Our theme is that nobody looks good wearing two caps simultaneously. In Part I, we discussed the breach of lease claim asserted by the Town of Beech Mountain (Town) as landlord against Genesis Wildlife Sanctuary (GWS) in the recent case of Town of Beech Mountain v. Genesis Wildlife Sanctuary, 2016WL2646664 (May 10, 2016). The Town did not prevail on its breach of lease claim.

In Part II, we discuss GWS’s claim of violation of its substantive due process against the Town. The core of GWS’s substantive due process claim arises from the Town wearing two caps simultaneously – being GWS’s landlord and land use regulator.

Town of Beech Mountain v. Genesis Wildlife Sanctuary

A. Facts

In 1999, the Town formed a 30-year lease with GWS for a total rent payment of $1.00. The lease limited GWS’s use of the property to operation of a wildlife public education that permitted the housing of wildlife. The Town granted GWS a right to extend the lease for another 30-year term with the same limitation and rent. The leased property was adjacent to Buckeye Lake (Lake), the Town’s drinking water supply.

GWS built several structures and housed animals for 10 years without disturbance. After consulting state environmental officials, the Town adopted an ordinance to protect water quality and one of the provisions of the ordinance prohibited the caging or housing of animals within 200 feet of the Lake (“Animal Housing Ban”). The Town intended this prohibition to bar GWS from housing animals.

In August 2010, the Town received a notice from state environmental officials indicating that these officials believed GWS’s operations violated the Animal Housing Ban and the Town may be in violation of state regulations. The next month the Town began enforcing the Animal Housing Ban against GWS. The Town’s enforcement extended to baring housing animals housed in cages within structures. GWS took remedial actions by removing all animals and cages from the leased premises, moved its operations to another location and struggled to find uses of the leased premises.

In March 2012, the Town began enforcing its rights as GWS’s landlord. The Town claimed that GWS was using the leased property for purposes that violated the law and was failing to make all arrangements for repairs necessary to keep the leased premises in good repair. The Town brought a claim of breach of lease against GWS and secured a summary ejection judgment. At that point, the Town had terminated the lease and regained full possession of the property.

GWS appealed the ejectment judgment to District Court, filed nine (9) counterclaims against the Town and transferred the case to Superior Court. One of these new claims asserted that the Town had violated GWS’s substantive due process rights.

B. Admitted Evidence

The Superior Court admitted evidence showing that (1) the Town’s governing board intended the width of the Animal Housing Ban to be sufficient to bar GWS from housing wildlife; (2) the Town did not inform GWS of its consideration or adoption of the Animal Housing Ban; (3) the Town had no objective scientific evidence to support the width of the Animal Housing Ban; (4) the Town had spilled several hundred thousand gallons of sewage from its lift station into the Lake in several incidents dating from 2004 to 2010; (5) the Town had received notices of violations from state environmental officials regarding these sewage spills, and (6) The Town “falsely represented” to GWS that the State required removal of animals and cages from the leased premises, “including animals and cages entirely indoors.” Beech Mountain p. 2.

C.The Superior Court’s Ruling and Judgment

The Superior Court granted summary judgment in favor of GWS on the Town’s breach of lease claim, overturning the summary ejectment judgment. The jury returned a verdict, finding that the Town had violated GWS’s substantive due process rights and that the Town had damaged GWS in the amount of $211,142.10.

The Court of Appeals’ Analysis of GWS’s Substantive Due Process Claim

  1. The Majority’s Analysis

The majority of the Court of Appeals upheld the Superior Court’s substantive Due Process rulings and the verdict of $211,142.10.

The majority reasoned that (1) substantive due process bars certain arbitrary, wrongful government actions regardless of the fairness of the procedures used by the government, (2) GWS’s substantive due process claim was an “as-applied claim” and challenged how a statute was applied in a particular context, and (3) the facts surrounding the citizen’s particular circumstances were relevant to an as-applied claim. Therefore, Superior Court did not err when it admitted evidence relevant to the Town’s actions and motives.

The majority found no North Carolina precedent relevant to GWS’s substantive due process claim and adopted three (3) factors from a federal 4th Circuit decision to consider when evaluating the claim. These factors are: (A) the zoning decision was tainted with fundamental procedural irregularity, (B) the action targeted a single party, and (C) the action deviates from or is inconsistent with regular practice. The majority concluded that “it is clear” government actors cannot single out a particular individual or entity for disparate treatment based on illegitimate, political or personal motives. Beech Mountain p. 9.

The majority of the Court of Appeals concluded that GWS presented sufficient evidence to create genuine issues as to whether the Town’s motives were to prevent GWS from using the property for the purposes set forth in their 30-year Lease. Therefore, the majority affirmed the judgment against the Town.

  1. The Minority Analysis

The minority observed that a core function of a municipal government is to enact ordinances for protection of the public water supply and the Town’s ordinance, including the Animal Housing Ban, was facially constitutional. Although the Animal Housing Ban only affected GWS, there was no evidence that the Town “has irrationally applied the Ordinance to Genesis’ operation and the mere fact that the Town had GWS in mind in drafting the Ordinance does not give rise to an as applied challenge.” Beech Mountain, p. 17-18 (emphasis by Judge Dillon). The minority noted that GWS may have breach of contract claims against the Town, such as a breach of lease claim or inverse condemnation claim, but the Animal Housing Ban was not applied irrationally to GWS. Therefore, Judge Dillon concluded that GWS’s claim of violation of its substantive due process claim failed.

Comments

  1. The essence of the problem in Beech Mountain is a government wearing two caps simultaneously. Both the majority and minority find something wrongful in the Town’s actions when it used police powers to achieve termination of GWS’ lease.
  2. Assuming that the Town’s motive when adopting the Animal Housing Ban was only to improve and protect the Lake, the Town possessed broad legislative and administrative discretionary powers to protect the Lake without threatening GWS’s quiet enjoyment. Among other actions, the Town could have employed best management practices or installed devices on its property that captured animal waste, the Town could have offered a substitute location for GWS or worked with GWS to move cages indoors, adopt management protocols or otherwise manage the potential threat to the Lake.

The Town’s actions have been determined to be wrongful and this determination has consequences. The Animal Housing Ban is practically unenforceable (it applies only to GWS) and GWS has restored to the position it enjoyed before the dispute. People acting in good faith should be able operate a wildlife education center and protect the Lake too.