Grooms Prop. Mgmt., Inc. v. Muirfield Condo. Ass'n, COA22-49

284 N.C.App. 369

876 S.E.2d 774

GROOMS PROPERTY MANAGEMENT, INC., Delores Bowdidge, Yevette Bowdidge-Jimenez, Penny Lynn Carroll, Ying Ding, Shuo Jiao, Dianne R. Eason, and Barbara Toney, Plaintiffs,

v.MUIRFIELD CONDOMINIUM ASSOCIATION and William Douglas Management. Inc., Defendants and Third-Party Plaintiffs,

v.Holly Moore and TC Corporate Holdings, Inc. f/k/a Trisure Corporation, Third-Party Defendants.

Jennifer Hayes, Plaintiff,

v.Muirfield Condominium Association, Stanage Elling, Michael Howard, Linda Kilgo, and Charity Guard, Defendants.

No. COA22-49

Court of Appeals of North Carolina.

Filed July 19, 2022

Cranfill Sumner LLP, by Steven A. Bader, Raleigh, and Patrick H. Flanagan, Charlotte, for Defendant/Third-Party Plaintiff-Appellant Muirfield Condominium Association.

Villmer Caudill, PLLC, by Bo Caudill, for Plaintiff-Appellee Jennifer Hayes.

No briefs filed by the remaining parties.

INMAN, Judge.

I. FACTUAL AND PROCEDURAL BACKGROUND

¶ 1 Defendant/Third-Party Plaintiff Muirfield Condominium Association ("Muirfield") is the condominium association for multiple buildings totaling around 50 units. Plaintiff Jennifer Hayes ("Ms. Hayes") owns one of the condominium units in Building 5, which was destroyed by fire on 19 December 2018.¹

¶ 2 Complete exterior and interior repairs to Building 5 were estimated to cost between $1.36 and $1.46 million. Muirfield, however, received only $933,421.00 in insurance proceeds toward the repairs. On 29 October 2019, Muirfield's board held a special meeting where it voted not to obtain a loan to cover the remaining deficiency, which included the completion of the units’ interior upfit.

¶ 3 On 10 January 2020, Ms. Hayes filed suit in Mecklenburg County Superior Court against Muirfield and its directors for (1) declaratory relief, (2) violations of Muirfield's Declaration Creating Unit Ownership and Establishing Restrictions, Covenants, and Conditions for Muirfield (the "Declaration"), (3) violations of Chapter 47A of our General Statutes, (4) breach of fiduciary duties, and (5) negligence. Specifically, she contended Muirfield violated Chapter 47A as well as the Declaration by failing to maintain the requisite insurance coverage on the buildings.

¶ 4 On 24 May 2021, Ms. Hayes filed a motion for partial summary judgment seeking declaratory relief "that the Association must promptly repair and restore the damage to Plaintiff's condominium unit and the building in which Plaintiff's unit is situated," as well as an injunction requiring Muirfield to repair her unit. Muirfield maintained that the Declaration required it to insure only the building's exterior and that it had therefore complied with both the statute and its governing Declaration.

¶ 5 On 27 August 2021, the trial court granted Ms. Hayes's motion for partial summary judgment for declaratory relief but denied injunctive relief. Specifically, the trial court ordered

[t]hat the Association's failure to purchase insurance sufficient to cover at least 80% of the replacement value of Building 5 constituted a violation of the COA's declarations, covenants, and restrictions and Chapter 47A of the N.C. General Statutes[,]

....

[and] [t]hat the Association must comply with Chapter 47A of the N.C. General Statutes, including but not limited to N.C. Gen. Stat. § 47A-25, which provides that "damage to or destruction of the building shall be promptly repaired and restored by the manager or board of directors ... using the proceeds of insurance on the building for that purpose, and unit owners shall be liable for assessment for any deficiency," ....

¶ 6 The trial court certified its order as a final judgment pursuant to Rule 54(b) of our Rules of Civil Procedure. Muirfield filed notice of appeal 24 September 2021, and Ms. Hayes noticed a cross-appeal four days later. Muirfield also filed a petition for writ of certiorari on 23 March 2022, and Ms. Hayes filed a motion to dismiss Muirfield's appeal for lack of jurisdiction on 4 April 2022.²

¶ 7 On appeal, Muirfield argues the applicable provisions of the Declaration are ambiguous regarding its coverage obligations, creating a genuine issue of fact that could not be resolved by summary judgment. We disagree and affirm.

II. ANALYSIS

A. Appellate Jurisdiction

¶ 8 The parties disagree as to whether this Court has jurisdiction to review the trial court's interlocutory order granting partial summary judgment for Ms. Hayes on fewer than all of her claims. An interlocutory order is subject to immediate review if "the order or judgment is final as to some but not all of the claims or parties, and the trial court certifies the case for appeal pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b), ... [or] if the trial court's decision deprives the appellant of a substantial right which would be lost absent immediate review." N.C. Dep't of Transp. v. Page , 119 N.C. App. 730, 734, 460 S.E.2d 332, 334 (1995) (citations omitted). If an interlocutory appeal does not fall within these two categories, we may nonetheless exercise our discretion to review the appeal on the merits by writ of certiorari pursuant to Rule 21(a)(1) of the North Carolina Rules of Appellate Procedure. Midsouth Golf, LLC v. Fairfield Harbourside Condo. Ass'n, Inc. , 187 N.C. App. 22, 26, 652 S.E.2d 378, 382 (2007).

¶ 9 Assuming, arguendo , that the trial court's partial summary judgment order was neither properly certified pursuant to Rule 54(b) nor affecting a substantial right, we allow Muirfield's petition for writ of certiorari in our discretion. See id. ("[A]ssuming arguendo that Plaintiff appeals from a nonappealable interlocutory order, we elect to consider the appeal by granting Plaintiff's conditional petition for writ of certiorari.").

B. Standard of Review

¶ 10 We review appeals from summary judgment orders de novo , meaning we review the matter anew without restriction by the trial court. Midrex Techs., Inc. v. N.C. Dep't of Revenue , 369 N.C. 250, 257, 794 S.E.2d 785, 791 (2016). The moving party bears the burden of showing it was entitled to summary judgment as a matter of law and that there is no genuine dispute as to any material fact. Jenkins v. Stewart & Everett Theatres, Inc. , 41 N.C. App. 262, 265, 254 S.E.2d 776, 778 (1979) ; N.C. Gen. Stat. § 1A-1, Rule 56(c) (2021). We view the evidence in the light most favorable to the non-moving party, giving them the benefit of all reasonable inferences. Jenkins v. Lake Montonia Club, Inc. , 125 N.C. App. 102, 104, 479 S.E.2d 259, 261 (1997).

¶ 11 Furthermore, "[i]nterpretation of the language of a restrictive covenant is a question of law reviewed de novo. " Erthal v. May , 223 N.C. App. 373, 378, 736 S.E.2d 514, 517 (2012). "In construing restrictive covenants, the fundamental rule is that the intention of the parties governs, and that their intention must be gathered from study and consideration of all the covenants contained in the instrument or instruments creating the restrictions." Friends of Crooked Creek, L.L.C. v. C.C. Partners, Inc. , 254 N.C. App. 384, 389, 802 S.E.2d 908, 912 (2017) (citation omitted).

C. Interpreting the Unambiguous Declaration is a Question of Law

¶ 12 Muirfield argues the Declaration provisions are ambiguous and therefore the trial court erred in granting Ms. Hayes partial summary judgment and concluding Muirfield violated the Declaration and Chapter 47A by failing to procure coverage for 80 percent of the replacement value of Building 5. Specifically, Muirfield contends that the word "building" only refers to the outside structure and not the interior units.³ We are not persuaded by these arguments because, when considered in the context of the language in the entire Declaration, we conclude the word "building" is not ambiguous.

¶ 13 Section 47A-24, in relevant part, requires condominium associations to, "if required by the declaration, bylaws or by a majority of the unit owners, ... obtain insurance for the property against loss or damage by fire and such other hazards under such terms and for such amounts as shall be required or requested." N.C. Gen. Stat. § 47A-24 (2021). Section 47A-25, in turn, states that "damage to or destruction of the building shall be promptly repaired and restored by the manager or board of directors, ... using the proceeds of insurance for that purpose, and unit owners shall be liable for assessment for any deficiency[.]" N.C. Gen. Stat. § 47A-25 (2021).

¶ 14 Thus, whether Muirfield violated Sections 47A-24 and -25 is determined by whether Muirfield violated the terms of its Declaration.

¶ 15 This Court has previously held that the construction of unambiguous contract terms, including the terms of a homeowners’ association declaration, presents a question of law. Dep't. of Transp. v. Idol , 114 N.C. App. 98, 100, 440 S.E.2d 863, 864 (1994) ; see also Shearon Farms Townhome Owners Ass'n. II, Inc. v. Shearon Farms Dev., L.L.C. , 272 N.C. App. 643, 649-51, 847 S.E.2d 229, 234-36 (2020) (observing that a homeowners’ association declaration is interpreted "under ordinary contract principles" and applying a declaration's plain language on de novo review). A genuine issue of material fact arises only when an ambiguity in a contract's terms requires the factfinder to discern the parties’ intent from the evidence. See Landover Homeowners Ass'n. v. Sanders , 244 N.C. App. 429, 430, 781 S.E.2d 488, 489 (2015) ("Where ambiguities exist in the language of a [homeowners association] declaration which create an issue of material fact, the trial court erred in granting summary judgment ....").

¶ 16 Whether such an ambiguity exists in the first instance is a question of law for this Court on de novo review. Bicket v. McLean Sec., Inc. , 124 N.C. App. 548, 553, 478 S.E.2d 518, 521 (1996). For the reasons explained below, we hold that no ambiguity exists here.

¶ 17 Section 20 of the Declaration provides:

(A) The following insurance coverage shall be maintained in full force and effect by the Association covering the operation and management of

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