Golden Triangle 3, LLC v. Rmp-Mallard Pointe, LLC

2020 NCBC 22

• Court: North Carolina Business Court
• Decided: March 23, 2020
• Docket: 19-CVS-13580
• Status: Published

Opinion

Golden Triangle #3, LLC v. RMP-Mallard Pointe, LLC, 2020 NCBC 22.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 19 CVS 13580

GOLDEN TRIANGLE #3, LLC,

Plaintiff and Counterclaim Defendant,

v.

RMP-MALLARD POINTE, LLC, and MALLARD CREEK ASSOCIATES #1, LLC,

Defendants and Counterclaim ORDER AND OPINION ON Plaintiffs, DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS and PURSUANT TO RULE 12(c) RMP-MALLARD POINTE, LLC,

Third-Party Plaintiff,

LEVINE PROPERTIES, INC.,

Third-Party Defendant.

1. THIS MATTER is before the Court upon Defendants RMP-Mallard Pointe,

LLC (“RMP”) and Mallard Creek Associates #1, LLC’s (“MCA”) (collectively,

“Defendants”) Motion for Judgment on the Pleadings Pursuant to Rule 12(c) (the

“Motion”). (ECF No. 22.)

2. Having considered the Motion, the related briefing, and the arguments of

counsel at the hearing on the Motion, the Court DENIES the Motion. James, McElroy & Diehl, P.A., by John R. Buric, John R. Brickley, and Preston O. Odom, III, for Plaintiff Golden Triangle #3, LLC and Third- Party Defendant Levine Properties, Inc.

Lincoln Derr PLLC, by Richard Jeremy Sugg and Tricia M. Derr, for Defendants RMP-Mallard Pointe, LLC and Mallard Creek Associates #1, LLC.

Bledsoe, Chief Judge. I.

BACKGROUND

3. The Court does not make findings of fact on motions for judgment on the

pleadings under North Carolina Rule of Civil Procedure 12(c) and recites only those

allegations in the pleadings that are relevant and necessary to the Court’s

determination of the Motion. See, e.g., Erickson v. Starling, 235 N.C. 643, 657, 71

S.E.2d 384, 394 (1952); Willard v. Barger, 2019 NCBC LEXIS 43, at *1–2 (N.C. Super.

Ct. July 12, 2019).

4. This case involves a potential real estate development project between

Plaintiff Golden Triangle #3, LLC (“Golden Triangle” or “Plaintiff”) and Defendants

RMP and MCA (collectively, the “Parties”) to redevelop real property located at the

intersection of Fairview and Providence Roads in Charlotte, North Carolina (the

“Project”). (Compl. ¶ 9, ECF No. 3.) While there are several agreements between the

Parties relating to the Project, including a lease agreement, a memorandum of lease,

and various amendments and extensions, (Compl. ¶ 11), the Project-related

agreement at issue for the purposes of the Motion is a 2014 Amended and Restated

Option Agreement (“Option Agreement”) dated December 9, 2014, (Compl. ¶ 10;

Stipulated Agreement of the Parties (pgs. 24–292), at STIPULATED-000197–000292 [hereinafter “Option Agreement”], ECF No. 25.2; Defs.’ Mot. J. Pleadings Pursuant

Rule 12(c) [hereinafter “Mot. J. Pleadings”], ECF No. 22). 1

5. The Option Agreement imposes various obligations on the Parties, including

a requirement that Golden Triangle and RMP investigate the potential rezoning of

specific real property, including the “Land” and an abutting parcel of real estate, the

“C-Store Parcel,” each as more particularly described in the Option Agreement.

(Compl. ¶ 12; Option Agreement ¶ 1(b)(i), Ex. A.) Initial rezoning was approved on

or about October 19, 2015. (Answer, Countercl. & Third-Party Compl. ¶ 85

[hereinafter “Answer”], ECF No. 9.) A site plan amendment to the zoning approval

was filed in 2016, (Answer ¶ 86), and approved on or about January 17, 2017, (Compl.

¶ 15; Answer ¶ 90). Appeal rights concerning the rezoning expired a month later.

(Compl. ¶ 15.)

6. The Option Agreement provides that upon obtaining final, non-appealable

rezoning of the Land and C-Store Parcel (“Rezoning”), Golden Triangle and RMP

“shall form [an] LLC and become members as provided in Paragraph 1(d) [of the

Option Agreement].” (Option Agreement ¶ 1(b)(i).)

7. Paragraph 1(d) includes the following obligations:

[T]he Parties promptly (and not later than thirty (30) days after the successful Rezoning . . . ) shall cause Articles of Organization for the LLC to be filed with the office of the Secretary of State of North Carolina, and both Parties shall sign the Operating Agreement attached hereto as Exhibit C and incorporated herein by reference (the “Operating Agreement”), make the contributions of the C-Store Parcel (including an assignment of any leases related thereto), Land and Property (as defined

1 The Parties first entered into an option agreement concerning the Project on March 15,

2013. (Compl. ¶ 9; Stipulated Agreement of the Parties (pgs. 24–292), at STIPULATED- 000183–000196). in the Purchase Agreement), and other capital to the LLC as and when required in the Operating Agreement and become members of the LLC.

(Compl. ¶ 14; Option Agreement ¶ 1(d).)

8. With respect to the obligation to contribute capital outlined in Paragraph

1(d), the Option Agreement further provides as follows:

Notwithstanding anything contained in this Agreement, the parties hereto agree that the capitalization of the LLC as set forth in this Paragraph 1(d) shall not occur until the closing of the Project Financing (as defined below) at which time the KeyBank Loan and the BB&T Loan or the then outstanding loans secured by (a) the Apartments and leasehold interest in the Ground Lease or (b) the Land, shall be contemporaneously paid in full.

With respect to the initial financing obtained for the LLC (the “Project Financing”), the LLC will use its best efforts to obtain either construction financing (if the C-Store Parcel and Land are rezoned and a new retail development is pursued) or permanent financing (if the Apartments are renovated) with a loan-to-value of not less than seventy- five percent (75%).

(Option Agreement ¶ 1(d).)

9. A representative of Golden Triangle caused the Articles of Organization for

the LLC (named “Carmel Providence, LLC”) to be filed with the North Carolina

Secretary of State within thirty days of Rezoning on August 30, 2016. (Compl. ¶¶

14(a), 16; Option Agreement Ex. C.) RMP has not signed the Operating Agreement

attached to the Option Agreement, (Compl. ¶ 19), the result of which, Golden Triangle

alleges, is that Project Financing as contemplated by Paragraph 1(e) cannot be

secured, (Compl. ¶ 22). In any event, Project Financing has not closed, and RMP has

not contributed any capital to the LLC. (Compl. ¶¶ 21–22.) 10. Paragraph 1(e)(i) of the Option Agreement provides that if “(a) the Rezoning

has been obtained and (b) RMP fails to comply with its obligation to form and

contribute capital to the LLC as set forth in Paragraph 1(d) above, MCA grants to

[Golden Triangle] the exclusive right, privilege and option (the “Levine Option”) to

purchase the Land[.]” (Option Agreement ¶ 1(e)(i).) This specific provision is the

subject of Plaintiff’s Complaint and Defendants’ Motion.

11. Sometime after RMP declined to sign the Operating Agreement, Plaintiff

delivered notice to Defendants of its intent to exercise the Levine Option. (Compl. ¶

24.) MCA denies that Plaintiff has the right to exercise the Levine Option under the

Option Agreement and has refused to sell the Land to Plaintiff. (Compl. ¶ 25.)

12. On July 10, 2019, Plaintiff filed its Complaint against Defendants, alleging

a claim for breach of the Option Agreement, for which it seeks specific performance

ordering MCA to sell the Land to Plaintiff, and, in the alternative, for a declaratory

judgment determining that Plaintiff properly exercised the Levine Option and that

MCA has a legal duty to sell the Land to Plaintiff. (Compl. ¶¶ 29–41.) The following

day, this case was designated as a mandatory complex business case by the Chief

Justice of the North Carolina Supreme Court, (ECF No. 1), and assigned to the

undersigned, (ECF No. 2).

13. Defendants answered the Complaint on September 10, 2019, and filed the

Motion on November 25, 2019. Defendants contend in the Motion that the Court

should find as a matter of law that Plaintiff is not entitled to an order compelling

MCA to sell the Land to Plaintiff, a declaratory judgment that Plaintiff could or properly did exercise the Levine Option, or a declaratory judgment that MCA is

required to sell the Land to Plaintiff. (Mot. J. Pleadings.)

14. The Court held a hearing on the Motion on January 29, 2020, at which all

parties were represented by counsel. The Motion is now ripe for resolution.

II.

ANALYSIS

15. “A Rule 12(c) motion for judgment on the pleadings is not favored by the law

and requires the trial court to view all facts and permissible inferences in the light

most favorable to the nonmoving party.” Governor’s Club Inc. v. Governors Club Ltd.

P’ship, 152 N.C. App. 240, 247, 567 S.E.2d 781, 786 (2002) (citation omitted); see also

Old Republic Nat’l Title Ins. Co. v. Hartford Fire Ins. Co., 369 N.C. 500, 510, 797

S.E.2d 264, 271 (2017) (“All well pleaded factual allegations in the nonmoving party’s

pleadings are taken as true and all contravening assertions in the movant’s pleadings

are taken as false.” (quoting Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494,

499 (1974))). “When ruling on a motion for judgment on the pleadings, the trial court

‘is to consider only the pleadings and any attached exhibits, which become part of the

pleadings.’ ” Terrell v. Lawyers Mut. Liab. Ins. Co., 131 N.C. App. 655, 660, 507

S.E.2d 923, 926 (1998) (quoting Minor v. Minor, 70 N.C. App. 76, 78, 318 S.E.2d 865,

867, disc. review denied, 312 N.C. 495, 322 S.E.2d 558 (1984)). “The Court may also

consider documents that are the subject of a plaintiff’s complaint and to which the

complaint specifically refers even though they are presented by the defendant.” S.

Envtl. Law Ctr. v. Saylor, 2019 NCBC LEXIS 60, at *11 (N.C. Super. Ct. Sept. 11, 2019) (citing Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840,

847 (2001)).

16. “[T]he court cannot select some of the alleged facts as a basis for granting

the motion on the pleadings if other allegations, together with the selected facts,

establish material issues of fact.” Id., at *10 (quoting J. F. Wilkerson Contracting Co.

v. Rowland, 29 N.C. App. 722, 725, 225 S.E.2d 840, 842 (1976)). “A motion for

judgment on the pleadings is the proper procedure when all the material allegations

of fact are admitted in the pleadings and only questions of law remain. When the

pleadings do not resolve all the factual issues, judgment on the pleadings is generally

inappropriate.” Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499. Rule 12(c) motions

“must be carefully scrutinized lest the nonmoving party be precluded from a full and

fair hearing on the merits. The movant is held to a strict standard and must show

that no material issue of facts exists and that he is clearly entitled to judgment.” Id.

17. Defendants’ argument is straightforward: “[t]he plain language of the

Option Agreement is clear and unambiguous” and provides “that (a) no capital was

to be contributed to the LLC until closing of the Project Financing, and (b) the Levine

Option is not triggered unless RMP fails to comply with its obligations to form and

contribute capital to the LLC pursuant to Paragraph 1(d).” (Defs.’ Br. Supp. Mot. J.

Pleadings 6 [hereinafter “Br. Supp. Mot.”], ECF No. 23.) Defendants read the phrase

“form and contribute capital” as identifying two separate obligations—the formation

of the LLC and the contribution of capital to the LLC—and the failure of either

obligation necessarily precludes Plaintiff’s exercise of the Levine Option. Thus, although Defendants’ acknowledge that the LLC was legally formed, they

nonetheless contend that the undisputed allegations establish that Project Financing

did not close and thus that RMP had no duty to contribute capital and therefore did

not do so. Since RMP did not have a duty to contribute capital, Defendants contend

that RMP’s admitted failure to contribute capital did not entitle Plaintiff to exercise

the Levine Option as a matter of law. (Br. Supp. Mot. 7.)

18. Plaintiff’s arguments in opposition are similarly straightforward and also

rest on the Option Agreement’s “clear and unambiguous” language. First, according

to Plaintiff, the Levine Option is triggered under Paragraph 1(e) when “RMP fails to

comply with its obligation to form and contribute capital to the LLC as set forth in

Paragraph 1(d)[,]” which contemplates that Plaintiff may exercise the Levine Option

upon the failure of any of RMP’s duties in paragraph 1(d). Because RMP admittedly

did not contribute capital to the LLC, Plaintiff argues that its right to exercise the

Levine Option has been triggered. (Resp. Br. Opposing Defs.’ Rule 12(c) Mot. Partial

J. Pleadings 9–10 [hereinafter “Resp. Br.”], ECF No. 36.) Plaintiff further contends

that even if closing Project Financing was a condition precedent to RMP’s

contribution of capital under the Option Agreement, RMP’s refusal to sign the

Operating Agreement to assist in obtaining Project Financing “constitutes a

subsidiary failure of RMP to comply with its obligation to form and contribute capital

to the LLC[,]” (Resp. Br. 1 (internal quotation marks omitted)), and thus cannot

impede Plaintiff’s right to exercise the Levine Option, (Resp. Br. 10–11). 19. “Whenever a court is called upon to interpret a contract its primary purpose

is to ascertain the intention of the parties at the moment of its execution.”

Certainteed Gypsum NC, Inc. v. Duke Energy Progress, LLC, 2018 NCBC LEXIS 91,

at *8 (N.C. Super. Ct. Aug. 28, 2018) (quoting Lane v. Scarborough, 284 N.C. 407,

409–10, 200 S.E.2d 622, 624 (1973)). “To do so, the Court must first look to the

language of the contract and determine if it is clear and unambiguous.” Id. “If the

plain language of a contract is clear, the intention of the parties is inferred from the

words of the contract.” Walton v. City of Raleigh, 342 N.C. 879, 881, 467 S.E.2d 410,

411 (1996) (citing Lane, 284 N.C. at 410, 200 S.E.2d at 624–25). “When a contract is

in writing and free from any ambiguity which would require resort to extrinsic

evidence, or the consideration of disputed fact, the intention of the parties is a

question of law.” Strader v. Sunstates Corp., 129 N.C. App. 562, 568, 500 S.E.2d 752,

755 (1998) (quoting Lane, 284 N.C. at 410, 200 S.E.2d at 624). “[O]ur courts adhere

to the central principle of contract interpretation that [t]he various terms of the

[contract] are to be harmoniously construed, and if possible, every word and every

provision is to be given effect.” WakeMed v. Surgical Care Affiliates, LLC, 243 N.C.

App. 820, 824, 778 S.E.2d 308, 312 (2015) (quoting In re Hall, 210 N.C. App. 409, 415,

708 S.E.2d 174, 178 (2011)).

20. “An ambiguity exists in a contract when either the meaning of words or the

effect of provisions is uncertain or capable of several reasonable interpretations.”

Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 525,

723 S.E.2d 744, 748 (2012) (quoting Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., 362 N.C. 269, 273, 658 S.E.2d 918, 921 (2008)). “[I]f there is any uncertainty

as to what the agreement is between the parties, a contract is ambiguous.” Crider v.

Jones Island Club, Inc., 147 N.C. App. 262, 267, 554 S.E.2d 863, 867 (2001). “The

fact that a dispute has arisen as to the parties’ interpretation of the contract is some

indication that the language of the contract is, at best, ambiguous.” WakeMed, 243

N.C. App. at 825, 778 S.E.2d at 312 (quoting Dockery v. Quality Plastic Custom

Molding, Inc., 144 N.C. App. 419, 422, 547 S.E.2d 850, 852 (2001)).

21. “Whether or not the language of a contract is ambiguous . . . is a question

for the court to determine.” W & W Partners, Inc. v. Ferrell Land Co., LLC, 2018

NCBC LEXIS 52, at *12 (N.C. Super. Ct. May 22, 2018) (quoting Lynn v. Lynn, 202

N.C. App. 423, 432, 689 S.E.2d 198, 205 (2010)). “If a court finds a contract

ambiguous, the intent of the parties becomes a question of fact.” Certainteed Gypsum

NC, 2018 NCBC LEXIS 91, at *9; see also Leonard v. Pugh, 86 N.C. App. 207, 210,

356 S.E.2d 812, 815 (1987) (“Ambiguous contracts must be interpreted by a jury

under proper instructions of the law.”). “The court must not . . . , under the guise of

construing an ambiguous term, rewrite the contract or impose liabilities on the

parties not bargained for and found therein.” Stovall v. Stovall, 205 N.C. App. 405,

410, 698 S.E.2d 680, 684 (2010) (quoting Lynn, 202 N.C. App. at 432, 689 S.E.2d at

205).

22. Applying these principles here, the Court concludes that the language

contained in Paragraph 1(e)(i) of the Option Agreement concerning “RMP’s obligation

to form and contribute capital to the LLC as set forth in Paragraph 1(d)” is capable of more than one reasonable interpretation and thus is ambiguous. For example, as

Plaintiff urges, the use of the singular “obligation” permits a reasonable

interpretation that RMP’s “obligation to form and contribute capital” requires that

RMP perform both tasks and that its failure to do either permits Plaintiff to exercise

the Levine Option. That said, Paragraph 1(d) involves four tasks, and the Option

Agreement does not attempt to identify which tasks involve formation of the LLC,

the contribution of capital to the LLC, both, or neither, thus creating ambiguity.

23. Moreover, as Defendants argue, the use of the word “and” in the phrase

“form and contribute capital,” in the context of the Option Agreement as a whole,

permits a reasonable interpretation that the Levine Option is triggered only if RMP

fails to both form the LLC and contribute capital to the LLC as outlined in Paragraph

1(d). Because it is undisputed that the LLC has been formed through the filing of its

Articles of Organization, see N.C.G.S. § 57D-2-20(b) (“An LLC is formed at the time

the articles of organization filed by the Secretary of State become effective.”), the

uncertainty as to which provisions under Paragraph 1(d) involve LLC formation and

which involve capital contribution become irrelevant under this interpretation of the

contract terms.

24. Based on the above, it appears to the Court that the conditions to permit

Plaintiff’s exercise of the Levine Option in Paragraphs 1(d) and 1(e) of the Option

Agreement are uncertain based on the contract’s plain terms and capable of several

reasonable interpretations. See, e.g., Schenkel & Shultz, Inc., 362 N.C. at 273, 658

S.E.2d at 921 (citation omitted) (finding ambiguity in such circumstances). Based on this ambiguity, the Court concludes that judgment on the pleadings is improper

under Rule 12(c) and that a determination of the parties’ intent through an

examination of extrinsic evidence, either at summary judgment, trial, or both will be

necessary to determine the parties’ agreement in Paragraphs 1(d) and 1(e) of the

Option Agreement.

25. As a result, the Court concludes that Defendants’ Motion should be denied.

See, e.g., Erickson, 235 N.C. at 657, 71 S.E.2d at 394 (holding “[t]he law does not

authorize the entry of a judgment on the pleadings in any case where the pleadings

raise an issue of fact on any single material proposition” and collecting cases); Houpe

v. City of Statesville, 128 N.C. App. 334, 344, 497 S.E.2d 82, 89 (1998) (“Judgment on

the pleadings is improper where there exists a material issue of fact[.]” (citing Hedrick

v. Rains, 121 N.C. App. 466, 468–69, 466 S.E.2d 281, 283, aff'd per curiam, 344 N.C.

729, 477 S.E.2d 171 (1996))).

III.

CONCLUSION

26. WHEREFORE, for the reasons set forth above, the Court hereby DENIES

Defendants’ Motion.

SO ORDERED, this the 23rd day of March, 2020.

/s/ Louis A. Bledsoe, III Louis A. Bledsoe, III Chief Business Court Judge