Landlord and Tenant--breach of lease--ejectment--notice--default
The trial court did not err in a breach of lease and ejectment action by granting summary
judgment in favor of plaintiff landlord, because: (1) the lease in the instant case did not require
any notice of termination; (2) the only written notice required prior to lease termination was the
10-day advance notice of rent nonpayment, and plaintiff had no subsequent obligation to declare
in writing that the lease was in default prior to effecting termination; and (3) defendant's alleged
inability to tender payment without having record of a Form W-9 signed by plaintiff was in fact
due to an internal company policy which was not an event beyond defendant's control.
Hutson Hughes & Powell, P.A., by James H. Hughes and James S.
Staton, for defendant-appellant.
Manning, Fulton & Skinner, P.A., by Michael S. Harrell, for
plaintiff-appellee.
ELMORE, Judge.
Steak and Ale of North Carolina, Inc. (defendant) appeals an
order of summary judgment entered in favor of Crabtree Avenue
Investment Group, LLC (plaintiff). We affirm.
Defendant owns and operates a restaurant located at 4420
Creedmoor Road in Raleigh. Defendant has been in possession of the
property since the execution of a commercial lease with the
landlord in December 1977, and plaintiff is a successor-in-interest
to this lease. Prior to plaintiff's acquisition of the property, defendant
paid its September 2003 monthly rent. The previous landlord, David
E. Rodger, sold the property to plaintiff on 15 September 2003. On
this same day, Mr. Rodger mailed a letter to defendant informing it
that he had conveyed the property to plaintiff. The letter
requested that defendant send future rent checks to plaintiff's
address at “8410 Falls of the Neuse Road, Suite C, Raleigh, NC
27615.” This letter did not contain a contact telephone or fax
number for plaintiff.
On 19 September 2003, defendant mailed two letters to
plaintiff at the address stated in Mr. Rodger's letter. In this
correspondence, defendant requested that plaintiff fill out an
attached IRS Form W-9 and provide a copy of the document
transferring the interest in the property to plaintiff. Both
letters were returned to defendant unopened, with a notation of
“F.O.E.” (forwarding order expired) on the envelope. Defendant did
not pay October 2003 rent to either Mr. Rodger or plaintiff.
On 30 October 2003, plaintiff mailed a letter via certified
mail, return receipt requested, to defendant. In this letter,
plaintiff stated that October rent had not been received; that
November rent was currently due; and that pursuant to the lease
agreement, rents are due on the first of the month. The letter
provided a contact phone and fax number and specified plaintiff's
address as “8410 Falls of Neuse Road _ Suite C, Raleigh, NC 27615.”
Defendant received this letter on 4 November 2003. On 5 November 2003, defendant transmitted by fax a request for
a signed Form W-9 and a copy of the deed transferring title of the
property to plaintiff. Defendant stated that it needed this
information in order to process the payments due.
(See footnote 1)
Plaintiff
responded to defendant's fax request in a letter dated 7 November
2003 and attached a copy of the deed granting title to plaintiff
and a completed Form W-9. When defendant failed to pay rent by 17
November 2003, more than 10 days after notice of non-receipt,
plaintiff terminated the lease on this day via a letter from its
legal counsel.
On 26 November 2003, defendant tendered rental payments for
the months of October, November, and December. Plaintiff returned
these checks to defendant and filed a complaint in summary
ejectment in the district court of Wake County on 4 December 2003.
In the complaint, plaintiff alleged the breach of defendant as,
“Failure to pay rent after demand within ten days. Lease
terminated on November 17, 2003.” The district court entered
judgment for plaintiff in the amount of $7,235.01, the amount of
rent due for the months of October, November, and December.
Defendant filed notice of appeal from this judgment and order of
ejectment, and plaintiff filed a motion for summary judgment withrespect to defendant's appeal. The district court heard the
summary judgment motion on 20 February 2004, and the court issued
an order granting the motion on 5 March 2004.
Summary judgment is appropriate when “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
judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c)
(2004). In reviewing the grant of a motion for summary judgment,
this Court must review the evidence in the light most favorable to
the non-moving party. See Dobson v. Harris, 352 N.C. 77, 83, 530
S.E.2d 829, 835 (2000).
Defendant challenges the summary judgment order on the basis
that the notice of default was insufficient for termination of the
parties' lease. After reviewing the lease terms and the substance
of plaintiff's notice to defendant, we cannot agree.
The leasing contract between defendant and plaintiff provides
that “[u]pon the occurrence of any Event of Default, Landlord shall
have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever . . .” (emphasis added).
The remedies include, inter alia, termination of the lease
agreement. One of the events listed as an “Event of Default” is
the tenant's failure to pay rent past due within 10 days of written
notice from the landlord. The contract specifies that the notice
is deemed to be delivered “when deposited in the United States
mail, postage prepaid, certified or registered, return receiptrequested[.]” In the 30 October letter, sent by certified mail
with return receipt requested, plaintiff informed defendant that
October rent was past due and that rents are due on the first of
the month and must be paid within 10 days of notice of non-receipt.
In support of its argument that plaintiff's 30 October letter
failed to provide adequate notice of default, defendant relies upon
ARE-100/800/801 Capitola, LLC v. Triangle Labs, Inc., 144 N.C. App.
212, 550 S.E.2d 31 (2001). However, that case is distinguishable
on its facts. There, the parties' lease contract provided that an
event of default included the tenant's failure to pay rent within
three business days of receiving notice that rent was past due.
Id. at 214, 550 S.E.2d at 33. Upon the occurrence of an event of
default, the landlord could exercise one of the following options
under the contract: re-entering the property, terminating the
lease, or terminating the tenant's possession of the property.
Notably, the lease agreement required that the landlord give
written notice of which remedy it was pursuing prior to taking the
action. However, plaintiff-landlord's written notice to defendant-
tenant following default did not specify which remedy plaintiff was
pursuing. Instead, plaintiff merely stated that it would be
initiating “curative remedies under the Lease and the law.” Id. at
215, 550 S.E.2d at 33. This Court held that the notice of lease
termination was insufficient under the contract because plaintiff
failed to indicate which of the three options it had chosen to
exercise. The Court emphasized that written notification of the
termination of a lease must be given “in strict compliance with the [leasing] contract as to both time and contents.” Id. at 219, 550
S.E.2d at 35 (quoting Stanley v. Harvey, 90 N.C. App. 535, 539,
369 S.E.2d 382, 385 (1988)).
In contrast, the lease in the instant case did not require any
notice of termination. Rather, plaintiff could effectively
terminate the lease without notice following defendant's failure to
pay rent within 10 days of written demand for rent past due. Thus,
the only written notice required prior to lease termination was the
10-day advance notice of rent non-payment. Plaintiff has no
subsequent obligation to declare in writing that the lease is in
default prior to effecting termination. Therefore, this Court's
analysis in Capitola of the specificity of a termination notice is
inapplicable here.
Defendant also asks this Court to consider that it did not
have plaintiff's W-9 tax documentation prior to the time when
October and November rents became due. Defendant points to the
“force majeure” provision in the parties' lease, which allows an
extension of time for performance by the tenant when the tenant's
ability to perform its obligations under the lease are delayed due
to a cause beyond the tenant's control. Defendant contends that
the delay in receiving the W-9 information from plaintiff
constituted an event beyond defendant's control which resulted in
its inability to make timely rent payments in accordance with the
contract.
Our review of the record establishes that defendant's alleged
inability to tender payment without having record of a Form W-9signed by plaintiff is in fact due to an internal company policy.
An internal accounting policy of defendant mandating receipt of
this information prior to releasing the rent monies is not an event
beyond defendant's control.
As there is no genuine issue of material fact and plaintiff is
entitled to judgment as a matter of law, we affirm the court's
order granting summary judgment to plaintiff.
Affirmed.
Judges McCULLOUGH and LEVINSON concur.
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