               IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA17-822

                              Filed: 19 December 2017

Cabarrus County, No. 16 CVS 284

WALTON NORTH CAROLINA, LLC and WALTON NC CONCORD, LP, Plaintiffs,

              v.

THE CITY OF CONCORD, NORTH CAROLINA, Defendant.


        Appeal by plaintiffs from order entered 5 May 2017 by Judge Kevin M. Bridges

in Cabarrus County Superior Court. Heard in the Court of Appeals 29 November

2017.


        K&L Gates, LLP, by Roy H. Michaux, Jr., and Scarbrough & Scarbrough,
        PLLC, by James E. Scarbrough and Madeline J. Trilling, for plaintiff-
        appellants.

        The Brough Law Firm, PLLC, by G. Nicholas Herman, and City of Concord
        Attorney Valerie Kolczynski, for defendant-appellee.


        TYSON, Judge.


        Walton North Carolina, LLC and Walton NC Concord, LP (collectively

“Walton”) appeal from the trial court’s order denying its motion for summary

judgment and granting summary judgment in favor of The City of Concord (the

“City”). We affirm.

                                   I. Background

                              A. History of the Property
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                                    Opinion of the Court



      The property at issue consists of 275.637 acres of unimproved land located on

Odell School Road in Concord, North Carolina. The property was annexed into the

city limits as of 30 September 2005, and was initially zoned Residential Low Density

(“RL”). The RL zone allows a net density of two dwellings per acre. In 2005, Section

4.8 of the Concord Development Ordinance (“CDO”) allowed for a “Cluster

Development,” to permit a density of more than two dwellings per acre, subject to

certain conditions and limitations.

      In 2005 and early 2006, the prior owner of the property sought to rezone the

property from RL to Residential Medium Density (“RM-1” or “RM-2”) to allow for the

development of 684 homes on the property.            The Concord Planning and Zoning

Commission (the “Zoning Commission”) denied this request on 21 February 2006.

      On 18 April 2006, the Zoning Commission approved the prior owner’s

Preliminary Plat for the development of up to 563 dwellings through the use of the

CDO’s cluster development provisions. The cluster development provisions were

repealed from the CDO on 12 January 2006, but the prior owner had submitted its

project “for review as a ‘cluster’ subdivision” prior to the effective date of the repeal.

      In order to pursue development under the Preliminary Plat, the developer was

required to (1) submit and obtain approval for construction drawings, (2) file a final

plat, and (3) obtain appropriate water and sewer infrastructure approvals prior to the

stated expiration of the Preliminary Plat approval on 31 December 2013. The prior



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                                  Opinion of the Court



property owner entered into an agreement with the City for the construction and cost

sharing of water and sewer infrastructure on 30 October 2006. In May 2007, the prior

owner submitted, and the City approved, construction drawings indicating 551

dwellings, fewer than the 563 allowed under the Preliminary Plat. No final plat was

ever submitted or approved.

      Because of the economic collapse of 2008 and the effects thereafter, the prior

owner went bankrupt, and the property was foreclosed upon on 24 August 2011.

                         B. Walton Purchases the Property

      Prior to purchasing the property, Walton had investigated the potential

economic uses of the property, as detailed in a written report dated 17 February 2012.

The report included a plan for developing the property by: (1) creating a new

development plan, different from the previously approved Preliminary Plat; (2)

seeking rezoning of the property to allow for a density of more than two dwellings per

acre; and (3) entering into a “Development Agreement” with the City for an “offsite

sewer extension.”

      This report also expressly recognized the cluster development provisions were

no longer in effect for RL zoned property, and stated “previous entitlements and

approvals” had expired and “the property should be considered raw and unentitled.”

Walton purchased the property on 15 March 2012.




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                                 Opinion of the Court



      Several months later, on 12 December 2012, the City sent Walton a letter

concerning the 31 December 2013 expiration of the approved Preliminary Plat,

offering to provide more information if requested. Walton never responded to the

City’s letter nor requested any further information regarding the approved

Preliminary Plat.

      In 2013, Walton discussed rezoning options for the property with planning staff

from the City. Walton had also spent over $200,000 on various surveys, assessments,

and reports to determine how many dwellings could be placed on the property under

current and proposed zoning classifications. At no point in 2013 did Walton discuss

pursuing development of the property under the prior approved Preliminary Plat

with the City. The Preliminary Plat expired according to the terms of the City’s

approval on 31 December 2013.

      In 2014, Walton and the City worked upon a co-operative development

agreement for the off-site sewer extensions to the property. From a meeting between

Walton and the City concerning the development agreement on 22 September 2014,

Walton’s notes indicate its awareness of the expiration of the prior approved

Preliminary Plat and the prior repeal of the cluster provisions from the CDO. The

City approved its development agreement with Walton on 9 October 2014, after the

required public notice and hearing.




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                                 Opinion of the Court



      On 21 November 2014, Walton submitted a preliminary site plan to develop

551 dwellings on the property, pursuant to the Preliminary Plat approval granted to

the prior owner. This plan more than doubled the number of dwellings allowed in the

RL zone, proposing a net density of 4.5 dwellings per acre instead of the allowed two

dwellings. In this submission, Walton stated it believed the property to be “zoned RL

Cluster.” On 2 December 2014, the City denied Walton’s preliminary site plan.

                                C. Zoning Decisions

      In order “to avoid the expense and delay of litigation,” Walton then applied to

and petitioned the Zoning Commission to rezone the property from RL to Residential

Compact – Conditional District (“RC-CD”) to allow for development of the property

with 551 dwellings. In a six to one vote, the Zoning Commission approved Walton’s

rezoning request and preliminary subdivision plat, subject to certain conditions, on

15 September 2015, after a similar request had been denied in May.

      Adjacent property owners filed an appeal to the City Council, pursuant to the

CDO, on 29 September 2015. The City Council held a public hearing on 11 November

2015. Representatives from Walton spoke in favor of rezoning. Nine citizens spoke

in opposition, mostly expressing concerns and objections related to traffic and

congestion, storm water control and flooding problems, and adverse effects upon

surrounding homes. The hearing was continued to 2 December 2015, to allow for

more discussion on storm water issues.



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                           WALTON V. CITY OF CONCORD

                                 Opinion of the Court



      At the continuation of the hearing, Walton and opponents of the rezoning were

given equal time to speak. At the end of the hearing, the City Council voted to deny

Walton’s rezoning request, concluding:

            The proposed zoning amendment is not consistent with the
            2015 Land Use Plan (LUP) because the proposed
            development of approximately two (2) dwelling units per
            acre will contribute to increased traffic in an already
            congested area, contributes more negative impacts to the
            public school system and potential negative impact to
            homes in surrounding area.

            The zoning amendment is not reasonable and not in the
            public interest because of a 25% increase in the number of
            homes that would be allowed if the zoning [were changed].
            (Emphasis original).

      Walton filed suit against the City on 28 January 2016, and sought (1) a

declaratory judgment to declare Walton had a common law vested right to develop

the property pursuant to the 2006 Preliminary Plat, as amended by the 21 November

2014 submittal; (2) an order finding the denial of its rezoning petition was not

supported by competent, material, clear and cogent evidence and was arbitrary and

capricious, and upholding the Commission’s approval; (3) specific performance by the

City to perform all terms and provisions of the development agreement; and, (4) a

finding that the City Council’s conduct at the hearings was in violation of Walton’s

equal protection rights under the North Carolina Constitution.

      Both parties participated in a court-ordered mediation conference on 29 June

2016. Negotiations ultimately failed, and both parties filed motions for summary


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                                  Opinion of the Court



judgment. In an order dated 5 May 2017, the superior court denied Walton’s motion

for summary judgment and granted summary judgment in favor of the City on all

issues. Walton appeals.

                                   II. Jurisdiction

      Jurisdiction lies in this Court from final judgment of the superior court

pursuant to N.C. Gen. Stat. § 7A-27(b) (2015).

                                      III. Issues

      Walton argues the trial court erred in granting the City’s motion for summary

judgment and denying its motion for summary judgment because: (1) Walton had a

common law vested right to develop the property based on the approved 2006

Preliminary Plat; (2) the development agreement between Walton and the City

approved a 551-dwelling subdivision; and, (3) the City Council’s denial of Walton’s

rezoning request was arbitrary and capricious, and should have been reversed.

                                     IV. Analysis

                               A. Standard of Review

             Our standard of review of an appeal from summary
             judgment is de novo; such judgment is appropriate only
             when the record shows that there is no genuine issue as to
             any material fact and that any party is entitled to a
             judgment as a matter of law. When considering a motion
             for summary judgment, the trial judge must view the
             presented evidence in a light most favorable to the
             nonmoving party. If the movant demonstrates the absence
             of a genuine issue of material fact, the burden shifts to the
             nonmovant to present specific facts which establish the


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                                   Opinion of the Court



             presence of a genuine factual dispute for trial.
             Nevertheless, if there is any question as to the weight of
             evidence summary judgment should be denied.

In re Will of Jones, 362 N.C. 569, 573-74, 669 S.E.2d 572, 576-77 (2008) (internal

citations, quotation marks, and brackets omitted).

                           B. Common Law Vested Rights

      Walton argues it has a common law vested right to develop the property in

accord with the prior approved 2006 Preliminary Plat. We disagree.

      “As a general proposition the adoption of a zoning ordinance does not confer

upon citizens . . . any vested rights[.]” Browning-Ferris Indus. v. Guilford Cty. Bd. of

Adjustment, 126 N.C. App. 168, 171, 484 S.E.2d 411, 414 (1997) (citation and

quotation marks omitted). However, landowners may “establish a vested right in a

zoning ordinance” under the common law. Id. “A party claiming a common law vested

right in a nonconforming use of land must show: (1) substantial expenditures; (2) in

good faith reliance; (3) on valid governmental approval; (4) resulting in the party’s

detriment.” Kirkpatrick v. Village Council for the Village of Pinehurst, 138 N.C. App.

79, 87, 530 S.E.2d 338, 343 (2000). The record does not support a showing of Walton’s

good-faith reliance on a valid governmental approval resulting in its detriment. See

id.

      It is uncontested Walton spent substantial sums prior to and after purchasing

the property. The record also clearly indicates Walton did not intend to rely upon the

prior approved 2006 Preliminary Plat, as Walton’s pre-purchase report stated its

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                                  Opinion of the Court



intention to create a new development plan. Even if Walton argues its subsequent

plans are almost identical to the prior approved Preliminary Plat, it waited nearly a

year after the expiration of the 2006 Preliminary Plat to begin seeking new

development approvals. See Warner v. W & O, Inc., 263 N.C. 37, 43, 138 S.E.2d 782,

786-87 (1964) (holding vested rights do not protect those who wait to develop their

property after an ordinance has been passed prohibiting the use).

      No genuine issue of material fact exists that Walton was well aware of the

Preliminary Plat’s expiration, as the City provided written notice to them over one

year prior to the Plat’s expiration. The pre-purchase report also correctly identifies

the previous repeal of the cluster development provisions in the CDO.

      Walton erroneously argues the 2006 approval, which grandfathered the

repealed cluster development provisions, in some way still allows those cluster

provisions as common law vested rights long after its expiration. No vested rights

exist where the party has prior knowledge of the existence of an ordinance prohibiting

the proposed use. Id. at 43, 138 S.E.2d at 787.

      Walton also argues it was unclear of what the expiration of the 2006

Preliminary Plat meant. The record clearly shows Walton took no good-faith action

to ascertain how the pending plat approval expiration may affect its proposed

development scheme in the year between the City’s notice and the Plat’s expiration.




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                                   Opinion of the Court



      Walton concedes the expenditures in excess of $200,000 made prior to its

purchase of the property “were needed regardless of the number of residential lots to

be developed.” Under the current RL zoning, the property can still be developed into

a net two unit per acre residential subdivision, albeit with less density than allowed

under the 2006 Preliminary Plat.

      Walton failed to show any common law vested rights. The expenditures it

made were not made in good-faith reliance on the approved 2006 Plat. Neither the

expiration of the plat’s approval nor the expenditures incurred are detrimental to

Walton’s ability to develop the property in accordance with the current RL zoning

requirements or to other densities upon rezoning. See Kirkpatrick, 138 N.C. App. at

87, 530 S.E.2d at 343. Walton failed to show the trial court’s grant of summary

judgment for the City was error on this basis.

                            C. Development Agreement

      Walton argues the development agreement it entered into with the City for the

construction and shared costs of water and sewer infrastructure to serve the proposed

development acted as a de facto zoning approval of a 551-dwelling subdivision. We

disagree.

      Local governments are authorized to enter into development agreements with

developers, subject to approval by “the governing body of a local government by

ordinance.” N.C. Gen. Stat. § 160A-400.22(a) (2015).         This authorization “is



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supplemental to the powers conferred upon local governments and does not preclude

or supersede rights and obligations established pursuant to other law regarding

building permits, site-specific development plans, phased development plans, or other

provisions of law.” N.C. Gen. Stat. § 160A-400.20(c) (2015) (emphasis supplied). A

development agreement requires:

             A description of all local development permits approved or
             needed to be approved for the development of the property
             together with a statement indicating that the failure of the
             agreement to address a particular permit, condition, term,
             or restriction does not relieve the developer of the necessity
             of complying with the law governing their permitting
             requirements, conditions, terms, or restrictions.

N.C. Gen. Stat. § 160A-400.25(a)(6) (2015) (emphasis supplied).

      Here, the development agreement between the City and Walton recites and

identifies Walton’s intention to “develop the Property into a residential subdivision

with approximately 551 dwelling units” and its need for “access to sanitary sewer and

potable water” in order to develop the property. Paragraph 3 of the agreement

unambiguously states:

             Walton shall submit to the Concord Planning and Zoning
             Commission a preliminary plat consistent with the
             purposes of this Agreement which shall at minimum depict
             the sizes, placements, and configurations of the lots,
             common open space, streets, sidewalks, and other
             improvements planned for the Property. The Property
             shall then be developed consistent with the preliminary plat
             approved by the Concord Planning and Zoning Commission
             and in accordance with this Agreement . . . . Walton
             understands that the City’s continued performance under
             this Agreement is contingent upon Walton receiving all

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                                  Opinion of the Court



             necessary approvals for its preliminary plat[.] (Emphasis
             supplied).

Paragraph 4 further clarifies “[t]he maximum number of dwelling units will be

determined by the applicable zoning and the approved preliminary plat[.]”

      The agreement also states “[t]he local ordinances applicable to the

development of the Property are those in force as of the date of this Agreement,” in

conformity with N.C. Gen. Stat. § 160A-400.26(a). The agreement was executed on 4

October 2014, months after the expiration of the approved 2006 Preliminary Plat on

31 December 2013, and years after the repeal of cluster development provisions from

the CDO in 2006.

      Walton erroneously asserts this development agreement constituted approval

for “approximately 551 dwelling units,” while the agreement clearly imposes and

requires compliance with the current zoning requirements. RL zoned property allows

a net density of two dwellings per acre.          Walton’s arguments on this basis are

overruled.

                              D. City Council’s Denial

      Walton contends the City Council’s denial of Walton’s request for rezoning was

arbitrary and capricious, and, as such, the approval recommendation by the Zoning

Commission should be upheld. We disagree.

      “Rezoning is a legislative act[.]” Sherrill v. Town of Wrightsville Beach, 81 N.C.

App. 369, 373, 344 S.E.2d 357, 360, disc. review denied, 318 N.C. 417, 349 S.E.2d 600


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                                   Opinion of the Court



(1986). “Ordinarily, the only limitation upon this legislative authority is that it may

not be exercised arbitrarily or capriciously.” Allred v. City of Raleigh, 277 N.C. 530,

545, 178 S.E.2d 432, 440 (1971) (citation omitted).

             It is well established that the grant or denial of a rezoning
             request is purely a legislative decision which will be
             deemed arbitrary and capricious [only] if “the record
             demonstrates that it had no foundation in reason and bears
             no substantial relation to the public health, the public
             morals, the public safety or the public welfare in its proper
             sense.”

Ashby v. Town of Cary, 161 N.C. App. 499, 503, 588 S.E.2d 572, 574 (2003) (quoting

Graham v. City of Raleigh, 55 N.C. App. 107, 110, 284 S.E.2d 742, 744 (1981)).

      “When the action of the legislative body is reviewed by the courts, the latter

are not free to substitute their opinion for that of the legislative body so long as there

is some plausible basis for the conclusion reached by that body.” Zopfi v. City of

Wilmington, 273 N.C. 430, 437, 160 S.E.2d 325, 332 (1968) (citation omitted).

      At the conclusion of the second hearing before the City Council on 2 December

2015, Council members found the proposed rezoning was inconsistent with the

current land use plan. They cited increased traffic in the area, a negative impact

upon the public schools, and the potential negative impacts on the surrounding homes

and properties. The Council also found the proposed rezoning, proposing a 25%

increase in homes over the current RL zoned allowances, was unreasonable and not

in the public interest. As these findings and the ultimate legislative decision to deny



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                                   Opinion of the Court



the rezoning request have a “plausible basis,” we are not free to substitute our opinion

for that of the City Council. See id.

      Additionally, “[t]he Planning and Zoning Commission . . . ha[s] no legislative,

judicial or quasi-judicial power.” In re Markham, 259 N.C. 566, 571, 131 S.E.2d 329,

334, cert. denied, 375 U.S. 931, 11 L. Ed. 2d 263 (1963). Whether or not property

should be rezoned is a determination reserved for “the City Council in the exercise of

its purely legislative function.” Id. at 572, 131 S.E.2d at 334. The existing RL zone

on the property is presumed to be correct. The burden of proof rested on Walton to

overcome that presumption. See Rakestraw v. Town of Knightdale, 188 N.C. App. 129,

136, 654 S.E.2d 825, 830 (2008). The recommendation by the Commission in this case

was advisory. The Council’s decision to deny the rezoning was not arbitrary and

capricious. Walton’s arguments to the contrary are without merit.

                                        V. Conclusion

      Walton had prior and actual notice, and ample time, to act upon the prior

approved 2006 Preliminary Plat, which would have allowed the development of a 551-

dwelling subdivision under the repealed, but grandfathered, cluster development

provisions in the CDO. Walton chose to pursue a “new development” plan not related

to the approved 2006 Preliminary Plat, and only attempted to revert back to the prior

approved Plat after it had expired. Walton did not rely in good faith upon a valid

governmental approval and cannot show a common law vested interest in developing



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                                  Opinion of the Court



the property under the expired 2006 Preliminary Plat. See Kirkpatrick, 138 N.C. App.

at 87, 530 S.E.2d at 343.

      We have examined the entire record and do not find any support for Walton’s

other assertions that the approval of the development agreement acted as a zoning

approval by the City for a 551-dwelling development under the express terms and

limitations of that agreement. Walton has also failed to provide any basis to show

the City Council’s denial of Walton’s rezoning request was arbitrary and capricious.

      Under de novo review, the trial court correctly granted summary judgment in

favor of the City and denied Walton’s motion for summary judgment. The trial court’s

order appealed from is affirmed. It is so ordered.

      AFFIRMED.

      Judges CALABRIA and DAVIS concur.




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