Landowners under ‘cloud of condemnation’ as DOT work stalls 

A perfect storm of calamities has put a standstill to many North Carolina Department of Transportation projects, and that’s keeping people whose properties lay in the path of current and planned road and highway construction in limbo, eminent domain attorneys say.

The problems predate the pandemic. In 2016 the North Carolina Supreme Court struck down the state’s Map Act, which had allowed the DOT to seize property for future projects without having to pay any compensation until the land was formally condemned. That unleashed a torrent of lawsuits by landowners against the DOT.

Eminent domain attorneys have credited the DOT for resolving Map Act cases, and the litigation has mostly now played itself out, but at a tremendous cost to the DOT. As of the first week in March, it had paid $750 million to owners of land affected by the Map Act, which includes both compensation for owners’ losses stemming from the Map Act, and the costs of directly acquiring land.

But the timing could hardly have been worse for the DOT, which now finds itself in a budgetary crisis. Gas tax revenues, which help fund highway construction, were declining even before the pandemic. Once the pandemic hit they plummeted, cutting the DOT’s revenues by hundreds of millions. The cost of cleaning up after Hurricanes Matthew and Florence only compounded the woes.

The crisis has placed the impacted landowners in a very difficult situation, said Jeremy Hopkins, an eminent domain attorney with Cranfill Sumner in Raleigh.

“These people are under a cloud of condemnation, waiting for what is going to happen,” Hopkins said.

Hopkins recently represented a couple who owned an apartment building, where they operated a restaurant on the bottom floor. They were notified of a taking, and they and their tenants moved out of the building. Then, they were notified that the project had been suspended indefinitely.

“To the state’s credit, they stepped up to the plate and did the right thing, and we got it worked out,” Hopkins said.

Some projects have been delayed for the time being, while others have been delayed for several years, and still others are on ice indefinitely, said Stan Abrams, an eminent domain attorney with the Law Offices of James Scott Farrin in Raleigh. Some projects were put on hold after an offer to property owners was made but then withdrawn. And COVID-19 has put a stop to civil jury trials, which Abrams said has hindered property owners’ ability to get just compensation.

Just as their clients are in limbo, so, to an extent, are the attorneys who represent them. The slowdown and COVID-19 have made it more difficult to resolve cases, and fewer property owners need representation for eminent domain cases, Abrams said. On top of that, working remotely has made collaboration with experts, clients, and colleagues more difficult. Virtual mediations and remote technology has allowed attorneys to continue to move some cases forward, albeit at a slower pace.

“The funding shortfall has impacted all aspects of the eminent domain process and has caused great uncertainty for property owners, but we have adjusted and adapted to minimize the impacts on our clients as much as possible,” Abrams said.

The DOT’s own numbers illustrate the scale of the slowdown. The amount it paid for property taken via its eminent domain powers decreased to $77,132,254 in 2020, down more than 45 percent from the $142,429,053 paid in 2019.

The news for landowning clients hasn’t been all bad, though. They scored another victory last May, when the Supreme Court ruled affirmed a Cumberland County jury verdict that awarded hefty sums of interest and attorneys’ fees to landowners whose property was frozen by the DOT in 1992. And hundreds of settlements, from the big to the small, have already been agreed to.

Hopkins’ firm settled a Map Act case in 2020 for $19.1 million. Matthew Bryant of Hedrick Bryant in Winston-Salem and his colleagues have represented more than 500 landowners in Map Act cases, who have received payments ranging from $50,000 to $17.5 million.

“The people who got the fifty thousands are as over the moon about that as the people who got $10 million,” Bryant said. “$50,000 is life-changing to some people.”

Follow Bill Cresenzo on Twitter @bcresenzonclw