NO. COA14-167
NORTH CAROLINA COURT OF APPEALS
Filed: 15 July 2014
EASTERN PRIDE, INC.,
KENNETH E. MOOREFIELD
and wife, LYNN B.
MOOREFIELD,
Plaintiffs,
v. Nash County
No. 13 CVS 186
GURDIAL SINGH and wife,
AMANDIP KAUR,
Defendants.
Appeal by Defendants from order entered 15 November 2013 by
Judge Gary E. Trawick in Nash County Superior Court. Heard in
the Court of Appeals on 19 May 2014.
Hornthal, Riley, Ellis & Maland, L.L.P., by L. Phillip
Hornthal, III, and Graebe Hanna & Sullivan, PLLC, by
Christopher T. Graebe, for Plaintiffs-appellees.
Nigle B. Barrow, Jr., for Defendants-appellants.
DILLON, Judge.
Gurdial Singh and Amandip Kaur (“Defendants”) appeal from a
trial court’s ruling granting summary judgment in favor of
Eastern Pride, Inc., Kenneth E. Moorefield, and Lynn B.
Moorefield (“Plaintiffs”) declaring that the construction and
operation of a Family Dollar store upon Plaintiffs’ real
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property does not violate the restrictive covenant contained in
a deed, which prevents certain uses of said property. For the
following reasons, we affirm the trial court’s order.
I. Background
Plaintiffs commenced this action, seeking a declaratory
judgment that a restrictive covenant prohibiting the use of
their real property “as a convenience store” would not be
violated by the construction and operation of a Family Dollar
store. Defendants filed their responsive pleading seeking,
inter alia, injunctive relief to prevent the construction and
operation of a Family Dollar store on Plaintiffs’ property. The
parties filed cross motions for summary judgment. The evidence
presented to the trial court on these motions tended to show as
follows: As of 2006, Plaintiffs Kenneth and Lynn Moorefield
(“the Moorefields”) owned two adjacent tracts of land in Rocky
Mount. One tract was developed as a convenience store (the
“Convenience Store Tract”); the other tract was undeveloped (the
“Vacant Tract”). On or about 29 December 2006, the Moorefields
contracted to sell the Convenience Store Tract to Defendants.
As part of the agreement, the Moorefields and Defendants agreed
that certain restrictive covenants would be placed on the
Convenience Store Tract and the Vacant Tract. Pursuant to this
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agreement, the Moorefields conveyed the Convenience Store Tract
to Defendants by deed (the “Deed”) which was recorded in the
Nash County Registry on 10 January 2007. The Deed contained the
following restrictive covenant language:
1) The [Convenience Store Tract] shall be
used solely as a convenience store with gas
pumps and no portion may be used nor may
there be operated thereon an adult
bookstore, adult video store, or an adult
entertainment facility. As long as Grantee
operates a convenience store on the
[Convenience Store Tract] the Grantor may
not use [the Vacant Tract] or any portion as
a convenience store.
. . . .
4) These restrictions shall be binding upon
and inure to the benefit of Grantor and
Grantee, their heirs, successors and
assigns.
(Emphasis added.)
On 18 July 2012, the Moorefields entered an agreement to
sell the Vacant Tract to Eastern Pride, Inc., who intended to
construct a building thereon to be leased to Family Dollar
Stores of North Carolina, Inc. for the operation of one of its
stores. On 12 September 2012, Family Dollar Stores executed a
“Letter of Intent” to lease the Vacant Tract from Eastern Pride
at some point after Eastern Pride purchased the tract from the
Moorefields. However, on 9 October 2012, Defendants’ counsel
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sent a letter to the Moorefields contending that the restrictive
covenant contained in the 2007 Deed prohibited the operation of
a Family Dollar store on the Vacant Tract.
On 15 November 2013, the trial court entered an order
allowing Plaintiffs’ motion for summary judgment, denying
Defendants’ motion for summary judgment, and declaring that “[a]
Family Dollar Store is not a ‘convenience store’ as prohibited
in the Deed[,]” the construction and operation of a Family
Dollar store did not violate the restrictive covenants in the
deed, and a copy of the order was to be recorded in the register
of deeds’ office. On 10 December 2013, Defendants gave notice
of appeal from the trial court’s order.
II. Standard of Review
In appeals from a trial court’s ruling from a party’s
motion for summary judgment from a declaratory judgment ruling,
[s]ummary judgment may be granted in a
declaratory judgment proceeding where 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.
Steiner v. Windrow Estates Home Owners Ass'n, 213 N.C. App. 454,
456-57, 713 S.E.2d 518, 521-22 (2011) (citations omitted).
Interpretation of the language of a restrictive covenant is
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generally a question of law reviewed de novo by this Court. See
Moss Creek Homeowners Ass'n v. Bissette, 202 N.C. App. 222, 228,
689 S.E.2d 180, 184 (observing that “restrictive covenants are
contractual in nature.”) (citation omitted)), disc. rev. denied,
364 N.C. 242, 698 S.E.2d 402 (2010); Harris v. Ray Johnson
Const. Co., Inc., 139 N.C. App. 827, 829, 534 S.E.2d 653, 654
(2000) (stating that contract interpretation is a matter of law,
reviewed de novo).
III. Analysis
Defendants contend that the trial court erred in granting
summary judgment in favor of Plaintiffs and declaring that the
construction and operation of a Family Dollar store on the
Vacant Tract did not violate the restrictive covenants
prohibiting the operation of a “convenience store” on that
tract. We disagree.
“In construing restrictive covenants, the fundamental rule
is that the intention of the parties governs, and that their
intention must be gathered from study and consideration of all
the covenants contained in the instrument or instruments
creating the restrictions.” Cumberland Homes, Inc. v. Carolina
Lakes Prop. Owners' Ass'n, 158 N.C. App. 518, 521, 581 S.E.2d
94, 96 (2003) (emphasis in original). “However, this intention
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may not be established by parol. Neither the testimony nor the
declarations of a party is competent to prove intent.” Schwartz
v. Banbury Woods Homeowners Ass’n, 196 N.C. App. 584, 591, 675
S.E.2d 382, 388 (2009), disc. review denied, 363 N.C. 856, 694
S.E.2d 391 (2010). “[A]ny ambiguities in the restrictions are
to be resolved in favor of the free and unrestricted use of the
land.” Black Horse Run Ppty. Owners Assoc. v. Kaleel, 88 N.C.
App. 83, 85, 362 S.E.2d 619, 621 (1987), disc. review denied,
321 N.C. 742, 366 S.E.2d 856 (1988). That is, as our Supreme
Court has explained, any doubt should be resolved in favor of
“the unrestricted use of property, so that where the language of
a restrictive covenant is capable of two constructions, the one
that limits, rather than the one which extends it, should be
adopted, and that construction should be embraced which least
restricts the free use of the land.” Long v. Branham, 271 N.C.
264, 268, 156 S.E.2d 235, 239 (1967). This “rule of strict
construction is grounded in sound considerations of public
policy: It is in the best interests of society that the free
and unrestricted use and enjoyment of land be encouraged to its
fullest extent.” Erthal v. May, ___ N.C. App. ___, ___, 736
S.E.2d 514, 518 (2012), appeal dismissed and disc. review
denied, 366 N.C. 421, 736 S.E.2d 761 (2013).
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Applying these principles to the present case, we believe
that, for the reasons stated below, the operation of a Family
Dollar store does not violate the restrictive covenant in the
Deed, and, therefore, hold that the trial court did not err in
granting summary judgment to Plaintiffs.
The term “convenience store” is not defined in the
restrictive covenant language in the Deed. We have held that
“[u]nless the covenants set out a specialized meaning, the
language of a restrictive covenant is interpreted by using its
ordinary meaning.” Erthal, ___ N.C. App. at ___, 736 S.E.2d at
522. A dictionary with the copyright date on or about the time
the restrictive covenant was executed “is an appropriate place
to ascertain the then customary definitions of words and terms.”
Angel v. Truitt, 108 N.C. App. 679, 683, 424 S.E.2d 660, 663
(1993) (applying a definition from the 1982 edition of The
American Heritage Dictionary to determine the customary
definition of the term “mobile home” as used in a restrictive
covenant executed in 1981) (citation omitted)).
Here, the restrictive covenants were entered into in 2006.
“[C]onvenience store” is defined as “[a] small retail store that
is open long hours and that typically sells staple groceries,
snacks, and sometimes gasoline.” The American Heritage
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Dictionary of the English Language, 401 (4th. ed. 2000). The
Merriam-Webster’s Collegiate Dictionary, also defines
“convenience store” as “a small often franchised market that is
open long hours.” Id. at 272 (11th. ed. 2003). Using these
accepted definitions, the ordinary meaning of the words show
that a key feature of a “convenience store” is its small size,
long store hours, and it sells some groceries, snacks, and
sometimes gasoline.
A Family Dollar store, however, is more accurately
described as a discount store, rather than as a convenience
store. For instance, in a Form 10-K filed with the Securities
and Exchange Commission, Family Dollar Stores, Inc. states that
its “stores are generally open seven days a week and operate
between the hours of 8:00 a.m. and 9:00 p.m.”; that its store
size is typically between 7,500 and 9,500 square feet; and that
it sells “quality merchandise at everyday low prices” with the
majority of products priced at $10 or less and offering “a
focused assortment of merchandise . . . such as health and
beauty aids, packaged food and refrigerated products, home
cleaning supplies, housewares, stationery, seasonal goods,
apparel, and home fashions.” The Family Dollar letter of intent
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with Eastern Pride states that the proposed building for the
Vacant Tract would be 8,320 square feet.
Looking at the dictionary definitions for “convenience
store” cited above, we do not believe a retail store occupying a
8,320 square-foot space is a “small retail store”; and, further,
it is at best ambiguous whether a store which is open only 13
hours per day constitutes being open for “long hours.” We
further note that none of above definitions for a convenience
store state that it typically sells products at discount prices,
like a Family Dollar store. We further note that the code
assigned to a Family Dollar store under the North American
Industrial Classification System (“NAICS”)1 is not the code
assigned by NAICS to convenience stores generally.
Specifically, the NAICS code assigned to Family Dollar stores is
452990, whereas the NAICS code generally assigned to convenience
stores selling gas is 447110 and the NAICS code generally
assigned to convenience stores not selling gas is 445120.
1
The NAICS is a number system used by businesses and
governmental agencies throughout North America. For instance,
the United States Department of Labor’s Bureau of Labor
Statistics utilizes the NAICS, describing it as a “framework to
group establishments into industries based on the activity in
which they are primarily engaged.”
http://www.bls.gov/bls/naics.htm.
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Accordingly, we do not believe that a Family Dollar Store falls
within the ordinary definition of a “convenience store.”
It is apparent that Defendants do not want an establishment
operating on the Vacant Tract which sells products which they
sell in their convenience store on their Convenience Store
Tract. Defendants could have negotiated that the restrictive
covenant contain language prohibiting certain types of goods
from being sold from a store operating on the Vacant Tract;
however, such language limiting the type of products that can be
sold on the Vacant Tract is not in the Deed. Rather, the
language in the Deed merely prevents the type of store that can
operate on the Vacant Tract. Certainly, the restrictive
covenant at issue would not prevent a Food Lion grocery store or
a Wal-Mart store from operating on the Vacant Tract since they
are clearly not “convenience store[s],” even though they sell
many of the same products that are sold in convenience stores.
We have reviewed the other arguments raised by Defendants
in their brief and find them unpersuasive. Accordingly, we
affirm the trial court’s order.
AFFIRMED.
Chief Judge MARTIN and Judge STEELMAN concur.