Andrea Morrell, G. Pony Morrell, & the Pasta Wench, Inc. v. Hardin Creek, Inc.
803 S.E.2d 668
| N.C. Ct. App. | 2017Background
- Plaintiffs Andrea and G. Pony Morrell operated The Pasta Wench from leased commercial units in Boone, NC; lease was with landlord Hardin Creek, Inc.; S. Greene (president of Hardin Creek) and Timberframe performed modifications.
- Lease (Feb 2, 2011) included Paragraph 5(b) stating landlord and tenant "discharge each other from all claims and liabilities arising from or caused by any hazard covered by insurance," and Paragraph 8 requiring tenant insurance; Paragraph 8 refers to a missing subparagraph (c).
- After agreed renovations (to satisfy NCDA&CS), sprinkler lines were relocated above a newly enclosed ceiling; on Jan 7, 2014 frozen pipes burst and damaged Plaintiffs’ business.
- Plaintiffs sued for negligence, breach of implied warranty of workmanlike performance, constructive eviction, breach of quiet enjoyment, and UDTP claims; they later sought to add property owner E. Greene.
- Trial court granted summary judgment for Defendants, concluding Paragraph 5(b) was an unambiguous, complete exculpatory clause; trial court also denied further discovery and dismissed the third-party complaint.
- The Court of Appeals reversed and remanded: it held the lease is ambiguous (due to the incomplete Paragraph 8 and uncertain scope of "covered by insurance") and that the exculpatory clause does not clearly waive negligence claims; negligence claims survive summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Paragraph 5(b) is ambiguous | Morrell: clause ambiguous because Paragraph 8 is incomplete, creating uncertainty what "covered by insurance" means | Hardin Creek: 5(b) is plain and unambiguous — it releases all claims for matters covered by insurance | Court: Ambiguous — Paragraph 8's missing subparagraph and linkage to 5(b) create genuine issue of meaning; remanded |
| Whether Paragraph 5(b) bars negligence claims | Morrell: clause does not clearly and explicitly waive negligence or claims for uninsured business losses | Hardin Creek: clause waives claims ("regardless of the cause of the damage or loss") including negligence; insurance requirement supports intent | Court: A waiver of negligence must be "clear and explicit"; lease lacks specific language waiving negligence — negligence claims survive |
| Whether summary judgment was proper on negligence and code-violation theories | Morrell: facts allege Code violations (sprinkler placement/coverage) and negligence per se; discovery needed to allocate responsibility among defendants | Hardin Creek: plaintiffs caused damage (left vent open); lease defenses resolve claims as a matter of law | Court: Summary judgment improper — negligence (including potential building-code violations) ordinarily for jury; record insufficient to allocate fault at summary judgment |
| Whether trial court properly denied discovery/amendment to add E. Greene | Morrell: further discovery and amendment necessary to identify responsible parties (E. Greene) | Hardin Creek: summary judgment appropriate; amendment/more discovery futile | Court: Because lease interpretation and negligence survive, trial court should revisit discovery schedule and reconsider motion to add E. Greene on remand |
Key Cases Cited
- State v. Philip Morris USA, Inc., 363 N.C. 623 (court looks to contract language to ascertain parties' intent)
- Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., 362 N.C. 269 (ambiguous contract issues are for the jury)
- International Paper Co. v. Corporex Constructors, Inc., 96 N.C. App. 312 (contract ambiguity requires jury determination)
- William F. Freeman, Inc. v. Alderman Photo Co., 89 N.C. App. 73 (insurance/subrogation language does not imply waiver of negligence absent clear words)
- Lexington Ins. Co. v. Tires Into Recycled Energy & Supplies, Inc., 136 N.C. App. 223 (upheld explicit waiver of recovery for losses covered by insurance)
- Winkler v. Appalachian Amusement Co., 238 N.C. 589 (clauses relieving negligence must use clear and explicit language)
- Lamm v. Bissette Realty, Inc., 327 N.C. 412 (owner negligence per se for building-code violations requires notice, failure to remedy, and proximate causation)
- Lassiter v. Cecil, 145 N.C. App. 679 (violation of Building Code can be negligence per se)