1. Appeal and Error_appealability_partial summary
judgment_certified as final_no just reason for delay
Partial summary judgment granting plaintiffs specific
performance of an option to purchase was interlocutory but
appealable where the court did not hear defendants'
counterclaims, but certified that the judgment was final and that
there was no just cause for delaying the appeal. N.C.G.S. § 1A-
1, Rule 54(b).
2. Vendor and Purchaser_option to purchase_violation of
underlying lease
The trial court erred by granting partial summary judgment
for plaintiffs in an action for specific performance of an option
to purchase real estate arising from a lease where there were
material issues of fact as to whether plaintiffs breached the
lease by creating a nuisance on the property (environmental
contamination) and by failing to maintain proper insurance, and
whether defendant had terminated the lease properly prior to its
expiration, thus preventing the exercise of the option.
Smith Debnam Narron Wyche Story & Myers, L.L.P., by Bettie
Kelley Sousa, for plaintiff appellees.
Barefoot & Patrick, L.L.P., by Thomas N. Barefoot, for
defendant appellants Connie Barham Kidd and Amanda Gail
Koenck.
TIMMONS-GOODSON, Judge.
Connie Barham Kidd ("Kidd") and her daughter, Amanda GailKoenck (collectively "defendants"), ap
peal from partial summary
judgment granting specific performance of a purchase option clause
contained in a lease agreement of certain real property owned by
defendants and leased by Bobby and Richard Raybon ("plaintiffs").
The facts pertinent to this appeal are as follows:
On 11 April 1974, plaintiffs entered into a lease agreement
with Marvin E. Barham and his wife, Idell Barham, for certain real
property on which a small house and grocery store were located.
The lease included a purchase option clause, which gave plaintiffs
"the option to buy property at the end of [the] lease including lot
and house on south side of store for $35,000.00." The lease
required plaintiffs, among other conditions, to maintain public
liability insurance on the property and to "use said premises in a
lawful manner and . . . not permit any nuisance to exist or
continue." The lease further provided that if plaintiffs "should
violate the terms of this Lease then the Lessors at their option
has [sic] the right and privilege to enter and take possession of
said leased premises in such event." The parties later modified
the lease to extend its terms and options from 1 July 1989 until 1
June 1999.
Under the will of Idell Barham, Amanda Koenck, a minor,
inherited a remainder interest in the property, while her mother,
Connie Kidd, inherited a life estate interest in the property.
Plaintiffs continued to lease the property from Kidd, and on 21
October 1997, notified her of their intent to exercise their option
to purchase the property. At this time, plaintiffs and defendants
were involved in litigation concerning plaintiffs' allegedenvironmental contamination of the property. By letter dated 5
November 1997, Kidd informed plaintiffs that they had violated the
terms of the lease, and that unless such violations were cured
within thirty days, Kidd intended to exercise her right to
terminate the lease agreement. In September or October of 1998,
defendants ceased accepting rent payments from plaintiffs. On 21
June 1999, plaintiffs filed a complaint in Wake County Superior
Court alleging that defendants had refused to sell them the
property and requested an order for specific performance.
Defendants thereafter filed a counterclaim alleging, inter alia,
that plaintiffs were in breach of the lease for creating a nuisance
on the property and for failing to maintain adequate public
liability insurance. The counterclaim further averred that,
pursuant to the termination of the lease, defendants had asked
plaintiffs to vacate the property, which request plaintiffs had
ignored. The counterclaim also named additional defendants who are
not pertinent to the present appeal.
Plaintiffs' motion for summary judgment came before the trial
court on 31 May 2000. Without hearing defendants' counterclaims,
the trial court determined that plaintiffs were entitled to
exercise the purchase option on the lease and therefore ordered
defendants to render specific performance by selling the property
to plaintiffs. Defendants now appeal the trial court's order.
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[1]We note initially that the trial court's order is
interlocutory, as it adjudicates fewer than all of the claims,
rights, and liabilities between fewer than all of the parties. SeeCunningham v. Brown, 51 N.C. App. 264, 266, 276 S.E.2d 718, 721
(1981). This Court does not review interlocutory appeals as a
matter of course. See N.C. Gen. Stat. § 1A-1, Rule 54(b) (1999);
Veazey v. Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950).
Under section 1A-1, Rule 54(b), of the General Statutes of North
Carolina, however, where there are multiple claims or multiple
parties to an action, the trial court "may enter a final judgment
as to one or more but fewer than all of the claims or parties . .
. if there is no just reason for delay and it is so determined in
the judgment." N.C. Gen. Stat. § 1A-1, Rule 54(b). The trial
court in the instant case entered a final judgment on fewer than
all of the claims and certified that the judgment was final in
nature and that no just cause existed to delay appeal. We may
therefore properly review the instant case on its merits. See DKH
Corp. v. Rankin-Patterson Oil Co., 348 N.C. 583, 585, 500 S.E.2d
666, 668 (1998).
[2]Defendants argue that the trial court erred in granting
partial summary judgment to plaintiffs, in that genuine issues of
material fact exist concerning whether or not plaintiffs breached
their lease with defendants by creating a nuisance on the property
and by failing to maintain proper insurance. Defendants assert
that plaintiffs' acts violated the lease, and that plaintiffs were
therefore not entitled to enforce the purchase option of the lease.
Defendants also contend that they properly terminated the lease
prior to its expiration on 1 June 1999, thus preventing plaintiffs
from exercising the purchase option. We agree with defendants that
genuine issues of material fact preclude entry of summary judgment,and we therefore reverse the order of the trial court.
A motion for summary judgment is only appropriate where the
"pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-
1, Rule 56(c) (1999); Johnson v. Insurance Co., 300 N.C. 247, 252,
266 S.E.2d 610, 615 (1980). Summary judgment is a drastic remedy
and should be used cautiously. See Bank v. Gillespie, 291 N.C.
303, 310, 230 S.E.2d 375, 379 (1976).
The lease agreement before the trial court in the instant case
requires plaintiffs to "maintain suitable public liability
insurance" and to prevent any nuisance from arising on the
property. The lease further provides that, unless plaintiffs
correct violations of the lease within a "reasonable length of
time[,]" defendants have the right to enter and take possession of
the property. In their counterclaims, defendants asserted that
plaintiffs breached material provisions of the lease agreement by
creating a nuisance and by failing to maintain public liability
insurance. "[I]t is fundamental in our jurisprudence that one who
breaches a material provision of a contract may not ask a court of
equity to enforce the rest of the agreement." Bowman v. Drum, 97
N.C. App. 505, 506, 389 S.E.2d 125, 125 (1990). A provision in a
lease agreement requiring lessees to obtain liability insurance on
the leased property constitutes a material provision of the lease
agreement. See id. at 505-06, 389 S.E.2d at 125.
Furthermore, the lease agreement allows plaintiffs to purchasethe property "at the end of [the] lease[.]"
The lease expired on
1 June 1999. Defendants allege that they terminated the lease
agreement on 10 September 1998, approximately one year after
informing plaintiffs that they were in breach of the lease.
Defendants also accepted no further rental payments by plaintiffs
after September or October of 1998. Whether or not defendants
properly terminated the contract prior to plaintiffs' ability to
exercise their option to purchase the property is an issue of
material fact precluding summary judgment. See Dettor v. BHI
Property Co., 324 N.C. 518, 519, 379 S.E.2d 851, 851 (1989)
(holding that summary judgment regarding a contract for sale of
real property was inappropriate where genuine issues of material
fact existed concerning the agreement). Because we hold that
genuine issues of material fact exist concerning plaintiffs'
ability to exercise the purchase option in the lease agreement, the
trial court erred in granting partial summary judgment to
plaintiffs.
Reversed and remanded.
Judges McGEE and BIGGS concur.
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