Leith Automotive had obtained vested rights in property in Southern Pines for a dealership before the town tried to block it with a zoning change, a judge has ruled.

Superior Court Judge James M. Webb ruled Friday that a 2005 rezoning by the Town Council doesn't apply to Leith, which bought land on U.S. 1 near Midland Road for an auto park with four dealerships. If upheld, this could end up costing Southern Pines millions of dollars in damages.

The town will appeal the ruling.

The Raleigh-based dealership bought the land in 2002 after confirming it was zoned General Business, which permits automobile dealerships.

In response to overwhelming opposition from neighboring residents and others in the community, the council voted unanimously in October 2005 to rezone that property as Office Services (OS). Car dealers are not a permitted use under OS zoning.

Leith's claim that it had obtained vested rights in the property and that the rezoning violated those rights was at issue in motions heard in Moore County Superior Court last week. Both sides had asked Webb for summary judgments in their favor.

Leith contended the zoning change came only after a storm of complaints, and long after the company relied on assurance from the town that what it wanted to build on the land was a permitted use. The company said it had already spent some $2 million to buy the property and develop its plans.

The town, on the other hand, argued that assurances about zoning are not commitments. Towns can change zoning at any time unless a building permit or some other formal permission has been granted. The town had not issued a building permit.

Leith filed a federal lawsuit against the town charging denial of due process. It sought more than $10 million in damages. But the Fourth Circuit Court of Appeals upheld a federal judge's decision that the state case has to be decided before there could be a federal claim.

Susan K. Burkhart, an attorney representing Southern Pines, told the court that Leith never applied for a building permit after receiving what she contended was no more than a note from a zoning clerk that dealerships are permitted uses on any property zoned for General Business.

Leith could have proceeded at any time to request the kind of permit that, under state law, would have protected its plan but didn't, she contended. Instead, representatives of the dealership came to meeting after meeting hashing over architectural requirements that clashed with designs Suzuki wanted for its dealership.

Leith had obtained a letter of intent (LOI) giving it one year's right to a Suzuki dealership. Leith's attorney, Robin Tatum Currin, described that agreement as a valuable thing in and of itself. Leith was asking Webb to rule that the town committed "tortious interference" with that contract, costing Leith money when the town changed the zoning from GB to OS, thus prohibiting a car dealership on its property.

Tortious interference is when somebody interferes on purpose to disrupt a contract between others that results in a loss to one of the parties. Webb denied the tortious interference claim.

Currin is drafting a proposed order for Webb to sign. The prevailing party in a civil suit is customarily asked to prepare a proposed order, which is then reviewed by other parties for comment or proposed changes before being submitted to the judge.

"Basically, what he said when he ruled on their argument was that relying on the zoning and spending $2 million to buy the property and working with the town on the architectural standards established a vested interest," Currin said. "It is a little different when you have a building permit. Obviously, we are very pleased."

Once the town exhausts any appeals and this ruling is upheld, Leith will go back to the federal courts to seek damages from the town for its losses under a claim of denial of due process, according to Currin. The actual amount of damages would be determined by a jury.

"This case is going to a jury," Currin said.

Burkhart, reached by telephone Friday, said, "We are definitely going to appeal. We think we have a case right on point, and we will prevail on appeal. We did win on the tort claims. Webb ruled in our favor and said the town is not liable for tortious interference."

She had stressed events in the timeline that she said showed it was Leith, not the town, that kept putting off asking for final architectural approval. Just getting a statement of existing zoning law in a letter doesn't give anybody a vested right, she said.

"We believe the towns and cities that give out general information on their zoning ordinance do not establish vested rights," she said. "The town does not believe that information in letters is permission."

Southern Pines won't be writing any such letters now but instead will hand over the zoning ordinance for developers and other applicants to read, she said.

Contact John Chappell at 783-5841 or by e-mail at jchappell@ thepilot.com.Y