Holmes v. North Carolina Farm Bureau Mutual Insurance , 233 N.C. App. 487 ( 2014 )


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  •                                    NO. COA13-1096
    NORTH CAROLINA COURT OF APPEALS
    Filed: 15 April 2014
    CURTIS RAY HOLMES,
    Plaintiff,
    v.                                        Guilford County
    No. 12 CVS 10238
    NORTH CAROLINA FARM BUREAU MUTUAL
    INSURANCE CO., INC.,
    Defendant.
    Appeal by      plaintiff from Order          entered 10 July 2013       by
    Judge John O. Craig, III, in Superior Court, Guilford County.
    Heard in the Court of Appeals 6 February 2014.
    Cahoon & Swisher, North & Cooke, by A. Wayland Cooke, for
    plaintiff-appellant.
    Nelson Levine De Luca & Hamilton, LLC, by David L. Brown
    and David G. Harris II, for defendant-appellee.
    STROUD, Judge.
    Dr.   Curtis    Holmes     (“plaintiff”)      appeals   from    an   order
    denying his motion for summary judgment and granting summary
    judgment in favor of North Carolina Farm Bureau Mutual Insurance
    Co., Inc. We affirm.
    I.     Background
    Plaintiff      is    a   dentist    and    property   owner    living   in
    Greensboro. He owns several office buildings in the Greensboro
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    area, including one at 5415 Friendly Avenue (“5415 Friendly”)
    and    one     across     the    street          at    5411       Friendly          Avenue     (“5411
    Friendly”).         Plaintiff        purchased         an        office-lessor’s            insurance
    policy       from   defendant         to     cover      his       property.            The     policy
    excludes from coverage any building that has been vacant for
    more than 60 consecutive days before a loss, including loss by
    theft.       The policy defines a vacant building for property owner
    policies      under     section       9(a)(1)(b)            of    the       policy.       Under    this
    section, a building is vacant “when 70% or more of its total
    square      footage:      (i)   Is     not    rented;            or    (ii)    Is     not    used    to
    conduct       customary      operations.”                  The        policy    clarifies          that
    “[w]hen      this    policy      is    issued         to    the       owner     of    a     building,
    building means the entire building.”
    In    November      2011,       someone         stole       eight       heating       and    air
    conditioning         units      from       outside         5415       Friendly.             Plaintiff
    informed      the     police,        but     the      perpetrator            was     never    found.
    Plaintiff also made a claim to defendant for the loss under the
    office-lessor         policy.        Defendant         refused         to     cover    plaintiff’s
    loss    because      it   believed         that       the    vacancy          provision       of    the
    policy applied.
    Plaintiff      filed      a    complaint         in       Guilford       County       Superior
    Court    alleging       breach       of    the     insurance           contract       and    seeking
    -3-
    recovery in excess of $40,000 for the stolen heating units plus
    attorney’s fees and costs. Defendant answered, contending that
    plaintiff’s recovery was barred by the vacancy provision of the
    insurance contract.     Defendant also filed a counterclaim for
    declaratory judgment concerning the rights and obligations of
    the parties under this policy. The parties conducted discovery
    and   filed   cross-motions   for   summary   judgment.   The   evidence
    forecast by the parties tended to show the following:
    5415 Friendly has five separate units: named “A,” “B,” “C,”
    “D,” and “G.” Unit A was 1,344 square feet; Unit B was 1,064
    square feet; Unit C was either 2,688 or 2,577 square feet1; Unit
    D was 2,128 square feet; and Unit G was 1,064 square feet. The
    total square footage of 5415 Friendly was thus either 8,288
    square feet or 8,177 square feet. As of November 2011, only one
    of the five units at 5415 Friendly was rented—Unit A.           Units B,
    D, and G were all vacant.2 The classification of Unit C was the
    primary point of contention at the summary judgment hearing.
    The evidence showed that Unit C was not leased in the sixty
    days before the theft. However, plaintiff had been allowing one
    1
    In his deposition, plaintiff stated that Unit C was
    approximately 2,688 square feet.         In his responses to
    defendant’s requests for admission, however, he claimed that
    Unit C was 2,577 square feet.
    2
    The evidence showed that plaintiff used Unit D to store excess
    furniture, but he agreed that it should be considered “vacant.”
    -4-
    of the tenants of 5411 Friendly, two independent real estate
    attorneys named Charles McNeil III and Ken Lucas, to use Unit C
    as    storage   for   their    old   files     and   excess    furniture.        The
    attorneys had a key to Unit C and could have used the entire
    space until plaintiff found a regular tenant. Mr. McNeil and Mr.
    Lucas kept their files in one 144 square foot room in Unit C.
    They did not use two additional 144 square foot rooms which
    contained various furniture of uncertain provenance.                      The rest
    of the space was not used.
    Mr. McNeil testified that he, Mr. Lucas, or one of their
    employees would go to Unit C once or twice a week to store,
    retrieve, or review files.            He further stated that they would
    sometimes sit in one of the chairs in Unit C to review the
    stored files, but that they normally only stayed five to ten
    minutes.     None of them used any of the space on the second floor
    of Unit C.      Mr. McNeil stated that the storage and review of old
    files was a “customary operation” of his law practice.
    After reviewing the discovery and hearing arguments from
    the   parties,    the   trial    court    allowed    defendant’s        motion   for
    summary    judgment,     and    denied     plaintiff’s        motion,    by   order
    entered 10 July 2013.          Plaintiff filed notice of appeal to this
    Court on 31 July 2013.
    -5-
    II.   Summary Judgment
    On appeal, plaintiff argues that the trial court erred in
    granting summary judgment to defendant and denying his motion
    for summary judgment because the undisputed facts showed that
    over    30%    of   5415   Friendly    was   either   rented   or   used    for
    customary operations.
    A.     Standard of Review
    We review a trial court order granting or
    denying a summary judgment motion on a de
    novo basis, with our examination of the
    trial court’s order focused on determining
    whether there is a genuine issue of material
    fact and whether either party is entitled to
    judgment as a matter of law. As part of that
    process, we view the evidence in the light
    most favorable to the nonmoving party.
    Cox v. Roach, ___ N.C. App. ___, ___, 
    723 S.E.2d 340
    , 347 (2012)
    (citation and quotation marks omitted), disc. rev. denied, 
    366 N.C. 423
    , 
    736 S.E.2d 497
     (2013).
    B.     Analysis
    Both parties agree that there are no genuine issues of
    material fact. They only disagree on the proper interpretation
    of     the    vacancy   provision     of   the   insurance   contract.     That
    provision states:
    9. Vacancy
    a.    Description of Terms
    -6-
    (1) As used in this Vacancy Condition, the
    term building and the term vacant have the
    meanings set forth in (1)(a) and (1)(b)
    below:
    (a) When this policy is issued to a tenant,
    and with respect to that tenant’s interest
    in Covered Property, building means the unit
    or suite rented or leased to the tenant.
    Such building is vacant when it does not
    contain enough business personal property to
    conduct customary operations.
    (b) When this policy is issued to the owner
    of a building, building means the entire
    building. Such building is vacant when 70%
    or more of its total square footage:
    (i) Is not rented; or
    (ii) Is   not  used  to     conduct   customary
    operations.
    . . . .
    b.    Vacancy Provisions
    If the building where loss or damage occurs
    has been vacant for more than 60 consecutive
    days before that loss or damage occurs:
    (1)   We will not pay for any loss or damage
    caused by any of the following even if
    they are Covered Causes of Loss:
    . . . .
    (e) Theft;
    Defendant contends that under the definition in subsection
    (a)(1)(b), which applies to plaintiff as an owner, if either 30%
    or less of the entire covered building is rented, or if 30% or
    -7-
    less of the building is used to conduct customary operations,
    then        the   building        is      considered          vacant.          Under    this
    interpretation, a building could be 30% rented and have another
    30% used for customary operations, but the building would still
    be considered vacant. Plaintiff argues, by contrast, that this
    provision means that if more than 30% of the building is either
    rented or used to conduct customary operations, then it is not
    vacant. Under this interpretation, that same building with 30%
    rented and 30% used for customary operations would be considered
    60% occupied, and therefore not vacant. We conclude that we need
    not    resolve    this     issue       here    because       even    under      plaintiff’s
    interpretation of the contract, 5415 Friendly was vacant for
    more than sixty days before the theft.
    It is uncontested that all of Unit A, 1,344 square feet,
    was    rented     during    the    relevant          period.       Unit    A    constitutes
    approximately 16% of the total square footage of the building.
    Unit C has been the sole point of contention in this case. There
    was    no     evidence     that    it     was       rented    at    a     relevant     time.
    Therefore, the only question is whether Unit C was used for
    “customary operations” and how much of Unit C was so used.
    The evidence showed that Mr. McNeil and Mr. Lucas only
    stored files in one 144 square foot room of Unit C. The evidence
    -8-
    did show that Mr. McNeil and Mr. Lucas used that room on a
    fairly regular basis, once or twice a week. They would store and
    retrieve client files in the room and sometimes sit in the chair
    in that room to review the files.              Mr. McNeil opined that the
    storage and review of these archived files was a part of his
    customary operations.         Nevertheless, that 144 square foot room
    was the only portion of Unit C that they used as part of these
    operations.      Although there was evidence that some pieces of
    furniture were     stored in two additional rooms, there was no
    evidence that Mr. McNeil and Mr. Lucas ever used those rooms.
    Mr. McNeil stated that he was unsure who owned the furniture,
    but that he did not think it was his.
    Plaintiff argues that we should count the entirety of Unit
    C as being      “used for customary operations”         because one room
    within   that    unit   was    being    used   and   those   using   it   had
    permission to occupy the entire unit. But that interpretation is
    contrary to the plain language of the contract.
    The court is to interpret a contract
    according to the intent of the parties to
    the contract, unless such intent is contrary
    to law. If the plain language of a contract
    is clear, the intention of the parties is
    inferred from the words of the contract.
    When the language of the contract is clear
    and   unambiguous,   construction   of   the
    agreement is a matter of law for the court,
    and the court cannot look beyond the terms
    -9-
    of the contract to determine the intentions
    of the parties.
    Williams v. Habul, ___ N.C. App. ___, ___, 
    724 S.E.2d 104
    , 111
    (citations and quotation marks omitted).
    Subsection       (b)   of    the     definitional       section    defines
    “building” as the “entire building” and defines “vacancy” in
    relation to the total square footage of the building.                       While
    plaintiff contends that not considering all of Unit C “occupied”
    is “like being a little bit pregnant,” the plain language of the
    contract directs us to consider only the portion of the total
    square   footage      “used     to     conduct       customary   operations.”
    Therefore,    the   relevant    question     under    the   contract   is   what
    percentage of the total square footage was actually so used, not
    what amount could have been used.
    Here, only 144 square feet of Unit C were used to conduct
    customary operations of Mr. McNeil’s law practice. Combined with
    the area of Unit A, which was 1344 square feet, the total square
    footage either rented or used to conduct customary operations
    was 1488 square feet. Using either measure of the total square
    footage—8288 square feet or 8177 square feet—this area does not
    exceed 30%.3     We conclude that the uncontested facts show that
    3
    Using either measure of total square footage, the percentage
    rented or used was approximately 18%.
    -10-
    5415    Friendly     was     “vacant”    for     purposes    of   the    insurance
    contract for more than 60 days prior to the theft.
    As   a    result,     under     that     contract,   plaintiff       was   not
    entitled to compensation for his loss and defendant did not
    breach the contract by refusing to pay the $40,000 to replace
    the stolen heating units. We hold that there are no genuine
    issues of material fact and defendant is entitled to judgment as
    a matter of law. Therefore, we affirm the trial court’s order
    allowing    defendant’s       motion    for     summary   judgment    and    denying
    plaintiff’s motion.
    III. Conclusion
    For the foregoing reasons, we hold that the trial court
    correctly       determined    that     there     are   no   genuine     issues    of
    material fact and that defendant is entitled to judgment as a
    matter of law. Therefore, we affirm the trial court’s order
    allowing defendant’s motion for summary judgment.
    AFFIRMED.
    Judges CALABRIA and DAVIS concur.
    

Document Info

Docket Number: COA13-1096

Citation Numbers: 233 N.C. App. 487, 756 S.E.2d 848, 2014 WL 1457698, 2014 N.C. App. LEXIS 357

Judges: Stroud, Calabria, Davis

Filed Date: 4/15/2014

Precedential Status: Precedential

Modified Date: 11/11/2024