Supreme Court: NCDOT must compensate Map Act property owners for lost market value

The state’s use of a law to reserve property for a future highway left a Fayetteville couple owning a house with no market value, the state Supreme Court agreed Friday.

The ruling upholds a decision by a jury in Cumberland County that the N.C. Department of Transportation should compensate the couple for the full value of their property, even though they were able to continue living on it for more than two decades.

But the county Superior Court erred in how it calculated interest on that value, the Supreme Court said and asked the local court to try again. The ruling could guide how property owners in hundreds of similar pending cases are compensated.

The Supreme Court ruled in 2016 that the so-called Map Act was unconstitutional because it amounted to a taking of property without just compensation. The N.C. Department of Transportation had used the law to prevent people from developing or significantly improving property where the state someday planned to build highways.

But the court said how much property owners should receive in compensation for their property under the act would need to be determined “on an individual, property-by-property basis.”

The jury in Cumberland County ruled that the home of Sarah and Ted Chappell lost all of its market value when NCDOT placed it in a Map Act corridor in 1992 for a planned loop highway around Fayetteville.

The jury agreed with the testimony of an appraiser for the couple that the value of the lost property was $143,386. Then the court added interest, compounded annually, of 8%, coming to nearly $831,000. Including attorney’s fees, expenses and reimbursement for property taxes, the total award came to $1.75 million.

The state appealed, arguing that was too much for taxpayers to pay for a house the couple continued to live in for 25 years. The state argued that the Map Act restrictions were more like an easement that limited what the Chappells could do with their property without taking it completely.

But the Supreme Court rejected that argument, saying the compensation should be based on the difference between what the property was worth before and after it was subject to the Map Act. All the evidence presented to the jury, including the testimony of appraisers for both the Chappells and NCDOT, pointed to a market value of zero after the Map Act was applied.

“The evidence in this case showed that for the Chappells, the fair market value of their property plummeted after the 1992 map was recorded because no one was interested in buying a house in Cumberland County that might eventually be condemned to make way for the Fayetteville Outer Loop,” the Supreme Court wrote.

Matthew Bryant, a Winston-Salem attorney whose firm has handled hundreds of Map Act cases, hailed the court’s ruling Friday.

“This case and all other cases we have filed across North Carolina confirm that the NCDOT took all the market value of the property when it filed its Maps,” Bryant wrote in an email. “Just compensation is owed and has been owed to owners for decades.”

NCDOT issued a statement Friday afternoon saying it had just received the court’s opinion and was still reviewing the details.

“We appreciate the guidance provided by the court on the complicated issues in question and will rely on that guidance as the Department works to resolve the remaining Map Act claims,” the statement said.

The Chappell’s attorney, Neil Yarborough, called the ruling a “great victory for property owners” that reaffirms principles that apply to a range of eminent domain cases, not just those involving the Map Act.

Yarborough said it’s not clear yet how the court’s ruling on the calculation of interest will affect the Chappells or other Map Act plaintiffs. The lower court took an interest rate — 8% — that state law says should be applied as a simple rate each year and then erroneously compounded it, the Supreme Court said.

The lower court will need to recalculate the interest owed on the value of the Chappells’ property, but the Supreme Court did not specify the outcome.

“At this point, it’s hard to say what the monetary impact will be,” Yarborough said, adding that the reason interest matters in Map Act cases is that owners were deprived of the full value of their property for decades.

The General Assembly passed the Map Act in 1987 to make it easier and cheaper for the state to build highways by allowing it to designate certain corridors for future roads where landowners would be barred from subdividing or building on their property. It was applied to corridors of highways the state did not plan to build for decades, prompting hundreds of landowners to sue.

After the 2016 Supreme Court ruling the law unconstitutional, NCDOT has spent about $600 million settling Map Act lawsuits.