Propst Bros. Dists., Inc. v. Shree Kamnath Corp.

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-519
Filed: 2 January 2019
Cabarrus County, No. 17 CVS 2387
PROPST BROS. DISTS., INC., Plaintiff,
v.
SHREE KAMNATH CORP., Defendant,
and
McDONALD’S CORP., Third Party Intervenor.
Appeals by Defendant and Third Party Intervenor from declaratory judgment
entered 5 February 2018 by Judge Martin B. McGee in Superior Court, Cabarrus
County. Heard in the Court of Appeals 15 October 2018.
Smith Moore Leatherwood LLP, by Matthew Nis Leerberg and Kip D. Nelson,
for Plaintiff-Appellee.
Helms Robison Lee & Bennett, P.A., by R. Kenneth Helms, Jr. and Stephen M.
Bennett, for Defendant-Appellant.
Womble Bond Dickinson (US) LLP, by Mark P. Henriques and Michael A.
Ingersoll, for Third Party Intervenor.
McGEE, Chief Judge.
I. Factual and Procedural History
Central Distributing Company sold a 6.31-acre tract of real property (the
“Tract”), located in Cabarrus County, to Catawba Oil Company, Inc. (“Catawba Oil”),
on 8 June 1990. The Tract was located directly northeast of the intersection of North
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
Carolina Highway 73 and Interstate 85. Catawba Oil subdivided the Tract in
February 1998, which resulted in three separate lots: Lot 1, consisting of 3.06 acres;
Lot 2, consisting of 2.55 acres; and Lot 3, consisting of 0.67 acres. The Tract is
bisected by a non-exclusive private right-of-way granted to a landowner whose
property borders the north end of the Tract. Lots 2 and 3 are on the western side of
the right-of-way, while Lot 1 is on the eastern side. Lot 3 is adjacent to Lot 2, and
makes up the easterly part of the southern border of Lot 2. The southern border of
Lot 3 adjoins Highway 73. The 1998 survey of the subdivision of the Tract indicates
that Propst Brothers Distributors, Inc. (“Propst”) owned property adjoining the
western border of Lot 3 and the southern border of Lot 2 at that time.
Catawba Oil conveyed the entirety of Lot 3 to Hillcrest Foods, Inc. (“Hillcrest”)
on 23 February 1998. The general warranty deed conveying Lot 3 to Hillcrest
included two restrictive covenants (the “Deed Restrictions”):
Grantee, or Waffle House, Inc., . . . or any subsequent
grantee of theirs may not operate a drive-thru type food
service restaurant on the real property granted by this
deed so long as Grantor, or its successors, operates a drive-
thru type food service restaurant in its convenience store
on the tract adjacent to this property [Lot 1].
No motor vehicle fuels may be sold or disposed from this
real property so long as Grantor or any Grantee of Grantor
sells or disposes motor vehicle fuels on [Lot 1.1]
1 The wording of the Deed Restrictions would also include Lot 2. However, for the purposes of
this appeal we only need to consider Lot 1.
-2-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
At the time Lot 3 was conveyed to Hillcrest, Catawba Oil was operating a drive-
thru type restaurant in a convenience store and selling motor vehicle fuels on Lot 1.
A Waffle House was built on Lot 3 and operated for a number of years. Hillcrest then
conveyed Lot 3 to the North Carolina Department of Transportation (“DOT”) on 2
October 2013, and a portion of the southernmost part of Lot 3 was used by DOT for a
“new right of way,” and a “permanent utility easement for [a] N.C. Highway Project”
involving Highway 73 and I-85. At some point in time, the Waffle House building
and all related structures were razed.
Catawba Oil conveyed Lot 1 to Shree Kamnath Corp. (“Shree”) on 10 March
2015. Shree operates a convenience store that sells motor vehicle fuels and includes
a McDonald’s Corporation (“McDonald’s”) restaurant franchise on Lot 1.
Catawba Oil conveyed Lot 2 to Propst on 28 May 2015. Catawba Oil did not
add any restrictive covenants to the general warranty deed conveying Lot 2 to Propst.
DOT conveyed the remaining portion of Lot 3 to Propst on 13 June 2017—being 0.434
acres that was not used for the “Highway Project.” Therefore, at the time of this
action, Propst owned all of the Tract on the western side of the private right-of-way.
Propst anticipated that development of Lot 2 would involve construction of a
“QuickTrips” convenience store and gas station, which might include a “QT Kitchen”
(“QT”)—a walk-in made-to-order food service business located inside the convenience
-3-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
store.2 Although the QuickTrips would be located entirely on Lot 2, a portion of Lot
3 would be used for ingress and egress, and include some parking spaces for
QuickTrip’s use.
Propst filed a complaint for declaratory judgment on 9 August 2017, seeking a
declaration that its proposed uses of Lot 3—the construction of a driveway and
parking spaces to service the QuickTrip on Lot 2—would not violate the Deed
Restrictions. Shree filed an answer and counterclaim on 25 September 2017 seeking
a declaratory judgment that the Deed Restrictions prohibited Propst’s proposed uses
of Lot 3. McDonald’s alleged that, as a tenant of Lot 1, it had a substantial legal
interest in the proceeding, and was allowed to intervene in this action with the
consent of Propst and Shree. The matter was heard on 9 October 2017. The trial
court entered a declaratory judgment on 5 February 2018, ruling that the Deed
Restrictions did not prohibit Propst’s proposed uses of Lot 3. Shree and McDonald’s
appeal.
II. Standard of Review
“Our standard of review of a declaratory judgment is the same as in other
cases.” Calhoun v. WHA Med. Clinic, PLLC, 178 N.C. App. 585, 596, 632 S.E.2d 563,
2 Propst’s attorney informed the trial court that the exact nature of the development of Lot 2
was uncertain, stating that it was possible that “it could be just a gas station,” but if the sale of made-
to-order food was included, it would either be a QT, or some other arrangement that required the
customer to walk into the convenience store to order and collect the food. For the sake of this appeal,
we will assume the development of Lot 2 will involve a QuickTrips that both sells motor vehicle fuels
and includes a QT.
-4-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
571 (2006) (citing N.C. Gen. Stat. § 1-258). “Accordingly, in a declaratory judgment
action where the trial court decides questions of fact, we review the challenged
findings of fact and determine whether they are supported by competent evidence.
. . . . We review the trial court’s conclusions of law de novo.” Id. at 596–97, 632 S.E.2d
at 571 (citations omitted). In the present case, the relevant facts have been stipulated
to by Propst, Shree, and McDonald’s.
III. Shree’s Appeal
Shree’s sole argument is that Propst’s “proposed use of Lot 3 as access and
parking to serve the sale or disposal of motor vehicle fuels on Lot 2 violates the Deed
Restrictions” and, therefore, the trial court erred in ruling otherwise in the
declaratory judgment. We disagree.
It is undisputed that the Deed Restrictions apply to Lot 3. Therefore, our
review is limited to whether the Deed Restrictions prevent the intended use of Lot 3.
The Deed Restriction relevant to Shree’s appeal reads as follows: “No motor vehicle
fuels may be sold or disposed from [Lot 3] so long as Grantor or any Grantee of
Grantor sells or disposes motor vehicle fuels on [Lot 1]” (the “Fuel Restriction”).
Shree has stipulated that “[t]he intended construction on Lot 3 by Propst [] will only
establish parking and egress for Lot 2.” Therefore, the intended uses of Lot 3—
parking, ingress, and egress—standing alone, do not violate the Fuel Restriction.
Propst intends to sell “motor vehicle fuels” on Lot 2; however, Lot 2 is unencumbered
-5-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
by any restrictive covenants relevant to this appeal, and Propst is free to sell motor
vehicle fuels on Lot 2.
This Court is ever cognizant that determinations concerning restrictive
covenants are fact specific. As our Supreme Court has made clear: “Each case must
be determined on its own particular facts.” Long v. Branham, 271 N.C. 264, 274, 156
S.E.2d 235, 242–43 (1967) (citation omitted). Shree’s argument is that, even though
Propst is free to operate a gas station on Lot 2, use of Lot 3 to help facilitate the sale
of motor vehicle fuels would violate the Fuel Restriction. Shree states that “the trial
court overlooked the purpose of the [Fuel] Restriction[] in favor of an overly strict
construction.” In support of its argument, Shree relies heavily on three cases from
our Supreme Court: Long, 271 N.C. 264, 156 S.E.2d 235; Realty Co. v. Hobbs, 261
N.C. 414, 135 S.E.2d 30 (1964); and Starmount Co. v. Memorial Park, 233 N.C. 613,
65 S.E.2d 134 (1951).
We first note there are two kinds of restrictive covenants that may encumber
real property—“affirmative” and “negative.” Our Supreme Court in Long, Realty
Company, and Starmount, was considering “affirmative” covenants. In Long, the
restrictive covenant provided: “[N]o lot in Timbercrest Subdivision ‘shall be used
except for residential purposes[.]’” Long, 271 N.C. at 268, 156 S.E.2d at 238 (emphasis
added). In other words, the covenant in Long “affirmatively” allowed use of the
encumbered property for solely “residential purposes,” and thereby prohibited any
-6-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
use of the encumbered property that was not for residential purposes. Id. When, for
example, this Court construes an “affirmative” covenant that restricts use of real
property to “residential purposes,” use of that encumbered property for any
commercial or other non-residential purpose, even if the encumbered property is used
for a residential purpose as well, would violate the “affirmative” restriction:
While conceding the drainage system may serve a
commercial purpose, [the appellant] argues that since it
also serves the residential community by preventing
flooding, it should be considered a residential use of the
property. We find this argument unconvincing when the
plain language of the covenant states: “This property shall
be used for residential purposes only.” (emphasis added).
The expression “shall be used for residential purposes only”
is not ambiguous. As used in this covenant, the word “only”
is synonymous with the word “solely” and is the same as
the phrase “and nothing else.”
Buie v. High Point Associates Ltd. Partnership, 119 N.C. App. 155, 159, 458 S.E.2d
212, 215 (1995).
Our Supreme Court in Long held:
It is quite clear that the use or grant of a right-of-way
across property restricted to residential use to reach
property used for business, commercial, or other forbidden
enterprises violates the restrictive covenants. Restricted
property cannot be made to serve a forbidden use even
though the enterprise is situated on adjacent or restricted
land.
Long, 271 N.C. at 269, 156 S.E.2d at 239 (citations omitted). We expressly disavow
Shree’s contention, concerning the “affirmative” covenant opinions cited above, that
-7-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
this “line of cases have treated restrictive covenants as barring not just literally listed
uses, but also uses that are integrally related. This line of cases demonstrates that
when a covenant prohibits a retail business, it prohibits parking for and access to
that business as well.” Contrary to Shree’s assertions, this line of cases stands for
the proposition that whether the use of a property encumbered by an “affirmative”
covenant is permissible will sometimes be determined by the nature of the use of an
adjacent property—so long as the encumbered property is being used, in some relevant
manner, in service of the adjacent property. Id. A parking lot servicing a business is
being used for a commercial purpose; a parking lot that only services a solely
residential development is likely not.3 “[O]rdinarily the opening or maintenance of a
street or a right-of-way ‘for the better enjoyment of residential property as such does
not violate a covenant restricting the property to residential purposes[.]’” Riverview
Property Owners Assoc. v. Hewett, 90 N.C. App. 753, 754, 370 S.E.2d 53, 54 (1988)
(citation omitted). “[W]hether traveling over a lot restricted to residential purposes
in getting to adjacent property violates the restriction depends upon the
circumstances involved.” Id. (citation omitted) (emphasis added). Long, Realty
Company, and Starmount did not determine that “restrictive covenants” bar “not just
literally listed uses, but also uses that are integrally related[,]” because no such
3 Sometimes the grantor’s intent, discernable from amendments or other relevant documents,
may clearly demonstrate that a more restrictive meaning of “residential purposes” applies to a
restrictive covenant. See Long, 271 N.C. at 274, 156 S.E.2d at 243.
-8-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
determination was necessary to reach the holdings in those opinions. A
determination that the use of certain property for a driveway servicing a business is
not a residential use of that property—and therefore violates an “affirmative”
covenant limiting use of that property to solely residential purposes—is not a
determination that the driveway of a business must be treated as if it is the business
itself when construing restrictive covenants.
In the present case, the Fuel Restriction is not an “affirmative” covenant. It is
a “negative” covenant, because, instead of mandating that Lot 3 only be used for a
specific purpose—e.g. “residential purposes only”—it includes a single prohibited
use—sale of “motor vehicle fuels . . . from [Lot 3].” See Russell v. Donaldson, 222 N.C.
App. 702, 706, 731 S.E.2d 535, 538 (2012). The Fuel Restriction does not interfere
with any other potential uses of Lot 3. Because of these significant differences, this
Court has found opinions construing “affirmative” covenants “not sufficiently similar
[to opinions construing ‘negative’ covenants] . . . to be binding authority.”4 Id.Pursuant to a plain reading of the Fuel Restriction, every use of Lot 3 other than the
“sale” or “disposal” of “motor vehicle fuels . . . from [Lot 3]” is permitted. On its face,
construction and use of a driveway and parking spaces do not constitute sale of “motor
vehicle fuels . . . from [Lot 3].”
4 Shree attempts to dismiss the relevance of the “affirmative” covenant and “negative”
covenant distinction by pointing out that the same rules of construction apply to both. However, the
distinction lies not in what rules of construction apply, but in how the prohibited activities are defined,
and in how that might impact application of the relevant rules of construction.
-9-
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
However, Shree argues, because the intended uses of the driveway and parking
spaces are to service a business that—among other things—sells “motor vehicle
fuels,” we should consider these intended uses of Lot 3 to be functionally equivalent
to the actual sale of “motor vehicle fuels . . . from [Lot 3].” We find Long, Realty
Company, and Starmount inapposite, as the Fuel Restriction does not mandate that
Lot 3 be used for a particular purpose that Propst’s proposed use violates.
Shree also cites this Court’s opinion in Charlotte Pavilion Rd. Retail Inv., LLC
v. N.C. CVS Pharmacy, LLC, 238 N.C. App. 10, 767 S.E.2d 105 (2014), that involved
a “negative” covenant that stated the encumbered property “shall not ‘be used for the
purpose of a health and beauty aids store, a drug store, a vitamin store or a
pharmacy.’” Id. at 13, 767 S.E.2d at 108. This Court explained:
This covenant must be construed according to the plain
ordinary meaning of its words. [Appellant] CVS argues
that the restrictive covenant . . . prohibits the construction
of a parking lot that would serve Walmart. It is CVS’s
position that the purpose of the restrictive covenant is to
prohibit the construction of a pharmacy on the restricted
parcel that would compete with CVS—this includes the
prohibition of a parking lot which would serve a prohibited
use. CVS notes that because the city of Charlotte’s
ordinance requires Walmart to provide parking for its
customers, parking is integral to the store’s operation and
therefore falls within the purview of the restrictive
covenant.
Id. at 13–14, 767 S.E.2d at 108. However, construing any ambiguities in the
restrictive covenant against enforcement, this Court in Charlotte Pavilion rejected
- 10 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
CVS’s argument and held that the restrictive covenant did not prevent the use of the
encumbered property as a parking lot in service of the competing Walmart:
In the instant case, we interpret the restrictive covenant to
prohibit exactly what it purports to ban on the face of the
restriction—the erection of a structure on the . . . tract that
operates as a prohibited type of retail store, namely a
pharmacy. Thus, a developer may not build a store—four
walls and a roof—that constitutes a vitamin store, beauty
aid store, or pharmacy. We do not believe that the intent
of the grantor . . . was to outlaw the construction of those
things which are integral or essential to the operation of a
retail business. If such prohibition was intended, the
drafter could have said as much by incorporating phrases
such as “used for store purposes” or “used for purposes
incidental to a store.” However, without more, we conclude
the construction of a parking lot and access easement on
the restricted property is not a prohibited use.
Id. at 15, 767 S.E.2d at 108–09 (some emphasis added).5 The rules of construction
for restrictive covenants as recognized by our appellate courts compelled the outcome
5 We recognize that, in dicta considering an opinion from Texas, this Court noted the Texas
opinion held that a restrictive covenant banning the “activity” of operating a business on the
encumbered property also banned that property from being used for any “‘integral part of the
proposed’” business—even when the actual business was located on an adjacent lot. The Texas court
further held that a parking lot was such an “integral part” of the prohibited business, and subject to
the restrictive covenant. Id. at 14-15, 767 S.E.2d at 108 (citation omitted). However, as well as being
a non-binding opinion from another jurisdiction, this Court determined that the Texas case was
inapposite on its facts—because the restrictive covenant in Charlotte Pavilion banned the physical
presence of a business on the encumbered property, not the operation of that business. Id. at 15, 767
S.E.2d at 108-09. Shree incorrectly asserts that this Court’s discussion of the Texas opinion
constituted “accept[ance of] the idea of parking as an integral use to a retail business.” Instead, this
Court in Charlotte Pavilion merely noted that the restrictive covenant at issue could have been drafted
in a manner that excluded uses “integral” to the operation of the prohibited business, but was not so
drafted. Id. We believe whether a parking lot is “integral” to a business, and how that determination
will impact the application of a restrictive covenant in a particular case, will depend on the specific
facts of that case—including how the restrictive covenant in question was drafted. Long, 271 N.C. at
274, 156 S.E.2d at 242-43 (citation omitted) (“Each case must be determined on its own particular
facts.”).
- 11 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
in Charlotte Pavilion. “While the intentions of the parties to restrictive covenants
ordinarily control the construction of the covenants, such covenants are not favored
by the law, and they will be strictly construed to the end that all ambiguities will be
resolved in favor of the unrestrained use of land.” Hobby & Son v. Family Homes,
302 N.C. 64, 70, 274 S.E.2d 174, 179 (1981) (citations omitted). “The rule of strict
construction is grounded in sound consideration of public policy: It is in the best
interests of society that the free and unrestricted use and enjoyment of land be
encouraged to its fullest extent.” Id. at 71, 274 S.E.2d at 179 (citations omitted).
“‘The law looks with disfavor upon covenants restricting the free use of property. As
a consequence, the law declares that nothing can be read into a restrictive covenant
enlarging its meaning beyond what its language plainly and unmistakably imports.’”
Russell, 222 N.C. App. at 705, 731 S.E.2d at 538 (citation omitted).
There was no necessity to read any unwritten intent into the “affirmative”
covenants at issue in Long, Realty Company, Starmount, and Buie in order to find
violations of those covenants. “A restriction of the enjoyment of property must be
created in express terms, or by plain and unmistakable implication.” Starmount, 233
N.C. at 616, 65 S.E.2d at 136 (citation omitted). By contrast, for this Court to hold
that the intended use of Lot 3 violated the Fuel Restriction, we would have to read
an intent into the Fuel Restriction that does not exist in its plain language. Russell,
222 N.C. App. at 705, 731 S.E.2d at 538.
- 12 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
It is correct that “the fundamental rule is that the intention of the parties
governs, and that their intention must be gathered from study and consideration of
all the covenants contained in the instrument or instruments creating the
restrictions.” Long, 271 N.C. at 268, 156 S.E.2d at 238 (citation omitted). However:
“Such restrictions will not be aided or extended by
implication or enlarged by construction to affect lands not
specifically described, or to grant rights to persons in whose
favor it is not clearly shown such restrictions are to apply.
Doubt will be resolved in favor of the unrestricted use of
property, so that where the language of a restrictive
covenant is capable of two constructions, the one that limits,
rather than the one which extends it, should be adopted,
and that construction should be embraced which least
restricts the free use of the land.”
Id. at 268, 156 S.E.2d at 239 (citation omitted) (emphasis added).
We hold that there is, at a minimum, doubt concerning whether the proposed
uses of Lot 3 violate the Fuel Restriction. Even assuming, arguendo, the Fuel
Restriction can be read as prohibiting Propst’s proposed uses of Lot 3, it can also be
read as permitting them. Therefore, our rules of construction dictate that we hold in
favor of the free use of Lot 3, and affirm the trial court. Id.; see also Starmount, 233
N.C. at 616, 65 S.E.2d at 136.
IV. McDonald’s Appeal
McDonald’s argues “the trial court erred in concluding that [Propst’s] proposed
development does not violate the Deed Restrictions.” We disagree.
The relevant restrictive covenant (the “Restaurant Restriction”) states:
- 13 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
Grantee, or Waffle House, Inc., . . . or any subsequent
grantee of theirs may not operate a drive-thru type food
service restaurant on [Lot 3] so long as Grantor, or its
successors, operates a drive-thru type food service
restaurant in its convenience store on [Lot 1].
It is undisputed that Propst is a subsequent grantee of Lot 3, that McDonald’s is
currently operating “a drive-thru type food service restaurant . . . on [Lot 1,]” that
Propst’s proposed development will not include a “restaurant . . . with a drive-thru
type food service window” on Lot 2 or Lot 3, and that “[t]he purpose of the
improvements to Lot 3 shall be an entry and exit drive and limited parking[.]” Propst
intends “to improve Lots 2 and 3 such that Lot 3 will provide parking and
ingress/egress for the benefit of Lot 2 and a convenience store will be constructed on
Lot 2. The convenience store will not have a drive-thru type food service window,”
but “may use touch screens to sell made-to-order fast foods which are consumed in
the car or at home” that will require customers to “exit their vehicle[s] to order and
get food prepared and/or sold on Lot 2.”
McDonald’s argues that the language “drive-thru type food service restaurant”
does not specifically limit the Restaurant Restriction to restaurants that provide
actual drive-thru service. Although “the fundamental rule is that the intention of the
parties governs, and that their intention must be gathered from study and
consideration of all the covenants contained in the instrument or instruments
creating the restrictions[,]” Long, 271 N.C. at 268, 156 S.E.2d at 238 (citation
- 14 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
omitted), considering all the relevant documents in this case, it is not at all clear that
“the plain and obvious purpose[] of [the Restaurant R]estriction” was to exclude the
type of food service operation proposed by Propst.6 Id. at 268, 156 S.E.2d at 239(citation and quotation marks omitted).
McDonald’s fundamental argument is that the Restaurant Restriction bans the
operation of any fast food type restaurant on Lot 3, and that the proposed QT
is essentially a new drive-thru-type restaurant because of
the way you go in, push something on the screen, get your
food, you know, as you’re paying for your gas and you’ve got
that, essentially fast food restaurant exactly competitive
with what McDonald’s does whether it’s a biscuit or the
sandwich, you’re getting it that same way that’s different
than a sit-down restaurant, it’s different than a Waffle
House, and our argument is it is a drive-thru-type
restaurant.
Apparently, there are not tables in the QT for the purpose of eating its food in-store.
We hold that the term “drive-thru type food service restaurant” is too ambiguous to
prohibit the type of restaurant Propst proposes to operate on Lot 2—one in which
customers must park and enter the convenience store in order to place an order,
purchase, and pick up their food. Id. at 268, 156 S.E.2d at 239. “Drive-thru type” is
not defined in the deed, and it can reasonably be read as prohibiting only traditional
6 We also note that when Propst granted the roadway easement that bisects the Tract to the
northerly adjacent property owner, the easement included a restrictive covenant stating the northerly
adjoining property could “not be used for restaurant purposes for on site preparation, sale, and
consumption of food” for a period of fifteen years. Propst was clearly capable of drafting a more
expansive restrictive covenant than the one encumbering Lot 3.
- 15 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
fast food restaurants that have drive-thru windows—such as Burger King, Bojangles’,
or McDonald’s. A reasonable argument could also be made that the Restaurant
Restriction also prohibits restaurants that do not serve fast food, but that have a
drive-thru window from which customers could pick up their “takeout” orders.
Even if we were to hold that “drive-thru type food service restaurant” could
reasonably be interpreted as meaning “fast food type restaurant,” and that QT is a
“fast food type restaurant,” McDonald’s argument still fails. “[W]here the language
of a restrictive covenant is capable of two constructions, the one that limits, rather
than the one which extends it, should be adopted, and that construction should be
embraced which least restricts the free use of the land.” Id. (citation and quotation
marks omitted). Applying the appropriate rules of construction, we adopt the
construction of “drive-thru type food service restaurant” that limits its application
solely to those restaurants that include an actual “drive-thru” service. We hold that
the Restaurant Restriction would not prohibit the proposed QT or its equivalent from
being built on Lot 3. Therefore, even if we assume, arguendo, that the driveway and
parking spaces proposed for Lot 3 would be a part of the QT for the purposes of the
Restaurant Restriction, Propst’s proposed use of Lot 3 does not violate the Restaurant
Restriction.
V. Conclusion
- 16 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
Upon our de novo review, we hold that the trial court’s findings of fact are
supported by stipulation and competent evidence. Calhoun, 178 N.C. App. at 596-97,
632 S.E.2d at 571. We further hold that the trial court did not err in concluding:
6. [T]hat the term “drive-thru type food service restaurant”
[in the Restaurant Restriction] means a restaurant with a
traditional drive-thru window through which food is
served. . . . .
7. Based on the specific facts stipulated here, . . . the
proposed convenience store is not a “drive-thru type food
service restaurant.”
8. The restrictions on Lot 3 do not prohibit . . . parking and
ingress and egress for the benefit of Lot 2 or any other
property owned by the owner of Lot 2 when Lot 2, or any
other property owned by the owner of Lot 2, is used as a
convenience store with no drive-thru type food service
restaurant, but sells or disposes of motor vehicle fuels.
....
10. The [trial court] further concludes that the proposed
convenience store to be developed on Lot 2 does not violate
the restriction on the sale or disposal of motor vehicle fuels
from the restricted Lot 3.[7]
This Court cannot “rewrit[e] [a] restrictive covenant to add a limitation not currently
there.” Winding Ridge Homeowners Ass'n v. Joffe, 184 N.C. App. 629, 638, 646 S.E.2d
801, 807 (2007), rev’d per curiam for the reasons stated in the dissent, 362 N.C. 225,
7 In Conclusion 9., the trial court stated that if “the proposed convenience store . . . qualified
as a drive-thru type food service restaurant, the use of Lot 3 for parking and ingress/egress supporting
the convenience store . . . would clearly violate the [Restaurant R]estriction.” We make no
determination regarding the legal correctness of Conclusion 9., because it has not been challenged on
appeal.
- 17 -
PROPST BROS. DISTS., INC. V. SHREE KAMNATH CORP.
Opinion of the Court
657 S.E.2d 356 (2008) (J. Geer, dissenting). Therefore, we affirm the trial court’s
judgment that “Lots 2 and 3 can be improved as proposed by [Propst].”
AFFIRMED.
Judges ELMORE and ARROWOOD concur.
Judge Elmore concurred in this opinion prior to 31 December 2018.
- 18 -