MICHAEL GALLIS,
Petitioner,
v
.
Mecklenburg County
No. 01-SP-3391
M&R INVESTORS, a South Carolina No. 02-SP-1197
General Partnership,
Respondent.
Johnston, Allison & Hord, P.A., by Michael L. Wilson & Alicia
Almeida Bowers, for petitioner-appellee.
Horack, Talley, Pharr & Lowndes, P.A., by Robert B. McNeill,
for respondent-appellant.
THORNBURG, Judge.
M&R Investors (“respondent”) appeals the trial court order
granting summary judgment in favor of Michael Gallis
(“petitioner”). For the reasons discussed herein, we reverse the
trial court's order.
The relevant facts and procedural history are as follows:
Concord Development Group LLC (“Concord”) defaulted on obligations
to both petitioner and respondent. Respondent foreclosed and the
resulting foreclosure sale generated surplus proceeds. Petitioner
filed a petition for a special proceeding to determine the
ownership of the surplus funds. On 8 August 2003, petitioner fileda motion for summary judgment in Mecklenburg County Superior Court.
The evidence presented upon the motion for summary judgment tends
to show the following: Petitioner worked with Concord in connection
with a real estate development in Mecklenburg County. Petitioner
and Concord entered into an agreement dated 13 October 1998. Under
this agreement, Concord was to pay petitioner a $300,000 fee (the
“fee”) and up to an additional $200,000 bonus (the “bonus”). A
deed of trust recorded 12 February 1999 secured the fee, but not
the bonus.
In January of 2000, Concord paid petitioner $100,000 in
connection with petitioner's agreement to the release of a portion
of the property encumbered by the deed of trust. In or about
February of 2000, petitioner earned the $200,000 bonus.
Subsequently, petitioner agreed to subordinate his deed of trust to
respondent's deed of trust in exchange for a second $100,000
payment from Concord. A subordination agreement entered into on 9
May 2000 by petitioner in favor of respondent was recorded on 22
June 2000.
Petitioner's motion for summary judgment contained affidavits
from petitioner and Concord indicating that the two $100,000
payments from Concord to petitioner were applied to the $200,000
bonus not secured by the deed of trust, leaving the entire secured
$300,000 still due. In opposition to petitioner's motion for
summary judgment, respondent presented the affidavit of Bill
Freeman, an accountant who had worked for Concord, which indicatedthat the two payments were applied towards the $300,000 secured
fee, leaving only $100,000 as secured by the deed of trust.
After a hearing on 21 August 2003, the trial court granted
petitioner's motion for summary judgment and ordered that $300,000
of the surplus proceeds be distributed to petitioner. Respondent
appeals. Petitioner cross-assigns as error the trial court's
denial of petitioner's motion to strike in whole or in part the
affidavit of Bill Freeman (the “Freeman affidavit”).
The dispositive issue on appeal is whether the trial court
erred in granting summary judgment in favor of petitioner. As we
conclude that petitioner was not entitled to judgment as a matter
of law, we hold that the trial court erred in granting summary
judgment in favor of petitioner.
“[T]he standard of review on appeal from summary judgment is
whether there is any genuine issue of material fact and whether the
moving party is entitled to a judgment as a matter of law.”
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504
S.E.2d 574, 577 (1998). Summary judgment is appropriate when,
“viewed in the light most favorable to the non-movant[,]” id., “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) (2003). The party moving for summary judgment
must establish that no triable issue of material fact exists “'by
proving that an essential element of the opposing party's claim isnon-existent, or by showing through discovery that the opposing
party cannot produce evidence to support an essential element of
his claim or cannot surmount an affirmative defense which would bar
the claim.'” DeWitt v. Eveready Battery Co., 355 N.C. 672, 681,
565 S.E.2d 140, 146 (2002) (quoting Collingwood v. G.E. Real Estate
Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989)).
On appeal, respondent argues that the Freeman affidavit and
petitioner's own documents establish that an issue of fact exists
as to whether the two $100,000 payments were made to reduce the
secured fee or the unsecured bonus. Respondent contends that this
issue is material in that both petitioner and respondent agree that
petitioner is only entitled to an amount from the surplus
proceeding equal to the amount secured by his deed of trust. Thus,
respondent asserts that the trial court erred by entering judgment
as a matter of law in favor of petitioner when this material
question of fact is disputed. Petitioner contends that no issue of
material fact was presented and thus, that the trial court
correctly determined that petitioner was entitled to the $300,000
as a matter of law.
After a careful review of the record and briefs, we conclude
that a genuine question of material fact exists as to whether the
two $100,000 payments at issue were made in satisfaction of the fee
or the bonus. The 9 May 2000 agreement (the “May Agreement”)
between petitioner and Concord contains the following language:
1. The total Earned Fee under the terms of
the Letter Agreement is $500,000.00.
2. The $100,000.00 Release Payment reduced
the balance due on the Earned Fee by
$100,000.00.
3. Concord/W-J shall pay [petitioner]
$100,000.00 in readily-available funds to
be credited against the Earned Fee, in
exchange for which [petitioner] will
subordinate the Deed of Trust to the M&R
Deed of Trust with regard to the 55-Acre
Parcel . . . .
4. The balance of the Earned Fee after the
payment of the $100,000.00 as set forth
above in Paragraph 3 will be $300,000.00,
and this balance will be due and payable
in full by Concord/W-J in accordance with
the terms of the Letter Agreement . . . .
The “Letter Agreement” refers to the initial agreement between
petitioner and Concord dated 13 October 1998 and contains
provisions about payment of both the fee and the bonus. As the May
Agreement specifically defines the phrase “Earned Fee” to be the
“total amount earned: $500,000.00” and refers to another agreement
that references both the fee and the bonus, we conclude that an
ambiguity exists as to whether the payments were made to reduce the
bonus or the fee. The depositions submitted by petitioner and
respondent differ over how these agreements should be interpreted,
which shows that a question of fact exists concerning the two
payments. This disagreement is material in that the way the
payments are attributed affects the amount secured by petitioner's
deed of trust, which is the amount that petitioner is entitled to
recover from the surplus proceeding.
We next address petitioner's argument, presented both in
support of his assertion that summary judgment was appropriate and
as a cross-assignment of error, that the trial court erred bydenying his motion to strike in whole or in part the Freeman
affidavit. Petitioner first argues that the trial court erred by
not excluding the entire Freeman affidavit because it was offered
to contradict the terms of an unambiguous agreement and thus, is
barred by the parol evidence rule. As discussed above, however, we
disagree with petitioner's contention that the language in
petitioner's documents unambiguously states how the payments at
issue were allocated. This argument is without merit.
Petitioner's contention that at least portions of the
affidavit should have been excluded by the trial judge under Rule
56(e) of the North Carolina Rules of Civil Procedure is also
without merit. Rule 56(e) provides, in pertinent part, that:
Supporting and opposing affidavits shall be
made on personal knowledge, shall set forth
such facts as would be admissible in evidence,
and shall show affirmatively that the affiant
is competent to testify to the matters stated
therein.
N.C. Gen. Stat. . 1A-1, Rule 56(e) (2003). A review of the
affidavit indicates that it does comply with the requirements of
Rule 56(e). The affidavit affirmatively shows Freeman's basis for
personal knowledge of and competency to testify concerning the
subject matter of his affidavit and sets forth facts which would be
admissible in evidence. Accordingly, we conclude that the trial
court did not err in denying petitioner's motion to strike in whole
or in part the Freeman affidavit.
As the record reveals that a genuine issue as to a material
fact remains as to how the two $100,000 payments from Concord topetitioner were intended to be applied, we hold that summary
judgment was inappropriate.
Reversed.
Judges GEER and LEVINSON concur.
Report per Rule 30(e).
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