Court Opinion

ID: 2733094
Source: CourtListenerOpinion
Date Created: 2014-09-16 12:04:10.210617+00
Date Added: 2024-06-11T12:01:13.935536
License: Public Domain

NO. COA14-215
                          NORTH CAROLINA COURT OF APPEALS
                             Filed:     16 September 2014
DAVID HYATT,
     Plaintiff

       v.

MINI STORAGE ON THE GREEN, DAVID B.
SMITH, AND NCI GROUP, INC. D/B/A
DOORS AND BUILDING COMPONENTS (DBCI),
     Defendants
                                                         Pender County
                                                         No. 09 CVS 1320
DAVID B. SMITH,
     Third-Party Plaintiff

       v.

THE ESTATE OF JOHN ALVIN ROYALL,
ROYALL COMMERCIAL CONTRACTORS, INC.
and E&S STEEL, INC.,
     Third-Party Defendants

       Appeal by plaintiff from orders entered 18 July 2013 and 21

August      2013   by    Judge    W.   Allen   Cobb,   Jr.,    in    Pender     County

Superior Court.          Heard in the Court of Appeals 5 June 2014.

       David & Associates, P.L.L.C., by Stuart Smith; Hodges &
       Coxe P.C., by Bradley A. Coxe, for Plaintiff.

       Hedrick, Gardner, Kincheloe & Garofalo, L.L.P., by Ellen P.
       Wortman, for Defendant Mini Storage on the Green.

       Wallace, Morris, Barwick, Landis & Stroud, P.A., by P.C.
       Barwick, Jr., Stuart L. Stroud, and Donald K. Phillips, for
       Third-Party Plaintiff David B. Smith.

       ERVIN, Judge.

       Plaintiff David Hyatt appeals from an order entered 18 July

2013   granting         summary   judgment     in   favor     of    Defendant    Mini
                                          -2-
Storage on the Green and from an order entered 19 August 2013

granting summary judgment in favor of Defendant and Third-Party

Plaintiff David B. Smith.            On appeal, Plaintiff argues that the

trial    court   erred     by     granting    summary     judgment      in    favor    of

Defendant Mini Storage because it breached a duty to provide

renters with safe storage units and because the rental agreement

between Plaintiff and Defendant Mini Storage fails to exculpate

Defendant from liability for failing to provide safe storage

units.      In addition, Plaintiff argues that the trial court erred

by granting summary judgment in favor of Defendant Smith because

any   assignment     of    the     contract     between    Defendant         Smith    and

Defendant     Mini   Storage       did    not   relieve     Defendant        Smith     of

liability and because the completed and accepted work doctrine

did not apply to the work that Defendant Smith performed on the

storage     units.        After    careful      consideration      of    Plaintiff’s

challenges to the trial court’s orders in light of the record

and   the    applicable     law,     we   conclude   that    the     trial     court’s

orders should be affirmed.

                             I. Factual Background
                                A. Substantive Facts
                 1. Liability of Defendant Mini Storage

      Defendant Mini Storage owns a storage facility located in

Hampstead.       On 15 October 2007, Plaintiff rented Unit No. 816

from Defendant Mini Storage pursuant to a written agreement.
                                           -3-
The    rental      agreement        provided,          among    other     things,           that

“[l]andlord [shall not] be liable to tenant and/or tenants guest

or invitees for any personal injuries sustained by tenant and/or

tenants      guest      or     invitees        while     on    or     about        landlord’s

premises.”       Plaintiff admitted that he had read and signed the

agreement and that he had not had any questions regarding the

terms of that agreement.

       On   3   July     2008,    Plaintiff       went    to    his     unit       to    collect

various personal items.             After entering the unit and collecting

his property, Plaintiff attempted to close the roller door to

his storage unit by pulling it down.                          As he did so, the door

became stuck.           Acting on the basis of a belief that he could

pull   the      door    down     past   the     point     at    which    it        was    stuck,

Plaintiff attempted to close the door with some force, at which

point the door came off of its tracks and struck Plaintiff in

the head, causing him to sustain personal injuries.

                       2. Liability of Defendant Mr. Smith

       In    2005,      Defendant       Mini    Storage        accepted        a    bid     from

Defendant Smith in connection with the construction of Building

No. 8, which consisted of 35 storage units, including Unit No.

816.    On 30 December 2005, Defendant Mini Storage and Defendant

Smith entered into a contract pursuant to which Defendant Smith

agreed to “furnish material and labor” for the project for a
                                              -4-
total cost of $92,000.                    Defendant Smith subsequently assigned

his contract with Defendant Mini Storage to John Alvin Royall

and Royall Commercial Contractors, Inc., for $10,000.                                 Royall

received      the    balance         of    the     contract       payments,    which      was

$82,000, in return for completing the project.

                                B. Procedural History

       On 4 November 2009, Plaintiff filed a complaint seeking to

recover damages for negligence.                    On 1 July 2011, Plaintiff filed

an amended complaint that asserted claims sounding in breach of

contract      and    breach     of    express       and    implied      warranty     against

Defendant Smith and sounding in breach of express and implied

warranty      against     NCI    Group,          Inc.,    d/b/a    Doors    and     Building

Components.         Plaintiff filed a second amended complaint on 15

July   2011    and    a   third       amended       complaint      on   5   October    2011.

Defendant Mini Storage and Defendant Smith filed answers denying

the material allegations of Plaintiff’s third amended complaint

and asserting various affirmative defenses on 28 October and 3

November 2011, respectively.

       On 4 June 2013, Defendant Mini Storage filed a motion for

summary judgment with respect to all of Plaintiff’s claims.                                On

7 June 2013, Defendant Smith filed a motion for summary judgment

as   well.      Defendants’          summary       judgment       motions    came    on   for

hearing before the trial court at the 15 July 2013 civil session
                                         -5-
of the Pender County Superior Court.              On 18 July 2013, the trial

court entered an order granting summary judgment in favor of

Defendant Mini Storage.              On 21 August 2013, the trial court

entered an order granting summary judgment in favor of Defendant

Smith based upon the fact that Defendant Smith had assigned his

contract with Defendant Mini Storage to Royall.                   Plaintiff noted

an appeal to this Court from the trial court’s orders.1

                        II. Substantive Legal Analysis
                              A. Standard of Review

      “‘[T]he standard of review on appeal from summary judgment

is   whether    there    is   any    genuine    issue   of   material       fact   and

whether the moving party is entitled to a judgment as a matter

of law.’”       Blackburn v. Carbone, 208 N.C. App. 519, 525, 703
S.E.2d 788, 794 (2010) (quoting Bruce–Terminix Co. v. Zurich

Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998)),

disc.     review   denied,     365 N.C. 194,   710 S.E.2d 52    (2011).

Summary     judgment     is   proper     “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.”             N.C. Gen. Stat. § 1A-1, Rule 56.

      1
      As a result of the fact that all of the other claims that
had been asserted in this case have been dismissed, the
challenged trial court orders represent an appealable final
judgment.
                                    -6-
We review orders granting or denying summary judgment using a de

novo standard of review, In re Will of Jones, 362 N.C. 569, 573,

669 S.E.2d 572, 576 (2008), under which “this Court ‘considers

the matter anew and freely substitutes its own judgment for that

of the [trial court].’”        Burgess v. Burgess, 205 N.C. App. 325,

327, 698 S.E.2d 666, 668 (2010) (quoting In re Appeal of the

Greens of Pine Glen Ltd. P’ship, 356 N.C. 642, 647, 576 S.E.2d
316, 319 (2003)).

                B. Defendant Mini Storage’s Liability

       In his brief, Plaintiff contends that the trial court erred

by granting summary judgment in favor of Defendant Mini Storage

on the grounds that the rental agreement between Plaintiff and

Defendant Mini Storage does not absolve Defendant Mini Storage

from   responsibility    for   providing    safe   storage   units.     More

specifically, Plaintiff argues that the relevant provision in

the rental agreement is not sufficiently explicit to operate as

a valid exculpatory clause.       Plaintiff’s argument lacks merit.

       According to well-established North Carolina law, contracts

“which exculpate persons from liability for negligence are not

favored,” Johnson v. Dunlap, 53 N.C. App. 312, 317, 280 S.E.2d
759, 763 (1981), cert. denied, 305 N.C. 153, 289 S.E.2d 380

(1982),   and   must    be   strictly    construed   against   the    person

seeking to escape liability.            Hall v. Sinclair Ref. Co., 242
                                         -7-
N.C. 707, 709, 89 S.E.2d 396, 397 (1955).                    “Nonetheless, such an

exculpatory      contract   will    be       enforced     unless     it    violates    a

statute, is gained through inequality of bargaining power, or is

contrary    to    a   substantial        public        interest.”          Fortson    v.

McClellan, 131 N.C. App. 635, 636, 508 S.E.2d 549, 551 (1998).

“This principle arises out of ‘the broad policy of the law which

accords to contracting parties freedom to bind themselves as

they see fit[.]’”       Sylva Shops Ltd. P’ship v. Hibbard, 175 N.C.

App. 423, 428, 623 S.E.2d 785, 790 (2006) (quoting Hall, 242
N.C. at 709, 89 S.E.2d at 397-98).                “[W]hen the language of the

contract and the intent of the parties are clearly exculpatory,

the contract will be upheld.”                Gibbs v. Carolina Power & Light

Co., 265 N.C. 459,          467, 144 S.E.2d 393, 400 (1965).                        As a

result, given the absence of any factual dispute concerning the

nature and extent of the contractual language at issue here, the

ultimate question raised by Plaintiff’s challenge to the trial

court’s decision is the extent to which Defendant Mini Storage

is   entitled    to   judgment     as    a    matter    of    law    based   upon    the

language of the rental agreement.

      The   relevant    provision       in     the     rental    agreement     between

Plaintiff   and    Defendant     Mini        Storage    states      that   “[l]andlord

[shall not] be liable to tenant and/or tenants guest or invitees

for any personal injuries sustained by tenant and/or tenants
                                         -8-
guest or invitees while on or about landlord’s premises.”                        As

Plaintiff concedes in his              initial    brief,   the fact that this

contractual language completely exempts Defendant Mini Storage

from       liability     for   any     personal     injuries    that     Plaintiff

sustained as a result of Defendant Mini Storage’s negligence

while      on   Defendant      Mini     Storage’s    premises        renders   this

provision       exculpatory     in     nature.2       In     addition,     despite

Plaintiff’s argument to the contrary, the exculpatory language

contained in the rental agreement is clear, unambiguous, and

enforceable.       In attempting to persuade us that the relevant

contractual language is not sufficiently explicit to exculpate

Defendant Mini Storage from liability for the personal injuries

that he sustained, Plaintiff directs our attention to a number

of decisions.           However, an examination of the decisions upon

which       Plaintiff     relies      demonstrates    that     the     exculpatory

       2
      Plaintiff clearly states in his initial brief that “the
contract clause must be analyzed as an exculpatory clause.”
Furthermore, Plaintiff did not argue that this clause was not
exculpatory at the hearing held before the trial court for the
purpose of considering Defendant Mini Storage’s summary judgment
motion.   However, Plaintiff does, for the first time, argue in
his reply brief that it was not clear whether the contractual
provision in question constituted an indemnity clause or an
exculpatory clause. In spite of the fact that this Court “will
not entertain what amounts to a new argument presented in th[e]
reply brief,” Oates v. N.C. Dep’t of Corr., 114 N.C. App. 597,
600, 442 S.E.2d 542, 544 (1994), we do believe, as Plaintiff
conceded until the filing of his reply brief, that the
contractual language at issue here constitutes an exculpatory,
rather than an indemnity, clause.
                                             -9-
provision        contained     in    the     agreement     at   issue   here   is    more

explicit than the language in any of the decisions upon which

Plaintiff relies.3           Simply put, the exculpatory clause at issue

here clearly and explicitly provides that Defendant Mini Storage

would      not   be   liable    for     personal     injuries      sustained    on   the

premises.         Such liability could only exist in the event that

Defendant Mini Storage acted negligently.                       As a result, given

that       the   exculpatory        clause    at   issue    here   clearly     absolved

Defendant Mini Storage from personal injury claims that could

       3
      Winkler v. Appalachian Amusement Co., 238 N.C. 589, 596, 79
S.E.2d 185, 190-91 (1953) (holding that a provision to the
effect that “the lessees shall, at their own cost and expense,
make any and all repairs that may be necessary inside the
portion of the building herein demised, excepting in the case of
. . . fire,” did not operate to excuse the defendant from
negligence liability); Hill v. Carolina Freight Carriers Corp.,
235 N.C. 705, 710, 71 S.E.2d 133, 137 (1952) (holding that a
provision indemnifying the defendant from “all losses thru fire,
theft & collision” did not suffice to preclude negligence
liability arising from the defendant’s negligence); Atlantic
Contracting and Material Company, Inc. v. Adcock, 161 N.C. App
273, 279-80, 588 S.E.2d 36, 41 (2003) (holding that language
indemnifying the defendant “against all losses, damages,
injuries, claims, demands and expenses” was not sufficiently
explicit to be enforceable); City of Wilmington v. North
Carolina Natural Gas Corporation, 117 N.C. App. 244, 248, 450
S.E.2d 573, 576 (1994) (holding that the contractual language
upon which the defendant relied did not explicitly absolve the
defendant from responsibility for its own negligence); and Lewis
v. Dunn Leasing Corporation, 36 N.C. App. 556, 559-60, 244
S.E.2d 706, 708-09 (1978) (holding language indemnifying the
defendant from “any and all claims or liability of every kind
and nature” not sufficiently specific).    In each instance, the
cases upon which Plaintiff relies applied to a wide range of
injuries in addition to personal injuries or did not clearly
indicate that negligence-based claims were excluded.
                                          -10-
only have arisen in the event that Defendant Mini Storage had

been   negligent,       we    must     next   determine    whether     any   of   the

exceptions        to   the    rule     providing    that     sufficiently     clear

exculpatory clauses are enforceable enunciated in Fortson apply.

       As    we    have      already      noted,   an     otherwise     enforceable

exculpatory clause will not be enforced in the event that it

“violates a statute, is gained through inequality of bargaining

power,      or    is   contrary      to   a   substantial     public     interest.”

Fortson, 131 N.C. App. at 636, 508 S.E.2d at 551.                     As an initial

matter, we note that Plaintiff has not cited any statute that is

inconsistent with the exculpatory provision at issue here, and

we have not located any such statute in the course of our own

research.        For that reason, the first Fortson exception does not

bar enforcement of the exculpatory clause at issue here.

       Secondly, we must determine if the exculpatory clause at

issue here “is contrary to a substantial public interest.”                        Id.

“[A] party cannot protect himself by contract against liability

for negligence in the performance of a duty of public service,

or where a public duty is owed, or public interest is involved,

or where public interest requires the performance of a private

duty.”      Hall, 242 N.C. at 710, 89 S.E.2d at 398.                  “An activity

falls within the public policy exception when the activity is

extensively regulated to protect the public from danger, and it
                                           -11-
would violate public policy to allow those engaged in such an

activity to ‘absolve themselves from the duty to use reasonable

care.’”       Fortson,      131     N.C.   App.      at   637, 508 S.E.2d    at    551

(quoting Alston v. Monk, 92 N.C. App. 59, 64, 373 S.E.2d 463,

466 (1988), disc. review denied, 324 N.C. 246, 378 S.E.2d 420

(1989)).          The     self-storage        industry         is     not,     unlike       the

industries     to    which      the    public     interest          exception       has    been

deemed applicable, extensively regulated by North Carolina law.

Alston, 92 N.C. App. at 64, 373 S.E.2d at 466-67 (invalidating a

release signed by a customer who received cosmetology services

in light of the extensive regulation of the cosmetology industry

and the use of hazardous chemicals); Fortson, 131 N.C. App. at

638,   508    S.E.2d      at   552    (invalidating        a     release      executed       in

connection with a rider’s participation in a motorcycle safety

training program).             On the contrary, the present case is more

analogous     to    Hall,      in     which    the    Supreme        Court     refused       to

invalidate a liability waiver contained in a rental contract

relating     to     the    installation         of    a    gas       tank     and    pumping

equipment.        Hall, 242 N.C. at 710-11, 89 S.E.2d at 398.                              As a

result, we conclude that the public interest exception does not

invalidate the exculpatory clause at issue here.

       Finally,     an    exculpatory         contract     that       has    been    “gained

through      inequality        of     bargaining      power”         is     unenforceable.
                                          -12-
Fortson, 131 N.C. App. at 636, 508 S.E.2d at 551.                     In applying

this exception to the general rule allowing the enforcement of

otherwise-enforceable exculpatory clauses, reviewing courts give

“consideration to the comparable positions which the contracting

parties occupy in regard to their bargaining strength, i.e.,

whether one of the parties has unequal bargaining power so that

he must either accept what is offered or forego the advantages

of the contractual relation in a situation where it is necessary

for   him   to    enter     into    the     contract   to   obtain   something    of

importance       to   him   which     for    all   practical    purposes   is    not

obtainable elsewhere.”             Hall, 242 N.C. at 710, 89 S.E.2d at 398.

In addition to admitting that he had read and understood the

provisions of the rental agreement before signing it, Plaintiff

acknowledged that there was another storage facility “up the

road” that he considered dealing with before electing to obtain

a storage unit from Defendant Mini Storage.                    As a result, given

that Plaintiff had other options for obtaining the storage unit

that he needed, we are unable to conclude that the exculpatory

provision contained in the rental agreement resulted from the

exercise of unequal bargaining power.4                 As a result, given that

the exculpatory clause at issue here is enforceable and clearly

barred Plaintiff’s claim, we hold that the trial court correctly
      4
      Plaintiff does not attempt to argue in his brief or reply
brief that any of the Fortson exceptions apply.
                                               -13-
granted summary judgment in favor of Defendant Mini Storage with

respect to Plaintiff’s personal injury claim.

                         C. Defendant Smith’s Liability

       Secondly, Plaintiff argues that the trial court erred by

granting summary judgment in favor of Defendant Smith on the

grounds that the assignment of the contract between Defendant

Smith   and      Defendant        Mini    Storage       to     Royall     did     not    relieve

Defendant        Smith       of     his        liability        under       the      contract.

Plaintiff’s argument lacks merit.

       As   a    result      of    the    fact    that       the   work     that      allegedly

resulted        in    Plaintiff’s        injuries       was     actually        performed       by

Royall rather than Defendant Smith, Plaintiff must, in order to

successfully pursue a claim against Defendant Smith, establish

that    Defendant        Smith      violated       some        duty     that    he      owed    to

Plaintiff.           In attempting to persuade us that the assignment of

Defendant       Smith’s      rights      and     duties      under    his      contract        with

Defendant Mini Storage to Royall did not relieve Defendant Smith

of   liability         for   any    injury       that     he    might     have       sustained,

Plaintiff directs our attention to numerous decisions that hold,

in effect, that a party to a contract who completely assigns all

rights and duties under the contract to another party remains

liable to the original party with whom the assignor contracted.

See, e.g., Rose v. Vulcan Materials Company, 282 N.C. 643, 662,
                                        -14-
194 S.E.2d 521, 534 (1973) (stating that “the assignor has power

only to delegate and not to transfer the performance of duties

as against the other party to the contract assigned”); Atlantic

& N.C.R. Co. v. Atlantic & N.C. Co., 147 N.C. 368, 380, 61 S.E.
185, 189 (1908) (holding that, in the absence of a novation,

“the    assignor    would,     notwithstanding        the     assignment,   still

remain liable”).        A careful study of the decisions upon which

Plaintiff relies demonstrates, however, that all of them address

the assignor’s liability to the other party to the original

contract rather than to a third party like Plaintiff.                        As a

result,    none    of   the    decisions       upon   which    Plaintiff    relies

undercut the validity of the trial court’s order in any way.

       In addition, Plaintiff cites N.C. Gen. Stat. § 25-2-210(1),

which provides that “[n]o delegation of performance relieves the

party delegating of any duty to perform or any liability for

breach.”      N.C.      Gen.    Stat.     §     25-2-210(1).       Although     he

acknowledges that the statutory provision upon which he relies

is only applicable to contracts for the sale of goods, Plaintiff

contends that the General Assembly intended for the principle

enunciated in N.C. Gen. Stat. § 25-2-210(1) to apply outside the

sale of goods context given the citation to Atlantic & N.C.R.

Co. in the comments relating to that statutory provision.                     Once

again, however, Plaintiff fails to recognize                   that Atlantic &
                                              -15-
N.C.R. Co. and “general North Carolina contract law” provide for

an assignor’s continued liability to the other party to the

original contract rather than to a third party.                              As a result,

N.C.       Gen.   Stat.    §    25-2-210(1)      has    no    bearing   on    the    proper

resolution of this issue.

       Simply       put,   the    only       arguments       advanced   in    Plaintiff’s

brief       in    opposition     to    the    trial    court’s     decision     to   grant

summary       judgment     in    favor   of     Defendant       Smith   establish       that

Defendant Smith, as an assignor, remains liable to Defendant

Mini       Storage     under      the    original        contract.            Nothing     in

Plaintiff’s         briefs      provides       any     basis     for    believing       that

Defendant Smith should be held liable to him as a stranger to

the original contract.                As a result, given that Plaintiff has

not established any basis for holding Defendant Smith liable for

his injuries, the trial court did not err by granting summary

judgment in favor of Defendant Smith.

                                      III. Conclusion

       Thus, for the reasons set forth above, we conclude that

Plaintiff’s challenges to the trial court’s orders lack merit.5

       5
      Although the parties have debated other issues in their
briefs in addition to those discussed in the text of this
opinion, we need not address these issues given our decision to
hold that the exculpatory clause barred Plaintiff’s claim
against Defendant Mini Storage and that the assignment of
Defendant Smith’s contract with Defendant Mini Storage to Royall
barred Plaintiff’s claim against Defendant Smith.
                              -16-
As a result, the trial court’s orders should be, and hereby are,

affirmed.

    AFFIRMED.

    Judge ROBERT N. HUNTER, JR. concurred in this opinion prior

to 6 September 2014.

    Judge DAVIS concurs.