Court Opinion

ID: 8907433
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:02:10.229889+00
Date Added: 2024-06-11T17:08:18.286091
License: Public Domain

WELLS, Judge.
Summary judgment is appropriate when there is no genuine issue of material fact. N.C. Gen. Stat. § 1A-1, Rule 56(c) of the Rules of Civil Procedure (1983). When a contract is in writing and free from ambiguity, such that no disputed facts exist, the intention of the parties becomes a question, of law for the court. Lane v. Scarborough, 284 N.C. 407, 200 S.E. 2d 622 (1973). If the writing leaves it uncertain as to the true agreement, however, what was meant by the parties may be made certain by parol evidence and the question is for the finder of fact. Cleland v. Children’s Home, 64 N.C. App. 153, 306 S.E. 2d 587 (1983). The fact that both parties have moved for summary judgment does not necessarily mean that summary judgment should be granted. See Id.; Steinberg v. Adams, 90 F. Supp. 604 (S.D.N.Y. 1950) (under similar federal rule). “Whether or not a genuine issue of material fact exists is a determination for the court, not the parties, and the fact that the parties may have thought there was no material fact in issue is in no way controlling.” Cram v. Sun Insurance Office, Ltd., 375 F. 2d 670 (4th Cir. 1967); see also Soley v. Star & Herald Co., 390 F. 2d 364 (5th Cir. 1968) (error to overlook factual issue). We believe there was a factual issue as to whether Bell’s entering into the lease with Snook constituted direct or indirect contract with, or association with, competition in violation of the contract. Summary judgment was therefore improperly granted.
The prerequisites for validity and enforceability of covenants not to compete have been discussed at length elsewhere and need not be repeated here. See A.E.P. Industries v. McClure, 308 N.C. 393, 302 S.E. 2d 754 (1983); Jewel Box Stores v. Morrow, 272 N.C. 659, 158 S.E. 2d 840 (1968). Under North Carolina law, the reasonableness of such covenants is a matter of law for the court to decide. Id. The court here did not rule that the covenant was unreasonable (nor do defendants so contend), only that Bell did not violate it in leasing to Snook. Since the reasonableness of the covenant depends on the circumstances of the case, Id., which *581have not been fully developed, we will confine our examination to the question decided, whether Bell’s conduct constituted a breach of that covenant. This requires interpretation of the contractual language “be associated with” or “be under contract with.”
Defendants argue that covenants not to compete are not favored and that the contractual language should therefore be strictly construed against plaintiff. Our review of the modern cases indicates that North Carolina has shown increasing willingness, in light of modern business conditions, to recognize and enforce such covenants. A.E.P. Industries v. McClure, supra; Enterprises, Inc. v. Heim, 276 N.C. 475, 173 S.E. 2d 316 (1970). Rather than apply rules of strict construction, our supreme court has given such covenants “reasonable and fair” construction. Jewel Box Stores v. Morrow, supra. We are aware of one recent North Carolina case using a rule of strict construction, but that resulted from application of Georgia law as lex loci contractus. Wallace Butts Ins. Agency v. Runge, 68 N.C. App. 196, 314 S.E. 2d 293 (1984). Giving the cited contractual language a reasonable and fair construction, we conclude there was at least a jury question whether Bell’s conduct fell within the contractual anti-competitive provisions.
First of all, it is well established that a lease is a contract, or at least an “association.” Bell’s lease agreement with Snook specifically recognized that Snook would operate a bicycle business in the other half of the building. Bell gave Snook a substantial business concession by allowing him to postpone payment of rent. The record does not reflect what constitutes typical commercial rents in Carrboro; the evidence at trial may well show that Snook received preferential treatment here as well. Moreover, the lease contained an option provision, exercisable during plaintiffs occupancy, allowing Snook to purchase the entire building. Taking this evidence in the light most favorable to plaintiff, we conclude that summary judgment for Bell on this issue was incorrectly granted. Since the claims of the other defendants arise under the same contract and are identical with Bell’s, and since it is well established that breach by Bell of his promise would justify non-performance by plaintiff, summary judgment in their favor was also incorrjfcV'C.
Kramer v. Old, 119 N.C. 1, 25 S.E. 813 (1896), does not require a different result. There the plaintiff purchased a milling *582business and the three defendant sellers contracted not to “continue business of milling.” The supreme court held that this language forbade defendants from taking stock in, organizing or managing a rival mill. The court continued:
While the courts will not restrain a party bound by such a contract from selling or leasing his premises to others to engage in the business which he has agreed to abstain from carrying on, or from selling to them the machinery or supplies needed in embarking in it (Reeves v. Sprague, 114 N.C. 647), a different rule must prevail when it appears that the prohibited party attempts, not to sell outright to others, but to furnish the machinery or capital, or a portion of either, in lieu of stock, in a corporation organized with a view to competition with the person protected by his contract against such injury. The three contracting defendants have presumably received the full value of the business sold, and which is protected by their own agreement against their own competition, and equity will not allow them, with the price in their pockets, to evade their contract under the thin guise of becoming the chief stockholders in a company organized to do what they can not lawfully do as individuals.
Id. The contract in Kramer, as in the Reeves case cited, precluded engaging in the same business', the contract here is not “such a contract,” Kramer v. Old, supra, but precludes a broader range of activities. As suggested above in Kramer, a court of equity will in any event look behind the mere form of subsequent dealings by the seller to enforce the spirit of the agreement. See also Reeves v. Sprague, supra (court considered enjoining non-party, but insufficient proof). The record here contains a sufficient forecast of evidence to show genuine issues of material fact.
For the foregoing reasons, summary judgment was improperly granted. The order is reversed and the cause remanded for further proceedings consistent with this opinion.
Reversed and remanded.
Judge BECTON concurs.
Judge Arnold dissents.