Preview:

NO. COA10-1535 NORTH CAROLINA COURT OF APPEALS Filed: 20 September 2011 NELSON W. TAYLOR, III, and PATRICIA V. TAYLOR, Plaintiffs, v. MARILYN MILLER, Defendant. Real Property -- right of first refusal -- valid and enforceable -- insufficient evidence of reasonableness The trial court did not err in an action concerning defendant's right of first refusal on the sale of a piece of property by denying plaintiffs' motion for summary judgment but did err in entering a declaratory judgment in defendant's favor concluding that the right of first refusal was valid and enforceable. Neither party was entitled to summary judgment on the issue of the reasonableness of the right of first refusal because the Court of Appeals could not determine whether either party submitted sufficient evidence regarding the circumstances surrounding the agreement to the fixed option price to warrant judgment in their favor. Carteret County No. 09 CVS 975

NO. COA10-1535 NORTH CAROLINA COURT OF APPEALS Filed: 20 September 2011 NELSON W. TAYLOR, III, and PATRICIA V. TAYLOR, Plaintiffs, v. MARILYN MILLER, Defendant. Appeal by plaintiffs from judgment entered 26 February 2010 and order entered 10 May 2010 by Judge W. Allen Cobb, Jr. in Carteret County Superior Court. 25 April 2011. James W. Thompson, III, PLLC, by James W. Thompson, III, for plaintiffs-appellants. Marilyn Miller, pro se, defendant-appellee. GEER, Judge. Plaintiffs Nelson W. Taylor, III and his wife Patricia V. Taylor motion appeal for from the trial court's but decision denying their Heard in the Court of Appeals Carteret County No. 09 CVS 975

summary

judgment,

apparently Miller may be

granting Rule

summary 56(c) "any

judgment (providing party").

for that

defendant summary

Marilyn judgment

under

entered

for

The trial court entered judgment upholding as valid

-2and enforceable a provision in a deed that granted Ms. Miller, Mr. Taylor's former wife, a right of first refusal with respect to the property that was the subject of the deed. The Taylors

contend that the provision, as a matter of law, constitutes an unreasonable restraint on alienation of property and is, as a result, invalid. We agree with the trial court that the Taylors

were not entitled to summary judgment, but we disagree with the trial court's determination as a matter of law that the right of first refusal was valid and enforceable. Because there are

genuine issues of material fact as to whether the right of first refusal is reasonable, we reverse and remand. Facts We first note that the transcript of the summary judgment hearing filed with the record indicates that the parties filed cross motions for summary judgment and that although the

decision was captioned "Declaratory Judgment," the trial court was deciding the matter on summary judgment. It also appears

that the parties each filed multiple affidavits in support of their positions and that some, although perhaps not all, of the pertinent documents were attached to those affidavits. The

record, however, does not contain copies of the motions, the affidavits, or any other materials presented to the trial court. The following undisputed facts are drawn from the verified

-3pleadings to the extent that the allegations are admitted, a single letter attached to the Taylors' reply to Ms. Miller's counterclaim, and the trial court's findings of fact that are not challenged on appeal. Mr. Taylor and Ms. Miller married in 1982 and separated in March 1993. On 17 June 1994, Mr. Taylor and Ms. Miller executed

a warranty deed to Mr. Taylor for a piece of property on Fisher Street in Morehead City, North Carolina, known as "Lot 3, Block or Square 90." The deed, as quoted by the trial court,

contained the following provision regarding Ms. Miller's right to repurchase the land: "If Grantee [Mr. Taylor] decides to sell Lot 3, Block or Square 90, as shown on the official map or plan of the Town of Morehead City of record in Map Book 1, Page 139, Carteret County Registry, he will communicate the full terms of any bona fide offer to the femme Grantor [Ms. Miller] by certified or registered mail, return receipt requested. She will then have ten (10) days from the date of the mailing [of] such notice in which to notify the Grantee herein that she will buy the property on the same terms and conditions as contained in the bona fide offer or for the sum of $41,500.00 plus the costs of all repairs and improvements (but not maintenance) made in/or on [sic] the premises from the date of this Deed to the date of the exercise of this right to repurchase by the femme Grantor herein. Grantee will keep careful records of all such repairs and improvements and will be paid only for those for which such records exist. If the femme Grantor does exercise her right under this

-4provision, closing shall take place in Carteret County, North Carolina, within thirty (30) days of the mailing to Grantee above the notice by femme Grantor. If the femme Grantor does not keep the Grantee herein notified of a mailing address by which she can be reached, this right given in this paragraph to her shall terminate. If the femme Grantor herein does not exercise her right given in this paragraph within ten (10) days of the mailing of the notice to her as provided herein, her rights hereunder will terminate." (Emphasis omitted.) In October 2002, Mr. Taylor conveyed an interest in the property to himself and his present wife, Patricia, in order to create a tenancy by the entireties. Seven years later, on 10

June 2009, Mr. Taylor wrote a letter to Ms. Miller stating, "As you will remember, there is in the separation agreement that we signed a provision that in the event that I want to sell the house on Fisher Street or the property upon which it sits you will have the right to buy it back at the amount that I paid you for it plus the costs of any improvements." According to Mr.

Taylor's letter, the house was badly in need of repairs, but it was impossible for him to borrow any money on the property for the purpose of making repairs or improvements. He asked Ms.

Miller to "agree to forego any rights under that provision of the separation agreement." letter. Ms. Miller did not respond to this

-5Subsequently, on 30 June 2009, Mr. Taylor wrote Ms. Miller another letter that explained, as quoted by the trial court: "'Enclosed you will find a Non-Warranty Deed from you to Bayard ([Mr. Taylor's] son). Street for some He has been living in the house on Fisher It is my intention to convey this

years.

property to him.

The house is beyond the point where it would

be worthwhile to spend money on it to try to refurbish it. Therefore, the plan is to raze the house and build something new on it.'" (Emphasis omitted.) The letter further stated: "'I do

not believe the provision in the separation agreement has any validity. Your execution of the enclosed non-warranty deed will

clear the record.'" Ms. Miller did not respond to this letter either. Mr. Taylor received a letter, dated 2 July 2009, Instead, from Ms.

Miller's attorney, which stated, as quoted by the trial court: "'I am hereby invoking the provision that allows my client to purchase from you said property for the sum of Forty-One

Thousand Five Hundred Dollars ($41,500.00). exercising property.'" her right under the provisions

Marilyn Miller is to purchase the

Five days later, on 7 July 2009, Mr. and Mrs. Taylor filed a verified complaint seeking a declaration of rights under the deed and a determination whether the right of first refusal

-6provision was a valid restraint on alienation of property. Ms.

Miller filed a verified answer and counterclaim seeking an order (1) upholding the right of first refusal and (2) directing the Taylors to specifically perform their obligations under it by conveying the property to Ms. Miller for $41,500.00. At some point, the parties apparently filed cross motions for summary judgment.1 At the hearing on 22 February 2010, the

trial court considered the parties' various affidavits and other materials, as well as the arguments presented by Ms. Miller, appearing pro se, and by Mr. Taylor, who is an attorney, acting as the Taylors' counsel. entered a decision On 26 February 2010, the trial court "Declaratory Judgment" that

entitled

concluded, after 11 findings of fact, that the Taylors were "not entitled to a declaration that the [right of first refusal] provision is invalid." The trial court then included in the

decretal portion of the judgment a determination that the right of first refusal as set forth in the deed between the parties "is VALID AND ENFORCEABLE." counterclaim for specific The court ordered that Ms. Miller's performance of the Taylors'

obligations under the right of first refusal would be calendared for disposition at a later date. The record does not specifically set out the basis for Ms. Miller's motion for summary judgment although it appears to have been seeking summary judgment on Ms. Miller's counterclaim.
1

-7On 8 March 2010, the Taylors filed a motion to amend the judgment. The Taylors asked the trial court to remove from the

declaratory judgment all references to the parties' contentions, or, in the alternative, to amend the findings of fact concerning the parties' contentions. The Taylors also filed a motion to

dismiss Ms. Miller's counterclaim. On 10 May 2010, the trial court entered an order denying the Taylors' motion to amend to the declaratory Ms. Miller's judgment and

allowing

their

motion

dismiss

counterclaim

without prejudice to being refiled once Ms. Miller's cause of action was ripe. The court also stated in this order that

"[t]he motion for Summary Judgment filed by the Defendant is not ruled timely upon as her counterclaim the is dismissed." judgment The and Taylors order

appealed

from

declaratory

the

denying their motion to amend the declaratory judgment. Discussion The Taylors contend that the deed's right of first refusal is, on its face, an unreasonable restraint on alienation and that the trial court, therefore, erred in denying their motion for summary judgment and entering a declaratory judgment that the provision is valid and enforceable. appropriate only "if and the pleadings, on Summary judgment is answers with to the

depositions, file, together

interrogatories,

admissions

-8affidavits, 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.R. Civ. P. 56(c).

The party moving for summary judgment has the burden of establishing the lack of any triable issue. Collingwood v. Gen.

Elec. Real Estate Equities, Inc., 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989). the non-moving Once the moving party meets its burden, then party must "produce a forecast of evidence

demonstrating that the plaintiff will be able to make out at least a prima facie case at trial." Id. All inferences of fact

must be drawn against the movant and in favor of the party opposing the motion. Purvis v. Moses H. Cone Mem'l Hosp. Serv. We

Corp., 175 N.C. App. 474, 476, 624 S.E.2d 380, 383 (2006). review a trial court's grant of summary judgment de

novo.

Coastal Plains Utils., Inc. v. New Hanover Cnty., 166 N.C. App. 333, 340-41, 601 S.E.2d 915, 920 (2004). A right of first refusal "'requires that, before the

property conveyed may be sold to another party, it must first be offered to the conveyor or his heirs, or to some specially

designated person.'"

Smith v. Mitchell, 301 N.C. 58, 61, 269

S.E.2d 608, 610 (1980) (quoting 6 American Law of Property

Download 10-1535.pdf

North Carolina Law