Jarman v. Twiddy & Co. of Duck ( 2023 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA22-422
Filed 20 June 2023
Johnston County, No. 21-CVS-568
THOMAS JARMAN and JESSICA VAUGHN, individually and as administrators of
the ESTATE OF GRESSY THOMAS JARMAN, Plaintiffs,
v.
TWIDDY AND COMPANY OF DUCK, INC., ROGER STRICKER and PATRICIA
STRICKER, Defendants and Third-Party Plaintiffs,
v.
GEORGIA MAY, Third-Party Defendant.
Appeal by Defendant/Third-Party Plaintiff Twiddy and Company of Duck, Inc.
from Order entered 15 December 2021 by Judge John W. Smith in Johnston County
Superior Court. Heard in the Court of Appeals 16 November 2022.
Fox Rothschild LLP, by Matthew Nis Leerberg, Henson Fuerst, PA, by Carma
L. Henson, and Silverman Thompson Slutkin & White, by Andrew George
Slutkin and Ethan Shale Nochumowitz admitted pro hac vice, for Plaintiffs-
Appellees Thomas Jarman and Jessica Vaughn.
Poyner Spruill LLP, by Dylan J. Castellino and Timothy W. Wilson, for
Defendant/Third-Party Plaintiff-Appellant Twiddy and Company of Duck,
Inc.
HAMPSON, Judge.
Factual and Procedural Background
JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
Twiddy and Company of Duck, Inc. (Twiddy) appeals from an Order entered
15 December 2021 denying its Motion to Change Venue of an action brought by
Thomas Jarman and Jessica Vaughn, individually and as administrators of the
Estate of Gressy Thomas Jarman (Plaintiffs). The Record before us tends to reflect
the following:
On 3 June 2019, Plaintiffs’ minor child died after drowning in a pool at a
vacation home in Corolla, North Carolina owned by Roger and Patricia Stricker (the
Strickers).1 At the time, the vacation home was rented by Georgia May (May)2 under
a Vacation Rental Agreement with Twiddy, a realty company located in Duck, North
Carolina that served as the agent for the Strickers. Plaintiffs were not parties to the
Vacation Rental Agreement but were staying at the vacation home with May and
other family members.
Relevant to this case, the Vacation Rental Agreement between Twiddy and
May provided:
Twiddy . . . is the Agent for a VACATION HOME . . . . The
owner . . . has given Agent the authority to enter into this
Agreement . . . . This Agreement sets forth the terms under
which You will lease the Premises through the Agent.
....
1. THIS IS A VACATION RENTAL AGREEMENT
UNDER THE NORTH CAROLINA VACATION RENTAL
ACT . . . .
1 The Strickers are residents of Pennsylvania.
2 May is the grandmother of the minor child and a resident of Maryland.
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
2. Agent, as agent of the Owner, hereby rents to You and
You hereby rent from the Agent, the Premises in
accordance with the terms and conditions contained in this
Agreement . . . .
....
4. Use and Tenant Duties. The use of the Premises is
restricted to use by You and Your family . . . . The term
“family” as used herein means parents, grandparents,
children and extended family members vacationing at the
Premises.
....
17. Indemnification and Hold Harmless. You agree to
indemnify and save harmless the Owner and Agent from
any liabilities . . . arising from or related to any claim or
litigation which may arise out of or in connection with Your
use and occupancy of the Premises including but not
limited to any claim or liability. . . which is caused, made,
incurred or sustained by You as a result of any cause,
unless caused by the grossly negligent or willful act of
Agent or the Owner, or the failure of Agent or the Owner
to comply with the Vacation Rental Act. . . . The terms
“Tenant,” “You,” and “Your” as used in this Agreement
shall include Tenant’s heirs, successors, assigns, guests,
invitees, representatives and other persons on the
Premises during Your occupancy (without regard to
whether such persons have authority under this
Agreement to be upon the Premises), where the context
requires or permits.
....
21. Disputes: This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
North Carolina, and shall be treated as though it were
executed in the County of Dare, State of North Carolina.
Any action relating to this Agreement shall be instituted
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
and prosecuted only in the Dare County Superior Court,
North Carolina. You specifically consent to such
jurisdiction and to extraterritorial service of process. You
shall be responsible for all legal fees and court costs
incurred by Agent and Owner in the enforcement of their
rights or Your obligations under this Agreement.
22. Miscellaneous: You agree and have verified that for
purposes of this vacation rental agreement that Your
confirmation number shall serve as Your electronic
signature and to be bound by same and in the same manner
as if You had otherwise ordinarily executed the document.
. . . Each section, subsection or paragraph of this
Agreement shall be deemed severable . . . .
May electronically signed each individual paragraph of the Vacation Rental
Agreement.
On 18 February 2021, Plaintiffs filed a Complaint against Twiddy and the
Strickers (collectively, Defendants) in Superior Court in Johnston County, North
Carolina, where Plaintiffs reside. The Complaint alleged claims of negligence,
wrongful death, negligent infliction of emotional distress, and punitive damages.
Defendants both filed responsive pleadings generally denying liability in the form of
Motions, Answers, and Third-Party Complaints. The Third-Party Complaints joined
May as Third-Party Defendant alleging the Plaintiffs’ Complaint falls within the
Indemnification and Hold Harmless provision of the Vacation Rental Agreement.
In their responsive pleadings, Defendants both included Motions to Change
Venue. The Motions alleged the terms of the Vacation Rental Agreement included a
mandatory forum-selection clause requiring this action be brought by Plaintiffs in
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
Dare County, North Carolina. Defendants’ Motions were heard on 28 October 2021
in Johnston County Superior Court. Defendants contended Plaintiffs should be
bound by the Vacation Rental Agreement—specifically, the provision requiring “Any
action relating to this Agreement shall be instituted and prosecuted only in the Dare
County Superior Court, North Carolina”—as third-party beneficiaries to the Vacation
Rental Agreement or by the doctrine of equitable estoppel. Defendants further
contended the language of the Vacation Rental Agreement is broad enough to cover
Plaintiffs’ claims for negligence, wrongful death, negligent infliction of emotional
distress, and punitive damages.
On 15 December 2021, the trial court entered its Order Denying Defendants’
Motions to Change Venue. In its Order, the trial court included Findings of Fact:
14. Thomas Jarman did not sign the Vacation Rental Agreement.
15. Jessica Vaughn did not sign the Vacation Rental Agreement.
16. No evidence has been presented that Thomas Jarman ever
read, or was aware, of the terms of the Vacation Rental
Agreement.
17. No evidence was presented that Jessica Vaughn ever read, or
was aware, of the terms of the Vacation Rental Agreement.
18. Plaintiffs were not parties to the Vacation Rental Agreement.
19. The signatories to the Vacation Rental Agreement did not
intend to confer a direct benefit on Plaintiffs, and there was never
a meeting of the minds that the plaintiffs would become parties
or third[-]party beneficiaries to the contract.
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Opinion of the Court
20. Plaintiffs were not actively nor directly involved in the
formation of the Vacation Rental Agreement.
21. Plaintiff[s’] causes of action are only based upon duties
imposed on Defendants by North Carolina common law and North
Carolina statutory law.
22. Plaintiffs’ causes of action do not arise out of or relate to the
Vacation Rental Agreement.
23. The Plaintiffs are not seeking the benefit of the Vacation
Rental Agreement. Plaintiffs’ causes of action exist separate and
apart from the Vacation Rental Agreement entered into between
Defendant Twiddy and Third-Party Defendant . . . May, and do
not arise out of or relate to the Vacation Rental Agreement.
24. The Court distinctly makes no findings of fact regarding
whether the forum-selection clause of the Vacation Rental
Agreement should, or should not, be enforced against . . . May.
That issue is not presently before this Court.
The trial court then concluded: Plaintiffs were not third-party beneficiaries of the
Vacation Rental Agreement; Plaintiffs were not equitably estopped from denying the
applicability of the forum-selection clause; and Plaintiffs’ causes of action did not
arise out of or relate to the Vacation Rental Agreement. Finally, the trial court
concluded Johnston County was a proper venue for this action pursuant to N.C. Gen.
Stat. § 1-82. Twiddy timely filed written Notice of Appeal from the Order Denying
Defendants’ Motions to Change Venue on 10 January 2022.3
Appellate Jurisdiction
3 The Strickers did not separately appeal. Neither the Strickers nor May have made any appearance
in this Court.
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
The trial court’s Order Denying Defendants’ Motions to Change Venue is an
interlocutory order. “An interlocutory order is one made during the pendency of an
action, which does not dispose of the case, but leaves it for further action by the trial
court in order to settle and determine the entire controversy.” McClennahan v. N.C.
School of the Arts, 177 N.C. App. 806, 807-08, 630 S.E.2d 197, 199 (2006) (citation
and quotation marks omitted). “Generally, a party has no right to appeal an
interlocutory order.” Cox v. Dine-A-Mate, Inc., 129 N.C. App. 773, 775, 501 S.E.2d
353, 354 (1998) (citing N.C. Dep’t of Transportation v. Page, 119 N.C. App. 730, 733,
460 S.E.2d 332, 334 (1995)). “However, ‘an appeal is permitted . . . if the trial court’s
decision deprives the appellant of a substantial right [that] would be lost absent
immediate review.’ ” Id. (citing Page, 119 N.C. App at 734, 460 S.E.2d at 334). “ ‘[A]n
immediate appeal is permitted where an erroneous order denying a party the right
to have the case heard in the proper court would work an injury to the aggrieved
party [that] would not be corrected if no appeal was allowed before the final
judgment.’ ” Id. at 775-76, 501 S.E.2d 354-55 (quoting Perkins v. CCH Computax,
Inc., 106 N.C. App. 210, 212, 415 S.E.2d 755, 757, reviewed on other grounds, 332
N.C. 149, 419 S.E.2d 574, decision reversed, 333 N.C. 140, 423 S.E.2d 780 (1992)).
This Court has recognized an order denying a motion based on improper venue,
which asserts venue is proper elsewhere, affects a substantial right because it
“ ‘would work an injury to the aggrieved party which could not be corrected if no
appeal was allowed before the final judgment.’ ” Thompson v. Norfolk S. Ry. Co., 140
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Opinion of the Court
N.C. App. 115, 121-22, 535 S.E.2d 397, 401 (2000) (quoting DesMarais v. Dimmette,
70 N.C. App. 134, 136, 318 S.E.2d 887, 889 (1984)). Likewise, orders addressing the
validity of a forum-selection clause also affect a substantial right. US Chem. Storage,
LLC v. Berto Constr., Inc., 253 N.C. App. 378, 381, 800 S.E.2d 716, 719 (2017). Thus,
Twiddy’s appeal from the trial court’s denial of Defendants’ Motions to Change Venue
is properly before us as the trial court’s Order denying Defendants’ Motions affects a
substantial right.
Issues
The key issues on appeal are whether, on the facts of this case, Plaintiffs—as
non-signatories to the Vacation Rental Agreement—may be bound by the forum-
selection clause contained in the Vacation Rental Agreement as (I) third-party
beneficiaries or (II) by equitable estoppel.
Analysis
As a preliminary matter, the parties disagree on the standard of review we
should apply to the trial court’s Order in this case. Twiddy contends we should
employ a de novo review. Plaintiffs assert our review is limited to whether the trial
court abused its discretion in denying the change of venue.
“Generally, a trial court’s denial of a motion to change venue ‘will not be
disturbed absent a showing of a manifest abuse of discretion.’ ” LendingTree, LLC v.
Anderson, 228 N.C. App. 403, 407, 747 S.E.2d 292, 296 (2013) (quoting Carolina
Forest Ass’n, Inc. v. White, 198 N.C. App. 1, 10, 678 S.E.2d 725, 732 (2009) (citation
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Opinion of the Court
and quotation marks omitted)). Likewise, as a general proposition, “[w]e employ the
abuse-of-discretion standard to review a trial court’s decision concerning clauses on
venue selection.” Mark Grp. Int’l, Inc. v. Still, 151 N.C. App. 565, 566, 566 S.E.2d
160, 161 (2002) (citation omitted). In particular, we apply an abuse of discretion
standard when the trial court issues an order regarding the enforceability of a venue-
selection clause under a Rule 12(b)(3) motion. See Wall v. Automoney, Inc., 284 N.C.
App. 514, 529, 877 S.E.2d 37, 51 (2022), rev. denied ___ N.C. ___, 884 S.E.2d 739(2023); see also SED Holdings, LLC v. 3 Star Props., LLC, 246 N.C. App. 632, 636,
784 S.E.2d 627, 630 (2016); Davis v. Hall, 223 N.C. App. 109, 110, 733 S.E.2d 878,
880 (2012); Cable Tel. Servs., Inc. v. Overland Contr’g., Inc., 154 N.C. App. 639, 645,
574 S.E.2d 31, 35 (2002); Mark Grp. Int’l, Inc., 151 N.C. App. at 568, 566 S.E.2d at
162; Appliance Sales & Serv., Inc. v. Command Elecs. Corp., 115 N.C. App. 14, 21,
443 S.E.2d 784, 789 (1994). We apply the abuse of discretion standard in these cases
because the disposition of these cases is “highly fact-specific.” Cox, 129 N.C. App. at
776, 501 S.E.2d at 355 (citation omitted). On the other hand, when a trial court is
called upon to interpret a forum- or venue-selection clause as a matter of law, we
review the trial court’s decision de novo. US Chem. Storage, LLC, 253 N.C. App. at
382, 800 S.E.2d at 720.
In this case, we broadly apply an abuse of discretion standard to the trial
court’s Order because the central determination made by the trial court was whether
to enforce the forum-selection clause in the Vacation Rental Agreement between
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
Twiddy and May as against Plaintiffs.4 However, the trial court’s decision not to
enforce the forum-selection clause stemmed from its legal conclusions Plaintiffs were
not third-party beneficiaries or estopped from denying the applicability of the forum-
selection clause.5 “[T]he trial court’s articulation and application of the relevant legal
standard is a legal question that is reviewed de novo.” Miller v. Carolina Coast
Emergency Physicians, LLC, 382 N.C. 91, 104, 876 S.E.2d 436, 447 (2022) (citation
omitted). “And, whatever the standard of review, ‘an error of law is an abuse of
discretion.’ ” Id. (quoting Da Silva v. WakeMed, 375 N.C. 1, 5 n.2, 846 S.E.2d 634,
638 (2020)); cf. LendingTree, LLC , 228 N.C. App. at 407, 747 S.E.2d at 296
(“Therefore, although we apply abuse of discretion review to general venue decisions,
we apply de novo review to waiver arguments.” (citation omitted)).
I. Third-Party Beneficiaries
On appeal, Twiddy first contends the trial court erred by failing to apply the
third-party beneficiary doctrine to bind Plaintiffs to the forum-selection clause. The
4 Indeed, the parties agree the forum-selection clause itself is properly interpreted as mandatory and
not permissive. The parties do, however, disagree as to whether—if the forum-selection clause was
deemed enforceable as to Plaintiffs—Plaintiffs’ claims in this case would otherwise fall within the
scope of the forum-selection clause’s language.
5 The trial court included these determinations as both findings of fact and conclusions of law. We
view the trial court’s application of the third-party beneficiary and equitable estoppel doctrines to be
in the nature of conclusions of law. See Phelps Staffing, LLC v. S.C. Phelps, Inc., 217 N.C. App. 403,
412, 720 S.E.2d 785, 792 (2011) (“Generally, any determination requiring the exercise of judgment or
the application of legal principles is more properly classified a conclusion of law.” (citation and
quotation marks omitted)).
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Opinion of the Court
third-party beneficiary doctrine usually applies to allow a third-party to enforce a
contract executed for their direct benefit. See Raritan River Steel Co. v. Cherry,
Bekaert & Holland, 329 N.C. 646, 650, 407 S.E.2d 178, 181 (1991). A party “is a third-
party beneficiary if she can show (1) that a contract exists between two persons or
entities; (2) that the contract is valid and enforceable; and (3) that the contract was
executed for the direct, and not incidental, benefit of the plaintiff.” Holshouser v.
Shaner Hotel Grp. Properties One Ltd. P’ship, 134 N.C. App. 391, 399-400, 518 S.E.2d
17, 25 (1999), aff’d, 351 N.C. 330, 524 S.E.2d 568 (2000). Here, however, Twiddy
contends that the Vacation Rental Agreement—existing between Twiddy and May
and as otherwise generally enforceable—was executed for the direct benefit of
Plaintiffs, and, thus, Plaintiffs—as third-party beneficiaries—should be bound by its
provisions.
In support of its position, Twiddy relies in large part on our decision in LSB
Fin. Servs., Inc. v. Harrison, 144 N.C. App. 542, 548 S.E.2d 574 (2001). There, this
Court affirmed a trial court’s decision enforcing an arbitration clause in an agreement
against a third-party to the agreement. Id. at 543, 548 S.E.2d 575. In that case, the
plaintiff was a banking institution and the defendant was a former employee of the
plaintiff. Under then-existing law, the plaintiff was not permitted to become a
member of the National Association of Securities Dealers, Inc. (NASD) and,
consequently, could not engage in the business of securities transactions unless it
partnered with a NASD member. Id. The plaintiff partnered with a registered
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Opinion of the Court
brokerage and the defendant served as a “dual employee” of the plaintiff and the
securities brokerage. Id. at 543, 584 S.E.2d at 576. This allowed the defendant to
serve as a broker under the supervision and control of the plaintiff. Id. The plaintiff
was then permitted to share in the profits derived from the defendant’s securities
brokerage work. Id. In order to perform the securities brokerage work, the defendant
was required to apply and register with NASD using a U-4 form. Id. at 543-44, 584
S.E.2d at 576. The U-4 registration form with NASD included an arbitration clause.
Id. at 544, 584 S.E.2d at 576. The defendant voluntarily terminated her employment
with the plaintiff and joined another brokerage. Id. The plaintiff sued the defendant
alleging, among other things, a breach of a separate non-compete. Id. The defendant
moved to compel arbitration against the plaintiff even though the plaintiff was not
(and could not) be a party to the U-4 registration with NASD. Id.
Our Court explained the direct benefit the plaintiff received from the U-4:
“plaintiff required defendant to sign the U-4 Form so that plaintiff would be in a
lawful position to benefit from the business of securities transactions.” Id. at 549, 548
S.E.2d at 579. As such, the plaintiff was an intended beneficiary of the U-4
registration and, therefore, deemed to be in privity of contract as a third-party
beneficiary. Id. at 548, 548 S.E.2d 578-79. As a result, we held the plaintiff could be
compelled to arbitrate its claims against the defendant.6
6 Our decision in that case also found grounding in equitable estoppel and principles of agency.
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Opinion of the Court
Indeed, the benefit the plaintiff received in LSB Fin. Servs. is illustrative of
the type of benefit our Courts have required to show a direct—rather than
incidental—benefit for purposes of invoking the third-party beneficiary doctrine. “ ‘A
person is a direct beneficiary of the contract if the contracting parties intended to
confer a legally enforceable benefit on that person.’ ” Revels v. Miss Am. Org., 182
N.C. App. 334, 336, 641 S.E.2d 721, 723 (2007) (quoting Holshouser, 134 N.C. App. at
400, 518 S.E.2d at 25). “ ‘It is not enough that the contract, in fact, benefits the [third-
party], if, when the contract was made, the contracting parties did not intend it to
benefit the [third-party] directly.’ ” Id. “ ‘As a general proposition, the determining
factor as to the rights of a third[-]party beneficiary is the intention of the parties who
actually made the contract.’ ” Vogel v. Reed Supply Co., 277 N.C. 119, 128, 177 S.E.2d
273, 279 (1970) (quoting 17 Am.Jur.2d, Contracts § 304). “ ‘The real test is said to be
whether the contracting parties intended that a third person should receive a benefit
which might be enforced in the courts.’ ” Id. “The Court, in determining the parties’
intentions, should consider circumstances surrounding the transaction as well as the
actual language of the contract.” Raritan River Steel Co., 329 N.C. at 652, 407 S.E.2d
at 182.
In LSB Fin. Servs., the whole purpose of the U-4 registration form was to allow
the plaintiff to legally engage in securities brokering. The plaintiff was not only
aware of the U-4 form but required the defendant (plaintiff’s employee) to register
with NASD. Not only did the defendant’s registration confer upon the plaintiff the
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Opinion of the Court
legal right to engage in securities brokering, but it also had the direct benefit of
granting the plaintiff the right to be compensated for securities brokerage work,
through the efforts of its employee.
In the case sub judice, unlike in LSB Fin. Servs., the Vacation Rental
Agreement between Twiddy and May was not intended to directly benefit Plaintiffs
by vesting them with any legally enforceable right. Certainly, Plaintiffs, themselves,
are not expressly designated as beneficiaries under the Vacation Rental Agreement.
Moreover, as the trial court found, there was no evidence Plaintiffs ever read or were
aware of the terms of the Vacation Rental Agreement. Further, there is no evidence
Plaintiffs were active or involved in entering into the Vacation Rental Agreement.
On the Record before us, there is no evidence of “the type of active and direct dealings
which courts have required to confer third[-]party beneficiary status on a party not
contemplated by the contract itself.” Hospira Inc. v. Alphagary Corp., 194 N.C. App.
695, 703, 671 S.E.2d 7, 13 (2009) (citation and quotation marks omitted).
Twiddy, nevertheless, contends the provisions of the Vacation Rental
Agreement placed Plaintiffs in a class of persons intended to benefit from the
contractual relationship between Twiddy and May. First, Twiddy points to the
provisions restricting use of the vacation home to May and May’s “family”. Second,
Twiddy relies on provisions of the indemnification clause. These provisions, however,
do not provide any direct benefit to Plaintiffs or evidence any intent to provide a direct
benefit to Plaintiffs.
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Opinion of the Court
As an initial matter, by its very terms, the provision restricting use of the
property does not purport to confer any benefit on May or any user of the property.
The provision restricting use of the property provides:
4. Use and Tenant Duties. The use of the Premises is
restricted to use by You and Your family . . . . The term
“family” as used herein means parents, grandparents,
children and extended family members vacationing at the
Premises.
It serves to expressly restrict May in whom she may invite to use the property during
her tenancy. Further, the provision provides no legally enforceable right of access to
the property by Plaintiffs (or other family members). See Raritan River Steel Co., 329
N.C. at 652, 407 S.E.2d at 182. It merely grants May the ability to invite family
members to use the property. As such, any benefit to Plaintiffs was purely incidental.
Twiddy, nevertheless, contends—by virtue of this provision—Plaintiffs became
lawful users of the property. To the contrary, however, this provision plainly
supposes that in its absence, Plaintiffs (along with any number of others) could have
been lawful users of the property. In any event, there is no evidence or showing this
provision was intended to directly benefit Plaintiffs. Rather, the intent of this
provision appears to be to provide uniformity in the types of users to whom Twiddy
would rent the property on behalf of the Strickers. See Revels, 182 N.C. App. at 336-
37, 641 S.E.2d at 724.
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Likewise, the indemnity provision certainly itself provides no benefit to May
or Plaintiffs. Rather, it is intended to attempt to cast a wide net over those from
which Defendants might seek indemnification for damages. The provision provides:
17. Indemnification and Hold Harmless. You agree to
indemnify and save harmless the Owner and Agent for any
liabilities . . . arising from or related to any claim or
litigation which may arise out of or in connection with Your
use and occupancy of the Premises including but not
limited to any claim or liability. . . which is caused, made,
incurred or sustained by You as a result of any cause,
unless caused by the grossly negligent or willful act of
Agent or the Owner, or the failure of Agent or the Owner
to comply with the Vacation Rental Act. . . . The terms
“Tenant,” “You,” and “Your” as used in this Agreement shall
include Tenant’s heirs, successors, assigns, guests, invitees,
representatives and other persons on the Premises during
Your occupancy (without regard to whether such persons
have authority under this Agreement to be upon the
Premises), where the context requires or permits.
(emphasis added).
To be fair, Twiddy does not contend the indemnity provision itself provides any
benefit to Plaintiffs. Instead, Twiddy asserts because the provision provides its
definition of “You” and “Your” is “as used in this Agreement”, then this definition
should apply to the forum-selection clause which states: “You specifically consent to
such jurisdiction and to extraterritorial service of process.” As such, Twiddy argues
Plaintiffs—as guests or invitees—should be bound as third-parties to the forum-
selection clause. However, this argument ignores the fact the Vacation Rental
Agreement expressly provides its provisions are severable and, indeed, May was
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Opinion of the Court
required to execute each provision individually. See Wooten v. Walters, 110 N.C. 251,
254-55, 14 S.E. 734, 735 (1892) (“A contract is entire, and not severable, when by its
terms, nature and purpose, it contemplates and intends that each and all of its parts,
material provisions, and the consideration, are common each to the other, and
interdependent. . . . On the other hand, a severable contract is one in its nature and
purpose susceptible of division and apportionment, having two or more parts, in
respect to matters and things contemplated and embraced by it, not necessarily
dependent upon each other, nor is it intended by the parties that they shall be.”).
Moreover, Twiddy’s argument that “You” and “Your” as defined by the
indemnity provision should be read uniformly into and throughout the Vacation
Rental Agreement is defeated by the fact it is plainly apparent in the terms of the
agreement itself that Defendants themselves intended no such thing. By way of
illustration, employing the expansive definitions of “You” and “Your” to the provision
restricting use of the property “by You and Your family” yields ludicrous results
permitting practically anyone to use the property during May’s tenancy resulting in
essentially no restriction whatsoever. It would mean the property would be restricted
to use by May and her heirs, successors, assigns, guests, invitees, representatives,
and other persons on the Premises during May’s occupancy (without regard to
whether such persons have authority under this Agreement to be upon the Premises)
. . . and their families (including extended families). In other words, use would not
be restricted to just May and her family members—it could include everyone from
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Opinion of the Court
non-family social guests and their families, delivery drivers and their families, and
even complete strangers who would otherwise be trespassers and their families. This
would functionally obliterate the provision restricting use of the property. We decline
to interpret the Vacation Rental Agreement to reach such an absurd result. See Atl.
Disc. Corp. v. Mangel’s of N.C., Inc., 2 N.C. App. 472, 478, 163 S.E.2d 295, 299 (1968)
(“A construction of a contract leading to an absurd, harsh or unreasonable result
should be avoided if possible.” (citing 51C C.J.S. Landlord and Tenant § 232(4), p.
594)). As such, it could not have been the parties’ intent that these definitions of “You”
and “Your” be applied throughout the Vacation Rental Agreement as Twiddy
contends.7 In turn, then, this provision evinces no intent on the part of the parties to
directly benefit Plaintiffs or bind them to the Vacation Rental Agreement, including
specifically to the forum-selection clause as third-party beneficiaries.
In summary, there is no showing on this Record that Defendants and May
intended to confer any legally enforceable right on Plaintiffs via the Vacation Rental
Agreement. Instead, the Record here reflects any benefit incurred by Plaintiffs
through the Vacation Rental Agreement was incidental and not direct. As such,
Twiddy has failed to show Plaintiffs were third-party beneficiaries to the Vacation
Rental Agreement. In turn, we conclude the trial court did not err by declining to
7 We acknowledge the additional clause appended to the definition of “You” and “Your” in the
indemnification provision which states: “where the context requires or permits.” The parties make no
argument as to how this clause operates in the context of the definition. It could modify “as used in
this Agreement” or it could modify “other persons”. It could have some other function entirely.
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Opinion of the Court
apply the third-party beneficiary doctrine to bind Plaintiffs to the forum-selection
clause.
II. Equitable Estoppel
Next, Twiddy contends the trial court also erred by failing to apply the doctrine
of equitable estoppel to bind Plaintiffs to the forum-selection clause in the Vacation
Rental Agreement. “ ‘Equitable estoppel precludes a party from asserting rights he
otherwise would have had against another when his own conduct renders assertion
of those rights contrary to equity.’ ” Ellen v. A.C. Schultes of Md., Inc., 172 N.C. App.
317, 321, 615 S.E.2d 729, 732 (2005) (quoting Int’l Paper Co. v. Schwabedissen
Maschinen & Anlagen GMBH, 206 F.3d 411, 417-18 (4th Cir. 2000) (citation and
quotation marks omitted)).
While Twiddy identifies no prior case where Courts have applied equitable
estoppel to bind a party to a forum- or venue-selection clause, both parties again
analogize this situation to cases involving arbitration clauses. In that context, we
have recognized: “ ‘[A] nonsignatory to an arbitration clause may, in certain
situations, compel a signatory to the clause to arbitrate the signatory’s claims against
the nonsignatory despite the fact that the signatory and nonsignatory lack an
agreement to arbitrate.’ ” Smith Jamison Constr. v. APAC-Atl., Inc., 257 N.C. App.
714, 717, 811 S.E.2d 635, 638 (2018) (quoting Am. Bankers Ins. Grp., Inc. v. Long, 453
F.3d 623, 627 (4th Cir. 2006)). “ ‘One such situation exists when the signatory is
equitably estopped from arguing that a nonsignatory is not a party to the arbitration
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Opinion of the Court
clause.’ ” Id. “ ‘In the arbitration context, the doctrine recognizes that a party may be
estopped from asserting that the lack of his signature on a written contract precludes
enforcement of the contract’s arbitration clause when he has consistently maintained
that other provisions of the same contract should be enforced to benefit him.’ ” Ellen,
172 N.C. App. at 321, 615 S.E.2d at 732 (quoting Schwabedissen, 206 F.3d at 418).
“ ‘To allow [a plaintiff] to claim the benefit of the contract and simultaneously avoid
its burdens would both disregard equity and contravene the purposes underlying
enactment of the Arbitration Act.’ ” Id. For example, “In Schwabedissen, the Fourth
Circuit Court of Appeals noted that ‘[a] nonsignatory is estopped from refusing to
comply with an arbitration clause “when it [is seeking or] receives a ‘direct benefit’
from a contract containing an arbitration clause.” ’ ” Id.; see also LSB Fin. Servs., 144
N.C. App. at 548, 548 S.E.2d at 579.
“[W]here the issue is whether the underlying claims are such that the party
asserting them should be estopped from denying the application of the arbitration
clause, a court should examine whether the plaintiff has asserted claims in the
underlying suit that, either literally or obliquely, assert a breach of a duty created by
the contract containing the arbitration clause.” Carter v. TD Ameritrade Holding
Corp., 218 N.C. App. 222, 231, 721 S.E.2d 256, 263 (2012) (citation and quotation
marks omitted). Even where a plaintiff’s claims sound in tort and not contract, a
plaintiff may not avoid arbitration where the claims at their root are an attempt to
hold the opposing party to the terms of the contract. See id. at 232, 721 S.E.2d at
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Opinion of the Court
263. Nevertheless, where a party’s claims “are dependent upon legal duties imposed
by North Carolina statutory or common law rather than contract law,” equitable
estoppel does not operate to require enforcement of an arbitration clause against a
non-signatory even where the contract “provides part of the factual foundation” for
plaintiffs’ complaint. Ellen, 172 N.C. App. at 322, 615 S.E.2d at 732-33; see also
Smith Jamison Constr., 257 N.C. App. at 720-21, 811 S.E.2d at 640 (applying Ellen
to conclude “Although the existence of the Subcontract ‘[p]rovide[s] part of the factual
foundation for [the] complaint,’ [the] claims . . . are ‘dependent upon legal duties
imposed by North Carolina statutory or common law rather than contract law.’ ”).
Applying these analogous principles to this case, Plaintiffs’ Complaint alleges
no breach of duty owed to them by the Vacation Rental Agreement. The Complaint
further makes no allegation the Vacation Rental Agreement conferred any direct
benefit on them. Indeed, the Complaint includes no claim or allegation whatsoever
arising out of the Vacation Rental Agreement itself.
To the contrary, the Complaint is grounded in claims for negligence and
wrongful death dependent upon legal duties allegedly imposed on Defendants by
North Carolina statutory or common law rather than contract law. Ellen, 172 N.C.
App. at 322, 615 S.E.2d at 732. Twiddy contends, however, the provisions of the
Vacation Rental Agreement operating to allow Plaintiffs to be permissive users of the
property during May’s tenancy and providing the Strickers “agree to provide the
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JARMIN V. TWIDDY & CO. OF DUCK, INC.
Opinion of the Court
premises to You in a fit and habitable condition” forms the basis for Plaintiffs’ claims.8
Plaintiffs’ Complaint makes no such allegations. For example, there is no claim
Plaintiffs are entitled to any refund of rent paid as a result of any breach of the duty
under the Agreement. Moreover, even if the Vacation Rental Agreement—including
listing May’s family as permissive users of the property—“provides part of the factual
foundation” for Plaintiffs’ Complaint,9 “[P]laintiffs’ ‘entire case’ does not ‘hinge[ ] on
[any] asserted rights under the . . . contract.’ ” Ellen, 172 N.C. App. at 322, 615 S.E.2d
at 732-33 (citation omitted). As such, we conclude the doctrine of equitable estoppel
did not require the trial court, under these facts and allegations, to bind Plaintiffs to
the forum-selection clause in the Vacation Rental Agreement. See Smith Jamison
Constr., 257 N.C. App. at 721, 811 S.E.2d at 640.
* * * *
Thus, as a matter of law, on the facts and allegations of this case, Plaintiffs—
as non-signatories to the Vacation Rental Agreement—may not be bound by the
forum-selection clause contained in the Vacation Rental Agreement as third-party
beneficiaries or by equitable estoppel. Therefore, the trial court did not err by
declining to enforce the forum-selection clause against Plaintiffs in this action.
8 This agreement to provide the premises in fit and habitable condition really appears to be intended
to provide Defendants with the opportunity to cure any defect or offer substitute performance prior to
having to refund May’s rental.
9 It bears mentioning both sets of Defendants, in their Answers, admit upon information and belief
the allegation Plaintiffs and their minor child were lawful visitors and/or tenants at the time of the
incident. Thus, how and whether Plaintiffs were permissive users of the property at the time is not
even really at issue in the case.
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Opinion of the Court
Consequently, the trial court did not abuse its discretion in denying the Motions to
Transfer Venue.10
Conclusion
Accordingly, for the foregoing reasons, the trial court’s 15 December 2021
Order denying the Defendants’ Motions to Change Venue is affirmed.
AFFIRMED.
Judges ZACHARY and GRIFFIN concur.
10We express no opinion as to whether—if Plaintiffs were bound by the Vacation Rental Agreement—
Plaintiffs’ claims would fall within the scope of the forum-selection clause. Like the trial court, we also
express no opinion as to whether the forum-selection clause applies to Defendants’ third-party claims
against May. We also express no opinion as to whether Defendants may have waived application of
the forum-selection clause by bringing their third-party indemnification action in Johnston County.
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