Court Opinion

ID: 9578495
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:45:46.525563+00
Date Added: 2024-06-11T13:27:58.419630
License: Public Domain

CAMPBELL, Judge,
concurring in part and dissenting in part.
I respectfully dissent from the majority opinion on the issue of whether plaintiff terminated defendant’s leasehold estate, thereby allowing plaintiff to bring an action for summary ejectment.
With respect to Part III of the majority opinion, I agree that under N.C. Gen. Stat. § 42-26(2), a breach of a lease cannot be made the basis for summary ejectment unless the lease provides for termination upon such a breach or reserves the right of re-entry for such breach. Morris v. Austraw, 269 N.C. 218, 222, 152 S.E.2d 155, 159 (1967). The majority concedes that the lease in the instant case provides for the right to “terminate the Lease, or terminate the Defendant’s possession of the property.”
The majority holds in footnote 4 that because “Plaintiff’s notices did not indicate which option it was exercising, Plaintiff’s notices are insufficient to terminate Defendant’s estate.” I disagree.
The record in the instant case indicates that the parties entered into a 32-page (plus 7 pages of exhibits) commercial lease (“the Lease”) whereby defendant-Tenant (“defendant”) agreed to pay plaintiff-Landlord (“plaintiff’) a monthly minimum rent on a square foot basis (“base rent”) plus common area maintenance (“CAM”) charges “without demand and without counterclaim, deduction or set-off.” The Lease was entered into as of 14 June 1995. On 10 February 1997, the parties entered into a formal lease amendment wherein they agreed that defendant was then in default for failure to pay rent but that defendant was given an opportunity to cure in accordance with the terms and conditions outlined therein. The parties agreed that the total amount owing at that time was $179,825.56 which was to be paid in accordance with a payment schedule attached to the lease amendment. Other than the changes made by the amendment, all of the terms of the Lease were to remain in full force and effect.
Section 26(a) (i) of the Lease made defendant’s failure “to pay rent including additional rent within 3 business days after notice of *221its failure to do so from Landlord” an “Event of Default.” Upon any such “Event of Default,” Section 26(b) of the Lease entitled plaintiff, upon written notice to defendant, to:
(i) re-enter the Demised Premises and correct or repair any condition which shall constitute a failure on Tenant’s part to perform or abide by the terms of this Lease, . . . and (ii) re-enter the Demised Premises and remove therefrom Tenant and all property belonging to or placed on the Demised Premises by, or at the direction of, Tenant, and place or store such Tenant property . . . and [Landlord] shall be further entitled to either (x) to terminate the term hereof or (y) to terminate Tenant’s right to possession or occupancy only, without terminating the term of this Lease Agreement. Unless the term is specifically terminated by notice in writing, it shall be assumed that the Landlord has elected to terminate possession only, without terminating the term.
(Emphasis added). Pursuant to this provision, upon any “Event of Default,” plaintiff had the following options: (1) terminate the remainder of the Lease; (2) exercise its reserved right of re-entry to terminate defendant’s right to possession of the property; or (3) ignore the default and do nothing. Further, the parties agreed, as part of the Lease, that if plaintiff’s written notice to defendant under Section 26(b) did not specifically terminate the Lease, then it was to be assumed that plaintiff had elected to exercise its right of re-entry.
On three separate occasions5 in a three-and-a-half month span, plaintiff sent defendant written notice informing defendant that it was in default of the Lease pursuant to Section 3 (“Covenant to Pay Rent”) and Section 26 (“Events of Default”). Each of these notices demanded that defendant immediately cure default by payment of the past due amount, and warned defendant that “[i]f payment is not received in accordance with the Lease, the Landlord will immediately initiate curative remedies under the Lease and the law.”
*222There is no question that defendant’s repeated failure to pay rent after having been notified by plaintiff that it was past due constitutes an “Event of Default” under Section 26(a)(i) of the Lease. There is likewise no question that Section 26(b) of the Lease gives the plaintiff the option either to terminate the Lease upon an event of default (i.e. breach of the Lease), or to exercise its reserved right of re-entry and to terminate defendant’s right to possession or occupancy, so long as defendant is given written notice. The only question, and the issue on which I disagree with the majority opinion, is whether plaintiff’s warning that “[i]f payment is not received in accordance with the Lease, the Landlord will immediately initiate curative remedies under the Lease and the law,” was sufficient to cause defendant’s leasehold estate to have “ceased” under G.S. § 42-26(2). I believe that it was.
The majority opinion relies on this Court’s decision in Stanley v. Harvey, 90 N.C. App. 535, 369 S.E.2d 382 (1988), to support its conclusion that plaintiff’s written notices to defendant “did not provide clear and unequivocal notice to Defendant that Plaintiff was terminating Defendant’s estate.” While I agree with the decision reached in Stanley, I believe the majority’s reliance upon it in the instant case is misplaced for the following reasons.
First, the lease in Stanley did not provide for a right of re-entry to terminate possession. The only way the lessor in Stanley could cause the lessee’s estate to “cease” was to terminate the lease altogether. The Court in Stanley held that the notice to vacate the premises was not a clear and unequivocal notice that the lease was to be terminated, since the lessee could arguably refuse such request to vacate because the lease did not provide for an automatic right of re-entry. However, in the instant case plaintiff did not attempt to terminate the Lease, instead choosing to rely on the parties agreed upon assumption that its written notices constituted an election to exercise its reserved right of re-entry to terminate defendant’s possession. Since plaintiff was not attempting to terminate the Lease, the holding in Stanley is not controlling.
Second, the lease in Stanley was a residential lease, whereas the parties in the instant case had entered into a commercial lease with detailed provisions concerning the rights of the parties upon default. It should be presumed that the parties who have entered into a commercial lease have negotiated at arm’s length and understand the results of their negotiations as memorialized in their written lease agreement. Thus, I do not believe the defendant in the instant case *223misunderstood the notices it received from plaintiff. Defendant must have understood the provision in Section 26 of the Lease setting out the assumption that written notice from plaintiff which did not specifically terminate the Lease was an election by the plaintiff to terminate possession only. Allowing the commercial lessor to go forward with summary ejectment in a situation such as this is consistent with the agreement that the parties had entered into. Thus, I believe plaintiff met the required obligations for it to institute a summary ejectment action.
For the foregoing reasons, although I concur with Parts I, II, and that portion of Part III dealing with plaintiff’s cross-assignment of error, I respectfully dissent from that portion of Part III of the majority opinion holding that plaintiff failed to effectively terminate defendant’s leasehold estate. I would, therefore, affirm the trial court’s grant of summary judgment for plaintiff.

. In addition to these three occasions (letters dated 27 July 1999; 13 October 1999 and 10 November 1999), there was evidence of at least two prior defaults by tenant: (1) an amendment to the Lease by a Letter Agreement dated 24 July 1996, where the Tenant acknowledged an indebtedness of past due rent to the Landlord and agreed to a payment schedule to retire this indebtedness and (2) the Lease Amendment dated 10 February 1997 wherein the Tenant acknowledged that it was in default under both the Lease and the Letter Agreement and agreed to make past due rent payments for December 1996 and January 1997, and made acknowledgment of an indebtedness due the Landlord in the amount of $179,825.56. Except as specifically modified by the Lease Amendment, the Lease (including all default provisions) remained in full force and effect.