Cape Hatteras Electric Membership Corp. v. Stevenson , 249 N.C. App. 11 ( 2016 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-1102
Filed: 16 August 2016
Dare County, No. 13 CVS 190
CAPE HATTERAS ELECTRIC MEMBERSHIP CORPORATION, an electric
membership corporation organized and existing pursuant to N.C. Gen. Stat. Chapter
117, Plaintiff,
v.
GINA L. STEVENSON and JOSEPH F. NOCE, Defendants.
Appeal by plaintiff from order entered 9 April 2015 by Judge Gregory P.
McGuire in the North Carolina Business Court. Heard in the Court of Appeals 30
March 2016.
Vandeventer Black LLP, by Norman W. Shearin and Ashley P. Holmes, for
plaintiff-appellant.
Brooks, Pierce, McClendon, Humphrey & Leonard, LLP, by Julia C. Ambrose
and Daniel F. E. Smith, for defendants-appellees.
Patrick Buffkin, for amicus curiae North Carolina Association of Electric
Cooperatives, Inc.
DIETZ, Judge.
At its heart, this is a case of straightforward contract interpretation. The
plaintiff is an electric cooperative whose bylaws require all members to grant an
easement across their land for power lines and other electric services upon request
by the cooperative with “reasonable terms and conditions.”
CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
Recent storms caused severe erosion near the cooperative’s existing
transmission lines. So the cooperative sent a letter to Defendant Gina Stevenson, a
cooperative member, instructing her to grant a 44-foot-wide easement across her
property for the rerouted lines. The letter attached a proposed right-of-way
agreement offering her one dollar in consideration for the easement.
Stevenson refused to sign. Then, in what the cooperative alleges was an effort
to frustrate the terms of the bylaws, Stevenson conveyed one of her lots to her
boyfriend, who was not a member of the cooperative. This forced the cooperative to
pursue a condemnation action to secure the easement. The cooperative sued
Stevenson and her boyfriend for intentional interference with contract and civil
conspiracy, and sought accompanying declaratory relief. The business court entered
summary judgment against the cooperative and it then appealed.
We affirm. As explained below, the cooperative’s demand for a 44-foot-wide
easement across Stevenson’s property in exchange for one dollar was not a reasonable
term or condition. Thus, the bylaws did not require Stevenson to agree to that
request. Because there was no breach of contract, the cooperative’s claims fail as a
matter of law. We also affirm the business court’s entry of declaratory relief, but
clarify that the declaration is limited to the facts of this case, where the request for
an easement was not accompanied by reasonable terms and conditions.
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
Facts and Procedural History
Gina Stevenson owns property on Hatteras Island. Electric power to
Stevenson’s property is provided by the Cape Hatteras Electric Membership
Corporation (CHEMC), an electric cooperative chartered by State law. Stevenson is
a member of the cooperative.
When members join the cooperative, they agree to be bound by the
cooperative’s bylaws. The bylaws contain two provisions at issue in this case.
First, the bylaws provide that a member shall grant an easement to the
cooperative when necessary to provide electric service to cooperative members, in
accordance with reasonable terms and conditions:
SECTION 1.08. Member to Grant Easements to
Cooperative and to Participate in Required
Cooperative Load Management Programs. Each
member shall, upon being requested to do so by the
Cooperative, execute and deliver to the Cooperative grants
of easement or right-of-way over, on and under such lands
owned or leased by or mortgaged to the member, and in
accordance with such reasonable terms and conditions, as
the Cooperative shall require for the furnishing of electric
service to him or other members or for the construction,
operation, maintenance or relocation of the Cooperative's
electric facilities.
Second, the bylaws provide that the cooperative may shut off a member’s
electricity when that member fails to comply with her membership obligations:
SECTION 2.01. Suspension; Reinstatement. Upon his
failure, after the expiration of the initial time limit
prescribed either in a specific notice to him or in the
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
Cooperative’s generally publicized applicable rules and
regulations, to pay any amounts due the Cooperative or to
cease any other noncompliance with his membership
obligations, a person’s membership shall automatically be
suspended; and he shall not during such suspension be
entitled to receive electric service from the Cooperative or
to cast a vote.
On 21 December 2012, CHEMC sent Stevenson a letter explaining that it
needed to reroute its transmission line across Stevenson’s property because recent
storms had severely eroded the ground near existing lines.
At some point in the month after receiving this letter, Stevenson had an
informal discussion with a CHEMC manager about rerouting the transmission lines.
Stevenson proposed that the cooperative pay to relocate one of Stevenson’s rental
homes to a nearby undeveloped lot that she owned. CHEMC did not agree to this
proposal.
The following month, on 13 February 2013, CHEMC sent a demand letter to
Stevenson attaching a proposed right-of-way agreement. The letter informed
Stevenson that “[r]elocation of the transmission line necessitates the granting by you
of an easement or right-of-way to the Cooperative.” It also stated that “as a member
of the Cooperative, you are obligated by its bylaws to grant the easement.” The right-
of-way agreement attached to this letter granted a 44-foot-wide easement across
Stevenson’s property, appearing to come just feet from the front door of one of her
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
rental homes. The agreement stated that Stevenson would grant this easement in
exchange for “the sum of One Dollar ($1.00) and other valuable consideration.”
The relocation of the transmission lines affected a number of properties, not
just those owned by Stevenson, and many residents talked about the cooperative’s
demands both in person and by email. At some point after Stevenson received the
demand letter, CHEMC told the local homeowner’s association that it was willing to
negotiate with homeowners impacted by the rerouted lines for additional
compensation. The record does not contain any direct communications between
CHEMC and Stevenson.
On 20 February 2013, Stevenson informed CHEMC by phone that she would
not grant the requested easement. A month later, on 26 March 2013, Stevenson
deeded her undeveloped lot to her boyfriend, Joseph Noce, who was not a member of
the cooperative and thus not a party to the bylaws. At the time he received the
property, Noce was aware that the cooperative had demanded that Stevenson grant
an easement across that property.
On 10 April 2013, CHEMC sued Stevenson, seeking a declaration of the
parties’ rights and obligations under Section 1.08 of the bylaws. The Chief Justice
designated the action as a mandatory complex business case the following day.
On 15 April 2013, CHEMC petitioned for condemnation of Stevenson’s and
Noce’s property to obtain the necessary easements. Three days after filing these
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
condemnation petitions, CHEMC sent another letter to Stevenson demanding that
she grant the requested easement. CHEMC warned Stevenson that if she did not
grant the easement, it could shut off her electricity. Then, on 15 May 2013, CHEMC
informed Stevenson that it planned to cut off her power before the upcoming
Memorial Day weekend if she did not “communicate with [CHEMC] as soon as
possible about the powerline easement sought from her.”
Two days later, faced with the possibility of having electricity to her rental
properties shut off during one of the busiest vacation weekends of the year, Stevenson
consented to an order in the condemnation proceeding conveying the requested
easements. The only remaining issue in the condemnation action was the amount of
compensation to be paid to Stevenson.
On 10 June 2013, CHEMC filed an amended complaint seeking a declaration
of the parties’ rights and obligations under both Section 1.08 and Section 2.01 of
CHEMC’s bylaws. CHEMC also added an intentional interference with contract
claim against Noce and a civil conspiracy claim against both Stevenson and Noce.
On cross-motions for summary judgment, the North Carolina Business Court
entered summary judgment for Stevenson and Noce on all claims. CHEMC timely
appealed. Because this case was designated as a complex business case and assigned
to the business court on 11 April 2013, this Court has appellate jurisdiction. See
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
Christenbury Eye Ctr., P.A. v. Medflow, Inc., __ N.C. App. __, __, 783 S.E.2d 264, 265–
66 (2016).
Analysis
On appeal, CHEMC challenges the business court’s entry of summary
judgment against it on its two tort claims and also challenges a portion of the court’s
corresponding declaratory judgment. We review an appeal from summary judgment
de novo. In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008). Summary
judgment is proper when “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. R. Civ. P. Rule 56(c). When considering a summary judgment motion,
a trial court must view the evidence in the light most favorable to the non-movant.
Jones, 362 N.C. at 573, 669 S.E.2d at 576.
I. Summary Judgment on Tort Claims
CHEMC first argues that the business court erred in granting summary
judgment against it on its claims for civil conspiracy and intentional interference with
contract. As explained below, we reject CHEMC’s arguments and affirm the business
court.
The theory underlying CHEMC’s intentional tort claims is straightforward:
the cooperative contends that Stevenson was contractually obligated to immediately
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Opinion of the Court
grant the requested easement and that, by working together to avoid that contractual
obligation, both Stevenson and Noce are liable to the cooperative. The flaw in this
theory is that Stevenson was not contractually obligated to grant the easement in the
first place.
As CHEMC conceded in the business court (and does not challenge on appeal),
Section 1.08 of the bylaws requires a cooperative member to grant an easement only
upon “reasonable terms and conditions.” Thus, if the cooperative’s demand for an
easement is made on unreasonable terms and conditions, the member has no
obligation to grant the easement. And if there was no obligation to grant the
easement, CHEMC’s tort claims fail because those claims require CHEMC to prove
some improper inducement not to perform a contractual obligation. See Griffith v.
Glen Wood Co., 184 N.C. App. 206, 212, 646 S.E.2d 550, 555 (2007) (“An essential
element of a claim for tortious interference with a contract is that ‘the defendant
intentionally induces the third person not to perform the contract.’”); see also New
Bar P’ship v. Martin, 221 N.C. App. 302, 310, 729 S.E.2d 675, 682 (2012) (“[W]here a
plaintiff’s underlying claims fail, its claim for civil conspiracy must also fail.”). Simply
put, the determinative issue in this appeal is whether CHEMC’s request for the
easement was made on reasonable terms and conditions. We hold that it was not.
In February 2013, CHEMC approached Stevenson and demanded that she
immediately grant the cooperative a 44-foot-wide easement across her property on
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Opinion of the Court
scenic Hatteras Island in exchange for one dollar. The demand letter from CHEMC
accompanying the proposed right-of-way agreement was wholly unilateral; it stated
that “[r]elocation of the transmission line necessitates the granting by you of an
easement or right of way to the Cooperative” and that Stevenson was “obligated” to
grant the easement. Neither the letter nor the attached right-of-way agreement
indicated that the cooperative intended to provide additional compensation to
Stevenson in the future or even that the cooperative would examine the impact of the
easement to determine if compensation was appropriate.
We hold, as the business court did, that this unilateral demand was not made
in accordance with “reasonable terms and conditions.” The amicus asks us to
delineate the sort of terms and conditions that are reasonable, and thus might satisfy
this contract language in future cases. Amicus contends that these bylaws are
“common” among electric cooperatives and guidance is needed. But the parties have
not briefed this issue, and we are unwilling to delve into this sort of advisory dicta
without an appropriate record and argument from the parties. See Poore v. Poore,
201 N.C. 791, 792, 161 S.E. 532, 533 (1931). Moreover, this situation is quite different
from one in which parties or amici seek guidance on the meaning of a statute. This
is contract language in corporate bylaws. If parties not before the Court want more
detail on the meaning of the phrase “reasonable terms and conditions” in those
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
bylaws, they can amend the documents to provide that clarity without waiting on
help from the courts.
In sum, we limit this opinion to the facts before us and hold only that a
unilateral demand to grant an easement in exchange for one dollar, with no
assurances of future compensation or review, is not one made “in accordance with
reasonable terms and conditions.” As a result, Stevenson was not contractually
obligated to grant the easement and CHEMC’s tort claims for intentional interference
with contract and civil conspiracy fail as a matter of law.
II. Section 2.01 of CHEMC’s Bylaws
CHEMC next challenges the business court’s declaratory judgment that, as
applied to the parties in this case, Section 2.01 of the cooperative’s bylaws is
unenforceable. For the reasons explained above, we affirm the business court’s
declaratory judgment with respect to the parties in this case, on the facts of this case.
Because CHEMC did not seek an easement from Stevenson on reasonable terms and
conditions, Stevenson’s refusal to grant the easement was not a breach of the bylaws.
We agree with the business court that the cooperative cannot threaten to shut off a
member’s electricity under Section 2.01 of the bylaws as a means to force that member
to grant an easement on unreasonable terms and conditions.
The amicus argues that the business court’s declaratory judgment could
prevent other electric cooperatives from using similar language in their own bylaws
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CAPE HATTERAS ELEC. MEMBERSHIP CORP. V. STEVENSON
Opinion of the Court
to disconnect power from members who breach the bylaws and refuse to grant an
easement even upon reasonable terms and conditions. CHEMC’s complaint in this
action expressly requested a declaration only with respect to the rights of the parties
in this action, and that declaratory judgment is limited to the facts of this case. We
interpret the business court’s declaratory judgment as limited to circumstances in
which the request for the easement is not made in accordance with reasonable terms
and conditions—as was the case here—and we affirm it on that basis.
Conclusion
We affirm the judgment of the North Carolina Business Court.
AFFIRMED.
Judges HUNTER, JR. and INMAN concur.
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