Appeal by plaintiff from order entered 24 February 2006 by
Judge Narley S. Cashwell in Vance County Superior Court. Heard in
the Court of Appeals 7 March 2007.
Attorney General Roy Cooper, by Assistant Attorney General
James M. Stanley, Jr., for plaintiff-appellant.
Cranfill, Sumner & Hartzog, L.L.P., by Stephanie Hutchins
Autry, for defendant-appellee.
Plaintiff, the state Department of Transportation ("DOT"),
appeals from an order pursuant to N.C. Gen. Stat. § 136-108 (2005),
in which the trial court determined (1) that the individual owners
within the Fernwood Hill Townhome development are necessary partiesto this condemnation action and (2) that Fernwood Hill's common
area, together with the individually-owned residential units,
constitute "a single, unified tract" for the purpose of awarding
damages. With respect to the first issue, we are bound by our
recent decision in N.C. Dep't of Transp. v. Stagecoach Village, 174
N.C. App. 825, 622 S.E.2d 142 (2005), disc. review denied, 360 N.C.
483, 630 S.E.2d 929 (2006) ("Stagecoach Village II"). The second
issue, however, presents a novel question: whether there is
sufficient unity of ownership within the townhouse development to
support treating the development as "a single, unified tract" for
the purpose of awarding condemnation damages. The parties to this
appeal have not cited any authority _ nor in our own research have
we uncovered any _ that specifically resolves this issue. After
careful review, we agree with the trial court that the property
interests in this case are sufficient to create the requisite unity
of ownership. Accordingly, we affirm.
On 18 August 2004, DOT initiated a condemnation action by
filing a complaint and declaration of taking along with a deposit
of $5,300.00 representing the amount DOT estimated to be just
compensation for the planned taking. The area that DOT seeks to
acquire _ for a highway project in Henderson, North Carolina _ is
a 0.14 acre portion of the common area of the Fernwood Hill
townhouse development. Defendant Fernwood Hill Homeowner's
Association ("the Association") holds title to the entire commonarea in fee simple. The common area consists of grassy and wooded
sections, parking areas, and sidewalks.
The development contains six individual residential units.
The common area completely surrounds and is physically contiguous
to the individually-owned residential units. In this condemnation
proceeding, DOT does not seek to directly acquire, either in full
or in part, any of the individually-owned properties.
The development is governed by a Declaration of Covenants,
Conditions and Restrictions ("Declaration"), which includes a
provision stating that the common area is "owned by the Association
for the common use and enjoyment of the owners." The Declaration
affirmatively grants every townhouse owner "a right and easement of
enjoyment in and to the Common Area which shall be appurtenant to
and shall pass with the title to every lot." The Declaration also
includes a number of restrictive covenants relating to such matters
as architectural control, animals on the premises, use of the
parking lot, display of signs, window-mounted air conditioners,
"offensive" activity, and a restriction "for residential purposes
only." Article IX of the Declaration grants each individual owner,
as well as the Association itself, "the right to enforce, by any
proceeding at law or in equity, all restrictions, conditions,
covenants, reservations, liens and charges now or hereafter imposed
by the provisions of this Declaration."
The Association answered DOT's complaint and moved pursuant to
N.C.R. Civ. P. 19 and 20 to add all the individual townhouse owners
as necessary and proper parties. Subsequently, on 30 August 2005,the Association filed a motion, pursuant to N.C. Gen. Stat. § 136-
108, seeking a determination of "all issues raised by the pleadings
other than the issue of damages." In addition to asking the trial
court to find that the individual owners were necessary and proper
parties, the Association contended that the "subject tract" for
determining just compensation consisted not merely of the common
area but the whole
townhouse community, including the individually-
On 24 February 2006, the trial court entered an order in the
Association's favor on both issues presented. The court ordered
that the individual townhouse owners be added as defendants and
concluded that "[t]he common area and the individual lots, with the
townhomes on them, possess substantial unity of ownership, physical
unity and unity of use such that they constitute a single, unified
tract for the purpose of awarding damages or offsetting benefits."
The trial court ordered DOT to prepare a revised plat "show[ing]
the unified tract." DOT appealed the order to this Court.
 As a preliminary matter, we note that this appeal is
interlocutory because the trial court's order "does not dispose of
the case, but leaves it for further action by the trial court in
order to settle and determine the entire controversy." Veazey v.
City of Durham
, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). Our
Supreme Court has held, however, with respect to condemnation
actions, that "interlocutory orders concerning title or area taken
must be immediately appealed" because these matters are "'vitalpreliminary issues' involving substantial rights." N.C. Dep't of
Transp. v. Stagecoach Village
, 360 N.C. 46, 48, 619 S.E.2d 495, 496
(2005) (quoting Dep't of Transp. v. Rowe
, 351 N.C. 172, 176, 521
S.E.2d 707, 709 (1999)
). See also Dep't of Transp. v. Airlie Park,
, 156 N.C. App. 63, 65-66, 576 S.E.2d 341, 343 ("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." (quoting
, 351 N.C. at 176, 521 S.E.2d at 709)), appeal dismissed
N.C. 504, 587 S.E.2d 417 (2003). Since the superior court's order
concerns the "area taken" in the condemnation action, DOT is
entitled to immediate appellate review of this order.
 Although DOT contends that the trial court erred in
ordering the joinder of all the individual townhouse owners as
necessary parties, DOT also concedes "that this Court previously
decided a similar issue adversely to the Department" in Stagecoach
and indicates that the purpose of its argument is "to
preserve these questions for possible further review by the North
Carolina Supreme Court." Indeed, our prior decision in Stagecoach
In that case, DOT sought to condemn part of the common area of
a townhouse development and filed suit against the homeowner's
association, the fee owner of the common area. In response, the
homeowner's association "asserted the individual lot owners werenecessary parties to the condemnation action inasmuch as each lot
owner's property rights were adversely affected by the taking."
Stagecoach Village II
, 174 N.C. App. at 826, 622 S.E.2d at 143-44.
Similar to the individual owners within the Fernwood Hill
development, the individual townhouse owners in Stagecoach Village
had a recorded easement in the common area affected by the
taking. Because "those owners of the easement have a material
interest in the subject matter of the controversy, receiving just
compensation for their individual easement, and their interest will
be directly affected by the trial court's decision," this Court
held that the individual owners "are necessary and proper parties."
at 826, 622 S.E.2d at 143.
We see no basis to distinguish Stagecoach Village II
case. Bound as we are by our prior decision addressing the same
issue, we affirm the superior court's determination that the
individual owners within Fernwood Hill are necessary parties to the
condemnation suit. See In re Civil Penalty
, 324 N.C. 373, 384, 379
S.E.2d 30, 37 (1989) ("Where a panel of the Court of Appeals has
decided the same issue, albeit in a different case, a subsequent
panel of the same court is bound by that precedent, unless it has
been overturned by a higher court.").
 We now turn to the crux of this appeal: the trial court's
conclusion of law that "[t]he common area and the individual lots,
with the townhomes on them, possess substantial unity of ownership,
physical unity and unity of use such that they constitute a single,unified tract for the purpose of awarding damages or offsetting
benefits." As this Court recognized in Dep't of Transp. v. Roymac
, 158 N.C. App. 403, 407, 581 S.E.2d 770, 773 (2003), appeal
, 358 N.C. 153, 592 S.E.2d 555 (2004), "[t]he distinction
between whether the condemned lots are part of a unified parcel of
land or instead independent parcels is significant because, if
treated as a unified parcel, the damages from the condemnation are
calculated by the effect on the property as a whole and not based
solely on the value of the condemned lots." The question whether
the common area and the individual townhouse lots constitute a
"single, unified tract" is an issue of law subject to de novo
review. See Barnes v. N.C. State Highway Comm'n
, 250 N.C. 378,
384, 109 S.E.2d 219, 224 (1959) ("Ordinarily the question, whether
two or more parcels of land constitute one tract for the purpose of
assessing damages for injury to the portion not taken . . . is one
of law for the court.").
North Carolina courts look for the presence or absence of
three "unities" to determine whether a condemned tract is part of
a larger, unified tract:
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
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.
, 109 S.E.2d at 224-25 (emphasis added). See also Roymac
, 158 N.C. App. at 407, 581 S.E.2d at 773 ("In determining
whether condemned land is part of a unified tract, North Carolina
courts consider three factors: (1) unity of ownership, (2) physical
unity, and (3) unity of use.").
In this case, the superior court determined that the common
area and the individual townhouses constituted a "single, unified
tract" based on the presence of all three unities _ substantial
unity of ownership, physical unity, and unity of use. On appeal,
DOT does not contest the court's conclusion that there was a unity
of use and physical unity between the common area and the
individual townhouse lots. Instead, DOT focuses exclusively on the
unity of ownership issue.
(See footnote 1)
The Association, as an initial matter, urges that this Court
need not reach DOT's arguments. Relying on Barnes
, the Association
contends that there was no need to show a unity of ownership since
(1) the presence of all three unities is not required, and (2) in
any event, the unity of use is the most important factor. The
Supreme Court, however, in a decision subsequent to Barnes
specifically foreclosed this argument by holding that a unity of
ownership is indispensable: "Absent unity of ownership . . . two
parcels of land cannot be regarded as a single tract for thepurpose of determining a condemnation award." Bd. of Transp. v.
, 296 N.C. 20, 26, 249 S.E.2d 390, 395 (1978). See also City
of Winston-Salem v. Slate
, 185 N.C. App. 33, 42, __ S.E.2d __, __,
2007 N.C. App. LEXIS 1705, *18 (2007) ("Although all three factors
need not be present, some unity of ownership must be established
when separate parcels of land are involved.").
, our Supreme Court described the unity of ownership
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.
250 N.C. at 384, 109 S.E.2d at 225 (internal citations omitted).
See also City of Winston-Salem v. Tickle
, 53 N.C. App. 516, 528,
281 S.E.2d 667, 674 (1981) ("The test of substantial unity of
ownership appears, then, to be whether some one of the tenants in
the land taken owns some quantity and quality of interest and
estate in all of the land sought to be treated as a unified
tract."), disc. review denied
, 304 N.C. 724, 288 S.E.2d 808 (1982).
, we observed that Barnes'
reference to "tenants incommon" was not meant to preclude unities of ownership based on
"other forms of ownership where more than one person holds an
interest and estate in property." Id.
DOT argues in these proceedings that no unity of ownership may
be found unless it can be shown that one of the parties has both an
an estate in the entire tract. According to DOT, it
is insufficient just to have an interest in the entire tract; a
party must have an estate as well. This position is contrary to
our holding in City of Winston-Salem v. Yarbrough
, 117 N.C. App.
340, 345, 451 S.E.2d 358, 362 (1994), disc. review denied
, 340 N.C.
110, 456 S.E.2d 311 (1995), that an inchoate dower interest _ which
is not an estate _ was sufficient to create a substantial unity of
ownership between contiguous lands owned separately by a husband
and wife. Yarbrough
acknowledged that "'[a]n inchoate dower
interest is not an estate in land nor a vested interest,'" Id.
(quoting Taylor v. Bailey
, 49 N.C. App. 216, 219, 271 S.E.2d 296,
298 (1980), appeal dismissed
, 301 N.C. 726, 274 S.E.2d 235 (1981)),
but nonetheless observed that an inchoate dower interest "'acts as
an encumbrance upon real property,'" id.
, 49 N.C.
App. at 219, 271 S.E.2d at 298), and is "a 'substantial right of
(quoting Shelton v. Shelton
, 225 S.C. 502, 505, 83
S.E.2d 176, 177 (S.C. 1954)). Consequently, "[w]e conclude[d] that
a person's inchoate dower interest in his spouse's real property is
'some quality' of interest" such that "there was substantial unity
of ownership among the [spouses'] tracts." Id.
, 451 S.E.2d at 362-
63. Accordingly, under Yarbrough
, the Association was requiredonly to show that at least one party had some interest or
the entire tract.
DOT contends further that no unity of ownership can exist in
this case given the Supreme Court's ruling in Martin
. The Martin
Court confronted the question whether two parcels satisfied the
unity of ownership requirement when one parcel was owned jointly by
two individuals and an adjacent parcel was owned by a corporation
in which one of those individuals was the sole shareholder. 296
N.C. at 26, 249 S.E.2d at 394-95. Martin
held that the two parcels
"cannot be treated as a unified tract for the purpose of assessing
condemnation damages," because "[a] corporation is an entity
distinct from the shareholders which own it" and "[w]here 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." Id.
28-29, 249 S.E.2d at 396. DOT asserts that this case rests on a
straightforward application of Martin
_ namely, that the
Association and the individual townhouse owners should not be
allowed to disregard the legal distinction between them in order to
unite their different parcels and thereby attempt to show greater
This case, however, is different from Martin
. Here, the
condemnees, the Association and now the individual owners, contend
that the multiple parcels at issue _ the common area and the six
individual townhouses _ possess a sufficient unity of ownership
because the townhouse owners have an interest in both the commonarea and all of the individual units. Thus, unlike Martin
claimed unity of ownership does not arise out of the closeness of
the relationship between the homeowner's association and the
individual townhouse owners. Instead, the claimed unity is
premised on each townhouse owner holding not only a fee simple
estate in his or her unit, but also (1) an interest in the common
area by virtue of the general easement and (2) an interest in the
other individual townhouses by virtue of the restrictive covenants.
According to the Association, the easement and restrictive
covenants provide the townhouse owners with sufficient interest in
the entire tract to support a substantial unity of ownership.
Here, we note the well-established principle that an easement
is an "interest in land." Shingleton v. State
, 260 N.C. 451, 458,
133 S.E.2d 183, 189 (1963). Accord Braswell v. State Highway &
Public Works Comm'n
, 250 N.C. 508, 512, 108 S.E.2d 912, 915 (1959).
Even DOT does not dispute that the direct taking of an easement
interest requires payment of just compensation. See French v.
State Highway Comm'n
, 273 N.C. 108, 112, 159 S.E.2d 320, 323 (1968)
(noting that an easement is a "property right" and that while
defendant "could take this property right from the plaintiff and
terminate it, the defendant could not do so without the payment of
compensation to the plaintiff for his property so taken"). The
easement held by the individual owners is not an easement in some
portion of the common area, but in the entire common area.
In addition, "[a] restrictive covenant constitutes an interest
in land in the nature of a negative easement." Dunes SouthHomeowners Ass'n v. First Flight Builders, Inc.
, 341 N.C. 125, 132,
459 S.E.2d 477, 481 (1995). "The servitude imposed by restrictive
covenants is a species of incorporeal right. It restrains the
owner of the servient estate from making certain use of his
property." Sheets v. Dillon
, 221 N.C. 426, 431, 20 S.E.2d 344, 347
(1942). See also Armstrong v. Ledges Homeowners Ass'n
, 360 N.C.
547, 554, 633 S.E.2d 78, 85 (2006) ("Covenants accompanying the
purchase of real property are contracts which create private
incorporeal rights, meaning non-possessory rights held by the
seller, a third-party, or a group of people, to use or limit the
use of the purchased property."). The Supreme Court has also
stated that "[i]t is clear in our minds that residential
restrictions generally constitute a property right of distinct
worth . . . ." Tull v. Doctors Bldg., Inc.
, 255 N.C. 23, 41, 120
S.E.2d 817, 829 (1961). Each of the individual owners therefore
has an interest in the other owners' townhouses.
Based on the language in Barnes
, requiring "some interest" in
the entire tract, and other North Carolina cases construing Barnes
we conclude that the Association has met the requirement of a
"substantial unity" of ownership for the entire tract. Tickle
N.C. App. at 528, 281 S.E.2d at 674. Each individual unit owner
has an estate in fee simple in his or her unit, has a property
interest in the entire common area by virtue of the recorded
easement, and has a property interest in the other units as a
result of the restrictive covenants. The Association, therefore,
has established a substantial unity of ownership across the entiredevelopment.
(See footnote 2)
Accordingly, we affirm the order of the superior
Judges TYSON and CALABRIA concur.