Raleigh ‘missing middle’ critics cannot pursue suit against developers

The North Carolina Court of Appeals has rejected an appeal from critics of Raleigh’s “missing middle” housing policies. The decision Wednesday means that critics cannot move forward with a lawsuit against developers of a 17-unit townhouse development in Hayes Barton.

At the same time, the critics can continue to pursue their complaint against the city. The Appeals Court dismissed Raleigh’s attempt to block that part of the lawsuit from moving forward.

Three Hayes Barton couples filed suit in 2023 after city officials approved a plan to replace one house with 17 townhouses on 2.4 acres at Williamson Drive. The project was permitted under Raleigh’s “missing middle” policies, adopted in the city’s development ordinance starting in 2021.

“The purported purpose of the Missing Middle Ordinances was to increase housing options for Raleigh residents by expanding building types and removing per-acre density restrictions in most residential districts,” Judge Jeff Carpenter wrote for a unanimous three-judge Appeals Court panel. The unpublished opinion has limited value as a precedent for future cases.

The complaint asserted four claims. “First, Plaintiffs sought a declaration that the Missing Middle Ordinances were illegally enacted,” Carpenter wrote. “In support of their request, Plaintiffs alleged the Missing Middle Ordinances were map amendments, not text amendments, and that the notices provided by Defendant-City were insufficient as a matter of law, rendering the Missing Middle Ordinances invalid.”

“Second, Plaintiffs asserted a due process violation against Defendant-City for failure to provide adequate notice,” the court opinion continued. “Next, Plaintiffs sought a declaration that one of the Missing Middle Ordinances was invalid because it subjected properties within R-4, R-6, and R-10 districts to regulations that are not uniform.”

Fourth, the critics sought a permanent injunction against the townhouse project. They argued they would be “irreparably harmed” if the development moved forward.

In March 2024, Superior Court Judge Patrick Nadolski dismissed the portion of the complaint targeting the townhouse project’s developers. He allowed the case to continue against the city.

The missing-middle policy critics appealed the decision in April 2024. The city filed its own appeal in November 2024.

Appellate judges rejected the plaintiffs’ argument that an appeal at this stage in the case would help prevent inconsistent verdicts as the lawsuit continues.

“Each of Plaintiffs’ causes of action, including their two requests for declaratory judgment and the alleged due process violation, are supported by one claim: Defendant-City’s adoption of the Missing Middle Ordinances was improper,” Carpenter wrote. “This claim is the basis for the actual controversy giving rise to the declarations and the alleged due process violation — all of which exclusively concern Defendant-City.”

Winning the case against Raleigh “may entitle Plaintiffs to declaratory or injunctive relief,” Carpenter added. “Thus, the remedy sought against Defendant-Developers in this case is wholly dependent upon the claim and causes of action asserted against Defendant-City.”

The issue left to resolve in the case now is the validity of Raleigh’s missing-middle policies, Carpenter explained. “A determination on the underlying claim would resolve the dispute, leaving nothing to be judicially determined between the parties aside from Plaintiffs’ entitlement to a permanent injunction against Defendant-Developers, which is a remedy.”

“It may have been convenient for Plaintiffs to obtain an injunction halting the Townhouse Project at the same time the factual issues between Plaintiffs and Defendant-City were resolved,” Carpenter wrote. “Nevertheless, convenience of litigation is not a substantial right. Accordingly, Plaintiffs have not established a substantial right and we dismiss their appeal as interlocutory.”

The court rejected the city’s petition as “moot.”

Chief Judge Chris Dillon and Judge Thomas Murry joined Carpenter’s opinion.

“Plaintiffs’ lawsuit jeopardizes affordable housing development across the City of Raleigh, exacerbating the ongoing housing crisis, and for several reasons should have been dismissed from the start,” Raleigh’s lawyers wrote in November 2024.

“Raleigh is facing a housing crisis,” city lawyers wrote. “To provide more affordable housing and more housing choices, the City passed a series of ordinances that, among other things, increased the available ‘by-right’ building types to include what is known as ‘missing middle’ housing (such as townhouses, duplexes, and tiny homes).”

“Plaintiffs’ lawsuit challenged those ordinances in an attempt to prevent a new townhouse subdivision in their neighborhood. However, the impact of the lawsuit extends far beyond a single neighborhood and instead jeopardizes numerous missing middle housing projects throughout the City that are currently in development,” the Raleigh court filing continued.

“But at the same time, Plaintiffs failed to establish standing or exhaust their administrative remedies, and their substantive legal theories were unsupported by applicable law,” city lawyers argued. “The lawsuit should have been dismissed. Instead, the trial court denied the City’s motion to dismiss without explanation — casting doubt on current and future missing middle housing development across all of Raleigh.”

“Raleigh ‘missing middle’ critics cannot pursue suit against developers” was originally published on www.carolinajournal.com.