Landlord and Tenant--summary ejectment--summary judgment
Summary judgment should not have been granted for plaintiff
landlord for summary ejectment where there was a conflict as to
whether defendant lessees timely provided business interruption
insurance as required by the lease and as to whether defendants
reimbursed plaintiff for the cost of fire and casualty insurance
as required by the lease.
Michael W. Strickland & Associates, P.A., by Nelson G. Harris,
for plaintiff-appellee.
David S. Crump for defendant-appellants.
GREENE, Judge.
Imran Hamerah (Hamerah) and Khloud Kaff (Kaff) (collectively,
Defendants) appeal an order filed 25 August 1999 granting a motion
for summary judgment in favor of Katherine Loomis (Plaintiff).
Plaintiff, as the landlord, and Defendants, as the tenants,
entered into a five-year Lease Agreement (the Lease) on 21 June
1994 for the property located at 3001 Hillsborough Street, Raleigh,
North Carolina (the Premises). Plaintiff and Defendants relied
heavily on Perry Mastromichalis (Mastromichalis), the attorney for
Plaintiff, to prepare the Lease. The Lease provided in pertinent
part:
9. Alterations and Improvements.
[Defendants] shall have the right and
privilege at any time during . . . [the Lease]to make, at [Defendants'] own expense, such
changes, improvements and alterations to the
Premises as [Defendants] may desire; provided,
however, [Defendants] shall not make any
material or structural changes to . . . [the
Premises] without the prior written
permissions of [Plaintiff] . . . [Defendants
agree] . . . to make improvements to the
[P]remises in excess of $30,000.00 and . . .
provide [Plaintiff] with the plans for the
remodeling of the [Premises].
. . . .
11. Indemnification and Liability
Insurance. . . . [Defendants] . . . will
procure and keep in force at [their] own
expense public liability insurance . . . which
policy or policies of insurance shall show
[Plaintiff] as an additional insure[d] . . . .
[Defendants] will cause a certificate of
insurance to be furnished to [Plaintiff]
evidencing such coverage and said policy shall
provide that said insurance may not be
cancelled [sic] without written notice to
[Plaintiff] at lease [sic] thirty (30) days
prior to any cancellation.
12. Property Insurance and Taxes.
. . . .
B. [Defendants] shall also, at
[Defendants'] sole cost and expense, obtain
and keep in force business interruption
insurance on the operation of the Premises in
an amount satisfactory to [Plaintiff].
C. . . . [Plaintiff's cost of
maintaining fire and casualty insurance on the
building] in such amount and to such extent as
[Plaintiff] determines desirable . . . shall
be paid by [Defendants], [and] shall be due
and payable as additional rent . . . and shall
be paid to [Plaintiff] at such time as[Plaintiff] is required to make such payment.
. . . .
16. Default. . . .
. . . .
(b) . . . [With the exception of
nonpayment of rent default occurs upon
Defendants' noncompliance with the]
performance of any of the . . . covenants,
agreements or conditions of [the] Lease,
[provided such noncompliance] shall continue
for a period of thirty (30) days after written
notice thereof is given by [Plaintiff] to
[Defendants].
17. Remedies. (a) Upon such a default,
it shall be lawful for [Plaintiff], at [her]
option, to declare the said term ended and to
enter into the Premises or any part hereof,
either with or without process of law, and
expel [Defendants] . . . .
. . . .
(c) . . . [Plaintiff] may employ an
attorney to enforce [Plaintiff's] rights and
remedies and [Defendants] agree[] to pay to
[Plaintiff] . . . reasonable attorney's fees.
. . . .
20. Option to Purchase. [Defendants]
shall have the option to purchase [the
Premises] after five (5) years of the [Lease]
for $175,000 . . . [p]rovided that [Defendants
are] not in default as provided herein . . . .
Beginning in February 1998, Plaintiff notified Defendants they
were in noncompliance with the Lease in several respects.
Defendants responded to each of the notices, contesting some of the
matters and attempting to comply with others. Defendants received
a notice from Plaintiff dated 24 November 1998, which informed
Defendants they were in noncompliance in the following respects:
(1) the payment of attorney's fees incurred by Plaintiff as a
result of Plaintiff's efforts to obtain Defendants' compliance withthe Lease; (2) failure to provide business interruption insurance
in the amount of $100,000.00; (3) failure to pay fire and casualty
insurance cost incurred by Plaintiff for purchase of a $250,000.00
policy; (4) failure to list Plaintiff as an additional insured in
the public liability insurance policy; and (5) Defendants'
structural changes to the building without Plaintiff's written
consent. Plaintiff informed Defendants in this 24 November notice
that these unauthorized structural changes must be inspected and
approved by the City of Raleigh building inspector on or before 24
December 1998.
On 3 December 1998, Defendants responded to Plaintiff's 24
November notice by providing Plaintiff with certain insurance
policies,
(See footnote 1)
denying any obligation to pay attorney's fees, and
agreeing to “complete and have final inspections for renovations
prior to February 24, 1999.” The delay in the inspections was
necessitated, according to Defendants, because Kaff was
hospitalized in her home country of Jordan and Hamerah needed to be
with her in Jordan. Defendants also indicated they had sent
Plaintiff a check in the amount of $450.00 to reimburse Plaintiff
for the cost of the fire and casualty insurance policy.
On 13 December 1998, Plaintiff responded to Defendants' 3
December 1998 letter by reasserting Defendants' noncompliance andinforming Defendants if these issues were not corrected by 24
December 1998, the Lease would be terminated. The noncompliance
issues asserted are as follows: (1) the payment of attorney's fees
incurred by Plaintiff as a result of Plaintiff's efforts to obtain
Defendants' compliance with the Lease; (2) failure to provide
business interruption insurance in the amount of $100,000.00; (3)
failure to pay fire and casualty insurance cost incurred by
Plaintiff for purchase of a $250,000.00 policy; and (4) the 24
February 1999 inspection of the structural changes by the City of
Raleigh was unacceptable.
On 31 December 1999, Plaintiff notified Defendants the Lease
was terminated and Defendants were directed to immediately vacate
the Premises and surrender possession to Plaintiff. The grounds
asserted in this notification for the termination are as follows:
(1) [Defendants'] failure to provide adequate
public liability insurance;
(2) [Defendants'] failure to provide adequate
insurance coverage on the building;
(3) [Defendants'] failure to provide adequate
business interruption insurance;
(4) [Defendants'] blatant defiance of
[Plaintiff's] rights of ownership through
fraudulent misrepresentations of [Defendants']
ownership of the [P]remises, including but not
limited to
(a)falsely stating both orally and in
writing to city and county officials that
[Defendants] are the owner of the
[P]remises, and
(b)stating the same under oath in a
civil deposition, and
(c)failing to correct such false
statements at the written request of the
landlord;
(5) [Defendants'] failure to keep the
building in compliance with all building
codes; and
(6) [Defendants'] failure to provide properbuilding permits to [Plai
ntiff] upon her
request.
Plaintiff filed a complaint in summary ejectment on 31
December 1998 demanding to recover possession of the Premises based
on the six grounds asserted in Plaintiff's 31 December letter to
Defendants. On 20 January 1999, the magistrate entered a judgment
in action for summary ejectment granting Plaintiff possession of
the Premises and Defendants appealed to district court.
On 23 July 1999, Plaintiff moved for summary judgment. In
support of her motion for summary judgment, Plaintiff offered
evidence that she had not received any indication from Defendants
showing compliance with building permits or building inspections
and did not receive the endorsement changing Defendants' business
interruption insurance coverage amount to $100,000.00 until 18
February 1999.
There was also evidence that in December 1998, Defendants were
“in their home country, Jordan” because Kaff was hospitalized there
and they had “made every reasonable effort to comply with any
alleged defaults of” the Lease. Hamerah stated he obtained verbal
permission from Plaintiff or her attorney for all the repairs or
improvements he made to the building, which improvements cost
nearly $130,000.00, and he obtained a City building permit for each
of the repair projects. Hamerah said he obtained a business
interruption insurance policy in November 1998 in the amount of
$100,000.00. Mastromichalis stated in his deposition that
Plaintiff informed Defendants to “do what you want to do [to the
building]; don't come to me; just pay money, pay rent.” WhenMastromichalis confronted Plaintiff about the Lease requirement
that structural changes to the building required her prior written
consent, Plaintiff responded “don't worry about it. It doesn't
have to be.”
On 25 August 1999, after considering the arguments of
Plaintiff and Defendants and the evidence, the trial judge
determined “there [was] no genuine issue as to any material fact,
and that the Plaintiff [was] entitled to judgment as a matter of
law.”
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