Swan Beach Corolla, L.L.C. v. County of Currituck ( 2014 )


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  •                            NO. COA13-1272
    NORTH CAROLINA COURT OF APPEALS
    Filed: 1 July 2014
    SWAN BEACH COROLLA, L.L.C., OCEAN
    ASSOCIATES, LP, LITTLE NECK
    TOWERS, L.L.C., GERALD FRIEDMAN,
    NANCY FRIEDMAN, CHARLES S.
    FRIEDMAN, TIL MORNING, LLC, and
    SECOND STAR, L.L.C.,
    Plaintiffs,
    v.                                        Currituck County
    No. 12-CVS-334
    COUNTY OF CURRITUCK; THE CURRITUCK
    COUNTY BOARD OF COMMISSIONERS; and
    JOHN D. RORER, MARION GILBERT, O.
    VANCE AYDLETT, JR., H.M. PETREY,
    J. OWEN ETHERIDGE, PAUL MARTIN,
    and S. PAUL O’NEAL as members of
    the CURRITUCK COUNTY BOARD OF
    COMMISSIONERS,
    Defendants.
    Appeal by plaintiffs from Order entered 24 July 2013 by
    Judge Wayland J. Sermons in Superior Court, Currituck County.
    Heard in the Court of Appeals 24 April 2014.
    Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
    L.L.P., by Lacy H. Reaves and J. Mitchell Armbruster, for
    plaintiffs-appellants.
    County of Currituck,      by     Donald     I.   McRee,   Jr.,   for
    defendants-appellees.
    STROUD, Judge.
    -2-
    Plaintiffs     appeal     from    an     order       entered        24   July     2013
    dismissing their complaint for declaratory judgment regarding
    vested        rights       they     claimed         to        develop     their       property
    commercially, for violations of constitutional rights under 
    42 U.S.C. § 1983
    , and for violation of Article V, Section 2 of the
    North Carolina Constitution. We reverse in part, affirm in part,
    and remand for further proceedings.
    I.     Background
    Plaintiffs are five companies and three individuals who own
    property in the Swan Beach Subdivision in Currituck County. On 6
    July    2012,   they     filed     a    complaint          against        the   County     of
    Currituck,      the    Currituck        Board        of    Commissioners,         and     the
    commissioners         themselves        in      their        official           capacities.
    Plaintiff Ocean Associates was the original developer of the
    land and the other plaintiffs purchased their land from it.1
    They alleged that they have common law vested rights to develop
    commercial uses on their property.                    They also raised claims of
    laches,     “easement         rights”     to     commercially             develop       their
    property,    state     constitutional          violations,          and    violations      of
    federal equal protection and due process under 
    42 U.S.C. § 1983
    .
    1
    The precise nature of the relationship between Ocean Associates
    and the other plaintiffs is not clear from the complaint.
    -3-
    According to the complaint, plaintiff Ocean Associates, LP,
    purchased approximately 1400 acres of property in the Carova
    Beach area of Currituck County in 1966 to develop a residential
    subdivision along with related commercial services.2 In 1969,
    Ocean Associates created and recorded a plat indicating that it
    intended to divide the property into residential and business
    lots. At the time, Currituck County had no applicable zoning
    ordinance. However, the County asked Ocean Associates to refrain
    from developing the business lots until the residential lots
    were    sufficiently    occupied.    After   filing    the   plat,     Ocean
    Associates began to prepare both the residential and business
    lots for development. They spent $425,050.00 on services such as
    surveying, land geosciences, general engineering, road grading,
    canal digging, dune building, filling lots, evacuating ditches,
    and    landscaping.    This   infrastructure   would    serve   both    the
    business and residential lots.
    In 1971, Currituck County adopted a zoning ordinance. The
    1971 ordinance designated plaintiffs’ property as RA-20. The RA-
    20 district allowed for low density residential and agricultural
    uses with only limited business uses. Plaintiffs allege that
    2
    Because this case comes to us on a motion to dismiss, all of
    the following facts are from the complaint; we express no
    opinion as to their veracity.
    -4-
    they did not know that the zoning of their property had changed.
    In    1975,     the   County    enacted     a    new    zoning         ordinance.    This
    ordinance zoned plaintiffs’ property in a similar manner to the
    previous ordinance. Plaintiffs believed that the County would
    still permit them to develop their property for commercial uses
    because the County had allowed other property owners to do the
    same.
    In   1989,     Currituck   County     enacted        a   Unified    Development
    Ordinance (UDO). The UDO zoned plaintiffs’ property RO2, which
    does not allow business uses except for marinas, campgrounds,
    outdoor recreational facilities, and small professional offices.
    The business and commercial uses intended by plaintiffs would
    not be permitted under this ordinance. Nevertheless, plaintiffs
    continued to believe that they would be allowed to commercially
    develop their property.
    In     2004,     plaintiffs     decided         to       move     forward     with
    development of the business lots because the density of the
    residential lots had finally become sufficient to support such
    use.    They    wanted    to   build   a    convenience         store,     real    estate
    offices, a post office, and a restaurant. Around September 2004,
    the    County    informed      plaintiffs       that   such      uses    would    not   be
    permitted. Plaintiffs asserted that they had vested rights to
    -5-
    use their property in this manner, but the County disagreed,
    asserting that the UDO barred such uses. Over the next three
    years,    plaintiffs     then   attempted     to    convince    the    County   to
    rezone their property so that they could develop their property
    for business uses. The parties agreed that such uses would not
    be permitted on their property under the UDO.
    Plaintiffs allege that despite the County’s assertion that
    the UDO prohibits business development in the RO2 district, the
    County has permitted other businesses to operate in the area.
    They    alleged   that   the    County    treated     plaintiffs      differently
    without a rational basis, or because the individual plaintiffs
    are Jewish.
    On 12 September 2012, defendants filed a motion to dismiss
    for lack of subject matter jurisdiction under Rule 12(b)(1) and
    failure to state a claim under Rule 12(b)(6). Defendants argued
    that    plaintiffs   failed     to   exhaust       applicable   administrative
    remedies and that they are protected by sovereign, governmental,
    and legislative immunity. They further argued that plaintiffs’
    complaint is barred by the applicable statutes of limitations.
    Plaintiffs filed an amended complaint on 13 February 2013.
    The    amended    complaint     added    an   allegation    that      the   County
    adopted a zoning ordinance in 1968, but that there was no map
    -6-
    accompanying the ordinance and that their property was not zoned
    at that time. The amended complaint also added a claim under
    Article    V,   Section    2    of    the    North    Carolina    Constitution.
    Plaintiffs alleged that the County had taxed their property as
    business     property     since      1969,    so     its   failure   to     permit
    plaintiffs      to   develop      their      property      for   business    uses
    contravenes the requirement of taxation by uniform rule.
    Defendants then filed an amended motion to dismiss and an
    amended brief in support of their motion.                  The motion was heard
    by the superior court on 20 May 2013. By order entered 24 July
    2013, the superior court allowed defendants’ 12(b)(1) motion to
    dismiss for failure to exhaust administrative remedies and their
    12(b)(6) motion for failure to state a claim, though it did not
    specify a reason. Plaintiffs timely appealed to this Court.
    II.   Standard of Review
    Defendants moved to dismiss plaintiffs’ complaint for lack
    of subject matter jurisdiction under N.C. Gen. Stat. § 1A-1,
    Rule 12(b)(1)(2011) and for failure to state a claim under N.C.
    Gen. Stat. § 1A-1, Rule 12(b)(6)(2011).
    Rule 12(b)(1) permits a party to contest, by
    motion, the jurisdiction of the trial court
    over the subject matter in controversy. We
    review Rule 12(b)(1) motions to dismiss for
    lack of subject matter jurisdiction de novo
    and   may  consider   matters  outside   the
    -7-
    pleadings. Pursuant to the de novo standard
    of review, the court considers the matter
    anew and freely substitutes its own judgment
    for that of the trial court.
    Trivette v. Yount, ___ N.C. App. ___, ___, 
    720 S.E.2d 732
    , 735
    (2011)   (citations,        quotation    marks,    brackets,     and   italics
    omitted).
    The standard of review of an order granting
    a 12(b)(6) motion is whether the complaint
    states a claim for which relief can be
    granted under some legal theory when the
    complaint is liberally construed and all the
    allegations included therein are taken as
    true.    On   a    motion   to  dismiss,  the
    complaint’s material factual allegations are
    taken as true. Dismissal is proper when one
    of   the    following   three  conditions  is
    satisfied:     (1) the complaint on its face
    reveals that no law supports the plaintiff’s
    claim; (2) the complaint on its face reveals
    the absence of facts sufficient to make a
    good claim; or (3) the complaint discloses
    some fact that necessarily defeats the
    plaintiff’s claim. On appeal of a 12(b)(6)
    motion to dismiss, this Court conducts a de
    novo review of the pleadings to determine
    their legal sufficiency and to determine
    whether the trial court’s ruling on the
    motion to dismiss was correct.
    Podrebarac v. Horack, Talley, Pharr, & Lowndes, P.A., ___ N.C.
    App.   ___,    ___,   
    752 S.E.2d 661
    ,     663-64   (2013)   (citation   and
    quotation marks omitted).
    III. Common Law Vested Rights Claim
    -8-
    Plaintiffs argue that the trial court erred in dismissing
    their common law vested rights claim under Rule 12(b)(1) for
    failure to exhaust administrative remedies. Defendants counter
    that    even    if    it   was   error    to    dismiss    under    Rule    12(b)(1),
    dismissal       was    proper     under    Rule        12(b)(6).    We     hold     that
    plaintiffs did not fail to exhaust administrative remedies and
    that their common law vested rights claim was sufficiently pled
    to survive a motion to dismiss under either Rule 12(b)(1) or
    Rule 12(b)(6).
    A.     Exhaustion of Administrative Remedies
    “As a general rule, where the legislature has provided by
    statute    an    effective       administrative         remedy,    that    remedy     is
    exclusive and its relief must be exhausted before recourse may
    be had to the courts.”            Presnell v. Pell, 
    298 N.C. 715
    , 721, 
    260 S.E.2d 611
    , 615 (1979). “If a plaintiff has failed to exhaust
    its    administrative        remedies,    the    court     lacks    subject       matter
    jurisdiction         and   the   action   must    be    dismissed.”       Justice    for
    Animals, Inc. v. Robeson County, 
    164 N.C. App. 366
    , 369, 
    595 S.E.2d 773
    , 775 (2004). Nevertheless, “a party need not exhaust
    an     administrative       remedy    where      the    remedy     is     inadequate.”
    Affordable Care, Inc. v. North Carolina State Bd. of Dental
    Examiners, 
    153 N.C. App. 527
    , 534, 
    571 S.E.2d 52
    , 58 (2002).
    -9-
    Facts justifying avoidance of administrative procedure must be
    pled in the complaint. Id. at 534, 
    571 S.E.2d at 58
    .
    “The     [administrative]         remedy    is     considered        inadequate
    unless it is calculated to give relief more or less commensurate
    with the claim.” Jackson for Jackson v. North Carolina Dept. of
    Human Resources, 
    131 N.C. App. 179
    , 186, 
    505 S.E.2d 899
    , 904
    (1998)     (citation     and   quotation      marks     omitted),        disc.    rev.
    denied,     
    350 N.C. 594
    ,    
    537 S.E.2d 213
        (1999).      Generally,
    constitutional      claims       are    not     subject       to   administrative
    remedies, so failure to pursue such remedies is not fatal to
    those claims. See Meads v N.C. Dep’t of Agric., 
    349 N.C. 656
    ,
    670, 
    509 S.E.2d 165
    , 174 (1988); Hardy ex rel. Hardy v. Beaufort
    County Bd. of Educ., 
    200 N.C. App. 403
    , 409, 
    683 S.E.2d 774
    , 779
    (2009).3
    Here,    plaintiffs       specifically      pled       that   they    were   not
    required     to   exhaust      administrative      remedies        and    that    the
    administrative remedies are inadequate. Nevertheless, we must
    consider whether the facts as pled justify failure to exhaust
    administrative procedures. We hold that plaintiffs sufficiently
    3
    Exhaustion may be required for procedural due process claims.
    See Edward Valves, Inc. v. Wake County, 
    343 N.C. 426
    , 435, 
    471 S.E.2d 342
    , 347 (1996), cert. denied, 
    519 U.S. 1112
    , 
    136 L.Ed. 2d 839
     (1997); Copper ex rel. Copper v. Denlinger, 
    363 N.C. 784
    ,
    788, 
    688 S.E.2d 426
    , 428 (2010).
    -10-
    pled futility because the Currituck County Board of Adjustment
    would not be authorized to hear plaintiffs’ common law vested
    rights claim.
    The ‘vested rights’ doctrine has evolved as
    a constitutional limitation on the state’s
    exercise of its police power to restrict an
    individual’s use of private property by the
    enactment    of     zoning   ordinances.     A
    determination of the ‘vested rights’ issue
    requires resolution of questions of fact,
    including    reasonableness    of    reliance,
    existence   of   good   or  bad   faith,   and
    substantiality of expenditures.
    Huntington Properties, LLC v. Currituck County, 
    153 N.C. App. 218
    ,   226,     
    569 S.E.2d 695
    ,   701    (2002)    (citations,   quotation
    marks, and brackets omitted).
    “In     reviewing     the    determination       of   an    administrative
    enforcement officer pursuant to N.C. Gen. Stat. § 160A-388, a
    board of adjustment sits in a ‘quasi-judicial capacity’ and has
    only the authority it is granted under that statute.” Dobo v.
    Zoning Bd. of Adjustment of City of Wilmington, 
    149 N.C. App. 701
    , 706, 
    562 S.E.2d 108
    , 111 (2002), rev’d in part on other
    grounds, 
    356 N.C. 656
    , 
    576 S.E.2d 324
     (2003). N.C. Gen. Stat. §
    160A-388(b) (2011) authorizes boards of adjustment to “hear and
    decide       special   and      conditional    use      permits,   requests   for
    variances, and appeals of decisions of administrative officials
    charged with enforcement of the ordinance.” Its role is solely
    -11-
    related to the interpretation of the ordinances and deciding
    whether to grant a variance from those ordinances. See Godfrey
    v. Zoning Bd. of Adjustment of Union County, 
    317 N.C. 51
    , 63,
    
    344 S.E.2d 272
    , 279 (1986). Boards of adjustment do not have the
    authority to adjudicate constitutional claims. Id.; Dobo, 149
    N.C. App. at 706, 
    562 S.E.2d at 111
    .
    Some common law vested rights cases have been appealed from
    boards of adjustment4; others have been brought as civil actions
    without prior administrative proceedings.5 These cases do not
    announce a clear rule for the proper method to pursue a vested
    rights claim.    Nevertheless, a rule can be inferred from the
    appellate courts’ treatment of those cases and the statutory
    authority of boards of adjustment discussed above. Our Supreme
    Court   has   differentiated    between   interpretations   of   zoning
    ordinances,    which   are     properly   considered   by   boards   of
    adjustment, and constitutional challenges, which are not.            See
    4
    See, e.g., Application of Campsites Unlimited, Inc., 
    287 N.C. 493
    , 
    215 S.E.2d 73
     (1975), Browning-Ferris Industries Of South
    Atlantic, Inc. v. Guilford County Bd. of Adjustment, 
    126 N.C. App. 168
    , 
    484 S.E.2d 411
     (1997), Kirkpatrick v. Village Council
    for Village of Pinehurst, 
    138 N.C. App. 79
    , 
    530 S.E.2d 338
    (2000).
    5
    See, e.g., Town of Hillsborough v. Smith, 
    276 N.C. 48
    , 
    170 S.E.2d 904
     (1969), Russell v. Guilford County, 
    100 N.C. App. 541
    , 
    397 S.E.2d 335
     (1990), MLC Automotive, LLC v. Town of
    Southern Pines, 
    207 N.C. App. 555
    , 
    702 S.E.2d 68
     (2010), disc.
    rev. denied, 
    365 N.C. 211
    , 
    710 S.E.2d 2
     (2011).
    -12-
    Batch v. Town of Chapel Hill, 
    326 N.C. 1
    , 11, 
    387 S.E.2d 655
    ,
    661-62 (holding that it was error to join a claim concerning the
    interpretation        of   development     ordinances     with   constitutional
    challenges thereto), cert. denied, 
    496 U.S. 931
    , 
    110 L.Ed. 2d 651
       (1990).    We    have   noted    that    where    interpretation    of    an
    ordinance   is   involved      the    property    owner    should   follow     the
    administrative         procedure      of      seeking     permission     for     a
    nonconforming use from the board of adjustment. See Huntington
    Properties, LLC, 153 N.C. App. at 227, 
    569 S.E.2d at 702
    ; see
    also Kirkpatrick, 138 N.C. App. at 87-88, 
    530 S.E.2d at 343-44
    (considering a common law vested rights claim in a case first
    brought to the board of adjustment, along with issues concerning
    interpretation of the ordinances). However, the discretion of a
    board of adjustment is not unlimited. Its “power to ‘determine
    and vary’ is limited to such variations and modifications as are
    in harmony with the general purpose and intent of the ordinance
    and do no violence to its spirit.” Lee v. Board of Adjustment of
    City of Rocky Mount, 
    226 N.C. 107
    , 111, 
    37 S.E.2d 128
    , 132
    (1946). A plaintiff is not required to request that the board of
    adjustment issue a variance that it does not have the authority
    to issue. See Smith, 276 N.C. at 57, 
    170 S.E.2d at 911
    .
    -13-
    Where the interpretation of the ordinance is not at issue,
    the ordinance prohibits the property owner’s intended use, and
    the property owner is claiming a common law vested right to such
    a nonconforming use, the only claim is a constitutional one. In
    such a case, plaintiffs are not required to first exhaust the
    procedures before the board of adjustment.                    Here, as in Smith,
    plaintiffs’   “contention       is     that    they   have    a    legal    right   to
    build, which right the city cannot take from them and for which
    no permit is authorized by the ordinance. . . . [T]he law does
    not require them to make a vain trip to the City Hall before
    exercising    it.”   Id.   at    57,    
    170 S.E.2d at 911
    .        Plaintiffs
    specifically alleged that the meaning of the UDO was not in
    dispute and that their desired use was not allowed under the
    ordinance.
    Therefore, we conclude that plaintiffs were not required to
    exhaust   administrative        remedies       before   the       Currituck   County
    Board of Adjustment in order to bring the present civil action.
    The trial court erred in dismissing plaintiffs’ vested rights
    claim under Rule 12(b)(1) for failure to exhaust administrative
    remedies.
    B.   Sufficiency of Claim
    -14-
    Next,    we    must   consider    whether   plaintiffs’   common     law
    vested rights claim was sufficiently pled to state a cause of
    action. We hold that plaintiffs sufficiently pled their common
    law vested rights claim to survive a motion to dismiss.6
    A party’s common law right to develop and/or
    construct vests when:     (1) the party has
    made, prior to the [enactment or] amendment
    of a zoning ordinance, expenditures or
    incurred contractual obligations substantial
    in amount, incidental to or as part of the
    acquisition of the building site or the
    construction or equipment of the proposed
    building;   (2)    the   obligations   and/or
    expenditures are incurred in good faith; (3)
    the obligations and/or expenditures were
    made in reasonable reliance on and after the
    issuance of a valid building permit, if such
    permit is required, authorizing the use
    requested by the party; and (4) the amended
    ordinance is a detriment to the party.
    Browning-Ferris,      126 N.C.      App. at 171-72, 
    484 S.E.2d at 414
    (citations and quotation marks omitted).
    “[W]hen a property owner makes expenditures in the absence
    of zoning     . . .      , subsequent changes in the zoning of the
    property    may    not   prohibit    the   resulting   nonconforming    use.”
    Finch v. City of Durham, 
    325 N.C. 352
    , 366, 
    384 S.E.2d 8
    , 16
    (1989). A property owner need not rely on the existence of a
    permit authorizing construction if none was required at the time
    6
    This case involves only common law vested rights; plaintiffs do
    not assert statutory vested rights under N.C. Gen. Stat. § 160A-
    385.1.
    -15-
    the expenditures were made. MLC Automotive, LLC, 207 N.C. App.
    at   565,    
    702 S.E.2d at 75
    .     “To    acquire    such    vested      property
    right[s] it is sufficient that, prior to the . . . enactment of
    the zoning ordinance and with the requisite good faith, he make
    a    substantial      beginning      of     construction       and     incur      therein
    substantial expense.” Campsites Unlimited, 287 N.C. at 501, 
    215 S.E.2d at 78
     (citation and quotation marks omitted). “A party
    acts in good faith reliance when it has an honest belief that
    the nonconforming use would not violate declared public policy.”
    Kirkpatrick, 138 N.C. App. at 87, 
    530 S.E.2d at 343
     (citation,
    quotation marks, and brackets omitted).
    As we are considering a 12(b)(6) motion to dismiss, we must
    assume      that   the   facts     alleged        by   plaintiffs      are      true   and
    liberally      construe      the    complaint.         Mosteller     v.    Duke    Energy
    Corp., 
    207 N.C. App. 1
    , 11, 
    698 S.E.2d 424
    , 431 (2010), disc.
    rev. denied, 
    365 N.C. 211
    , 
    710 S.E.2d 38
     (2011). The relevant
    allegations are as follows:
    In    1966,    plaintiffs       or    their      predecessors        in    interest
    acquired      approximately        1400    acres       of   property      in    Currituck
    County.      The    property       was     not    then      zoned    and       commercial
    development was allowed.             In June 1966,           the County adopted a
    “Subdivision Ordinance.” On 2 September 1969, consistent with
    -16-
    this    ordinance,         Plaintiff      Ocean      Associates     recorded      a    plat
    showing      577     residential       lots    and     six    business    areas   on    the
    property.       Such commercial uses were permitted in that area at
    the time. The County asked that the commercial development not
    begin until there was sufficient residential density in the area
    to    support      the    businesses      and     plaintiffs       agreed.    Plaintiffs
    began development in 1969. Between 1968 and 1971, plaintiffs
    spent approximately $425,050.00 to prepare both the residential
    and    the    business       lots.     These     expenditures       included      general
    engineering, land geosciences, road grading, canal digging, dune
    building,       lot      filling,      evacuating       ditches,    landscaping,        and
    surveying.         Plaintiffs would not have expended these funds “but
    for the fact that business and commercial uses were permitted on
    the Property under County law . . . .” In the early 1970s,
    plaintiffs completed the infrastructure that would serve both
    the business and residential lots.
    In    October        1971,      Currituck       County      adopted    a       zoning
    ordinance and prepared a map. The map seemed to designate the
    property as “RA-20.” The RA-20 district permitted mostly low
    density      residential         and   agricultural      uses,     with   only    limited
    business or commercial uses. The County adopted a second zoning
    ordinance       in       1975,    which       seemed     to    continue      designating
    -17-
    plaintiffs’      property     as     RA-20.       The    County     assured    property
    owners that subdivisions approved prior to adoption of these
    ordinances would continue to be allowed.
    In   1989,   the     County    adopted      a     UDO,   which   is    still    in
    effect. Although unclear, plaintiffs’ property was apparently
    zoned RO2. The RO2 district allows only limited business uses.
    Plaintiffs’ planned uses for the property are not allowed under
    the UDO.        Plaintiffs moved forward with further development of
    the business lots in 2004. The County informed plaintiffs that
    their intended uses were not permitted under the UDO and denied
    that plaintiffs had any vested rights to use their property in
    that manner.
    Taking     these   facts      as    true,        we   hold   that     plaintiffs
    sufficiently pled their claim for common law vested rights to
    survive a motion to dismiss. Plaintiffs have alleged that their
    property was not zoned at the time they made their expenditures
    to prepare the business lots. They have alleged that this use
    was lawful at the time the expenditures were made and that the
    expenditures were made in good faith reliance on that fact. They
    have    alleged      that     they        expended       over     $400,000     on     the
    development. They allege that they are prejudiced by the zoning
    -18-
    ordinance because their intended commercial use would not be
    permitted under the ordinance.
    In Campsites Unlimited, our Supreme Court held that the
    property owners had a vested right because they made substantial
    expenditures in reliance on the lack of zoning. 287 N.C. at 502,
    
    215 S.E.2d at 78
    . In that case, the property owners had cleared
    and constructed roadways and staked out lots. 
    Id.
     The alleged
    construction activities here were at least as substantial as
    those in Campsites Unlimited, if not more. Plaintiffs’ clearing
    of the lots, canal digging, dune building, and road grading were
    intended to prepare the site for development. Cf. Russell, 
    100 N.C. App. at 545
    ,   
    397 S.E.2d at 337
       (holding   that   the
    plaintiff’s expenditures were not substantial where there was
    “no evidence of ground breaking, tree clearing or anything else
    done to prepare the site for development”). We conclude that
    these expenditures were “substantial.”
    Additionally, taking the allegations of the complaint as
    true, plaintiffs’ reliance on the lawfulness of their project
    was in good faith. The required “good faith”
    is not present when the landowner, with
    knowledge that the adoption of a zoning
    ordinance is imminent and that, if adopted,
    it will forbid his proposed construction and
    use of the land, hastens, in a race with the
    town commissioners, to make expenditures or
    -19-
    incur obligations before the town can take
    its contemplated action so as to avoid what
    would otherwise be the effect of the
    ordinance upon him.
    Campsites Unlimited, 287 N.C. at 503, 
    215 S.E.2d at 79
     (citation
    and quotation marks omitted).
    Here,         plaintiffs     filed        plats        indicating     business
    development before any zoning ordinance was in place. There is
    no indication that they were aware of any plans to zone their
    property such that business development would not be allowed.
    Cf.     
    id.
        The    face   of    the    complaint      does     not    reveal    that
    plaintiffs failed to acquire any other permits required to begin
    construction. Cf. Browning-Ferris, 126 N.C. App. at 172, 
    484 S.E.2d at 414
    . Indeed, plaintiffs have alleged that the County
    was aware of their plans and condoned them.
    In sum, plaintiffs’ allegations, if true, show that they
    have made substantial expenditures in good faith reliance on the
    lack    of    zoning    at   the   time    the    expenditures      were     made.   We
    conclude that plaintiffs have sufficiently pled a common law
    vested rights claim. Accordingly, we hold that the trial court
    erred    in    allowing      defendants’    motion       to    dismiss     under   Rule
    12(b)(6).7
    7
    There was a question raised at oral arguments concerning
    whether the plaintiffs other than Ocean Associates could bring a
    -20-
    IV.     Equal Protection and Due Process § 1983 Claims
    Plaintiffs       next    argue      that        the    trial       court    erred    in
    dismissing their equal protection and substantive due process
    claims under 
    42 U.S.C. § 1983
     (2006) for failure to exhaust
    administrative         remedies   and      sovereign          immunity.8     Although       the
    basis    for    its    decision   is       not   clear        from   the    trial    court’s
    order, defendants moved to dismiss plaintiffs’ § 1983 claims on
    the     basis     of    failure       to   exhaust           administrative        remedies,
    sovereign immunity, and legislative immunity. Defendants did not
    argue at the motion hearing that the § 1983 claim was improperly
    pled    or     that    the   claims    would      be     barred      by   the     statute    of
    limitations. On appeal, defendants do not argue that they are
    immune.
    “To state a claim under 
    42 U.S.C. § 1983
    , a plaintiff must
    show that [a person], acting under color of law, has ‘subjected
    [him]     to     the    deprivation        of      any       rights,       privileges,      or
    immunities secured by the Constitution and laws.’” Copper, 363
    vested rights claim as successors in interest even though they
    did not actually expend the funds themselves. The individuals
    involved with the property are apparently the same, but the
    corporate forms have changed. This issue was not raised in the
    pleadings, briefed by the parties, or addressed by the trial
    court, so we express no opinion on that question.
    8
    Defendants did not argue to the trial court and do not argue on
    appeal that plaintiffs failed to allege any element of these
    claims.
    -21-
    N.C.   at    789,     688    S.E.2d    at     429   (quoting     
    42 U.S.C. § 1983
    (2006)). “[A] municipality is a ‘person’ within the meaning of
    section 1983.” Moore v. City of Creedmoor, 
    345 N.C. 356
    , 365,
    
    481 S.E.2d 14
    , 20 (1997).
    Plaintiffs      alleged        that    the    County    has      allowed       other
    similarly situated property owners to operate businesses in the
    zoning      districts        that   prohibit        commercial        buildings       while
    denying plaintiffs the opportunity to do the same.                             They have
    alleged that the County treated them differently because they
    are    Jewish.      Moreover,       plaintiffs       allege    that      the    County’s
    decision to treat them differently was arbitrary and without any
    rational relationship to a valid governmental objective. They
    allege      that    they     have   been      damaged   by     this     discrimination
    because they have lost income they could have received from the
    commercial development of their property.                       All of the claims
    were brought against the County itself and the individual County
    Commissioners in their official capacity.
    First, plaintiffs’ § 1983 claims may not be dismissed for
    failure     to     exhaust    administrative        remedies.     While    claims       for
    violation of procedural due process may be subject to exhaustion
    requirements, Copper, 363 N.C. at 789-90, at 688 S.E.2d at 430,
    substantive constitutional claims are not, Edward Valves, Inc.,
    -22-
    
    343 N.C. at 435
    , 
    471 S.E.2d at 347
    . Here, plaintiffs’ claims are
    founded on substantive due process and equal protection. They
    were not required to exhaust any administrative process to bring
    these claims. See Edward Valves, Inc., 
    343 N.C. at 435
    , 
    471 S.E.2d at 347
    .
    Second, defendants are not protected from § 1983 claims on
    the basis of sovereign immunity. Corum v. University of North
    Carolina Through Bd. of Governors, 
    330 N.C. 761
    , 772, 
    413 S.E.2d 276
    , 283 (“[S]overeign immunity alleged under state law is not a
    permissible       defense    to    section      1983    actions.”),      disc.    rev.
    denied, 
    506 U.S. 985
    , 
    121 L.Ed. 2d 431
     (1992); Glenn-Robinson v.
    Acker,    
    140 N.C. App. 606
    ,   627,    
    538 S.E.2d 601
    ,   616     (2000)
    (noting that “a municipal entity has no claim to immunity in a
    section    1983    suit”    (citation      and    quotation      marks   omitted)),
    disc. rev. denied, 
    353 N.C. 372
    , 
    547 S.E.2d 811
     (2001). Indeed,
    defendants do not argue on appeal that they are immune from suit
    under § 1983.
    Finally, defendants argue that plaintiffs’ § 1983 claim is
    barred by the statute of limitations concerning challenges to
    zoning    ordinances.       Plaintiffs     urge    us    not     to   consider    this
    argument since it was not raised below. Defendants did argue in
    their brief to the trial court that the statute of limitation
    -23-
    barred plaintiffs’ § 1983 claims, but only “[t]o the extent
    Plaintiffs[’]      due    process        and     equal    protection      claims    are   a
    based on” a lack of notice of the amendments to the zoning
    ordinances.     But plaintiffs’ § 1983 claims are not based on any
    notice issue. Plaintiffs specifically alleged in their amended
    complaint that they are not “attacking a defect in the ordinance
    adoption process . . . .”                Defendants apparently recognized this
    fact as they did not argue at the motions hearing that the
    statute of limitations would require dismissal of these claims.
    Moreover, it is not clear that they ever received a ruling from
    the   trial    court     on   this       issue.          Therefore,    they      have   not
    preserved this issue for our review and we will not address it.
    N.C.R. App. P. 10(a)(1); Lovelace v. City of Shelby, 
    153 N.C. App. 378
    , 384, 
    570 S.E.2d 136
    , 140 (declining to address an
    appellee’s     argument       that       was   not   raised      below),    disc.       rev.
    denied, 
    356 N.C. 437
    , 
    572 S.E.2d 785
     (2002).
    We   hold        that   the        trial     court       erred   in     dismissing
    plaintiffs’ claims under 
    42 U.S.C. § 1983
     because the claims are
    not   barred      by     sovereign        immunity        or    failure     to     exhaust
    administrative remedies. Therefore, we reverse the portion of
    the trial court’s order dismissing these claims.
    V.     Tax Claim
    -24-
    Plaintiffs     finally    argue      that     the     trial      court      erred      in
    dismissing their claim under Article V, Section 2(2) of the
    North Carolina Constitution. We disagree.
    Plaintiffs      alleged     that       defendant      violated         Article         V,
    Section 2(2) of the North Carolina Constitution by refusing to
    allow business development on property that it has classified
    for   tax   purposes    as     business       property.          The    North     Carolina
    Constitution       “requires    that      taxation        must    be       imposed      by    a
    uniform rule.” HED, Inc. v. Powers, 
    84 N.C. App. 292
    , 294, 
    352 S.E.2d 265
    , 266, disc. rev. denied, 
    319 N.C. 458
    , 
    356 S.E.2d 4
    (1987).     That    requirement      is      met   “if     the      rate     is      uniform
    throughout each taxing authority’s jurisdiction.” State ex rel.
    Dyer v. City of Leaksville, 
    275 N.C. 41
    , 49, 
    165 S.E.2d 201
    , 206
    (1969).
    Here,      plaintiffs     do     not       actually        challenge        the        tax
    classification or the uniformity of the tax rules. Indeed, they
    assert that the tax classification of their property as business
    property    is     entirely    accurate.         They     have    not       alleged      that
    defendants tax such property in a non-uniform manner. At best,
    the tax classification of plaintiffs’ property might be relevant
    to the “good faith” element of their vested rights claim. But
    their   allegations     are     insufficient         to     state      a    claim       under
    -25-
    Article    V,    Section    2    of     the    North   Carolina   Constitution.
    Therefore, we affirm the trial court’s dismissal of this claim.
    VI.    Conclusion
    For the foregoing reasons, we conclude that the trial court
    erred in dismissing plaintiffs’ vested rights claim and their §
    1983   claims,    but   that     it    properly   dismissed   plaintiffs’   tax
    claim. Therefore, we reverse those portions of the trial court’s
    order dismissing the vested rights and § 1983 claims, affirm the
    portion    dismissing      the    tax    claim,    and   remand   for   further
    proceedings.
    REVERSED, in part; AFFIRMED, in part; and REMANDED.
    Judges HUNTER, JR., Robert N. and DILLON concur.