Court Opinion

ID: 9348656
Source: CourtListenerOpinion
Date Created: 2022-12-20 14:10:24.098425+00
Date Added: 2024-06-11T16:43:23.959236
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                2022-NCCOA-488

                                  No. COA22-49

                                Filed 19 July 2022

Mecklenburg County, Nos. 20 CVS 269, 20 CVS 300

GROOMS PROPERTY MANAGEMENT, INC., DELORES BOWDIDGE, YEVETTE
BOWDIDGE-JIMENEZ, PENNY LYNN CARROLL, YING DING, SHUO JIAO,
DIANNE R. EASON, and BARBARA TONEY, Plaintiffs,

            v.

MUIRFIELD CONDOMINIUM ASSOCIATION and WILLIAM                           DOUGLAS
MANAGEMENT. INC., Defendants and Third-Party Plaintiffs,

            v.

HOLLY MOORE and TC CORPORATE HOLDINGS, INC. f/k/a TRISURE
CORPORATION, Third-Party Defendants.

JENNIFER HAYES, Plaintiff,

            v.

MUIRFIELD CONDOMINIUM ASSOCIATION, STANAGE ELLING, MICHAEL
HOWARD, LINDA KILGO, and CHARITY GUARD, Defendants.

      Appeal     by   Defendant/Third-Party   Plaintiff   Muirfield   Condominium

Association from an Order entered 27 August 2021 by Judge Carla Archie in

Mecklenburg County Superior Court. Heard in the Court of Appeals 7 June 2022.
                       GROOMS PROP. MGMT., INC. V. MUIRFIELD CONDO. ASS’N

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                                         Opinion of the Court

            Cranfill Sumner LLP, by Steven A. Bader and Patrick H. Flanagan, for
            Defendant/Third-Party   Plaintiff-Appellant Muirfield  Condominium
            Association.

            Villmer Caudill, PLLC, by Bo Caudill, for Plaintiff-Appellee Jennifer Hayes.

            No briefs filed by the remaining parties.

            INMAN, Judge.

                  I.     FACTUAL AND PROCEDURAL BACKGROUND

¶1          Defendant/Third-Party       Plaintiff   Muirfield    Condominium        Association

     (“Muirfield”) is the condominium association for multiple buildings totaling around

     50 units. Plaintiff Jennifer Hayes (“Ms. Hayes”) owns one of the condominium units

     in Building 5, which was destroyed by fire on 19 December 2018.1

¶2          Complete exterior and interior repairs to Building 5 were estimated to cost

     between $1.36 and $1.46 million. Muirfield, however, received only $933,421.00 in

     insurance proceeds toward the repairs. On 29 October 2019, Muirfield’s board held

     a special meeting where it voted not to obtain a loan to cover the remaining deficiency,

     which included the completion of the units’ interior upfit.

            1 Ms. Hayes’s suit was consolidated with a related case brought against Muirfield by
     the remaining plaintiffs-appellees. Because this appeal concerns only Ms. Hayes’s claims for
     relief, we omit discussion of the other parties’ claims except where necessary.
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¶3         On 10 January 2020, Ms. Hayes filed suit in Mecklenburg County Superior

     Court against Muirfield and its directors for (1) declaratory relief, (2) violations of

     Muirfield’s Declaration Creating Unit Ownership and Establishing Restrictions,

     Covenants, and Conditions for Muirfield (the “Declaration”), (3) violations of Chapter

     47A of our General Statutes, (4) breach of fiduciary duties, and (5) negligence.

     Specifically, she contended Muirfield violated Chapter 47A as well as the Declaration

     by failing to maintain the requisite insurance coverage on the buildings.

¶4         On 24 May 2021, Ms. Hayes filed a motion for partial summary judgment

     seeking declaratory relief “that the Association must promptly repair and restore the

     damage to Plaintiff’s condominium unit and the building in which Plaintiff’s unit is

     situated,” as well as an injunction requiring Muirfield to repair her unit. Muirfield

     maintained that the Declaration required it to insure only the building’s exterior and

     that it had therefore complied with both the statute and its governing Declaration.

¶5         On 27 August 2021, the trial court granted Ms. Hayes’s motion for partial

     summary judgment for declaratory relief but denied injunctive relief. Specifically,

     the trial court ordered

                  [t]hat the Association’s failure to purchase insurance
                  sufficient to cover at least 80% of the replacement value of
                  Building 5 constituted a violation of the COA’s
                  declarations, covenants, and restrictions and Chapter 47A
                  of the N.C. General Statutes[,]

                  ....
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                   [and] [t]hat the Association must comply with Chapter 47A
                   of the N.C. General Statutes, including but not limited to
                   N.C. Gen. Stat. § 47A-25, which provides that “damage to
                   or destruction of the building shall be promptly repaired
                   and restored by the manager or board of directors . . . using
                   the proceeds of insurance on the building for that purpose,
                   and unit owners shall be liable for assessment for any
                   deficiency,” . . . .

¶6          The trial court certified its order as a final judgment pursuant to Rule 54(b) of

     our Rules of Civil Procedure. Muirfield filed notice of appeal 24 September 2021, and

     Ms. Hayes noticed a cross-appeal four days later. Muirfield also filed a petition for

     writ of certiorari on 23 March 2022, and Ms. Hayes filed a motion to dismiss

     Muirfield’s appeal for lack of jurisdiction on 4 April 2022.2

¶7          On appeal, Muirfield argues the applicable provisions of the Declaration are

     ambiguous regarding its coverage obligations, creating a genuine issue of fact that

     could not be resolved by summary judgment. We disagree and affirm.

                                         II.     ANALYSIS

     A. Appellate Jurisdiction

¶8          The parties disagree as to whether this Court has jurisdiction to review the

     trial court’s interlocutory order granting partial summary judgment for Ms. Hayes

     on fewer than all of her claims. An interlocutory order is subject to immediate review

            2Muirfield has moved this Court to dismiss Ms. Hayes’s cross-appeal. Ms. Hayes did
     not respond to that motion and did not file a brief in support of her cross-appeal. As a result,
     we grant Muirfield’s motion to dismiss.
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                                            Opinion of the Court

       if “the order or judgment is final as to some but not all of the claims or parties, and

       the trial court certifies the case for appeal pursuant to N.C. Gen. Stat. § 1A-1, Rule

       54(b), . . . [or] if the trial court’s decision deprives the appellant of a substantial right

       which would be lost absent immediate review.” N.C. Dep’t of Transp. v. Page, 119

       N.C. App. 730, 734, 460 S.E.2d 332, 334 (1995) (citations omitted). If an interlocutory

       appeal does not fall within these two categories, we may nonetheless exercise our

       discretion to review the appeal on the merits by writ of certiorari pursuant to Rule

       21(a)(1) of the North Carolina Rules of Appellate Procedure. Midsouth Golf, L.L.C.

       v. Fairfield Harbourside Condo. Ass’n, Inc., 187 N.C. App. 22, 26, 652 S.E.2d 378, 382

       (2007).

¶9            Assuming, arguendo, that the trial court’s partial summary judgment order

       was neither properly certified pursuant to Rule 54(b) nor affecting a substantial right,

       we allow Muirfield’s petition for writ of certiorari in our discretion.             See id.

       (“[A]ssuming arguendo that Plaintiff appeals from a nonappealable interlocutory

       order, we elect to consider the appeal by granting Plaintiff’s conditional petition for

       writ of certiorari.”).

       B. Standard of Review

¶ 10          We review appeals from summary judgment orders de novo, meaning we

       review the matter anew without restriction by the trial court. Midrex Techs., Inc. v.

       N.C. Dep't of Revenue, 369 N.C. 250, 257, 794 S.E.2d 785, 791 (2016). The moving
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       party bears the burden of showing it was entitled to summary judgment as a matter

       of law and that there is no genuine dispute as to any material fact. Jenkins v. Stewart

       & Everett Theatres, Inc., 41 N.C. App. 262, 265, 254 S.E.2d 776, 778 (1979); N.C. Gen.

       Stat. § 1A-1, Rule 56(c) (2021). We view the evidence in the light most favorable to

       the non-moving party, giving them the benefit of all reasonable inferences. Jenkins

       v. Lake Montonia Club, Inc., 125 N.C. App. 102, 104, 479 S.E.2d 259, 261 (1997).

¶ 11         Furthermore, “[i]nterpretation of the language of a restrictive covenant is a

       question of law reviewed de novo.” Erthal v. May, 223 N.C. App. 373, 378, 736 S.E.2d

       514, 517 (2012). “In construing restrictive covenants, the fundamental rule is that

       the intention of the parties governs, and that their intention must be gathered from

       study and consideration of all the covenants contained in the instrument or

       instruments creating the restrictions.” Friends of Crooked Creek, L.L.C. v. C.C.

       Partners, Inc., 254 N.C. App. 384, 389, 802 S.E.2d 908, 912 (2017) (citation omitted).

       C. Interpreting the Unambiguous Declaration is a Question of Law

¶ 12         Muirfield argues the Declaration provisions are ambiguous and therefore the

       trial court erred in granting Ms. Hayes partial summary judgment and concluding

       Muirfield violated the Declaration and Chapter 47A by failing to procure coverage for

       80 percent of the replacement value of Building 5. Specifically, Muirfield contends

       that the word “building” only refers to the outside structure and not the interior
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       units.3 We are not persuaded by these arguments because, when considered in the

       context of the language in the entire Declaration, we conclude the word “building” is

       not ambiguous.

¶ 13          Section 47A-24, in relevant part, requires condominium associations to, “if

       required by the declaration, bylaws or by a majority of the unit owners, . . . obtain

       insurance for the property against loss or damage by fire and such other hazards

       under such terms and for such amounts as shall be required or requested.” N.C. Gen.

       Stat. § 47A-24 (2021). Section 47A-25, in turn, states that “damage to or destruction

       of the building shall be promptly repaired and restored by the manager or board of

       directors, . . . using the proceeds of insurance for that purpose, and unit owners shall

       be liable for assessment for any deficiency[.]” N.C. Gen. Stat. § 47A-25 (2021).

¶ 14          Thus, whether Muirfield violated Sections 47A-24 and -25 is determined by

       whether Muirfield violated the terms of its Declaration.

¶ 15          This Court has previously held that the construction of unambiguous contract

              3  Ms. Hayes argues that Muirfield waived its argument that the Declaration was
       ambiguous because Muirfield did not use the word “ambiguous” at the hearing on Ms. Hayes’s
       motions. At the hearing, however, counsel for the other plaintiffs in the consolidated case
       conceded, “I think the parties would acknowledge there’s some ambiguity . . . .” Additionally,
       counsel for Muirfield argued that it was not responsible for interior repairs—exactly what it
       is arguing on appeal. Therefore, Muirfield “raised that specific issue before the trial court to
       allow it to make a ruling on that issue,” and did not “swap horses between courts in order to
       get a better mount [on appeal].” Regions Bank v. Baxley Com. Props., L.L.C., 206 N.C. App.
       293, 298-99, 697 S.E.2d 417, 421 (2010) (citations omitted).
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       terms, including the terms of a homeowners’ association declaration, presents a

       question of law. Dep’t. of Transp. v. Idol, 114 N.C. App. 98, 100, 440 S.E.2d 863, 864

       (1994); see also Shearon Farms Townhome Owners Ass’n. II, Inc. v. Shearon Farms

       Dev., L.L.C., 272 N.C. App. 643, 649-51, 847 S.E.2d 229, 234-36 (2020) (observing that

       a homeowners’ association declaration is interpreted “under ordinary contract

       principles” and applying a declaration’s plain language on de novo review). A genuine

       issue of material fact arises only when an ambiguity in a contract’s terms requires

       the factfinder to discern the parties’ intent from the evidence.       See Landover

       Homeowners Ass’n. v. Sanders, 244 N.C. App. 429, 430, 781 S.E.2d 488, 489 (2015)

       (“Where ambiguities exist in the language of a [homeowners association] declaration

       which create an issue of material fact, the trial court erred in granting summary

       judgment . . . .”).

¶ 16          Whether such an ambiguity exists in the first instance is a question of law for

       this Court on de novo review. Bicket v. McLean Sec., Inc., 124 N.C. App. 548, 553,

       478 S.E.2d 518, 521 (1996).     For the reasons explained below, we hold that no

       ambiguity exists here.

¶ 17          Section 20 of the Declaration provides:

                     (A) The following insurance coverage shall be maintained
                     in full force and effect by the Association covering the
                     operation and management of the Condominium Units and
                     Common Property:
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                    (1) Casualty insurance covering the building and all
                    improvements upon the land and all personal property
                    subject to this Declaration and any additions added by
                    amendment, except such personal property as may be
                    owned by the Condominium Unit Owners, shall be
                    procured in an amount equal to the maximum insurable
                    replacement value thereof (exclusive of excavation,
                    foundations, streets and parking facilities) as determined
                    annually by the insurance company affording such
                    coverage; and provided that such policies may be written
                    on a co-insurance basis of not less than eighty percent
                    (80%). . . . Such coverage shall afford protection against:
                    (a) loss or damage by fire or other hazards covered by the
                    ·standard extended coverage endorsement . . . .

¶ 18         Section 21 of the Declaration states who has responsibility for repairs in the

       event of a casualty, including a total destruction of the building:

                    (A) If any part of the Common Areas and Facilities shall
                    be damaged by casualty, the determination of whether or
                    not to reconstruct or repair it shall be made as follows:

                           ....

                           (2) Total destruction shall be destruction of more
                           than two-thirds (2/3) of the building. In the event of
                           total destruction, the Common Areas and Facilities
                           shall      not  be    reconstructed     or   repaired
                           if . . . Condominium Unit Owners who own three-
                           fourths (3/4) or more of the building vote against
                           reconstruction or repair.

                           (3) Any such reconstruction or repair shall be
                           substantially in accordance with the plans and
                           specifications contained herein.

                    (B) If the damage is only to those parts of one or more
                    Condominium Units for which the responsibility for
                    maintenance and repair is that of the Unit Owner, then the
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                   Condominium Unit Owner shall be responsible for
                   reconstruction and repair after casualty. In all other
                   instances, the responsibility of reconstruction and repair
                   after casualty shall be that of the Association as follows:

                         (1) Immediately after the casualty causing damage
                         to property for which the Association has the
                         responsibility for maintenance and repair, the
                         Association shall obtain reliable and detailed
                         estimates of the cost to place the damaged property
                         in condition as good as that before the casualty. Such
                         costs may include professional fees and premiums
                         for such bonds as the Boards of Directors deem
                         appropriate.

                         (2) When the damage is to both the Common Areas
                         and Facilities and Condominium Units, the
                         insurance proceeds shall be applied first to the costs
                         of repairing the Common Areas and Facilities and
                         the balance to the Condominium Units.

¶ 19         Section 4 of the Declaration provides the following description of the term

       “units”:

                   Each unit shall include all the space within the boundaries
                   thereof. . . . It is the intent that each unit will include all
                   interior drywall, panelling [sic] and molding and any
                   surface finish, or wallpaper, and all finished flooring, such
                   as exposed wooden flooring, vinyl or linoleum floor
                   covering, matting and carpeting, but will not include studs,
                   supports and wall insulation, concrete slabs, floor or ceiling
                   joists. Each unit shall be deemed to include the interior
                   and exterior of any and all doors, windows, sliding glass
                   doors and other closures. . . . Included also as part of a
                   unit are the following: (a) the heating and air conditioning
                   systems serving the unit . . . (b) all electrical switches,
                   electrical outlets and light fixtures . . . (c) the electrical
                   wiring and service system . . . (d) the plumbing for water
                   service . . . and (e) the drainage or sewer plumbing . . . .
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¶ 20          Section 20(A) of the Declaration provides that the insurance will cover both

       “the Condominium Units and Common Property.” (Emphasis added). Moreover, the

       casualty insurance required by Section 20(A)(1) is to cover the “building” and only

       excepts “such personal property as may be owned by the Condominium Unit

       Owners[.]” The word “building” is in a subsection that mandates insurance coverage

       for “Condominium Units,” disclosing that the building includes such units, which

       aligns with the definition of “building” as “containing” units.4

¶ 21          Muirfield does not contest that it failed to procure coverage for 80 percent of

       the estimated cost of replacing both the interior and exterior of the building. We

       reject Muirfield’s argument that the coverage requirement applied only to the

       exterior building structures.

¶ 22          As stated above, the Declaration excludes only “personal property” from the

       coverage requirement. Since the Declaration defines what the “unit” includes in

       Section 4, the “personal property” of the unit owner referenced in Section 20(A)(1)

       must refer to everything else in the unit. Therefore, Muirfield is required to maintain

              4 We find Craig v. Sandy Creek Condo. Ass’n, Inc., No. COA08-1048, 2009 WL 1663950
       (N.C. Ct. App. June 16, 2009) (unpublished), persuasive on this matter. The court in Craig
       reasoned that Section 47A-24’s mandate that the board “obtain insurance for the property,”
       combined with the definitions of “property,” “building,” and “unit” in Chapter 47A, meant
       “pursuant to Article 1, Chapter 47A, ‘property’ includes the ‘units’ which are housed inside
       the ‘buildings.’ ” Id. at *3-4.
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       insurance to cover those items that the Declaration mentions as being part of the

       “unit,” none of which is excepted by Section 20(A)(1) as “personal property.”

¶ 23         Muirfield also argues that Section 21 of the Declaration, which defines who is

       responsible for repair in the case of a casualty, means that it is not responsible for

       repairing the interior of Building 5 because unit owners must repair and replace

       damage to their units. Section 21(B) of the Declaration provides:

                    If the damage is only to those parts of one or more
                    Condominium Units for which the responsibility for
                    maintenance and repair is that of the Unit Owner, then the
                    Condominium Unit Owner shall be responsible for
                    reconstruction and repair after casualty. In all other
                    instances, the responsibility of reconstruction and repair
                    after casualty shall be that of the Association as follows:

                    ....

                           (2) When the damage is to both Common Areas and
                           Facilities and Condominium Units, the insurance
                           proceeds shall be applied first to the costs of
                           repairing the Common Areas and Facilities and the
                           balance to the Condominium Units.

       (Emphasis added).

¶ 24         Muirfield contends that, because unit owners typically have the responsibility

       of repairing and replacing things that are defined as part of the “unit,” the unit

       owners also have the responsibility to replace those things in the event of “total

       destruction.” This argument conflicts with provisions in the Declaration requiring
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       the Association to repair and replace damage to more than the just a unit, such as

       when there is a “total destruction” of the building.

¶ 25         Muirfield next argues that because unit owners can obtain their own

       insurance, and Section 21 mandates the Association’s insurance proceeds be applied

       first to the common areas, that Muirfield is not responsible for insuring the interior

       units. This argument also fails.

¶ 26         The Declaration provides that unit owners are responsible in the event of unit-

       only damage. In the event of “total destruction,” however, the coverage responsibility

       shifts to Muirfield. A unit owner’s ability to obtain insurance coverage for the interior

       does not negate the Association’s coverage obligations. The applicable provisions

       simply specify the priority order for the Association to make repairs: first to the

       Common Areas and then to the units.

¶ 27         Accordingly, we hold that by the express terms of the Declaration, Muirfield

       was required to procure insurance sufficient to cover 80 percent of the “building,”

       including the interior upfits of the individual units. And, because the Declaration

       required said insurance, the plain language of Sections 47A-24 and -25 compelled the

       Association to insure and apply insurance proceeds to the building structure and the

       units. Therefore, the trial court did not err in granting Ms. Hayes’s motion for partial

       summary judgment as to these issues.
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                                  III.     CONCLUSION

¶ 28       For the foregoing reasons, we affirm the trial court’s order.

           MOTION TO DISMISS APPEAL GRANTED; MOTION TO DISMISS CROSS-

       APPEAL GRANTED; PETITION FOR WRIT OF CERTIORARI ALLOWED;

       AFFIRMED.

           Judges HAMPSON and GRIFFIN concur.