Court Opinion

ID: 4025325
Source: CourtListenerOpinion
Date Created: 2016-08-16 12:11:40.39987+00
Date Added: 2024-06-11T12:16:17.001418
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                 No. COA15-1102

                              Filed: 16 August 2016

Dare County, No. 13 CVS 190

CAPE HATTERAS ELECTRIC MEMBERSHIP CORPORATION, an electric
membership corporation organized and existing pursuant to N.C. Gen. Stat. Chapter
117, Plaintiff,

              v.

GINA L. STEVENSON and JOSEPH F. NOCE, Defendants.

      Appeal by plaintiff from order entered 9 April 2015 by Judge Gregory P.

McGuire in the North Carolina Business Court. Heard in the Court of Appeals 30

March 2016.

      Vandeventer Black LLP, by Norman W. Shearin and Ashley P. Holmes, for
      plaintiff-appellant.

      Brooks, Pierce, McClendon, Humphrey & Leonard, LLP, by Julia C. Ambrose
      and Daniel F. E. Smith, for defendants-appellees.

      Patrick Buffkin, for amicus curiae North Carolina Association of Electric
      Cooperatives, Inc.

      DIETZ, Judge.

      At its heart, this is a case of straightforward contract interpretation. The

plaintiff is an electric cooperative whose bylaws require all members to grant an

easement across their land for power lines and other electric services upon request

by the cooperative with “reasonable terms and conditions.”
              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                   Opinion of the Court

      Recent storms caused severe erosion near the cooperative’s existing

transmission lines. So the cooperative sent a letter to Defendant Gina Stevenson, a

cooperative member, instructing her to grant a 44-foot-wide easement across her

property for the rerouted lines.      The letter attached a proposed right-of-way

agreement offering her one dollar in consideration for the easement.

      Stevenson refused to sign. Then, in what the cooperative alleges was an effort

to frustrate the terms of the bylaws, Stevenson conveyed one of her lots to her

boyfriend, who was not a member of the cooperative. This forced the cooperative to

pursue a condemnation action to secure the easement.            The cooperative sued

Stevenson and her boyfriend for intentional interference with contract and civil

conspiracy, and sought accompanying declaratory relief. The business court entered

summary judgment against the cooperative and it then appealed.

      We affirm. As explained below, the cooperative’s demand for a 44-foot-wide

easement across Stevenson’s property in exchange for one dollar was not a reasonable

term or condition. Thus, the bylaws did not require Stevenson to agree to that

request. Because there was no breach of contract, the cooperative’s claims fail as a

matter of law. We also affirm the business court’s entry of declaratory relief, but

clarify that the declaration is limited to the facts of this case, where the request for

an easement was not accompanied by reasonable terms and conditions.

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              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                  Opinion of the Court

                         Facts and Procedural History

      Gina Stevenson owns property on Hatteras Island. Electric power to

Stevenson’s property is provided by the Cape Hatteras Electric Membership

Corporation (CHEMC), an electric cooperative chartered by State law. Stevenson is

a member of the cooperative.

      When members join the cooperative, they agree to be bound by the

cooperative’s bylaws. The bylaws contain two provisions at issue in this case.

      First, the bylaws provide that a member shall grant an easement to the

cooperative when necessary to provide electric service to cooperative members, in

accordance with reasonable terms and conditions:

             SECTION 1.08. Member to Grant Easements to
             Cooperative and to Participate in Required
             Cooperative Load Management Programs. Each
             member shall, upon being requested to do so by the
             Cooperative, execute and deliver to the Cooperative grants
             of easement or right-of-way over, on and under such lands
             owned or leased by or mortgaged to the member, and in
             accordance with such reasonable terms and conditions, as
             the Cooperative shall require for the furnishing of electric
             service to him or other members or for the construction,
             operation, maintenance or relocation of the Cooperative's
             electric facilities.

      Second, the bylaws provide that the cooperative may shut off a member’s

electricity when that member fails to comply with her membership obligations:

             SECTION 2.01. Suspension; Reinstatement. Upon his
             failure, after the expiration of the initial time limit
             prescribed either in a specific notice to him or in the

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              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                  Opinion of the Court

             Cooperative’s generally publicized applicable rules and
             regulations, to pay any amounts due the Cooperative or to
             cease any other noncompliance with his membership
             obligations, a person’s membership shall automatically be
             suspended; and he shall not during such suspension be
             entitled to receive electric service from the Cooperative or
             to cast a vote.

      On 21 December 2012, CHEMC sent Stevenson a letter explaining that it

needed to reroute its transmission line across Stevenson’s property because recent

storms had severely eroded the ground near existing lines.

      At some point in the month after receiving this letter, Stevenson had an

informal discussion with a CHEMC manager about rerouting the transmission lines.

Stevenson proposed that the cooperative pay to relocate one of Stevenson’s rental

homes to a nearby undeveloped lot that she owned. CHEMC did not agree to this

proposal.

      The following month, on 13 February 2013, CHEMC sent a demand letter to

Stevenson attaching a proposed right-of-way agreement.          The letter informed

Stevenson that “[r]elocation of the transmission line necessitates the granting by you

of an easement or right-of-way to the Cooperative.” It also stated that “as a member

of the Cooperative, you are obligated by its bylaws to grant the easement.” The right-

of-way agreement attached to this letter granted a 44-foot-wide easement across

Stevenson’s property, appearing to come just feet from the front door of one of her

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              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                 Opinion of the Court

rental homes. The agreement stated that Stevenson would grant this easement in

exchange for “the sum of One Dollar ($1.00) and other valuable consideration.”

      The relocation of the transmission lines affected a number of properties, not

just those owned by Stevenson, and many residents talked about the cooperative’s

demands both in person and by email. At some point after Stevenson received the

demand letter, CHEMC told the local homeowner’s association that it was willing to

negotiate with homeowners impacted by the rerouted lines for additional

compensation.   The record does not contain any direct communications between

CHEMC and Stevenson.

      On 20 February 2013, Stevenson informed CHEMC by phone that she would

not grant the requested easement. A month later, on 26 March 2013, Stevenson

deeded her undeveloped lot to her boyfriend, Joseph Noce, who was not a member of

the cooperative and thus not a party to the bylaws. At the time he received the

property, Noce was aware that the cooperative had demanded that Stevenson grant

an easement across that property.

      On 10 April 2013, CHEMC sued Stevenson, seeking a declaration of the

parties’ rights and obligations under Section 1.08 of the bylaws. The Chief Justice

designated the action as a mandatory complex business case the following day.

      On 15 April 2013, CHEMC petitioned for condemnation of Stevenson’s and

Noce’s property to obtain the necessary easements. Three days after filing these

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              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                  Opinion of the Court

condemnation petitions, CHEMC sent another letter to Stevenson demanding that

she grant the requested easement. CHEMC warned Stevenson that if she did not

grant the easement, it could shut off her electricity. Then, on 15 May 2013, CHEMC

informed Stevenson that it planned to cut off her power before the upcoming

Memorial Day weekend if she did not “communicate with [CHEMC] as soon as

possible about the powerline easement sought from her.”

      Two days later, faced with the possibility of having electricity to her rental

properties shut off during one of the busiest vacation weekends of the year, Stevenson

consented to an order in the condemnation proceeding conveying the requested

easements. The only remaining issue in the condemnation action was the amount of

compensation to be paid to Stevenson.

      On 10 June 2013, CHEMC filed an amended complaint seeking a declaration

of the parties’ rights and obligations under both Section 1.08 and Section 2.01 of

CHEMC’s bylaws. CHEMC also added an intentional interference with contract

claim against Noce and a civil conspiracy claim against both Stevenson and Noce.

      On cross-motions for summary judgment, the North Carolina Business Court

entered summary judgment for Stevenson and Noce on all claims. CHEMC timely

appealed. Because this case was designated as a complex business case and assigned

to the business court on 11 April 2013, this Court has appellate jurisdiction. See

                                         -6-
                CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                   Opinion of the Court

Christenbury Eye Ctr., P.A. v. Medflow, Inc., __ N.C. App. __, __, 783 S.E.2d 264, 265–

66 (2016).

                                       Analysis

         On appeal, CHEMC challenges the business court’s entry of summary

judgment against it on its two tort claims and also challenges a portion of the court’s

corresponding declaratory judgment. We review an appeal from summary judgment

de novo. In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008). Summary

judgment is proper when “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.” N.C. R. Civ. P. Rule 56(c). When considering a summary judgment motion,

a trial court must view the evidence in the light most favorable to the non-movant.

Jones, 362 N.C. at 573, 669 S.E.2d at 576.

   I.       Summary Judgment on Tort Claims

         CHEMC first argues that the business court erred in granting summary

judgment against it on its claims for civil conspiracy and intentional interference with

contract. As explained below, we reject CHEMC’s arguments and affirm the business

court.

         The theory underlying CHEMC’s intentional tort claims is straightforward:

the cooperative contends that Stevenson was contractually obligated to immediately

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               CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                    Opinion of the Court

grant the requested easement and that, by working together to avoid that contractual

obligation, both Stevenson and Noce are liable to the cooperative. The flaw in this

theory is that Stevenson was not contractually obligated to grant the easement in the

first place.

       As CHEMC conceded in the business court (and does not challenge on appeal),

Section 1.08 of the bylaws requires a cooperative member to grant an easement only

upon “reasonable terms and conditions.” Thus, if the cooperative’s demand for an

easement is made on unreasonable terms and conditions, the member has no

obligation to grant the easement.       And if there was no obligation to grant the

easement, CHEMC’s tort claims fail because those claims require CHEMC to prove

some improper inducement not to perform a contractual obligation. See Griffith v.

Glen Wood Co., 184 N.C. App. 206, 212, 646 S.E.2d 550, 555 (2007) (“An essential

element of a claim for tortious interference with a contract is that ‘the defendant

intentionally induces the third person not to perform the contract.’”); see also New

Bar P’ship v. Martin, 221 N.C. App. 302, 310, 729 S.E.2d 675, 682 (2012) (“[W]here a

plaintiff’s underlying claims fail, its claim for civil conspiracy must also fail.”). Simply

put, the determinative issue in this appeal is whether CHEMC’s request for the

easement was made on reasonable terms and conditions. We hold that it was not.

       In February 2013, CHEMC approached Stevenson and demanded that she

immediately grant the cooperative a 44-foot-wide easement across her property on

                                           -8-
              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                   Opinion of the Court

scenic Hatteras Island in exchange for one dollar. The demand letter from CHEMC

accompanying the proposed right-of-way agreement was wholly unilateral; it stated

that “[r]elocation of the transmission line necessitates the granting by you of an

easement or right of way to the Cooperative” and that Stevenson was “obligated” to

grant the easement. Neither the letter nor the attached right-of-way agreement

indicated that the cooperative intended to provide additional compensation to

Stevenson in the future or even that the cooperative would examine the impact of the

easement to determine if compensation was appropriate.

      We hold, as the business court did, that this unilateral demand was not made

in accordance with “reasonable terms and conditions.”         The amicus asks us to

delineate the sort of terms and conditions that are reasonable, and thus might satisfy

this contract language in future cases.      Amicus contends that these bylaws are

“common” among electric cooperatives and guidance is needed. But the parties have

not briefed this issue, and we are unwilling to delve into this sort of advisory dicta

without an appropriate record and argument from the parties. See Poore v. Poore,

201 N.C. 791, 792, 161 S.E. 532, 533 (1931). Moreover, this situation is quite different

from one in which parties or amici seek guidance on the meaning of a statute. This

is contract language in corporate bylaws. If parties not before the Court want more

detail on the meaning of the phrase “reasonable terms and conditions” in those

                                          -9-
                CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                   Opinion of the Court

bylaws, they can amend the documents to provide that clarity without waiting on

help from the courts.

         In sum, we limit this opinion to the facts before us and hold only that a

unilateral demand to grant an easement in exchange for one dollar, with no

assurances of future compensation or review, is not one made “in accordance with

reasonable terms and conditions.” As a result, Stevenson was not contractually

obligated to grant the easement and CHEMC’s tort claims for intentional interference

with contract and civil conspiracy fail as a matter of law.

   II.      Section 2.01 of CHEMC’s Bylaws

         CHEMC next challenges the business court’s declaratory judgment that, as

applied to the parties in this case, Section 2.01 of the cooperative’s bylaws is

unenforceable.    For the reasons explained above, we affirm the business court’s

declaratory judgment with respect to the parties in this case, on the facts of this case.

Because CHEMC did not seek an easement from Stevenson on reasonable terms and

conditions, Stevenson’s refusal to grant the easement was not a breach of the bylaws.

We agree with the business court that the cooperative cannot threaten to shut off a

member’s electricity under Section 2.01 of the bylaws as a means to force that member

to grant an easement on unreasonable terms and conditions.

         The amicus argues that the business court’s declaratory judgment could

prevent other electric cooperatives from using similar language in their own bylaws

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              CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON

                                  Opinion of the Court

to disconnect power from members who breach the bylaws and refuse to grant an

easement even upon reasonable terms and conditions. CHEMC’s complaint in this

action expressly requested a declaration only with respect to the rights of the parties

in this action, and that declaratory judgment is limited to the facts of this case. We

interpret the business court’s declaratory judgment as limited to circumstances in

which the request for the easement is not made in accordance with reasonable terms

and conditions—as was the case here—and we affirm it on that basis.

                                    Conclusion

      We affirm the judgment of the North Carolina Business Court.

      AFFIRMED.

      Judges HUNTER, JR. and INMAN concur.

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