Opinion of the Court
operating a private water system that services numerous residences in Swain
County.” Greasy Branch is governed by a set of bylaws that were adopted on
7 December 1987 and last amended on 25 March 2015. As outlined in the bylaws,
Greasy Branch operates on a membership basis where people pay an annual “tap fee”
and become members of the corporation eligible to receive water. Membership is
transferable to subsequent purchasers of residences already receiving water from
Greasy Branch. Additionally, the bylaws contain restrictions on members’ use of the
water they receive. One such restriction is that members may not make commercial
use of any tap, including “daily or weekly rentals other than full time renters or any
use of water for profit.”
On 28 July 2022, plaintiffs closed on residential property that was serviced by
Greasy Branch. The prior owners of the property were members of Greasy Branch
and Greasy Branch supplied the only source of water on the property. As part of the
closing, plaintiffs paid a water fee to Greasy Branch to continue receiving water
service. At that time, plaintiffs were aware that Greasy Branch supplied water to
the residence but contend they were not aware of Greasy Branch’s bylaws which were
not publicly recorded.
Soon after purchasing the property, plaintiffs began using it as a second
residence and listed the property for short-term rentals on Airbnb. On or about
28 April 2023, plaintiffs received a letter from Greasy Branch’s Secretary-Treasurer,
Mike Hyde, notifying them of the annual meeting for members of Greasy Branch.
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Plaintiffs responded that they would be unable to attend but offered to call in to the
meeting and, alternatively, asked for updates after the meeting.
On 30 May 2023, plaintiffs received a call from Mr. Hyde advising that
plaintiffs were in violation of the bylaws by using the water for their short-term
rentals and, as a result, Greasy Branch was going to discontinue plaintiffs’ water
access. That same day, Greasy Branch sent a follow-up letter containing the same
information and additionally notifying plaintiffs that billing for their membership fee
would be mailed to them on 1 July 2023. Plaintiffs objected and continued to rent the
property on Airbnb. On 7 July 2023, plaintiffs sent a check for the member fee.
Plaintiffs filed an action on 15 August 2023, seeking declaratory judgment and
a preliminary injunction against Greasy Branch disconnecting the water service. A
temporary injunction against Greasy Branch disconnecting plaintiffs water service
was ordered on 28 September 2023. A preliminary injunction to the same effect was
ordered on 23 February 2024. In August 2024, both parties filed motions for
summary judgment. A hearing on the motions was held on 16 September 2024 and
Judge Sellers granted Greasy Branch’s motion for summary judgment on
25 September 2024. Plaintiffs gave notice of appeal on 25 October 2024.
II. Discussion
On appeal, plaintiffs contend that the trial court erred in denying plaintiffs’
motion for summary judgment and granting summary judgment in favor of Greasy
Branch. Specifically, plaintiffs argue that 1) an implied contract, if any, was formed
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between plaintiffs and Greasy Branch on 28 July 2022 and did not include the terms
set out in Greasy Branch’s bylaws, 2) the contract was never modified to include the
bylaws, 3) enforcing the bylaws would amount to an unconscionable contract of
adhesion, and 4) allowing Greasy Branch to restrict the use of land through its bylaws
is against public policy. We address each argument in turn.
A. Standard of Review
“Our standard of review from an order granting summary judgment is de
novo.” Bryan v. Kittinger, 282 N.C. App. 435, 437 (2022) (citing Forbis v. Neal, 361
N.C. 519, 524 (2007)). Summary judgment is proper 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 a judgment as a matter of law.” N.C.G.S. § 1A-1, Rule 56(c)
(2025).
B. Implied Contract
“[A] contract implied in fact arises where the intent of the parties is not
expressed, but an agreement in fact, creating an obligation, is implied or presumed
from their acts. Such an implied contract is as valid and enforceable as an express
contract.” Creech v. Melnik, 347 N.C. 520, 526–27 (1998) (citations omitted). “The
essence of any contract is the mutual assent of both parties to the terms of the
agreement . . . .” Snyder v. Freeman, 300 N.C. 204, 217–18 (1980). When
determining whether mutual assent exists in a contract implied by fact, “one looks
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not to some express agreement, but to the actions of the parties showing an implied
offer and acceptance.” Id. at 218. This Court has found a contract implied in fact
where one party knowingly accepts a benefit conferred upon them by another party.
See Lake Toxaway Cmty. Ass’n, Inc. v. RYF Enters., LLC, 226 N.C. App. 483, 489–90
(2013) (finding an implied contract between a property owner making use of private
roads and the community association that maintained the roads).
Here, the undisputed facts demonstrate that plaintiffs and Greasy Branch
formed a contract implied in fact that included plaintiffs’ membership in Greasy
Branch and, by extension, Greasy Branch’s bylaws including the prohibition on using
water for short-term rentals. When plaintiffs paid the water fee during the closing
process on their property, they demonstrated a willingness to contract with Greasy
Branch, which was reciprocated when Greasy Branch accepted the payment. At that
time, Greasy Branch had already adopted its bylaws with the restriction on the use
of water for short-term rentals. By paying for water services through Greasy Branch,
plaintiffs impliedly accepted the already existing terms of that service.
Plaintiffs argue that because they had no knowledge of the restrictions on
water use for short-term rentals and Greasy Branch’s bylaws are not recorded, the
restrictions were not terms of their contract with Greasy Branch. Additionally,
plaintiffs argue that their use of the property for short-term rentals demonstrates
that they did not assent to Greasy Branch’s bylaws. However, as internal governing
documents, Greasy Branch’s bylaws were not required to be recorded in the deeds of
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the properties Greasy Branch services or otherwise of public record. See N.C.G.S.
§ 55-16-01 (requiring only that a corporation maintain records of its bylaws and make
it available for inspection). Moreover, it was plaintiffs’ duty to investigate the terms
of the service and restrictions on the property before closing on the property and
paying the water dues. See Hearne v. Statesville Lodge No. 687, 143 N.C. App. 560,
562 (2001) (“Before purchasing property, it is incumbent upon buyers to take
reasonable steps to protect their own interest.”).
Additionally, plaintiffs demonstrated knowledge of their membership in
Greasy Branch when they attempted to attend the annual membership meeting.
Enforcing the benefits of membership in Greasy Branch without also enforcing the
restrictions merely because plaintiffs did not investigate the terms of the service
would effectively allow plaintiffs to unilaterally pick and choose the contract terms
after its formation. Therefore, the contract between plaintiffs and Greasy Branch
included both the plaintiffs’ membership in Greasy Branch and the terms of Greasy
Branch’s bylaws.
Even assuming, arguendo, that plaintiffs had not assented to Greasy Branch’s
bylaws before being notified of their violation, plaintiffs later assented by paying the
member dues on 7 July 2023. When they paid those dues, plaintiffs had full
knowledge of Greasy Branch’s bylaws including the restriction on short-term rentals.
That plaintiffs joined as members of Greasy Branch and continued to use the property
for short-term rentals is not evidence of a lack of assent but rather evidence of a
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contract violation.
C. Contract Modification
Plaintiffs argue that the bylaws’ terms were proposed as a modification to their
contract with Greasy Branch when Greasy Branch notified plaintiffs of the upcoming
member dues and their breach of the bylaws on 30 May 2023. Further, plaintiffs
contend that the modification was not supported by mutual assent or consideration.
However, since we find that a contract implied in fact that included Greasy Branch’s
bylaws existed before 30 May 2023, no modification is needed to enforce the bylaws.
D. Adhesion Contract
Plaintiffs also argue that enforcing Greasy Branch’s bylaws against them
would amount to a contract of adhesion, which, in turn, should not be enforced
because its terms would fall outside plaintiffs’ reasonable expectations and would be
unconscionable. We disagree.
In contracts of adhesion, the adhering party had no realistic opportunity to
bargain the terms of a contract and could not obtain the desired product or service
except by entering the contract. See Joyner v. Adams, 87 N.C. App. 570, 577 (1987);
Sears Roebuck & Co. v. Avery, 163 N.C. App. 207, 215 (2004) (interpreting Arizona
contract law). Like all contracts, contracts of adhesion may be unenforceable on the
ground of unconscionability. See King v. Bryant, 369 N.C. 451, 459–60 (2017);
Brenner v. Little Red Sch. House, Ltd., 302 N.C. 207, 213 (1981). A contract is
unconscionable where “the inequality of the bargain is so manifest as to shock the
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judgment of a person of common sense, and where the terms are so oppressive that
no reasonable person would make them on the one hand, and no honest and fair
person would accept them on the other.” Brenner, 302 N.C. at 213.
Here, plaintiffs allege that their contract with Greasy Branch is a contract of
adhesion because they cannot drill a well, making Greasy Branch the only possible
source of water for their residence. However, this ignores the power of choice the
plaintiffs had in purchasing a residence serviced by Greasy Branch in the first place.
Plaintiffs knew when they closed on their property that the water was provided by
Greasy Branch. Though they did not take it, plaintiffs had the opportunity to
investigate the terms of the water service and reject them. Thus, there was not an
inequality of bargaining power sufficient to find a contract of adhesion nor
unconscionability.
E. Public Policy
Lastly, plaintiffs argue that Greasy Branch’s prohibition of use of their services
for short-term rentals is an unreasonable restraint on the use of the property and
against public policy. In support of this argument, plaintiffs point to the
unenforceability of transfer fee covenants. N.C.G.S. § 39A-1; Broad St. Clinic Found.
v. Weeks, 273 N.C. App. 1, 6–8 (2020). However, Greasy Branch’s bylaws constitute
only a restriction on the use of water they provide, not the use of the property as a
whole. While the availability of utilities can certainly impact the use of a property,
Greasy Branch’s restriction on the utility it provides does not rise to the level of
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restraint on alienation as transfer fees. Thus, we do not find that Greasy Branch’s
bylaws are unenforceable as against public policy.
III. Conclusion
For the foregoing reasons, we affirm the trial court’s order granting summary
judgment in favor of Greasy Branch.
AFFIRMED.
Judges STROUD and STADING concur.
Report per Rule 30(e).
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