Hyatt v. Mini Storage on the Green , 236 N.C. App. 278 ( 2014 )

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
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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.
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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
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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
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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.
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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
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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
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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.
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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.
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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
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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.
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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.
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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,
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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 &
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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.
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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.