NO. COA NORTH CAROLINA COURT OF APPEALS. Filed: 2 April 2013

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Benedict Crawford
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1 An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA NORTH CAROLINA COURT OF APPEALS Filed: 2 April 2013 CAROLINA COAST AND LAKES, INC., Plaintiff, v. Perquimans County No. 09 CVS 98 THE SHORES AT LAND S END HOMEOWNERS ASSOCIATION, INC., Defendant. Appeal by defendant from orders entered 10 April 2012 and 17 May 2012 by Judge Walter H. Godwin, Jr. in Perquimans County Superior Court. Heard in the Court of Appeals 8 January HORNTHAL, RILEY, ELLIS & MALAND, L.L.P., by L. Phillip Hornthal, III, for plaintiff. TRIMPI & NASH, LLP, by John G. Trimpi and Thomas P. Nash, IV, for defendant. ELMORE, Judge. The Shores at Land s End Homeowners Association, Inc. (the HOA) appeals from order entered 10 April 2012 granting summary judgment in favor of Carolina Coast and Lakes, Inc. (Carolina Coast) and declaring that the HOA is and has been solely responsible for the upkeep and maintenance of the common areas

2 -2- of The Shores at Land s End Subdivision, including the streets and roads therein, since 5 September 2006, and from order entered 17 May After careful consideration, we reverse the trial court s orders and remand with further instructions consistent with this opinion. Background Carolina Coast developed The Shores at Land s End Subdivision in Perquimans County. After purchasing the property, Carolina Coast recorded Declarations of Covenants, Conditions and Restrictions (the Declaration) for each parcel in the Perquimans County Registry on 12 December 2001 and 24 May On 24 June 2004, Carolina Coast filed Articles of Incorporation to officially create the HOA, which was formed to operate, manage, and maintain the subdivision. The bylaws required all members to pay assessments for the maintenance, repair, restoration, and reconstruction of the common areas. As the developer, Carolina Coast maintained authority over the subdivision s assets and served as the controlling member of the HOA. Additionally, Carolina Coast installed the streets within the subdivision. Perquimans County required Carolina Coast to

3 -3- post a $147, cash bond or maintenance bond to ensure that Carolina Coast maintained the subdivision roads until (1) the Department of Transportation (DOT) accepted maintenance responsibility or (2) until title to the streets was accepted by the HOA. Once either condition was met, the maintenance bond was to be refunded to Carolina Coast. On 4 December 2003 and 14 May 2004, DOT certified that the streets were properly installed in accordance with the minimum design criteria. According to DOT standards, a street must contain two occupied residences for each one-tenth of a mile before DOT will accept maintenance responsibilities. On 19 August 2006, Carolina Coast called an Association meeting to address the transfer of management and control of the HOA and its assets to the property owners; thus, Carolina Coast s intention was to relinquish control and allow the HOA to become an independent entity. Prior to the meeting, Carolina Coast prepared a non-warranty deed. Ultimately, the HOA and Carolina Coast executed a turnover deed (the deed) whereby Carolina Coast transferred all rights, title, and interest in the subdivision s common areas to the HOA. The deed was signed by both parties on 5 September 2006 and recorded on 8 September

4 Upon execution, Carolina Coast provided the HOA with $59, in previously collected assessments. The deed, drafted by Carolina Coast, included an agreement relating to the continued maintenance of the subdivision roads. The HOA and Carolina Coast executed this agreement. The dispositive issue is whether the trial court erred in granting summary judgment when there existed material issues of fact. Analysis A. Interlocutory Appeal The HOA acknowledges that this appeal stems from an interlocutory order as a pending counterclaim remains unresolved. However, immediate review is available when the trial court enters a final judgment as to one or more, but fewer than all, claims or parties and certifies there is no just reason for delay. Sharpe v. Worland, 351 N.C. 159, , 522 S.E.2d 577, 579 (1999) (quotation marks omitted). Here, the trial court certified this case for immediate review under N.C. Gen. Stat. 1A-1, Rule 54(b); thus this appeal is properly before us. B. Road Maintenance Responsibility

5 -5- The HOA first argues that the trial court erred in entering summary judgment in favor of Carolina Coast. More specifically, the HOA disputes the trial court s conclusion that it is and has been solely responsible for street upkeep and maintenance within the subdivision since 5 September We agree that entry of summary judgment was improper, but for the reason that this issue was improperly decided on summary judgment. Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows 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. In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation omitted). When a material term of a contract is ambiguous, summary judgment is improper. Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362 N.C. 269, 275, 658 S.E.2d 918, 923 (2008) ( Because we conclude that the language of the... Agreement is susceptible to differing yet reasonable interpretations, the one broad, the other narrow, the contract is ambiguous and summary judgment was inappropriate. ). A contract that is plain and unambiguous on its face will be interpreted by the court as a matter of law. When an agreement is ambiguous and the intention of the parties is unclear, however, interpretation of the contract is for the [trier of fact]. An

6 -6- ambiguity exists in a contract when either the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations. Thus, if there is uncertainty as to what the agreement is between the parties, a contract is ambiguous. Id. at 273, 658 S.E.2d at 921 (citations omitted). When the language of a term is ambiguous, determination of the intention of the parties is best left to the trier of fact. Id. at 274, 658 S.E.2d 918, 922 (citation omitted); see also Crider v. Jones Island Club, Inc., 147 N.C. App. 262, 267, 554 S.E.2d 863, 867 (2001) ( ambiguities [in the contract] create an issue of material fact for the jury ). Here, the trial court seems to have decided that when ownership of the roads was deeded to the HOA, responsibility for maintenance of the roads was automatically transferred to the HOA as well. It appears that the trial court disregarded specific language in the deed relating to road maintenance, decided it did not control, or decided the HOA was immediately eligible to apply for DOT takeover. We disagree with the trial court s interpretation. Instead, we believe that the language in the deed constitutes a valid contract, drafted by Carolina Coast and, to the extent there are material ambiguities contained within, summary judgment was improper.

7 -7- The relevant contract language in the deed provides: Street Maintenance: (1) Upon eligibility for state (public) maintenance of roads, streets, and associated right-of-ways within The Shores at Land s End Subdivision, the Grantee SHALL IMMEDIATELY upon such eligibility apply to the North Carolina Department of Transportation for such road, street and associated right-of-way maintenance. This is an affirmative obligation which the Grantee hereby agrees to immediately undertake upon eligibility. (2) Upon such eligibility for application for state (public) maintenance, Carolina Coast and Lakes, Inc. shall be relieved of any and all further maintenance responsibilities for any road, street or associated right-of-ways within The Shores at Land s End Subdivision. Thereafter, such maintenance responsibilities shall be with the [DOT] and/or with [the HOA]. The ambiguity resides within section 2, namely the meaning of eligibility for application for state (public) maintenance[.] Section 1 states upon eligibility for state maintenance of roads the HOA shall immediately upon such eligibility apply for DOT maintenance. Section 2 states: Upon such eligibility for application for state (public) maintenance, Carolina Coast and Lakes, Inc. shall be relieved of all further maintenance responsibilities for any road[.]

8 -8- The HOA argues that, when construed with section 1, [u]pon such eligibility for application indicates that the DOT and/or the HOA would assume road maintenance responsibilities only once the roads met the requirements for acceptance by DOT. Carolina Coast argues that the language [u]pon such eligibility for application in section 2 means the HOA has been responsible for road maintenance since the deed was executed, because there is and has never been anything preventing the HOA from applying for DOT takeover of the roads, even if everyone knew that the application would be rejected i.e. that the roads themselves were not eligible for DOT takeover. According to Gretchen Byrum (Byrum), the DOT district engineer in charge of the petition process, anyone may petition the DOT for takeover at any time. However, if the roads do not meet certain criteria, including a housing density at or above two occupied houses per every.1 mile of road and certification of the culverts, the petition will be denied. According to Byrum and deposition testimony of other witnesses, there were portions of the roads, at least, which were still not eligible for DOT takeover at the time of the hearing. We hold that the language eligibility for application is susceptible to differing yet reasonable interpretations...,

9 -9- the contract is ambiguous and summary judgment was inappropriate. Schenkel, 362 N.C. at 275, 658 S.E.2d at 923. We reverse the 10 April 2012 order and remand for trial. C. 17 May 2012 Order The HOA argues, and Carolina Coast acknowledges, that the appeal bond should not have exceeded $250.00, pursuant to N.C. Gen. Stat Although we agree, we need not address this issue based on this Court s reversing and remanding the 10 April 2012 order of the trial court. Also as the summary judgment in favor of Carolina Coast has been reversed and remanded, the remaining provisions of the 17 May 2012 order, all of which are related to the $147, developer s bond, are also reversed. Reversed and remanded. Judges MCGEE and HUNTER, Robert C. concur. Report per Rule 30(e).

IN THE COURT OF APPEALS OF NORTH CAROLINA. No. COA Filed: 6 September 2016

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