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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
The CITY OF CHARLOTTE, a municipal corporation, Plaintiff, v.
JOHN P. HURLAHE, JR., LINDA D. HURLAHE, ROBERT HULL, WILLIAM H.
HOGUE, and THELMA W. HOGUE, GARY L. BETOW, THRIFTY RENT-A-CAR
SYSTEM, INC., TRSTE, INC., WACHOVIA BANK, N.A., CITY/COUNTY TAX
COLLECTOR, AFFORDABLE TRANSPORTATION, INC., Defendants
Filed: 20 June 2006
1. Eminent Domain_lost profits_predicted rental income
Lost profits are not recoverable in a taking under eminent domain, but rental income is
admissible on the question of fair market value. The trial court here did not err by admitting
testimony from experts concerning their use of predicted rental income in determining the fair
market value of property when used for a valet parking business near an airport. A cautionary
instruction clarified any jury confusion on the issue.
2. Eminent Domain_condemnation_future use of land_airport parking
Future uses of the land are admissible in a condemnation action if the owner has taken
steps to adapt the land prior to the taking. Testimony in a condemnation of land near an airport
concerning the value of property as a valet parking business was admissible where it was
undisputed that the property was largely covered by paved and gravel parking areas, defendant
had used the property for parking cars, plaintiff used the property for airport parking after it was
condemned, and an expert appraiser testified that the property was ready to go as a valet
3. Appeal and Error_preservation of issues_issue not raised at trial
An issue not raised at trial or assigned as error was not preserved for appellate review.
4. Eminent Domain_land near airport_evidence of possible use as parking lot
The was no prejudice in a condemnation action involving land near an airport from the
admission of evidence that the owner would have used the land as a valet parking lot. Testimony
about the possible uses of property is relevant to its highest and best use, the parties agree that
airport parking is the highest and best use here, the city operated a parking lot on the property
after the taking, and the City did not argue that the admission was prejudicial.
5. Appeal and Error_preservation of issues--failure to renew motion for directed
Plaintiff's failure to renew its motion for a directed verdict at the close of all the evidence
meant that it did not preserve for appellate review the denials of its motions for a directed verdict
and for a motion for a new trial or a judgment n.o.v.
Appeal by plaintiff from judgment entered 9 November 2004 by
Judge Yvonne Mims Evans, in Mecklenburg County Superior Court.
Heard in the Court of Appeals 28 March 2006.
Morris York Williams Surles & Barringer, LLP, by Robyn M. Lacy
and John P. Barringer, for plaintiff.
The Odom Firm, PLLC, by T. LaFontine Odom, Sr. and Thomas L.
Odom, Jr., for defendants.
Rebecca Cheney, for City of Charlotte.
Nexsen, Pruet, Adams, Kleemeir, PLLC, by Robert H. Hull, Jr.,
M. Jay DeVaney and Eric H. Biesecker, for Trustee in the Deed
Harkey and Lambeth, by Averill Harkey, for William Hogue.
Plaintiff, the city of Charlotte, appeals from judgment
awarding defendants John and Linda Hurlahe damages of $2,000,000
plus interest, and from the trial court's denial of plaintiff's
post trial motions for a new trial or judgment notwithstanding the
verdict. Defendants cross-appeal from an order granting
plaintiff's motion to extend the time for plaintiff to serve its
proposed record on appeal, and denying defendants' motion to
dismiss plaintiff's appeal. We affirm.
In 1986 defendants moved to Charlotte, North Carolina.
Defendants bought property near Charlotte/Douglas International
Airport in 1986; they bought an adjoining tract in 1993, for a
total of approximately 3.6 acres. Defendants' land (the subject
property), was located less than a mile from the airport terminal
passenger drop-off area, and close to highways providing access to
the airport. This appeal arises from plaintiff's condemnation of
the subject property. From 1986 to 2002 defendants operated a Thrifty Car Rental
franchise on the subject property. Defendants also rented parking
spaces to rental car customers and other travelers. The property
had over 450 parking spaces, both paved and gravel. During the
fall of 2001 defendants' business dropped off, following the events
of 11 September 2001 and the resultant decrease in air travel.
Defendants could not meet their financial obligations, and on 16
October 2002 Thrifty Car Rental terminated defendants' franchise.
Several weeks later, defendants were contacted by the city about
condemnation of the subject property.
On 30 December 2002 plaintiff filed a Complaint, Declaration
of Taking, and Notice of Deposit, alleging that the city had on
that day taken the subject property by eminent domain. Plaintiff
sought determination of the amount of compensation owed to
defendants, which plaintiff alleged was $842,500. Before trial all
other issues were resolved, and a jury trial was conducted in
October 2004 on the issue of the amount of compensation defendants
were owed for the condemnation of the subject property.
At trial, both plaintiff and defendants presented the
testimony of expert witnesses, who offered varying opinions on the
fair market value of the subject property. On 15 October 2004 the
jury returned a verdict finding that defendants were entitled to
damages of $2,000,000 in compensation for the taking of the subject
property. Upon this verdict, the trial court on 9 November 2004
entered judgment in favor of defendants. Plaintiff's post trial
motions for a new trial or judgment notwithstanding the verdictwere denied, and on 7 December 2004 plaintiff appealed both the
judgment and the denial of these motions. On 7 June 2005
defendants filed a motion in the trial court, seeking dismissal of
plaintiff's appeal. Defendants cross-appeal from the denial of
this motion, and from the court's granting of plaintiff's motion
for extension of time to serve its proposed record on appeal.
Condemnation is defined as a determination and declaration
that certain property (esp. land) is assigned to public use,
subject to reasonable compensation; the exercise of eminent domain
by a governmental entity. Black's Law Dictionary 310 (8th ed. 2004).
Eminent domain is the inherent power of a governmental entity to
take privately owned property, . . . subject to reasonable
compensation for the taking. Black's Law Dictionary 562 (8th ed.
2004). Plaintiff is authorized to exercise the power of eminent
domain, and is directed to follow the condemnation procedures set
forth in N.C. Gen. Stat. § 136-103 et seq. (2005).
N.C. Gen. Stat. § 136-112 (2005), sets out damages to which a
condemnee is entitled, and provides in pertinent part that [w]here
the entire tract is taken the measure of damages for said taking
shall be the fair market value of the property at the time of
taking. N.C. Gen. Stat. § 136-112(2) (2005). The fair market
value of a property may be defined as the price which a willing
buyer would pay to purchase the asset on the open market from a
willing seller, with neither party being under any compulsion tocomplete the transaction. Carlson v. Carlson, 127 N.C. App. 87,
91, 487 S.E.2d 784, 786 (1997) (citation omitted).
 Plaintiff argues that the trial court erred by admitting
evidence concerning the net income of a hypothetical valet parking
business on the subject property. We disagree.
Plaintiff challenges the court's admission of certain
testimony. Admission of evidence is 'addressed to the sound
discretion of the trial court and may be disturbed on appeal only
where an abuse of such discretion is clearly shown.' Under an
abuse of discretion standard, we defer to the trial court's
discretion and will reverse its decision 'only upon a showing that
it was so arbitrary that it could not have been the result of a
reasoned decision.' Gibbs v. Mayo, 162 N.C. App. 549, 561, 591
S.E.2d 905, 913 (quoting Sloan v. Miller Building Corp., 128 N.C.
App. 37, 45, 493 S.E.2d 460, 465 (1997); and White v. White, 312
N.C. 770, 777, 324 S.E.2d 829, 833 (1985)), disc. review denied,
358 N.C. 543, 599 S.E.2d 45 (2004). Accordingly, we must determine
whether the trial court abused its discretion in admitting evidence
of the predicted net income from operation of a valet parking lot
on the subject property.
In a condemnation case the issue for determination is damages
based upon the difference in fair market value of the property
before and after the taking. Accepted methods of appraisal in
determining fair market value include: (1) the comparable sales
method, (2) the cost approach, and (3) the capitalization of incomeapproach. City of Statesville v. Cloaninger, 106 N.C. App. 10,
16, 415 S.E.2d 111, 115 (1992) (emphasis added) (citing Metro.
Sewerage Dist. of Buncombe Co. v. Trueblood, 64 N.C. App. 690, 308
S.E.2d 340 (1983); and 4 J. Sackman, nichols' The Law on Eminent Domain
§§ 12B.04, 12B.08, 12B.11 (rev. 3d ed. 1990)). [T]he income
approach is generally considered the most reliable method for
determining the market value of investment property[.] In re
Appeal of the Greens of Pine Glen Ltd. P'Ship, 356 N.C. 642, 648,
576 S.E.2d 316, 320 (2003) (determination of fair market value for
tax assessment). Under the income approach, an appraiser
calculates the economic rent the property earns and deducts normal
operating expenses to arrive at net operating income. That figure
is then capitalized [divided] by a rate of return [percent] to
determine the fair market value of the property. Dept. of
Transportation v. Fleming, 112 N.C. App. 580, 583, 436 S.E.2d 407,
409 (1993) (citing 5 J. Sackman, Nichols' The Law of Eminent Domain §
19.01 (rev. 3d ed. 1993)).
In the instant case, the challenged testimony was offered by
two of defendants' expert witnesses, both of whom used the income
method to determine the fair market value of the subject property.
The first, Bruce Tomlin, was recognized by the court as an expert
in commercial real estate appraisal. Tomlin testified that the
income approach was commonly used in the appraisal of commercial or
non-residential property. He told the jury that the income
approach is where you consider what could you achieve in net income
from the operation of the real estate[,] and said that: [You] . . . collect rental comparables, to see
what income you could generate. You will look
at occupancy rates. . . . [T]hen you'll come
down to an effective . . . gross income. . . .
After you have your effective gross income,
you take off your expenses[,] . . . [to reach
the] N.O.I. or net operating income. . . .
And then, investors value that out in the
market place. . . . Take the [net operating
income] and divide it by [the appropriate]
percent capitalization rate.
Tomlin explained that the capitalization rate was a measure of the
perceived risk of investing in a property, and that the greater the
risk, the higher the capitalization rate. Tomlin also testified
about the procedure he used to obtain the information necessary for
application of the income approach to the subject property.
Similar testimony was offered by defense witness Roscoe
Shiplett, also recognized by the court as an expert in real estate
appraisal. Shiplett testified that, because of the absence of
comparable sales of airport parking lots at Douglas Airport, the
income approach was the most appropriate method to determine the
fair market value of the subject property. He explained the
calculations required to convert the parking lot rental net income
to fair market value. Both Tomlin and Shiplett testified regarding
the reasons that the income approach was used, and the process by
which they derived the necessary numerical values. We conclude
that the testimony of both Tomlin and Shiplett was admissible on
the issue of the subject property's fair market value as
ascertained by the income approach, and that the trial court did
not abuse its discretion by admitting this evidence. Plaintiff,
however, argues that evidence of the net income from operation ofa parking lot on the subject property constituted inadmissible
evidence of lost profits. We disagree.
Plaintiff correctly states that [l]oss of profits are not
elements of recoverable damages in an award for a taking under the
power of eminent domain. Dept. of Trans. v. Byrum, 82 N.C. App.
96, 99, 345 S.E.2d 416, 418 (1986) (citation omitted). Thus, for
example, if identical adjoining stores were taken in the
condemnation of a shopping center, the owners of these two stores
should be entitled to the same amount in damages, even if one owner
ran a profitable fine jewelry business, while the other operated a
failing shoe repair shop.
In Dept. of Transportation v. Fleming, 112 N.C. App. 580, 582,
436 S.E.2d 407, 409 (1993), the landowner's witnesses calculated
the value of the condemned property based entirely on the net
income from the operation of defendants' plumbing business. This
Court stated that [a]lthough the income approach is an accepted
method of appraisal, '[i]n assessing the value of property on the
basis of income, care must be taken to distinguish between income
from the property and income from the business conducted upon the
property.' Id. at 583, 436 S.E.2d at 409 (quoting 4 J. Sackman,
Nichols' The Law of Eminent Domain § 12B.09 (rev. 3d ed. 1993)).
Comparing rental income derived directly from property to profits
from a plumbing business, the Court found no evidence that the
real estate contributed in any unique way to the income derived
from the business. Id. at 584, 436 S.E.2d at 410. However, rental income . . . has long been an accepted
consideration in arriving at fair market value of the property at
the time of the taking. Byrum, 82 N.C. App. at 100, 345 S.E.2d at
419 (distinguishing the income from rental of campground spaces
from the profits of a restaurant and game room located in the
campground). Thus, [w]hen rental property is condemned the owner
may not recover for lost rents, but rental value of property is
competent upon the question of the fair market value of the
property at the time of the taking. Kirkman v. Highway
Commission, 257 N.C. 428, 432, 126 S.E.2d 107, 110 (1962) (citation
This Court has previously upheld the admission of evidence of
the rental income from an airport parking lot in determination of
the fair market value of property condemned for airport use. In
Raleigh-Durham Airport Authority v. King, 75 N.C. App. 121, 330
S.E.2d 618 (1985), plaintiff argued that the trial court erred in
its admission of the testimony of defendant Mary King as to the
revenues and expenses of the parking business operated on the 3.6
acres at issue in this case and contended it was evidence of the
profits of defendants' business and that although evidence of rents
paid for use of the land is admissible, evidence of the profits of
a business conducted on land is not admissible to prove the fair
market value of the land. King, 75 N.C. App. at 123, 330 S.E.2d
at 619-20. This Court held:
[Defendant] was essentially renting or leasing
parking spaces to airline passengers.
Evidence of the rental revenues from land may
be admitted and considered in determining thefair market value of the land at the time of
Id. And, in Raleigh-Durham Airport Authority v King, 75 N.C. App.
57, 63, 330 S.E.2d 622, 625-26 (1985), this Court stated that:
[T]he airport was the 'principal market maker'
in the area, affecting property values and
commercial viability of land in the vicinity
of the airport. Airport rentals of space
inside the terminal, . . . established the
maximum rent that could be charged[, and]. . .
availability of that space directly affected
the amount of rent that could be charged
outside the terminal. Thus, [the witness's]
use of airport rentals allowed him to appraise
the defendants' property within the context of
the commercial and economic realities of the
In the present case, neither Tomlin nor Shiplett testified that
defendants were entitled to damages in the amount of lost
profits; instead, each performed the calculations necessary to
convert rental income to fair market value. We conclude that their
testimony did not constitute improper evidence of lost profits.
 Plaintiff also argues that the challenged testimony was
inadmissible, on the grounds that it pertained to a hypothetical
business. In support of this position, plaintiff cites several
cases holding that damages in a condemnation case should not be
calculated by reference to a proposed use of the land for which the
land was not adapted at the time of the taking. For example, in
State v. Johnson, 282 N.C. 1, 191 S.E.2d 641 (1972), the North
Carolina Supreme Court noted that:
In condemnation proceedings, the well
established rule is that in determining fair
market value the essential inquiry is, 'what
is the property worth in the market, viewed
not merely with reference to the uses to whichit is at the time applied, but with reference
to the uses to which it is plainly adapted --
that is to say, what is it worth from its
availability for all valuable uses?'
Id. at 14, 191 S.E.2d at 651 (quoting Barnes v. Highway Commission,
250 N.C. 378, 387, 109 S.E. 2d 219, 227 (1959)). In Johnson this
Court held that, on the facts presented therein, it is not proper
for the jury . . . to consider an undeveloped tract of land as
though a subdivision thereon is an accomplished fact. Id. at 15,
191 S.E.2d at 651. And, in City of Wilson v. Hawley, 156 N.C. App.
609, 577 S.E.2d 161 (2003), this Court upheld the exclusion of
evidence regarding the potential for operating a sweet potato farm
on property where the defendant had not converted wooded acreage to
However, [i]f an owner has taken steps prior to the date of
taking to adapt his land for future uses, the future uses to which
the land is adapted are admissible. Hawley, 156 N.C. App. at 613,
577 S.E.2d at 164. In the instant case, it is undisputed that the
subject property was largely covered by paved and gravel parking
areas, that defendant had used the property for parking cars, and
that plaintiff used it for airport parking after it was condemned.
Tomlin even testified that the subject property was ready to go
for use as a valet parking business. We conclude that this use of
the property was properly considered by the jury.
 On appeal plaintiff also raises for the first time the
additional issue of whether rental income from a valet parking
business should be excluded on the grounds that the nature of such
a business is that of a service, rather than rental. Plaintifffailed to raise this issue at trial, or to assign error on this
basis, and thus has not preserved this question for appellate
review. N.C.R. App. P. 10(a) and (b)(1).
Finally, we note that plaintiff asked for and received a
cautionary instruction to the jury stating in pertinent part that:
Loss of profits of a business conducted on the
property taken is not an element of
recoverable damages. Accordingly, value based
on the net income of a business is not the
true measure of damages and is not
permissible. Notwithstanding, when the income
is directly attributable to the land itself,
such income may be considered in determining
the value of the property.
Accordingly, any jury confusion arising from admission of the
challenged testimony was properly clarified and explained by the
trial court. We conclude that the trial court did not abuse its
discretion by admitting evidence of the net income that might be
obtained from operation of a valet parking business on the
property. This assignment of error is overruled.
 Plaintiff argues next that the trial court erred by
admitting evidence of the Hurlahe's intended future use of the
subject property. We disagree.
Testimony about possible uses of the property is relevant to
determination of its highest and best use. Indeed, the highest
and best use, the highest and most valuable use, the highest and
most profitable use, or the most advantageous use are generally
accepted factors in determining the market value of land taken incondemnation proceedings. Williams v. Highway Commission, 252
N.C. 514, 517, 114 S.E.2d 340, 342 (1960) (citation omitted).
Defendant John Hurlahe testified that, had the property not
been condemned, he would have operated it as an airport parking
lot. In fact, the parties agree that airport parking is the
highest and best use of the property. It is undisputed that the
city operated a parking lot on the subject property after taking it
from defendant. In this context, we perceive no harm to plaintiff
from defendant's testimony that, like the plaintiff, he too would
have used the land for a parking lot.
The burden is on the appellant not only to show error, but to
show prejudicial error, i.e., that a different result would have
likely ensued had the error not occurred. Responsible Citizens v.
City of Asheville, 308 N.C. 255, 271, 302 S.E.2d 204, 214 (1983)
(citation omitted). In the instant case, plaintiff does not argue
on appeal that admission of this testimony prejudiced their case,
and we discern no prejudice. This assignment of error is
 Plaintiff also argues that the trial court committed
reversible error by denying its motion for directed verdict.
However, although plaintiff moved for directed verdict at the end
of the defendants' evidence, it failed to renew this motion at the
close of all the evidence. This Court has previously held:
By offering their own evidence, defendants
waived their motion for a directed verdict
made at the close of plaintiffs' evidence and,
in order to preserve the question of thesufficiency of the evidence for appellate
review, they were required to renew this
motion at the close of all the evidence.
Defendants did not, however, renew their
motion for directed verdict at the close of
the evidence. Because of this failure,
defendants are not entitled to argue this
issue on appeal.
Cannon v. Day, 165 N.C. App. 302, 305-06, 598 S.E.2d 207, 210,
(citing Gibbs v. Duke, 32 N.C. App. 439, 442, 232 S.E.2d 484, 486
(1977)), disc. review denied, 359 N.C. 67, 604 S.E.2d 309 (2004).
This assignment of error is overruled.
In a related assignment of error, plaintiff argues that the
trial court abused its discretion by denying their motion for a new
trial or, in the alternative, for judgment notwithstanding the
verdict. Under N.C. Gen. Stat. § 1A-1, Rule 50 (2005):
(b) (1) Whenever a motion for a directed verdict
made at the close of all the evidence is
denied or for any reason is not granted, . . .
a party who has moved for a directed verdict
may move to have the verdict and any judgment
entered thereon set aside and to have judgment
entered in accordance with his motion for a
directed verdict[.] . . . [T]he motion shall
be granted if it appears that the motion for
directed verdict could properly have been
granted. A motion for a new trial may be
joined with this motion, or a new trial may be
prayed for in the alternative.
(emphasis added). Plaintiff failed to move for a directed verdict
at the close of all the evidence. Therefore, plaintiff failed to
preserve [the] right to move for judgment notwithstanding the
verdict. Tatum v. Tatum, 318 N.C. 407, 408, 348 S.E.2d 813, 813
(1986) (citation omitted). This assignment of error is overruled.
We have considered plaintiff's remaining assignments of error
and conclude they are without merit.
Defendants cross-appeal from the denial of their motion to
dismiss plaintiff's appeal, and from the trial court's order
granting plaintiff additional time to prepare the Record on Appeal.
We have considered their arguments in this regard and find them to
be without merit. This assignment of error is overruled.
For the reasons discussed above, the judgment in this case is
Chief Judge MARTIN and Judge ELMORE concur.
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