Summary
In Rushing, a commercial lease obligated the tenant to pay a pro rata share of Common Area Operating Expenses ("CAOE"), which were defined as "all costs incurred by [landlord] relating to the ownership and operation of the Industrial Center," including the "operating, repair and maintenance, in neat, clean, good order and condition, of... [t]he common areas, including parking areas."
Summary of this case from Kmart Corporation v. Cragmere Associates, LLCOpinion
No. COA03-274
Filed March 2, 2004 This case not for publication
Appeal by defendant West's Charlotte Transfer Storage, Inc. from order entered 14 May 2002 by Judge David S. Cayer in Mecklenburg County District Court. Cross-appeal by plaintiff from order entered 13 November 2002 by Judge Fritz Y. Mercer in Mecklenburg County District Court. Heard in the Court of Appeals 3 December 2003.
Koehler Cordes, P.L.L.C., by Stephen D. Koehler, for plaintiff-appellee.
Eric D. Levine, for defendants-appellants.
Mecklenburg County No. 01 CVD 19376.
Defendant West's Charlotte Transfer Storage, Inc. ("WCT"), the lessee of property owned by plaintiff North Carolina Industrial Capital, LLC ("NCIC"), appeals from the trial court's grant of summary judgment awarding possession of the property to NCIC. Because we conclude that there was no genuine issue as to any material fact and plaintiff was entitled to judgment on the issue of possession as a matter of law, we affirm the trial court's grant of summary judgment.
Facts
On 16 June 1999, NCIC leased to WCT warehouse property within an industrial complex in Charlotte, North Carolina ("the premises"). The lease provided that WCT was responsible for paying, in addition to the base rent, a 31.99% pro rata share of the Common Area Operating Expenses ("CAOE") for the complex. CAOE were defined in the lease in pertinent part as:
(a) "Common Area Operating Expenses" are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Industrial Center, including, but not limited to, the following:
(i) The operation, repair and maintenance, in neat, clean, good order and condition, of the following:
(aa) The Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, park-ways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators and roof.
(bb) Exterior signs and any tenant directories.
(cc) Fire detection and sprinkler systems.
. . . .
(b) Any Common Area Operating Expenses . . . that are specifically attributable to the Building or to any other building in the Industrial Center or the operation, repair and maintenance thereof, shall be allocated entirely to the Building or to such other building. However, any Common Area Operating Expenses . . . that are not specifically attributable [to a particular building] shall be equitably allocated by Lessor to buildings in the Industrial Center.
Under the lease, a failure by WCT to make any payment of its share of CAOE would constitute a default. That default would become a breach of the lease if not cured "prior to the expiration of the applicable grace period. . . ." In the event of a breach, the lease provided that NCIC could terminate WCT's right to possession of the premises without further notice.
In practice, the arrangement operated as follows. NCIC would bill WCT during the year for estimated CAOE amounts, as allowed under the lease. At the end of the year, NCIC would submit to WCT a "Statement of Expenses" that showed the total actual CAOE figure for the complex, itemized the types of expenses included as CAOE, and stated the amount due from WCT as its pro rata share of the CAOE less the amount already paid in estimated payments. The dispute underlying this appeal originated in early 2001 when WCT received the 2000 statement showing a balance due of $20,374.25. WCT disputed the inclusion of $30,000.00 for paving a new parking lot and $10,290.00 for removal and replacement of metal edging, flashing, gutters, and downspouts. WCT also disputed the $24,000.00 property management fee, of which WCT's pro rata share was $7,677.60. WCT contended that the management fee should be three percent of rent collected, for a total of $3,064.25 . After notifying NCIC that it did not agree with the 2000 CAOE statement, WCT tendered payment of only $5,670.44.
After the parties' attempts to resolve the dispute informally failed, NCIC sent WCT a demand letter on 2 July 2001, stating that if WCT failed to pay the amount of $20,374.25 due on the 2000 statement within seven days, NCIC would consider WCT to be in breach of the lease and would proceed to terminate WCT's right to possession. On 15 August 2001, NCIC filed a complaint in summary ejectment in Mecklenburg County small claims court against "David Rushing and John Clayton, d/b/a West's Charlotte Metro Moving Storage." On 4 October 2001, the court entered judgment for NCIC against Rushing and West's, but dismissed Clayton with prejudice. On 12 October 2001, Rushing filed notice of appeal to district court. During this period, WCT was also failing to pay the full monthly statements for 2001 CAOE amounts. For the months January through June 2001, WCT paid less than the amount billed on each statement. WCT paid the full amounts billed for July through September 2001, but then ceased making any 2001 CAOE payments at all.
On 31 October 2001, NCIC sent another demand letter, stating that WCT now owed a balance of $29,048.78. NCIC again stated that if payment was not received within seven days, WCT would be considered in breach of the lease and its possession terminated. WCT tendered payment of the balance due for the 2001 estimated CAOE on 12 December 2001, but did not make any payment toward the 2000 CAOE.
On 28 March 2002, Rushing filed a motion to dismiss himself as a party and to add WCT, the actual lessee, as a defendant. The district court granted this motion. On 9 April 2002, NCIC filed a motion for summary judgment. The district court granted NCIC's motion on 14 May 2002.
On 12 June 2002, WCT (by then the sole remaining defendant in the action) filed notice of appeal from the district court's order. NCIC filed a motion in district court to dismiss WCT's appeal on 28 October 2002. NCIC cross-appeals from the district court's denial of its motion to dismiss. On review of a grant of summary judgment, this Court must determine (1) whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact; and (2) whether the moving party is entitled to judgment as a matter of law. Von Viczay v. Thoms, 140 N.C. App. 737, 738, 538 S.E.2d 629, 630 (2000), aff'd per curiam, 353 N.C. 445, 545 S.E.2d 210 (2001). As stated by this Court: "The moving party bears the burden of establishing the lack of a triable issue of fact. The motion must be denied where the non-moving party shows an actual dispute as to one or more material issues." Johnson v. Trustees of Durham Tech. Cmty. Coll., 139 N.C. App. 676, 681, 535 S.E.2d 357, 361, appeal dismissed and disc. review denied, 353 N.C. 265, 546 S.E.2d 101 (2000) (internal citations omitted). The non-moving party may not "rest upon the allegations of its pleading to create an issue of fact, even though the evidence must be interpreted in a light favorable to the nonmovant." Smiley's Plumbing Co. v. PFP One, Inc., 155 N.C. App. 754, 761, 575 S.E.2d 66, 70, disc. review denied, 357 N.C. 166, 580 S.E.2d 698 (2003).
Discussion
Defendant asserts that "[t]he issue for this court is whether certain expenses that were included by Plaintiff in the 2000 Statement of Expenses were fair and reasonable under the Lease." Defendant contends that the 2000 statement improperly included expenses arising from "capital improvements." According to defendant, the $30,000.00 for paving a new parking lot and $10,290.00 for removal and replacement of roofing, gutters, and downspouts were "capital improvements" that should not have been included as CAOE. Defendant also takes issue with the $24,000.00 property management fee, which it views as unreasonably high. Defendant argues that an issue of fact as to whether these expenses could be included as CAOE should have precluded summary judgment.
Plaintiff counters that the dispute between the parties over what expenses are properly included as CAOE is "a legal dispute regarding the construction of the contract." We agree. "When the language of a contract is plain and unambiguous, its construction is a matter of law for the court." Marsh Realty Co. v. 2420 Roswell Ave., 90 N.C. App. 573, 576, 369 S.E.2d 113, 115 (1988). The lease at issue in this case is unambiguous.
Although defendant attempts to distinguish "capital improvements" — such as paving and roof repairs — from "operating expenses," the lease makes no such distinction. Subparagraph 4.2(a) of the lease defines "Common Area Operating Expenses" as "all costs incurred by Lessor relating to the ownership and operation of the Industrial Center. . . ." The subparagraph thenlists examples of such expenses, including the "operation, repair and maintenance" of "parking areas . . . and roof."
Subparagraph 4.2(a)'s definition of CAOE as "all costs . . . relating to the ownership and operation" of the complex is not susceptible to more than one interpretation: all costs means all costs. Despite the distinction defendant advocates between "capital improvements" and "operating expenses," the plain language of the lease is broad enough to include as CAOE paving a new parking lot and making major repairs to the roof. The inclusion of improvements within CAOE is confirmed by subparagraph 4.2(c) of the lease, which refers to "the improvements, facilities and services set forth in Subparagraph 4.2(a). . . ." (Emphasis added)
The unambiguous language of the lease establishes that the challenged amounts were properly included as CAOE. Under the lease, defendant's failure to pay its share of CAOE constituted a default. It is undisputed that WCT received notice of the default on 2 July 2001 and again on 31 October 2001 and that WCT did not cure that default by paying the amounts due within the allotted time. Pursuant to the lease, WCT's failure to cure the default constituted a breach of the lease, which entitled NCIC to terminate WCT's right to possession of the premises without further notice. Under the lease, NCIC was therefore entitled to possession as a matter of law. With respect to the property management fee, any factual issue was not material to the lawsuit. An issue of fact is material if it "is of such a nature as to affect the outcome of the action." Johnson, 139 N.C. App. at 681, 535 S.E.2d at 361. Because NCIC was entitled to possession based on nonpayment of the other expenses, it is immaterial whether WCT had a legitimate complaint regarding the management fee. We also note that the lease provided:
If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment `under protest' and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum.
Under this provision, if WCT disagreed with the amounts charged, it should have paid the amounts due and then filed its own action.
In conclusion, the district court properly granted summary judgment awarding NCIC possession of the premises. Plaintiff has cross-appealed from the trial court's denial of its motion to dismiss defendant's appeal. We hold that defendant complied with the Rules of Appellate Procedure and, therefore, affirm the trial court's order denying plaintiff's motion to dismiss the appeal.
Affirmed.
Judges McGEE and HUNTER concur.
Report per Rule 30(e).