Opinion
No. COA10-1567
Filed 16 August 2011 This case not for publication
Appeal by Defendant from judgment and order entered 23 July 2010 by Judge Rebecca W. Blackmore in District Court, New Hanover County. Heard in the Court of Appeals 10 May 2011.
Block, Crouch, Keeter, Behm Sayed, L.L.P., by Christopher K. Behm and Christopher B. Barbour, for Plaintiff-Appellee. Brian J. Moore Associates, by Brian J. Moore, for Defendant-Appellant.
New Hanover County No. 09 CVD 2085.
Wais Nasser (Plaintiff) filed a complaint against Dynamic Images Salon Spa, Inc. (Defendant) on 7 May 2009, alleging breach of a lease agreement, and seeking damages in the amount of $8,415.00 from Defendant, and attorney's fees. Plaintiff contended, inter alia, that (1) Plaintiff and Defendant entered into a commercial lease agreement whereby Defendant leased real property located at 201 Princess Street in Wilmington from Plaintiff; (2) Defendant vacated the premises prior to the ending date of the lease agreement; and (3) Defendant owed rent for the months of March, April, and May 2009. Defendant filed an unverified answer and counterclaims on 13 July 2009, in which Defendant claimed breach of contract and covenants of quiet enjoyment, as well as constructive eviction by Plaintiff. Plaintiff filed a motion for summary judgment dated 4 March 2010, which the trial court heard during the 19 July 2010 session of New Hanover County civil district court. Plaintiff also filed two affidavits concerning attorney's fees on 21 July 2010. In a judgment and order entered 23 July 2010, the trial court granted Plaintiff's motion for summary judgment, awarded Plaintiff attorney's fees in the amount of $14,363.75, and dismissed Defendant's counterclaims with prejudice. Defendant appeals.
Facts
Plaintiff and Defendant executed a commercial lease agreement on 8 May 2006, whereby Defendant agreed to lease certain property in Wilmington from Plaintiff for a period of three years for the operation of a spa and salon. Under the lease, Plaintiff was to "deliver all mechanical systems in good working order per City Code; . . . complete any roof repair, [and] interior water-damage repair[.]" Plaintiff was also required to deliver the HVAC systems and the electrical and plumbing systems in good working order. Plaintiff alleged in his complaint that Defendant owed rent from March 2009 through May 2009, and that Defendant vacated the property on or about May 1, 2009. Plaintiff also sought, pursuant to the lease agreement, reasonable attorney's fees.
In its unverified answer and counterclaims, Defendant asserted that, at the time Defendant took possession of the property, the property had extensive and material defects. Defendant further alleged it submitted written requests for repairs to Plaintiff that were not completed. Defendant alleged that it was required to make repairs at its own cost and was not reimbursed for those repairs. Defendant also alleged that it vacated the property because its business was suffering due to the insufficient maintenance and repair.
The record includes a notice of hearing on Plaintiff's motion for summary judgment dated 4 March 2010, setting a hearing on 15 March 2010. An order was entered 26 March 2010 continuing the hearing to 14 June 2010, citing scheduling conflicts of Defendant's attorney, as well as the limited time remaining in the court session. The hearing was again continued to 19 July 2010, by order dated 24 May 2010, which cited scheduling conflicts of Plaintiff's attorney. The trial court's judgment and order granting Plaintiff's motion for summary judgment stated that Defendant's counsel was present, but that "Defendant failed to appear . . . at the July 19, 2010 [hearing] despite notice and a subpoena to its principal to do so[.]"
Standard of Review
Our Supreme Court has stated the standard of review of a motion for summary judgment as follows:
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." The trial court may not resolve issues of fact and must deny the motion if there is a genuine issue as to any material fact. Moreover, "all inferences of fact . . . must be drawn against the movant and in favor of the party opposing the motion." The standard of review for summary judgment is de novo.
Forbis v. Neal, 361 N.C. 519, 523-24, 649 S.E.2d 382, 385 (2007) (citations omitted).
Analysis A. Inferences of Fact
Defendant first argues that the trial court erred in granting Plaintiff's motion for summary judgment because Defendant's "counterclaims and affidavit in opposition to the motion raise a genuine issue of material fact." Defendant asserts that: "The Inferences of Fact Were Drawn in Favor of the Movant and Against the Party Opposing the Motion." Specifically, Defendant asserts that the trial court incorrectly interpreted the lease agreement's silence on an issue. The trial court made the following finding of fact: "The Lease does not contain any provision authorizing or allowing for rent abatement or offset of rent by the tenant under any scenario." Defendant asserts that
the fact that the lease is silent with respect to the propriety of rent abatement should not be taken to indicate that rent abatement is not permitted under the lease agreement since such a construction strongly favors the moving party rather tha[n] the non-moving party and is contrary to well established law requiring all inferences to be made in favor of the non-moving party.
Defendant, however, cites no authority for this contention.
"A lease is a contract[.]" Strader v. Sunstates Corp., 129 N.C. App. 562, 570, 500 S.E.2d 752, 756 (1998). "[T]he provisions of a lease are interpreted according to general principles of contract law." Wal-Mart Stores, Inc. v. Ingles Mkts., Inc., 158 N.C. App. 414, 418, 581 S.E.2d 111, 115 (2003). Interpretation of a contract is a question of law, not of fact. Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 829, 534 S.E.2d 653, 654 (2000). Thus, there is no question of fact regarding the terms of the lease. An interpretation of the effect of a lease's silence on an issue is a question of law. We note that Defendant cites no authority in support of its contention that it was entitled to cease payment of rent.
Our Court reviewed the obligations of landlord and tenant in a commercial setting in Gardner v. Ebenezer, LLC, 190 N.C. App. 432, 660 S.E.2d 172 (2008):
Our Legislature has recognized the mutuality of landlord and tenant lease obligations in the residential context under section 42-41 of our General Statutes, which states: "The tenant's obligation to pay rent under the rental agreement or assignment and to comply with G.S. 42-43 [tenant to maintain dwelling unit] and the landlord's obligation to comply with G.S. 42-42(a) [landlord to provide fit premises] shall be mutually dependent." However, no such mutuality has been recognized in commercial leases. Rather, in a commercial lease,
[t]he duty of the tenant, if the landlord fails to perform his contract to repair, is to do the work himself, and recover the cost in an action for that purpose, or upon a counterclaim in an action for rent, or if the premises are made untenable by reason of the breach of contract, the tenant may move out and defend in an action for rent as upon an eviction.
Thus, where a landlord breaches his duty to repair in a commercial lease, the tenant may: (1) sue the landlord for damages equal to "the difference between the rental value of the premises for the term, in the condition as contracted to be, and the rental value in their actual condition[;]" (2) make the repairs and collect from the landlord the reasonable cost of such repairs; or (3) move out and claim constructive eviction.
Id. at 435-36, 660 S.E.2d at 174-75 (citations omitted).
Defendant also contends that the trial court erred in failing to consider the allegations made in its answer and counterclaims. However,
[c]ertain verified pleadings may be treated as affidavits for the purposes of a motion for summary judgment. However, in order to properly consider verified pleadings in response to a motion for summary judgment such pleadings must meet the requirements of Rule 56(e). Rule 56(e) provides that "[s]upporting or opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Since [the] defendant's pleadings were unverified, the trial court acted properly in refusing to consider them.
Venture Properties I v. Anderson, 120 N.C. App. 852, 855, 463 S.E.2d 795, 796-97 (1995).
In the present case, Defendant's answer and counterclaims were not verified. Therefore, the trial court did not err by failing to consider the allegations set forth therein. Defendant's arguments that a question of material fact remained and that the trial court erred by failing to consider its counterclaims are therefore without merit.
B. Sanctions
Defendant next argues that the trial court erred by dismissing Defendant's counterclaims "with prejudice without considering the possibility of lesser sanctions[.]" We agree. N.C. Gen. Stat. § 1A-1, Rule 41 (2009) states:
(b) Involuntary dismissal; effect thereof. — For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim therein against him. . . . Unless the court in its order for dismissal otherwise specifies, a dismissal under this section and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a necessary party, operates as an adjudication upon the merits.
. . . .
(c) Dismissal of counterclaim; crossclaim, or third-party claim. — The provisions of this rule apply to the dismissal of any counterclaim, crossclaim, or third-party claim.
Our Court has held that "the trial court must . . . consider lesser sanctions when dismissing a case pursuant to Rule 41(b) for failure to prosecute." Wilder v. Wilder, 146 N.C. App. 574, 576, 553 S.E.2d 425, 426 (2001) (emphasis omitted). In Wilder, we noted that:
In considering the dismissal for failure to prosecute, this [C]ourt applied the [following] standard . . .: "[u]nder Rule 41(b), a trial court may enter sanctions for failure to prosecute only where the plaintiff or his attorney `manifests an intention to thwart the progress of the action to its conclusion' or `fails to progress the action toward its conclusion' by engaging in some delaying tactic."
Id. at 576-77, 553 S.E.2d at 427 (citations and emphasis omitted). The Wilder Court concluded, holding that there are:
three factors that the trial judge must address before dismissing for failure to prosecute under Rule 41(b). They are: (1) whether the plaintiff acted in a manner which deliberately or unreasonably delayed the matter; (2) the amount of prejudice, if any, to the defendant; and (3) the reason, if one exists, that sanctions short of dismissal would not suffice.
Id. at 578, 553 S.E.2d at 428.
Defendant argues that the trial court's order dismissing Defendant's counterclaims states: "Plaintiff is entitled to dismissal of Defendant['s] counterclaims with prejudice for failure to prosecute at the July 19, 2010 session of court." However, we first note that the quoted material is properly viewed in context as follows:
The above-encaptioned action and [m]otion originally appeared on the March 15, 2010 New Hanover County Civil District Trial Calendar, and was continued by the [c]ourt during that session and, later, again by consent of the parties from the June 14, 2010 session. Nonetheless, Defendant failed to appear to prosecute its counterclaims at the July 19 2010 session[,] despite notice and a subpoena to its principal to do so, and oral motions by counsel for Defendant to continue and to withdraw were denied by this [c]ourt, in its discretion, at that time. Accordingly, Plaintiff is entitled to dismissal of Defendant['s] counterclaims with prejudice for failure to prosecute at the July 19, 2010 session of court.
Plaintiff argues that the trial court's order also states that "the decision was made only `[a]fter hearing oral arguments from counsel and reviewing the . . . materials.'" Plaintiff further asserts that the above quoted statement in the judgment and order demonstrates "complete compliance with the requirements laid out in Wilder[.]" We disagree. The trial court's judgment and order dismissing Defendant's counterclaims for failure to prosecute does not contain any findings addressing "(1) whether the plaintiff acted in a manner which deliberately or unreasonably delayed the matter; (2) the amount of prejudice, if any, to the defendant; [or] (3) the reason, if one exists, that sanctions short of dismissal would not suffice" as required by Wilder and, therefore, its decision to dismiss is unsupported. We must therefore vacate the portion of the trial court's order dismissing Defendant's counterclaims. Wilder, 146 N.C. App. at 578, 553 S.E.2d at 428.
C. Attorney's Fees
Defendant next argues that the trial court erred in awarding Plaintiff attorney's fees. However, this argument is premised on Defendant's argument that summary judgment was improper. As we have already concluded, the trial court did not err in granting summary judgment in favor of Plaintiff. Therefore, this argument is without merit.
Affirmed in part, vacated in part, and remanded.
Judges STROUD and BEASLEY concur.
Report per Rule 30(e).