A judge is penalizing the N.C. Department of Transportation for “reckless indifference, gross negligence and bad faith” in failing to obey a 2016 court order relating to the state’s purchases of properties in the path of the Winston-Salem Northern Beltway.

As a penalty, Superior Court Judge John O. Craig III is forbidding the department from using in future court hearings any property appraisals that were supposed to have been finished by the end of May but not turned in on time.

Craig said in his July 6 sanctions order that 191 appraisals were supposed to have been performed by the end of May, and that while a number were filed after deadline, about 100 appraisals still have not been submitted.

Craig’s order bans the use of any appraisals submitted after May 28.

Matthew Bryant, an attorney representing hundreds of landowners in the beltway cases, said the ruling will help landowners convince the court that the beltway designations in 1997 and 2008 took away the market for their properties and amounted to a full — yet uncompensated — taking of the lands.

Although the state has argued that the beltway designation did not necessarily take all value from a landowner’s property, landowners want full payment plus interest from the time of the beltway designation.

“On behalf of our owners, we have stood ready now to sell the department the property they need for this roadway and get fairly paid,” Bryant said. “We still stand ready to do that. We are not in the way of building this road, but will defend our clients’ rights to full and just payment,” Bryant said.

Craig, in his sanctions order issued in Forsyth Superior Court, castigated the department for failing to take many steps it could have taken to compensate landowners in a more timely fashion under the earlier 2016 order.

Craig said the department:

  • Failed to tell the court that it could not meet the deadline for conducting appraisals.
  • Took no steps to comply with the 2016 order during the year the order was on appeal.
  • Only filed a motion asking for an extension of time three weeks after the deadline had passed, and two weeks after the landowners filed a motion for sanctions against the state.
  • Failed to line up the number of appraisers needed to do the work and have it spaced out evenly to avoid a last-minute “dump” of property appraisals.
  • Assigned one two-person appraisal firm to conduct 75 to 100 of the 191 property appraisals.
  • Failed to keep track of how the appraisals were going so that both the department and its lawyers could see that delays were occurring.
  • Began “rapid compliance” with the deadline two weeks after the order’s deadline had expired, and after the landowners had asked for court sanctions because of the delays.

A spokesman for the N.C. Department of Transportation said that the department was studying Craig’s order to determine its next steps.

“Our goal continues to be a solution that is fair for both property owners and the state’s taxpayers,” said Steve Abbott, with communications in the N.C. Department of Transportation.

Craig’s order was the latest legal blow against the state’s transportation department in connection with the beltway cases.

Beginning in 2011, property owners in the path of the Winston-Salem Northern Beltway filed suit against the N.C. Department of Transportation, alleging that by designating their lands as being in the path of the beltway under the former Map Act, the state had actually taken their lands without compensation.

The landowners wanted a judge to force the state to both buy their properties and pay them interest from the time the lands were designated, either in 1997, for properties on the west side of Winston-Salem, or in 2008 for properties on the east side.

The landowners argued that the Map Act restrictions on their lands — limiting their ability to develop or subdivide — killed the market for their properties and was thus a property taking. The state Supreme Court agreed, to a point: In a June 2016 ruling, the state’s highest court said that the state had indeed taken landowner property rights.

But the high court didn’t rule on whether the full value of the properties was taken by the Map Act, or whether the Map Act basically amounted to a negative easement on the property, similar to a restrictive covenant that prevents a landowner from doing something.

Judge Craig, in his 2016 order, said the issue of what kind of taking had occurred would likely be resolved in separate hearings, yet to take place, on the individual properties.

The state has argued that some property owners suffered no loss at all during the years in which their properties were in the path of the beltway. Those property owners would still be compensated as in an ordinary condemnation, but might not get the benefit of interest owed from the date of the beltway designation.

In some cases, Judge Craig said in his July 6 order, the state asked a second appraiser to go back and examine some properties for which appraisals had already been done by another company.

Bryant said it appeared that the second appraiser was finding “little to no damages” to property owners arising from the Map Act designation.

Craig said in his order that the Transportation Department had made deposits on only 40 of the 191 properties involved, and that nine of the deposits were for zero dollars. At the time of his order, Craig said about 150 deposits had not been made.

By striking the late appraisals from consideration at future hearings, Bryant said Wednesday that the state would not be able to use them to dispute the full-value losses that property owners claim.

Craig said in his order that the state would also not be allowed to use appraisers involved in the late appraisals as expert witnesses giving testimony. And Craig said that he would disallow any second appraisals that the state had performed on properties.

Craig’s order notes that the first hearing on the contested value of a beltway property is scheduled to take place Sept. 10.

wyoung@wsjournal.com 336-727-7369 @wyoungWSJ

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