United States: Searching For The Heart Of The Doctrine Of Vested Rights Part II

On July 7, 2015, we posted "Searching for the Heart of the Doctrine of Vested Rights." (See here) In that post, we compared a Court of Appeals' decision in a public school teachers' vested rights case with a decision of the North Carolina Supreme Court in a land use vested rights case.  We asked - "What might be the organizing principle of the doctrine of vested rights?" and concluded that fairness was the heart of the Doctrine of Vested Rights.

On April 15, 2016, a unanimous North Carolina Supreme Court affirmed and modified the Court of Appeals' decision in the teachers' vested rights case.  We continue our search for the heart of the Doctrine of Vested Rights by comparing and contrasting the teachers' case with land use cases.    

Essential Ingredients

Unfairness can be an abstraction or a personal feeling, but the law demands more than philosophy or passion.  The essential ingredients in every vested rights case is (1) a right (2) protected by the federal or state constitutions.

Searching for these essential ingredients triggered an important dialogue among Appellate Division judges and justices in the teachers' case.  The question was:  When does a statute itself create a contract between the State of North Carolina and public employees – a constitutionally protected property right?  The North Carolina Supreme Court concluded that unless the repealed statute contained promissory language like "contract" or "agreement", no contract was created.  Because the repealed teachers' statute lacked such language, the statute itself could not supply the essential ingredients for vested rights.

But, as Justice Edmunds wrote for the Court "[the] analysis does not end here."  If teachers made contracts in reliance upon the repealed law, then a protected property right exists which the new law cannot take away easily. (Limited instances exist where a protected right can be taken – the heart of the Doctrine of Vested Rights is fairness and fairness requires balancing interests).

Comparing Cases

Land use vested rights cases possess some similarities to the teachers' case.  In both species of cases, the intended consequences of a repealed law caused private citizens to take important steps permitted by it.  For teachers, they stayed in North Carolina, did a good job and gained tenure-like status through a contract.   In land use cases, property owners plan and design uses and buildings permitted by the repealed law. 

Nevertheless, important differences exist.  In land use cases, a protected property interest is always present – the property owner's land—and a statute containing promissory language never exists.   Consequently, the principal focus in these cases is the extent of steps and activities taken by a property owner in order to enjoy the benefits of the repealed law.  In other words, is retroactive application of the new law to activities already in progress unfair in a constitutional sense?

The Wobble of Land Use Vested Rights

Legal scholars attempt to organize existing land use vested rights decisions into categories, perhaps with the hope of predicting outcomes in new cases.  Ironically, studying past cases confirm that the future is uncertain. 

Nevertheless, early vested rights cases can be instructive as to the sources of uncertainty.  In one early case, the property owner was developing his property and the development did not require a building permit.  Thereafter, the local government adopted its first zoning ordinance and stopped the property owner from completing the development and using his property.  The Court held that the property owner possessed a vested right to complete the development and use his property despite the new law. 

Today, a tall stack of pancaking regulations applies to any significant proposed development.  Within the stack, you are likely to find a variety of pancakes administered by multiple governments at all levels of government – local, state and federal.  The property owner cannot enjoy his property for his intended, use until all permits and approvals required by the entire stack have been secured.   The question now is, how many and what variety of pancaking regulations must the property owner have satisfied to possess a vested right to complete his plan of development and enjoy his property?  

Unfortunately, the answer is not simple or predictable.  Every development is different.  Every local jurisdiction is different and regulations overlap differently. 

The point is not to empathize with property owners and developers.  The complexity of the development process means only the smartest and most diligent folks succeed—competition is limited and the risks and rewards are substantial.

Instead, the point is that discerning unfairness in a constitutional sense in land use cases is complex and evolving.  As long as the stack grows taller, land use vested rights will continue to wobble.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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