Cape Hatteras Electric Membership Corp. v. StevensonÂ
249 N.C. App. 11
| N.C. Ct. App. | 2016Background
- Plaintiff Cape Hatteras Electric Membership Corporation (CHEMC), an electric cooperative, has bylaws requiring members to grant easements for electric facilities "in accordance with such reasonable terms and conditions."
- After storm erosion, CHEMC demanded a 44-foot-wide easement across member Gina Stevenson’s property to reroute a transmission line, offering $1 in the attached right-of-way agreement.
- Stevenson refused; she later conveyed an undeveloped lot to nonmember Joseph Noce. CHEMC then filed condemnation proceedings and threatened to disconnect Stevenson’s power under bylaw suspension provisions if she did not grant the easement.
- CHEMC sued for declarations and asserted tort claims (intentional interference with contract and civil conspiracy) against Stevenson and Noce; the Business Court granted summary judgment to defendants.
- The Court of Appeals affirmed, holding CHEMC’s unilateral $1 demand was not a request made on "reasonable terms and conditions," so no bylaw obligation arose and the tort claims failed. The declaratory judgment was affirmed as limited to the case facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CHEMC's demand for a 44-foot easement for $1 satisfied the bylaws' requirement of "reasonable terms and conditions" | Bylaws obligate member to grant easement on CHEMC request; demand was proper so member had to comply | The demand was unilateral and unreasonable (only $1, no assurances of compensation or review), so bylaws did not compel grant | Demand was not made on reasonable terms and conditions; member had no contractual duty to grant easement |
| Whether defendants are liable for intentional interference with contract | Defendants induced breach of the member duty under the bylaws | No breach existed because the bylaw condition (reasonable terms) was unmet | Tort claim fails because there was no enforceable contractual obligation to induce or breach |
| Whether defendants are liable for civil conspiracy | Joint action to thwart CHEMC’s bylaw rights makes them liable | No underlying tort or breach, so conspiracy claim fails | Conspiracy claim dismissed because underlying claim fails |
| Whether CHEMC could lawfully threaten disconnection under Section 2.01 to compel compliance | Section 2.01 allows suspension for noncompliance with membership obligations, including failure to grant easements | Where the easement demand is not on reasonable terms, suspension/disconnection cannot be used to coerce compliance | Declaratory relief affirmed: CHEMC cannot use Section 2.01 to force a member to grant an easement when the request was not on reasonable terms; declaration limited to these facts |
Key Cases Cited
- In re Will of Jones, 362 N.C. 569 (discussion of summary judgment standard)
- Griffith v. Glen Wood Co., 184 N.C. App. 206 (intentional interference requires inducement of nonperformance)
- New Bar P’ship v. Martin, 221 N.C. App. 302 (civil conspiracy fails if underlying claims fail)
- Poore v. Poore, 201 N.C. 791 (court declines to issue broad advisory dicta without proper record or adversarial briefing)
- Christenbury Eye Ctr., P.A. v. Medflow, Inc., 783 S.E.2d 264 (jurisdictional note that this Court has appellate jurisdiction over business court appeals)