the trial court's order had no effect on defendants' answer or remaining affirmative defenses, the burden remained on the State to overcome defendants' remaining defenses and establish all of the necessary elements before proceeding withthe condemnation. Therefore, we conclude that the order striking defendants' second affirmative defense does not in effect determine the action and prevent a judgment from which appeal might otherwise be taken.
    Accordingly, we hold that defendants' appeal is not within any exception permitting immediate appellate review and should be dismissed as interlocutory. Even assuming, arguendo, that defendants' appeals were properly before this Court, we would hold that the decision of the trial court should be affirmed. Shortly after the trial court entered the orders that are the subject of these appeals, this Court decided Department of Transportation v. Blue, 147 N.C. App. 596, 556 S.E.2d 609 (2001), which addresses the very issues before us in these appeals. Defendants correctly concede that we are bound by that decision. Because the trial court's orders striking defendants' second affirmative defense are consistent with that decision, we would affirm.
    Accordingly, we hold that defendants' appeal should be, and is, dismissed as interlocutory.
    Dismissed.
    Judges BRYANT and LEVINSON concur.
    Report per Rule 30(e).

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