Opinion
No. COA03-395
Filed March 2, 2004 This case not for publication
Appeal by defendant from an order entered 9 December 2002 by Judge David S. Cayer in Mecklenburg County District Court. Heard in the Court of Appeals 14 January 2004.
Kennedy Covington Lobdell Hickman, L.L.P., by John H. Capitano and Amy P. Williams, for plaintiff-appellee. Horack, Talley, Pharr Lowndes, P.A., by Henry N. Pharr, III, for defendant-appellant.
Mecklenburg County No. 02-CVD-14651.
Lake Norman Castaldi's, LLC ("defendant") appeals from an order filed 9 December 2002 granting summary judgment in favor of Northcross Land and Development, L.P. ("plaintiff") in a summary ejectment action. Because plaintiff is not equitably estopped from acting upon defendant's default on a commercial lease and has not waived its right to enforce the bankruptcy default provision of the lease, we affirm. The undisputed facts of the case reveal that on 7 January 1998 defendant entered into a ten-year commercial lease with plaintiff to rent space for a restaurant in the Northcross Shopping Center in Mecklenburg County, North Carolina. The lease included a default provision, which defendant could trigger by non-payment of rent or by filing for bankruptcy. Defendant failed to pay the rent in March 2001, and on 11 April 2001, filed for bankruptcy in the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division. The parties entered into a stipulated order in the bankruptcy action on 4 April 2002, whereby defendant agreed to pay $45,000.00 in arrears to plaintiff prior to 29 May 2002. By 16 May 2002, defendant had paid $30,000.00, and subsequently requested additional time to pay the remaining $15,000.00. On 21 May 2002, the parties through counsel agreed to an extension of the payment deadline until 24 June 2002. An "Order Confirming Plan" was filed in the bankruptcy action on 25 June 2002, which gave defendant until 24 June 2002 to pay the remaining arrearage.
Although, throughout the record it appears defendant is properly classified as a LLC, the caption in the order granting summary judgment lists defendant as "Lake Norman Castaldi's, Inc."
Although the record in th is case contains few page numbers corresponding with the index and apparently omits pages in key documents, because the basic facts of this case are undisputed, we elect to exercise our discretion under Rule 2 of the North Carolina Rules of Appellate Procedure to address the merits of the appeal.
Only the first few pages of the "Order Confirming Plan" are included in the record, without the signatures of the parties or judge and further without the date upon which it was signed. Fortunately, we are able to locate in the record an affidavit stating these pertinent facts.
Defendant received a "Late Notice" from plaintiff on 22 June 2002, which reflected a balance due of $21,213.16. Defendant didnot telephone plaintiff to inquire about the late notice and the specifics of the amount and request an itemized statement until 25 June 2002. Defendant was not informed by plaintiff's representative at any time during this telephone conversation that the failure to make payment by 24 June 2002 would constitute a default under the parties' agreement in the stipulated order. Defendant, in fact, asserts that plaintiff stated that it would "look forward" to receiving payment by 28 June 2002.
Defendant's payment was received by plaintiff on 28 June 2002, but the payment was rejected by plaintiff on 2 July 2002. On 9 July 2002, plaintiff filed this summary ejectment action and on 25 July 2002, the bankruptcy action was dismissed based upon defendant's default under the lease, stipulated order, and the "Order Confirming Plan." On 9 December 2002, the trial court granted summary judgment in favor of plaintiff on the grounds that defendant had defaulted under the lease both by non-payment of rent and by filing for bankruptcy, and ordered defendant to vacate the premises.
The issues are whether: (I) plaintiff is equitably estopped from enforcing the default provisions of the lease, stipulated order, and "Order Confirming Plan" for non-payment, and (II) plaintiff has waived its right to enforce the bankruptcy default provision of the lease.
I.
Defendant first contends that plaintiff is equitably estopped from enforcing the default provisions of the lease, stipulatedorder, and "Order Confirming Plan" by its representations that payment should be made by 28 June 2002, even though the "Order Confirming Plan" required payment by 24 June 2002 and by demanding a higher amount than agreed upon in the stipulated order.
"[T]he essential elements of an equitable estoppel as related to the party estopped are: (1) Conduct which amounts to a false representation or concealment of material facts, or, at least, which is reasonably calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party afterwards attempts to assert; (2) intention or expectation that such conduct shall be acted upon by the other party, or conduct which at least is calculated to induce a reasonably prudent person to believe such conduct was intended or expected to be relied and acted upon; (3) knowledge, actual or constructive, of the real facts. . . ."
Meachan v. Board of Education, 47 N.C. App. 271, 277-78, 267 S.E.2d 349, 353 (1980) (citation omitted). Further, the party asserting equitable estoppel must show "`(1) lack of knowledge and the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party sought to be estopped; and (3) action based thereon of such a character as to change his position prejudicially.'" Id. at 278, 267 S.E.2d at 353 (citation omitted).
In this case, as to the amount owed by defendant, defendant does not contend the amount claimed was a false representation, and in fact after its own investigation, tendered payment of the amount stated in the "Late Notice." As to the representations that payment could be made by 28 June 2002, defendant should have been aware that the payment deadline had been extended until 24 June 2002 because that was the date agreed to by the parties asreflected in the "Order Confirming Plan." Any confusion over the date of the revised deadline was due only to mis-communication between defendant and its counsel in the bankruptcy action. Furthermore, even if defendant reasonably relied on the statement by plaintiff's representative that plaintiff would "look forward" to receiving payment by 28 June 2002, this did not result in defendant changing its position prejudicially, because the telephone conversation did not occur until 25 June 2002, the day after the agreed upon deadline for making payment. Thus, the 25 June 2002 telephone conversation was immaterial to defendant's failure to meet the 24 June 2002 deadline. Therefore, plaintiff was not equitably estopped from rejecting defendant's late payment.
II.
Nevertheless, even if plaintiff should be equitably estopped from acting upon defendant's default for non-payment, the trial court also granted summary judgment under the bankruptcy default provision of the lease. Defendant argues that the bankruptcy default provision of the lease was waived by plaintiff's apparent assent to the bankruptcy action and the orders entered therein and its subsequent and allegedly inconsistent demand for payment.
This Court has previously recognized that although a bankruptcy default provision in a lease is unenforceable during the pendency of the bankruptcy action, the dismissal of the bankruptcy action for a failure to comply with orders of the bankruptcy court "returned the parties to the same status which they had before the commencement of the case and the protection from the bankruptcytermination clause . . . was lost." Miller v. Parlor Furniture, 79 N.C. App. 639, 641, 339 S.E.2d 804, 805 (1986). Thus, since defendant's bankruptcy action was dismissed based upon its failure to comply with the orders of the bankruptcy court, the parties were restored to the same status as prior to that action, and the bankruptcy default provision of the lease was rendered enforceable. Thus, the trial court did not err in granting summary judgment for plaintiff.
Affirmed.
Judges McGEE and GEER concur.
Report per Rule 30(e).