K4C6R, LLC v. Elmore

828 S.E.2d 677
CourtCourt of Appeals of North Carolina
DecidedMay 7, 2019
DocketCOA18-1008
StatusPublished

This text of 828 S.E.2d 677 (K4C6R, LLC v. Elmore) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
K4C6R, LLC v. Elmore, 828 S.E.2d 677 (N.C. Ct. App. 2019).

Opinions

ARROWOOD, Judge.

John A. Elmore, II ("Mr. Elmore"), Porters Neck Company, Inc. ("PNC"), and Forest Creek Ventures, Inc. ("FCV") (collectively, "defendants") appeal from an order denying their motion for summary judgment in part, and granting it in part. For the reasons stated herein, we affirm in part, and reverse in part.

I. Background

Mr. Elmore and Mr. Lionel L. Yow, Jr. ("Mr. Yow") formed PNC in or about 1991 to own and develop residential real property in Porters Neck. Thereafter, Mr. Elmore and Mr. Yow formed FCV to own and develop residential real property in Forest Creek. Mr. Yow filed for bankruptcy in 2011. During the administration of the bankruptcy, K4C6R, LLC ("K4C6R") successfully bid on Mr. Yow's interest in PNC and FCV, resulting *679in Mr. Elmore and K4C6R each owning fifty percent (50%) of PNC and FCV.

Due to disputes between the two owners, the parties executed a written contract (the "division agreement") the intent of which was to distribute half of the real estate assets each to Mr. Elmore and to K4C6R respectively. To that end, the division agreement distributed fifty percent (50%) of PNC and FCV's assets to K4C6R in exchange for its shares of stock in the PNC and FCV companies. Porters Neck Plantation, Inc. ("PNP") was established as K4C6R's successor entity with respect to the properties in Porters Neck that K4C6R received in the division, and Forest Creek Plantation, Inc. ("FCP") was established as K4C6R's successor entity with respect to its properties in Forest Creek. The division agreement contained a right of first refusal ("ROFR"), which provides:

K4C6R, on the one hand, and PNC and FCV, on the other, each grants the other a right of first refusal with respect to the sale of the undeveloped Forest Creek property, to be triggered by a bona fide third[-]party offer to purchase the undeveloped property, provided, however, that this right of first refusal shall apply only to cash-only sales.

On or about 30 September 2015, FCP received an offer to purchase all of FCP's developed and undeveloped property ("the third-party offer" or "the offer"). Although the ROFR is only for undeveloped Forest Creek property, the third-party offer did not allocate the amount being offered for the undeveloped property. FCP forwarded the offer to defendants, who inquired what portion of the offer was allocated to undeveloped property. FCP did not provide this information, and defendants did not waive the ROFR rights or make an offer. Eventually, the offer expired.

On 2 May 2016, K4C6R, FCP, and PNP (collectively, "plaintiffs") filed a complaint against defendants seeking declaratory judgment as to the parties' rights under the division agreement and injunctive relief, and to recover damages for breach of contract.

Defendants answered the complaint and filed counterclaims on or about 9 September 2016. Plaintiffs answered the counterclaims on 10 November 2016. On 20 November 2016, defendants moved for summary judgment. The matter came on for hearing before the Honorable Charles H. Henry on 6 December 2017, in New Hanover Superior Court.

The trial court entered an order on 29 December 2017 granting summary judgment in part and denying it in part. Conclusion of law 5 of the order interprets the division agreement's ROFR as follows.

a. That the right of first refusal possessed by Porters Neck Company Inc. and Forest Creek Ventures, Inc. is limited to offers that contemplate the cash sale of undeveloped property within the Forest Creek subdivision or the cash sale of developed property and undeveloped property within the Forest Creek subdivision where the offer delineates the amount of the offer that pertains to the undeveloped property. This same interpretation applies to K4C6R's right of first refusal as well.
b. The Division Agreement requires that in order to entertain any "cash only" offers that contemplate the sale of any undeveloped property, the offeror must allocate the amount being offered for the undeveloped property so a party can decide whether to exercise its right of first refusal.
c. If presented with a cash offer to purchase undeveloped property within the Forest Creek subdivision by a bona fide third[-]party, Porters Neck Company Inc. and Forest Creek Ventures, Inc. will have thirty days to exercise their right of first refusal. This same time limitation applies to K4C6R's right of first refusal as well.
d. There exists no right of first refusal in which the seller finances all of the purchase price of the undeveloped land.

The 29 December 2017 order did not determine all of the claims involved in the action. The remaining claims came on for trial before the Honorable Anna Mills Wagoner at the 19 March 2018 civil jury term in New Hanover Superior Court. The trial court *680entered an order concluding all claims in dispute between the parties on 5 April 2018.

Defendants filed notice of appeal from the Honorable Judge Charles H. Henry's order on 4 May 2018.

II. Discussion

On appeal, defendants argue the trial court erroneously interpreted the ROFR in its 29 December 2017 order because: (1) conclusion of law 5(a) could be read to hold the ROFR applies to offers to purchase both developed and undeveloped land only if the offer specifies the amount designated to purchase the undeveloped property; (2) the parties' ROFR is not limited to cash payment offers; and (3) the division agreement does not state that there is no ROFR if the seller finances all of the purchase price of the undeveloped land. We address each argument in turn.

"Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows 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.' " In re Will of Jones , 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting Forbis v. Neal , 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007) ).

"The construction of a contract is a matter of law for the courts when the language is plain and unambiguous." Gillespie v. DeWitt , 53 N.C. App. 252, 266, 280 S.E.2d 736, 746 (citations omitted), disc. rev. denied , 304 N.C. 390

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Bluebook (online)
828 S.E.2d 677, Counsel Stack Legal Research, https://law.counselstack.com/opinion/k4c6r-llc-v-elmore-ncctapp-2019.