Opinion
No. COA11–725.
2012-06-5
CK–SOUTHERN ASSOCIATES, Plaintiff v. CHARLOTTE N.C. HOTEL CORPORATION, Defendant.
Parker Poe Adams & Bernstein LLP, by Michael G. Adams and Jami J. Farris, for plaintiff-appellee. Poyner Spruill LLP, by Lee A. Spinks, Joshua B. Durham, and Karen H. Chapman, for defendant-appellant.
Appeal by defendant from judgment entered 24 September 2010 by Judge Yvonne Mims Evans in Mecklenburg County Superior Court. Heard in the Court of Appeals 30 November 2011. Parker Poe Adams & Bernstein LLP, by Michael G. Adams and Jami J. Farris, for plaintiff-appellee. Poyner Spruill LLP, by Lee A. Spinks, Joshua B. Durham, and Karen H. Chapman, for defendant-appellant.
CALABRIA, Judge.
Charlotte N.C. Hotel Corporation (“defendant”) appeals from a judgment entered upon a jury verdict awarding CK–Southern Associates (“plaintiff”) $1,326,392.30 as a lien on defendant's property. To satisfy the lien, the trial court ordered a foreclosure sale of defendant's property. We find no error.
I. Background
Plaintiff owns a skyscraper, currently known as One Wells Fargo Center, located in downtown Charlotte, North Carolina (“the Office”). The Office was formerly known as One Wachovia Center. Defendant owns a hotel located on land adjacent to the Office (“the Hotel”). The Hotel was originally owned by a subsidiary of plaintiff.
In 1989, plaintiff and its subsidiary entered into a cross-easement agreement (“the easement agreement”) concerning, inter alia, the rights and obligations of the parties with respect to an outdoor plaza (“the Plaza”) located on portions of both plaintiff's and defendant's respective properties. According to the easement agreement, the owner of the Office was responsible for the costs of maintenance of the Plaza, and the Hotel owner was required to reimburse the Office owner for 23% of these maintenance costs. The easement agreement defined maintenance costs and included an enforcement provision for the payment of these costs. Specifically, the maintenance costs could be enforced by a lien on the Hotel property. From 1998 to 2007, the owner of the Hotel paid plaintiff $1,704.00 per month in maintenance costs.
In 2004, the Plaza was experiencing problems with heaving and uneven pavers, cracked grout, deteriorating caulking, leaks within outdoor fountains located within the Plaza, water infiltration into the Plaza's structural slab and supporting structure, and deteriorating landscapes. As a result, plaintiff determined it was necessary to undertake a comprehensive repair project (“the project”) on the Plaza. The project would involve removing and replacing pavers, grout, caulking, and setting beds, as well as removing and replacing the waterproofing membranes underneath the Plaza, repairing a clock tower located within the Plaza, landscaping, and other maintenance.
In a letter dated 25 October 2005, plaintiff sent defendant the estimated costs of maintenance for 2006. The letter also stated that the Office expected to later bill the Hotel for “the cost to re-design, engineer, waterproof and reinstall the pavers in the Outdoor Plaza ....“ According to plaintiff's letter, the estimate for these costs was $1,530,000.00, with the Hotel's share being $351,900.00.
Subsequently, defendant sent plaintiff a letter dated 30 April 2007 requesting an opportunity to review plaintiff's renovation plans to “determine whether the work being performed is what would be considered ‘maintenance and repair’ or whether it is something more in the nature of a renovation or redesign.” Defendant's letter indicated that it would pay its share for the portions of the project which were maintenance and repair, but refused to pay any amount for renovations. Plaintiff responded to defendant's letter with an email dated 2 May 2007, which explained the project and included an updated budget for the project. This budget estimated the cost of the project at $4,125,546.00, with the Hotel's share being $948,976.00.
Defendant responded to plaintiff's estimate by email dated 11 July 2007. In its email, defendant requested additional information regarding the project and noted that it “t[ook] exception to the replacement of the [pavers] on the sidewalks around the plaza as they are not being replaced as a result of waterproofing deterioration.” In a letter dated 19 February 2008, plaintiff sent defendant a newly updated budget based upon finalized construction documents. The letter explained that the cost to replace the pavers was the same as the cost of using the existing pavers due to the labor costs required in removing, cleaning, and returning the old pavers to their original positions. The final budget attached to this letter estimated the cost of the project at $4,646,774.00, with the Hotel's share being $1,068,758.00.
The project began on 3 March 2008, and plaintiff sent defendant invoices for its share of expenses, as they accrued, during the course of the project. Defendant refused to pay these invoices, as it had decided that the project should not be considered “costs of maintenance” as defined by the easement agreement. As a result, on 7 January 2009, plaintiff initiated an action against defendant in Mecklenburg County Superior Court, seeking to have the unpaid costs of the project owed by defendant enforced as a lien against defendant's property, as provided in the easement agreement.
On 11 December 2009, the parties filed cross-motions for summary judgment. After a hearing on 14 January 2010, the Honorable Richard D. Boner (“Judge Boner”) entered an order on 22 January 2010 granting partial summary judgment to plaintiff. Pursuant to N.C. Gen.Stat. § 1A–1, Rule 56(d), Judge Boner determined which material facts were and which were not controverted. Judge Boner's order concluded that portions of the project, which he termed the “Plaza Surface Repair Costs,” could be considered maintenance costs as defined by the easement agreement as a matter of law, but that the amount of the costs would be determined at trial. In addition, Judge Boner concluded that there was a material factual dispute over whether other portions of the project, which he termed the “Other Project Costs,” could have been considered part of the costs of maintenance. Thus, Judge Boner did not determine the extent and amount that defendant owed plaintiff for the Other Project Costs.
The disputed issues set out in the summary judgment order were tried by a jury beginning 23 August 2010. On 27 August 2010, the jury returned a verdict finding that all Other Project Costs, as defined by Judge Boner, fit within the definition of costs of maintenance under the easement agreement. The jury awarded plaintiff a total of $1,141,819.13 as defendant's share of all portions of the project, plus $95,751.42 in prejudgment interest. On 24 September 2010, the trial court entered a judgment which awarded plaintiff $1,326,392.30, which included the jury verdict, interest, plaintiff's attorneys' fees, and costs, as a lien on defendant's property. The trial court ordered defendant's property to be sold at a foreclosure sale to satisfy the lien. Defendant appeals.
II. Costs of Maintenance
Defendant argues that the trial court erred by denying its motion for summary judgment. Specifically, defendant contends that the project should have been excluded as maintenance costs under the easement agreement as a matter of law. We disagree.
Summary judgment shall be rendered
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. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is genuine issue as to the amount of damages.
N.C. Gen.Stat. § 1A–1, Rule 56(c) (2011). “Review of summary judgment on appeal is de novo. The evidence must be evaluated in the light most favorable to the non-moving party.” Collier v. Bryant, ––– N.C.App. ––––, ––––, 719 S.E.2d 70, 75 (2011) (internal citation omitted).
Defendant argues that the partial summary judgment order incorrectly interpreted portions of the easement agreement to conclude that the costs incurred by the project could be considered maintenance costs for which defendant was required to contribute according to the easement agreement. The easement agreement defined “costs of maintenance” as follows:
[A]ll reasonable and ordinary expenses incurred for the operation, maintenance and repair of the Outdoor Plaza and improvements, fixtures and personal property which are part of the Outdoor Plaza. This term shall also include costs for the maintenance (structural or otherwise) and landscaping of adjoining rights of way, including any improvements made by or required of Office Owner to the underground ramp in East Third Street. Costs of maintenance shall also include cleaning, security services, landscape maintenance and replacements, insurance, services of independent contractors, real and personal property taxes attributable to the Outdoor Plaza, and any other expense or charge which in accordance with generally accepted accounting and management principles would be considered an expense of maintaining, operating or repairing the Outdoor Plaza.
Defendant contends that the costs incurred for the project could not be considered as maintenance costs for four reasons: (1) the expenses from the project did not constitute “ordinary” expenses of the operation, maintenance, and repair of the Plaza; (2) the costs of maintenance did not include the replacement of any portion of the Plaza and also did not include structural work; (3) the costs of the project were capital expenditures for which defendant had no liability; and (4) the project included work on areas outside of the Plaza.
“When the language of a contract is plain and unambiguous, its construction is a matter of law for the court. If the language used in a contract is ambiguous and the parties' intention is unclear, the interpretation of the contract is for the jury.” Marsh Realty Co. v. 2420 Roswell Ave., 90 N.C.App. 573, 576–77, 369 S.E .2d 113, 115 (1988) (citations omitted). “A contractual clause is ambiguous if the language used is fairly and reasonably susceptible to either of the constructions asserted by the parties.” Novacare Orthotics & Prosthetics E., Inc. v. Speelman, 137 N.C.App. 471, 476, 528 S.E.2d 918, 921 (2000)(internal quotations and citation omitted). In the instant case, we agree with the trial court that the easement agreement is unambiguous, and thus, we shall construe it as a matter of law.
A. Ordinary Expenses
Defendant argues that the project cannot be considered an ordinary expense under the plain meaning of the term ordinary. In support of its contention, defendant notes that the costs of maintenance had never exceeded $21,000.00 per year and that, according to the easement agreement, defendant was required to pay for the costs of maintenance on demand.
The easement agreement does not define the term ordinary. However, “[i]n construing contracts ordinary words are given their ordinary meaning unless it is apparent that the words were used in a special sense.” Harris v. Latta, 298 N.C. 555, 558, 259 S.E.2d 239, 241 (1979). Black's Law Dictionary defines ordinary as “occurring in the regular course of events; normal; usual.” Black's Law Dictionary, 9th Edition 1209 (2009). There is nothing in this definition that places a time limitation on an “ordinary” occurrence. The parties entered into a permanent easement agreement regarding the Plaza, and thus, ordinary expenses must be considered in the context of the overall life of the Plaza and not merely by considering month-to-month expenses. The undisputed evidence was that the problems experienced by the Plaza were the result of normal aging to be expected during the Plaza's useful life. Consequently, the trial court did not err by determining that the expenses of the project were ordinary expenses, as they would “occur[ ] in the regular course of events” over the life of the Plaza and during the relationship of the parties under the easement agreement.
B. Replacement and Structural Work
Defendant next contends that the project does not fit within the definitions of maintenance and repair, because it constituted replacement and structural work. In support of its argument, defendant notes that the easement agreement contains the terms “replacement” and “structural,” but these terms do not appear in the primary definition of costs of maintenance.
Defendant's argument relies on an overly narrow definition of the words maintenance and repair. In Chambers v. North River Line, our Supreme Court established the following definitions for these terms: “The word maintain is practically the same thing as repair, which means to restore to a sound or good state, after decay, injury, dilapidation, or partial destruction.” 179 N.C. 199, 201, 102 S.E. 198, 199 (1920)(internal quotations and citation omitted). Thus, the requirement that defendant contribute to all expenses required to restore the Plaza “to a sound or good state” is broad enough to encompass the replacement and structural work that was part of the project, regardless of whether those two terms were included in the primary definition of the costs of maintenance.
C. Capital Expenditures
Defendant additionally argues that the project costs were capital expenditures which were not covered as part of the costs of maintenance. To support its argument, defendant cites the following portion of the definition of costs of maintenance in the easement agreement: “Costs of maintenance shall also include ... any other expense or charge which in accordance with generally accepted accounting and management principles would be considered an expense of maintaining, operating, or repairing the Outdoor Plaza.” Defendant contends that the project would have been considered a capital expenditure, rather than an expense, under general accounting and management principles.
However, the classification of the project under these general accounting principles is immaterial, as the portion of the definition cited by defendant does not encompass the entire definition of the costs of maintenance. Instead, by using the word “also,” this section adds additional items as part of the costs of maintenance which did not fall within the previous portions of the definition. Since we already determined that the project costs were properly considered maintenance costs under the primary definition, i.e., the “reasonable and ordinary expenses incurred for the operation, maintenance and repair of the Outdoor Plaza and improvements, fixtures and personal property which are part of the Outdoor Plaza,” we need not consider whether they also fit within the additional portion of the definition cited by defendant.
D. The Plaza
Finally, defendant contends that the project included work in areas beyond the definition of the Plaza in the easement agreement. In the agreement, the Plaza was defined as “the area shown on Exhibit C generally bordered by the pavement of South College Street and East Third Street and the exterior walls of the Office Building and Hotel at Hotel Plaza Level. The Outdoor Plaza shall include all amenities and improvements installed in this area.” Defendant notes that the referenced “Exhibit C” was a two-dimensional drawing of the surface of the Plaza and contends that the choice of a two-dimensional drawing over a three-dimensional drawing requires interpreting the definition of the Plaza to only include the surface area.
Defendant's argument is unpersuasive. Exhibit C depicts several subsurface elements such as gas lines and underground cables, and thus, it does not support defendant's argument that the Plaza should be defined as only existing at the surface level. Moreover, the definition also clearly includes “all amenities and improvements” installed in the Plaza. Ultimately, the Plaza and its amenities could not exist without its underground supporting structures and it would be illogical to consider the surface and subsurface portions of the Plaza as separate. Since the easement agreement required defendant to contribute to all expenses required to restore the Plaza “to a sound or good state,” Chambers, 179 N.C. at 201, 102 S.E. at 199, it necessarily was required to contribute to both surface and subsurface work as part of the costs of maintenance.
Defendant has failed to demonstrate that the trial court incorrectly interpreted the costs of maintenance provision in the easement agreement. Accordingly, we conclude that the trial court did not err in denying defendant's motion for summary judgment. This argument is overruled.
III. Partial Summary Judgment
Defendant argues that the trial court erred by granting partial summary judgment to plaintiff and setting the issues of the amount owed for “Plaza Surface Repair Costs” and the extent and amount owed for “Other Project Costs” for a jury trial pursuant to N.C. Gen.Stat. § 1A–1, Rule 56(d). We disagree.
N.C. Gen.Stat. § 1A–1, Rule 56(d) states:
If on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established.
N.C. Gen.Stat. § 1A–1, Rule 56(d) (2011). In the instant case, defendant contends that the trial court's partial summary judgment order erroneously treated certain facts as established facts rather than controverted facts.
A. Plaza Surface Repair Costs
Defendant first challenges the trial court's finding that the “Plaza Surface Repair Costs” were costs of maintenance under the easement agreement as a matter of law. The trial court's order defined the Plaza Surface Repair Costs as those costs which were related to “the removal and replacing of the pavers, landscaping, grout, caulking, setting beds, and similar materials, and repairing and refinishing the clock tower....”
In contending that this finding was error, defendant argues that the jury should have been allowed to interpret the term “costs of maintenance” in order to determine whether these repairs were covered by the easement agreement, based upon its summary judgment arguments above. However, the jury would only be required to interpret the easement agreement if it was ambiguous. Marsh Realty, 90 N.C.App. at 576, 369 S.E.2d at 115. It has already been determined that the trial court properly concluded that the easement agreement was unambiguous. Moreover, it has been determined that the trial court properly interpreted the agreement to include the costs of replacement for items, such as the pavers and mortar, as part of the costs of maintenance. Finally, there is no dispute that this portion of the project was part of the Plaza as defined by the easement agreement. Accordingly, the trial court properly found that the Plaza Surface Repair Costs were costs of maintenance under the easement agreement. This argument is overruled.
B. Other Project Costs
Defendant also contends that the trial court erred in submitting to the jury the issue of whether the portions of the project which the trial court's order referred to as “Other Project Costs” were included as part of the costs of maintenance under the easement agreement. This term included all costs incurred for the repair and replacement of the waterproofing, the repair and replacement of electrical items, and the repair and replacement of plumbing items. Defendant argues that these costs could not have been part of the costs of maintenance as a matter of law. In support of this argument, defendant cites an email from one of plaintiff's employees which stated that “[t]he primary reason for this project is to replace the deteriorating waterproofing underneath the pavers.... [T]he waterproofing system is at the end of its useful life and must be replaced before any damage is done to the structure below.” Defendant contends that this email established that the Other Project Costs were incurred for the benefit of the underground garage and not the Plaza.
However, plaintiff provided other evidence to support its summary judgment motion. This included an affidavit by plaintiff's property manager, Robert Lee Taylor III, that averred that all costs associated with the project, including the Other Project Costs, were incurred for the operation, maintenance and repair of the Plaza. Since there was conflicting evidence regarding whether the Other Project Costs was part of the costs of maintenance under the easement agreement, the trial court properly submitted this issue to the jury. This argument is overruled.
C. Trial Court's Findings
Defendant argues that the trial court erred by reading the undisputed findings in the partial summary judgment order to the jury. Defendant again contends that the jury should have been able to independently interpret the easement agreement to determine if the Other Project Costs fell within the definition of the costs of maintenance in the agreement. However, as previously noted, it was unnecessary for the jury to interpret the easement agreement, because the agreement was unambiguous. The trial court properly determined that the costs incurred for what it had defined as Other Project Costs would properly be considered as part of the costs of maintenance under the easement agreement, so long as the jury determined the Other Project Costs were primarily incurred for the Plaza. This argument is overruled.
IV. Cross–Examination
Defendant argues that the trial court erred by prohibiting it from cross-examining plaintiff's witness Fred Klein (“Klein”) regarding statements made by plaintiff's representative and by plaintiff's project engineer when they were present during Klein's consultations with plaintiff's tax advisor. However, defendant cites no authority in support of this argument, and therefore, we deem this argument abandoned pursuant to N.C.R.App. P. 28(b)(6) (2011).
V. Directed Verdict
Defendant argues that the trial court erred by denying its motion for a directed verdict at the end of trial. Specifically, defendant contends that the trial court should have held that plaintiff failed to perfect its lien as a matter of law. We disagree.
The standard of review for a motion for directed verdict is whether the evidence, considered in the light most favorable to the non-moving party, is sufficient to be submitted to the jury. A motion for directed verdict should be denied if more than a scintilla of evidence supports each element of the non-moving party's claim.
Weeks v. Select Homes, Inc., 193 N.C.App. 725, 730, 668 S.E.2d 638, 641 (2008) (citation omitted).
In the instant case, defendant argues that plaintiff failed to perfect its lien in the manner required by the easement agreement. The relevant portion of the agreement states:
Unpaid amounts together with interest and costs of collection, including reasonable attorneys' fees, shall be a charge on the entire Property of the defaulting Owner, which may be foreclosed in accordance with the laws of the State of North Carolina.... To evidence such lien, an Owner shall prepare a written claim of lien pursuant to Chapter 44A of the North Carolina General Statutes. The lien for the unpaid assessment shall attach from the date of the recording of the notice. The lien claimant shall send a copy of this notice to the holder(s) of each recorded first or second lien mortgage or deed of trust on the property subject to this contractual lien at the lienholder's address set forth in its recorded security instrument. Any such lien may be enforced only by the foreclosure upon the Property subject thereto as provided for contractual liens on real property under the laws of the State of North Carolina.
(Emphasis added). Defendant contends that plaintiff failed to provide evidence that it sent notice to any senior lienholders as required by the emphasized language above. Defendant argues that without this evidence, plaintiff could not establish that it had perfected its lien. However, while plaintiff was indeed required to provide notice to the senior lienholder under the terms of the easement agreement, this requirement did not affect the perfection of the lien against defendant. The easement agreement clearly states that the filing of the lien and any resultant foreclosure on that lien was governed by Chapter 44A of our General Statutes. Under N.C. Gen.Stat. § 44A–11 (2011), “[a] claim of lien on real property granted by this Article shall be perfected ... upon the filing of the claim of lien on real property ...” Plaintiff presented evidence that it had filed a claim of lien in accordance with all statutory requirements, and this evidence was sufficient to establish that it had perfected its lien. This argument is overruled.
VI. Conclusion
The trial court did not err by denying defendant's motion for summary judgment, by granting partial summary judgment to plaintiff, or by framing the issues for trial. Defendant waived its argument that the trial court erred by prohibiting certain questions during its cross-examination of Klein. The trial court properly denied defendant's motion for a directed verdict because plaintiff submitted sufficient evidence that it had perfected its lien pursuant to N.C. Gen.Stat. § 44A–11. Defendant received a fair trial, free from error.
No error. Judges BRYANT and STROUD concur.
Report per Rule 30(e).