Wal-Mart Stores East, L. P. v. North Edgefield Organized Neighbors, Inc. ( 2013 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 15, 2013 Session
WAL-MART STORES EAST, L.P. V. NORTH EDGEFIELD ORGANIZED
NEIGHBORS, INC.
Appeal from the Chancery Court for Davidson County
No. 12445IV Russell T. Perkins, Judge
No. M2013-01351-COA-R3-CV -Filed December 17, 2013
This appeal arises from a Complaint to Quiet Title and for Declaratory Relief filed by Wal-
Mart Stores East, L.P. Pursuant to a 2008 Quitclaim Deed, Wal-Mart conveyed, subject to
a reversion clause, a one-quarter acre parcel to the defendant upon which stood a 1930’s era
Fire Hall. The reversion clause states, in pertinent part, that fee-simple ownership of the
property shall revert to Wal-Mart in the event the improvements are subject to any casualty.
“Casualty” is defined in the deed to include a fire that results in damage to all or substantially
all of the Fire Hall or damage that is not repaired within 180 days after the occurrence of
such casualty. It is undisputed that substantially all of the Fire Hall was damaged following
a fire that occurred on December 1, 2011. This action ensued, and Wal-Mart subsequently
filed a motion for summary judgement contending fee-simple title reverted to Wal-Mart due
to the December 2011 casualty. The defendant did not dispute the fact that substantially all
of the Fire Hall was damaged by the fire; nevertheless, the defendant opposed the motion on
the basis that the term “casualty,” as defined in the deed, is ambiguous. The trial court
concluded as a matter of law that the term “casualty” was clear and unambiguous, that the
damage resulting from the December 2011 fire constituted a casualty, and that the property
reverted back to Wal-Mart. Therefore, the court granted summary judgment in favor of the
petitioner. The defendant appeals. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.
Joseph Howell Johnston, Nashville, Tennessee, for the appellant, North Edgefield Organized
Neighbors, Inc.
J. Graham Matherne, Nashville, Tennessee, for the appellee, Wal-Mart Stores East, L.P.
OPINION
In 2004, Wal-Mart Stores East, L.P. (“Wal-Mart”), purchased several acres located
on and near Gallatin Pike in Nashville, Tennessee, for the purpose of constructing and
operating one of its stores. Within this larger tract is a one-quarter acre parcel upon which
stood an abandoned 1930’s era fire station, known as Fire Hall No. 18 (hereinafter “the Fire
Hall”), which is the property at issue in this case.
In 2008, following discussions with various community leaders, Wal-Mart prepared
and executed a Quitclaim Deed that conveyed the Fire Hall to a community non-profit
corporation, North Edgefield Organized Neighbors, Inc. (“NEON”), subject to numerous
conditions and restrictions. These restrictions included NEON’s acknowledgment that the
Fire Hall did not fully comply with Metro Department of Building Codes, and that NEON
agreed to repair all existing code violations, maintain insurance on the building, and open and
operate a cultural arts center for the community. The Quitclaim Deed also contained the
following reversion clause:
[I]n the event that the PROPERTY and/or the improvements thereon are
subject to any CASUALTY or CONDEMNATION, then the PROPERTY or
as much of the PROPERTY as was not taken under the power of eminent
domain shall revert to the GRANTOR, and this deed shall become forfeited
and the PROPERTY and all the rights herein conveyed shall at once revert to
and revest in and become the property of GRANTOR, its successors or assigns
without any declaration of forfeiture or act of re-entry, and without any other
act by GRANTOR to be performed. For purposes of the foregoing sentence,
“CASUALTY” shall mean a fire or other casualty that results in damage to all
or substantially all of the Firehall (as hereinafter defined) or damage that is not
repaired within 180 days after the occurrence of such casualty[.]
The deed was signed by an officer of Wal-Mart on November 17, 2008, and delivered
to NEON. One year later, on November 17, 2009, the president of NEON signed the
Quitclaim Deed on behalf of NEON as the grantee. The deed was duly recorded on
December 9, 2009.
Over the next two years, the covenants in the deed notwithstanding, NEON failed to
remedy the code violations, failed to maintain insurance, and failed to open and operate the
facility as a community center. Then, on December 1, 2011, a fire caused substantial damage
to the roof and rear portion, as well as smoke and water damage throughout the remainder
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of the structure.1 The following day, December 2, 2011, the Metro Codes Department
conducted an inspection and declared the building “unsafe for human habitation.” The
Property Standards Inspection Report (“Report”) stated that more than 75% of the exterior
and interior of the building had been damaged and that the plumbing, heating, and electrical
facilities had become non-functional from the fire damage. The Report further stated:
The severity of the condition of this property is such that the repairs necessary
to bring this property into compliance with applicable codes would exceed
fifty percent of the structure’s value qualifying this property for demolition.
And in the case of this property(s), the damage/destruction of the structure(s)
exceeds 75%, rendering the restoration of the structure(s) impractical. This
level of damage/destruction is an immediate hazard to the community.
The Report valued the building at $34,500 with repairs costing between $95,000 and
$100,000. Moreover, the Report noted that no previous progress had been made in making
repairs. Based upon this Report, the Metro Codes Department set a hearing for the
condemnation of the building on January 26, 2012.
Upon learning that NEON was planning to make repairs to the Fire Hall, Wal-Mart
sent NEON a cease and desist letter, dated December 5, 2011, in which it asserted ownership
of the property based on the substantial damage caused by the fire, which caused reversion
of title to Wal-Mart.
Representatives of both Wal-Mart and NEON appeared and participated at the January
26, 2012, condemnation hearing before the Metro Codes Department. At the conclusion of
the hearing, the Metro Codes Department recognized Wal-Mart as the fee-simple owner of
the property based on the reversion clause and issued an order requiring the demolition of the
Fire Hall within 90 days. NEON filed an appeal to the Metro Property Standard and Appeals
Board contesting Wal-Mart’s ownership.
On March 22, 2012, Wal-Mart commenced this action in the Chancery Court for
Davidson County.2 Wal-Mart subsequently filed a motion for summary judgement that was
properly supported by a statement of undisputed facts and affidavits. Wal-Mart contended
it was entitled to judgment as a matter of law based on the undisputed fact that substantially
1
It is believed the fire was caused by homeless persons who inhabited the Fire Hall.
2
Two weeks later, on April 4, 2012, the appeal from the demolition order was heard; however, the
Appeals Board deferred action pending a final judgment by the Chancery Court.
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all of the Fire Hall was damaged, which constituted a casualty as that term is defined in the
reversion provision and triggered the reversion.
NEON did not dispute the fact that all or substantially all of the Fire Hall was
damaged by the fire; however, it opposed the motion contending the reversion clause is
ambiguous. Specifically, NEON asserted that the deed identifies two definitions of the term
“casualty,” and that both must have occurred for the Fire Hall to revert. It also asserted that
but for Wal-Mart’s interference, NEON could have repaired the property within 180 days of
the fire. As a consequence, NEON insisted the Fire Hall did not revert to Wal-Mart.
Prior to the hearing, the parties stipulated that there were no genuine issues of material
fact and that the dispositive issue was the meaning of the defined term “casualty.” Following
the hearing, the trial court granted summary judgment in favor of Wal-Mart, finding the
reversion clause in the deed to be clear and unambiguous in that it provided two separate and
distinct grounds for reversion, and that one of the grounds for reversion had occurred.
In this appeal, NEON contends that the conditions contained in the Quitclaim Deed
with respect to reversion are ambiguous, and, therefore, summary judgment was
inappropriate. It also contends that Wal-Mart’s efforts to prevent NEON from repairing the
Fire Hall estops it from claiming title because the property was not repaired within 180 days.3
A NALYSIS
As the moving party, Wal-Mart is entitled to summary judgment “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits
. . . show that there is no genuine issue as to any material fact and that [it] is entitled to a
judgment as a matter of law.” Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 83 (Tenn. 2008)
(quoting Tenn. R. Civ. P. 56.04; accord Penley v. Honda Motor Co., 31 S.W.3d 181, 183
(Tenn. 2000)). It is undisputed that a fire occurred on December 1, 2011, which damaged all
or substantially all of the Fire Hall; therefore, whether Wal-Mart is entitled to judgment as
a matter of law is dependent on the meaning of the term “casualty” as defined in the
Quitclaim Deed.
When courts are determining the meaning of terms of a contract, or deed, they are to
ascertain the intent of the parties based on the ordinary and natural meaning of the words
3
NEON also raised the issue of whether Wal-Mart prepared the deed; however, Wal-Mart does not
dispute the fact that it prepared the deed. NEON also contends that in the event we find the term “casualty”
in the reversion clause is ambiguous, then it becomes a question of fact. We have concluded the term is not
ambiguous, which renders this issue moot.
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used in the instrument. Barnes & Robinson Co., Inc. v. OneSource Facility Servs., Inc., 195
S.W.3d 637, 642 (Tenn. Ct. App. 2006) (citing Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95
(Tenn. 1999)). In construing a contract or deed, the court will not apply a strained
construction of the language to create an ambiguity where one does not exist. Planters Gin.
Co. v. Fed. Compress & Warehouse Co., Inc., 78 S.W.3d 885, 891 (Tenn. 2002) (citing
Empress Health and Beauty Spa, Inc., v. Turner, 503 S.W.2d 188, 190-91 (Tenn. 1973)). The
interpretation of a deed is a question of law, which is reviewed de novo with no presumption
of correctness. Griffis v. Davidson Co. Metro. Gov’t., 164 S.W.3d 267, 274 (Tenn. 2005).
A contract is ambiguous “only when it is of uncertain meaning and may fairly be
understood in more ways than one.” Planters Gin. Co., 78 S.W.3d at 890 (quoting Turner,
503 S.W.2d at 190-91). However, terms are not ambiguous merely because the parties
disagree as to the interpretation of a given clause. Cookeville Gynecology & Obstetrics, P.C.
v. Se. Data Sys., Inc., 884 S.W.2d 458, 462 (Tenn. Ct. App. 1994).
Wal-Mart asserts that “casualty,” as defined in the deed, can result from either
substantial damage or damage not repaired within 180 days; thus, only one need be
established for the reversion to occur. Conversely, NEON asserts that the words “and” and
“or” in the definition of casualty are interchangeable in the construction of contracts;
therefore, reversion would not occur if the damage could be repaired within 180 days.
In support of this argument, NEON relies on City of Knoxville v. Gervin, 89 S.W.2d
348 (Tenn. 1936) and Pryor Oldsmobile v. Tenn. Motor Vehicle Comm’n, 803 S.W.2d 227
(Tenn. Ct. App. 1990). We find NEON’s reliance on these cases misplaced.
Both cases allow “and” and “or” to be used interchangeably; however, it is only done
when the context so provides. Specifically, the cases that Gervin relies upon hold that the
context in which the terms “and” and “or” are used must favor the conversion to find them
interchangeable. State v. White, 177 S.W. 478, 479 (Tenn. 1915) (“Ordinarily, the word ‘and’
expresses the relation of addition, but it is frequently construed as meaning “or,” provided
the context favors the conversion.”) (emphasis added); Bird v. State, 175 S.W. 554, 556
(Tenn. 1915) (finding that the legislature “evidently used” “or” to mean “and” to better
harmonize the meaning of the statute); Smith v. Haire, 181 S.W. 161, 163-64 (Tenn. 1915)
(finding that husband interchangeably used the words “or” and “and” in certificates of
deposit, showing that he attached no significance to the word “or”); Ransom v. Rutherford
Cnty., 130 S.W. 1057, 1062 (Tenn. 1910) (“We think it quite plain from a consideration of
the act that it was the intention of the Legislature. . . .”). In addition, Pryor explicitly states
that “the word ‘or’ is sometimes interpreted as conjunctive in a given context. . .” Pryor, 803
S.W.2d at 230 (emphasis added). Here, the context does not suggest that the parties meant
“or” to be “and” in defining “casualty.” In fact, the relevant language can only reasonably
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be interpreted in one way; thus, the term is not ambiguous. To replace “or” with “and” would
require that we ignore the ordinary and natural meaning of the terms. Furthermore, if we
were to apply the interpretation as suggested by NEON, we would be applying a strained
construction of the language to create an ambiguity where one does not exist, which we are
not allowed to do. See Planters Gin. Co., 78 S.W.3d at 891.
It is apparent, not only from the context, but also from the ordinary and natural
meaning of the language that the word “casualty” is defined by two separate, independent
clauses connected by the disjunctive article “or.” These two separate, independent events that
can cause a “casualty” are: 1) damage to all or substantially all of the building, or 2) damage
that is not repaired within 180 days. Thus, applying the ordinary and natural meaning of these
words, it is clear that the grantee (NEON) would have had the right to effect repairs if the
damage to the Fire Hall had only been minor; however, that is not what occurred here.
Because the December 2011 fire caused damage to all or substantially all of the building,
NEON had no right to effect repairs.
In considering the language by the ordinary usage, it is clear that the parties intended
to create two triggering events which would revert title to the grantor: the word “casualty”
is defined by two separate clauses connected by the disjunctive article “or.” Therefore, we
find that the relevant language incorporated by the parties in the deed is not ambiguous.
Accordingly, we affirm the trial court’s ruling that the term “casualty” was clear and
unambiguous, that the damage resulting from the December 2011 fire, which was to all or
substantially all of the Fire Hall, constituted a casualty which reverted the property back to
Wal-Mart, and that Wal-Mart is entitled to summary judgment.
Because we have concluded that the deed unambiguously states that casualty shall
mean a fire or other casualty that results in damage to all or substantially all of the Fire Hall,
and that this form of casualty is in the alternative to and independent of whether the damage
is repaired within 180 days after the occurrence, NEON’s issue as it pertains to Wal-Mart
issuing cease and desist orders and commencing this action is rendered moot.
I N C ONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs of
appeal assessed against North Edgefield Organized Neighbors, Inc.
______________________________
FRANK G. CLEMENT, JR., JUDGE
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