Ocracomax, LLC v. Davis

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA15-1171

Filed: 2 August 2016

Hyde County, No. 15CVS16

OCRACOMAX, LLC, Plaintiff-Appellee,

v.

CHRISTOPHER M. DAVIS and wife, JENNIFER L. DAVIS, OCRACOKE
HORIZONS UNIT OWNERS ASSOCIATION, INC., Defendants-Appellants.

Appeal by defendants from Order entered 18 June 2015 by Judge Wayland J.

Sermons, Jr. in Hyde County Superior Court. Heard in the Court of Appeals 28 April

2016.

L. Phillip Hornthal III for plaintiff-appellee.

Vandeventer Black LLP, by Kevin A. Rust and Wyatt M. Booth, for defendants-
appellants.

ELMORE, Judge.

Ocracomax, LLC (plaintiff) filed a complaint on 26 February 2015 against

Christopher M. Davis and wife, Jennifer L. Davis, and Ocracoke Horizons Unit

Owners Association, Inc. (defendants) seeking a declaratory judgment and a

mandatory injunction. Defendants appeal from the trial court’s order granting

plaintiff’s motion for judgment on the pleadings and denying defendants’ motion to

dismiss. After careful review, we affirm.

I. Background
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Opinion of the Court

The issue in this case involves two condominium unit owners at Ocracoke

Horizons Condominiums who were unable to reach an agreement regarding two

parking spaces in the covered garage in their shared building. Ocracoke Horizons

Condominiums is a condominium complex on Ocracoke Island and was created

pursuant to Chapter 47C of the North Carolina General Statutes (The North Carolina

Condominium Act) and by virtue of a Condominium Declaration (Declaration),

recorded 30 July 1991 in the Hyde County Register of Deeds.

Plaintiff recorded its deed for unit 1B on 20 May 2011, and the Davises

recorded their deed for unit 1A on 19 January 2012. Both deeds contain the following

language: “Each Unit is conveyed subject to that ‘Condominium Declaration’ and all

the terms and provisions thereof as recorded in Book 140, beginning at page 834,

Hyde County Registry[.]” The Declaration lists “Limited Common Elements” in

Article III, Section 1, including “one parking space large enough for two average-sized

(10’ x 20’ each) passenger cars per Unit[.]” The shared, covered garage for units 1A

and 1B contains two adjacent parking spaces, as described above. There is no specific

allocation or assignment of a particular parking space as between units 1A and 1B.

In plaintiff’s complaint, it alleged the following: The Davises’ predecessor, who

originally owned both units, built a shed on part of one of the parking spaces. The

Davises maintain ownership of the shed and claim they are entitled to both the full

parking space and the portion of the second parking space that contains the shed.

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Opinion of the Court

The Davises’ concurrent use of the shed and full parking space is contrary to

plaintiff’s property rights afforded in the limited common elements as defined by

Article III of the Declaration. The Association, through its President John D. Wooton,

the law partner of Christopher Davis, has declined to enforce plaintiff’s right to

parking or take action against the Davises.

Accordingly, plaintiff alleged it “is entitled to a judgment declaring that the

nonconforming shed is a change in the appearance of the Common Elements or the

exterior appearance of a Unit . . . as prohibited by the Declaration.” Additionally,

“plaintiff is entitled to a judgment declaring its right to a parking space appurtenant

to plaintiff’s unit . . . and/or requiring defendants Davis to remove the non-conforming

structure, the shed.” In its second claim, plaintiff alternatively requests a mandatory

injunction ordering the Davises or the Association to remove the shed.

In defendants’ answer and motion to dismiss, they argue that plaintiff lacks

standing to sue the Association and that plaintiff’s complaint is barred by the statute

of limitations. Defendants also assert the affirmative defenses of estoppel, the

doctrine of laches, and waiver. Plaintiff moved for judgment on the pleadings, and

after a hearing on the motions, the Hyde County Superior Court entered an order on

18 June 2015 as follows:

(1) Defendant’s Motion to dismiss is DENIED;

(2) Plaintiff’s Motion for Judgment on the Pleadings is
GRANTED;

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Opinion of the Court

(3) The Court declares that the prior built shed referenced
in the pleadings in the garage serving Units 1A and 1B of
Ocracoke Horizons Condominiums was a change in the
appearance and use of the limited common areas as set
forth in Article III of Section 1 of the Condominium
Declaration recorded July 30, 19921 in Volume 140, Page
834 of the Hyde County Registry.

(4) The Court further declares and orders that the plaintiff
is entitled to one parking place large enough for two
averaged-sized (ten feet by twenty feet) passenger cars,
and that plaintiff is entitled to that parking within the
confines of that limited common area denominated as
“Garage” for Units 1A and 1B as shown on sheet three of
the plat for Ocracoke Horizon Condominiums, as recorded
in Condominium Cabinet C, page 383-C, which has not
been altered by the erection of a shed.

(5) Costs are taxed to the defendants.

(6) Defendant’s oral motion for stay of this Order pending
appeal is DENIED.

Defendants appeal.

II. Analysis

Pursuant to Rule 12(c) of our Rules of Civil Procedure, “[a]fter the pleadings

are closed but within such time as not to delay the trial, any party may move for

judgment on the pleadings.” N.C. Gen. Stat. § 1A-1, Rule 12(c) (2015). “Judgments

on the pleadings are disfavored in law, and the trial court must view the facts and

permissible inferences in the light most favorable to the non-moving party.” Groves

1 The record reveals the Declaration was recorded 30 July 1991.

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Opinion of the Court

v. Cmty. Hous. Corp., 144 N.C. App. 79, 87, 548 S.E.2d 535, 540 (2001) (citing Flexolite

Elec. v. Gilliam, 55 N.C. App. 86, 88, 284 S.E.2d 523, 524 (1981)). Therefore, the

motion “ ‘should only be granted when the movant clearly establishes that no material

issue of fact remains to be resolved and that the movant is entitled to judgment as a

matter of law.’ ” New Bar P’ship v. Martin, 221 N.C. App. 302, 306, 729 S.E.2d 675,

680 (2012) (quoting Cash v. State Farm Mut. Auto. Ins. Co., 137 N.C. App. 192, 201–

02, 528 S.E.2d 372, 378, aff’d per curiam, 353 N.C. 257, 538 S.E.2d 569 (2000)). We

review a trial court’s order granting a motion for judgment on the pleadings de novo.

Id. at 307, 729 S.E.2d at 680.

The authority of a court to enter a declaratory judgment is provided for in N.C.

Gen. Stat. § 1-253 (2015), which provides,

Courts of record within their respective jurisdictions shall
have power to declare rights, status, and other legal
relations, whether or not further relief is or could be
claimed. . . . The declaration may be either affirmative or
negative in form and effect; and such declarations shall
have the force and effect of a final judgment or decree.

Furthermore,

[a]ny person interested under a deed, will, written contract
or other writings constituting a contract, or whose rights,
status or other legal relations are affected by a statute,
municipal ordinance, contract or franchise, may have
determined any question of construction or validity . . . and
obtain a declaration of rights, status, or other legal
relations thereunder.

N.C. Gen. Stat. § 1-254 (2015).

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Opinion of the Court

Our General Assembly has provided that Article 26, governing declaratory

judgments, “is to be liberally construed and administered.” N.C. Gen. Stat. § 1-264

(2015). “[I]ts purpose is to settle and afford relief from uncertainty and insecurity

with respect to rights, status, and other legal relations[.]” Id. Our Supreme Court

has stated, “While the statute does not expressly so provide, this Court has held on a

number of occasions that courts have jurisdiction to render declaratory judgments

only when the pleadings and evidence disclose the existence of an actual controversy

between parties having adverse interests in the matter in dispute.” Gaston Bd. of

Realtors v. Harrison, 311 N.C. 230, 234, 316 S.E.2d 59, 61 (1984) (citations omitted).

As stated above, pursuant to Article III of the Declaration, the limited common

elements consist of, inter alia, “one parking space large enough for two average-sized

(10’ x 20’ each) passenger cars per Unit . . . . The above listed Common Elements are

located outside the Unit’s boundaries, designed to serve a single Unit and allocated

exclusively to that Unit.” Article V, entitled “Regulations and Restrictions,” provides,

“A unit owner may not change the appearance of the Common Elements or the

exterior appearance of a Unit or any other portion of the Condominium without

permission of the Association as provided in the Bylaws.”

The Bylaws provide, “The failure of . . . a Unit Owner to enforce any right,

provision, covenant or condition which may be granted by the Condominium

Instruments or the Condominium Act shall not constitute a waiver of the right of the

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Opinion of the Court

. . . Unit Owner to enforce such right, provision, covenant or condition in the future.”

The Bylaws further state,

Failure to comply with any of the Condominium
Instruments and the Rules and Regulations shall be
grounds for relief, including without limitation, an action
to recover any sum due for money damages, injunctive
relief, . . . any other relief provided for in these Bylaws or
any combination thereof and any other relief afforded by a
court of competent jurisdiction, all of which relief may be
sought . . . by any aggrieved Unit Owner[.]”

A. Waiver

Defendants argue that plaintiff waived its right to enforce the Declaration

because it had actual knowledge of the shed prior to purchasing unit 1B, utilized the

shed for a number of years, and made no objection to the shed’s existence until over

three years after its purchase. Defendants claim that any right not illegal or contrary

to public policy may be waived. Plaintiff responds by citing the “No Waiver of Rights”

clause in the Bylaws and by noting that its primary relief sought was “its right to

parking.”

Defendants’ argument relies on two restrictive covenants cases. In Medearis

v. Trustees of Myers Park Baptist Church, 148 N.C. App. 1, 13–14, 558 S.E.2d 199,

207–08 (2001), the plaintiffs were deemed to have waived their rights to enforce

residential restrictions, which would have imposed an undue hardship on the

defendants, who already spent over $1.5 million in acquiring property and with whom

the plaintiffs negotiated repeatedly to redesign the construction plans. In Rodgerson

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Opinion of the Court

v. Davis, 27 N.C. App. 173, 179, 218 S.E.2d 471, 475 (1975), this Court stated, “Where

restrictions have been imposed according to a general plan, one of the grantees of lots

subject thereto, who has himself violated such restrictions, will not be allowed in

equity to complain against similar violations by other grantees.”

Here, in contrast, plaintiff is not attempting to enforce a restrictive covenant.

The trial court granted plaintiff’s primary relief requested, that is, a declaratory

judgment acknowledging its right to one parking space large enough to fit two

passenger cars. Per the Bylaws listed above, plaintiff’s alleged failure to immediately

enforce its delineated right shall not constitute a waiver of its right to enforce it in

the future. As defendants point out, plaintiff’s purchase agreement states, “[T]he

storage shed immediately adjacent to unit 1A is the property of unit 1A.” Plaintiff’s

failure to object to the shed, however, did not waive plaintiff’s separate right to one

parking space, which remained available in the covered garage despite the shed.

In defendants’ reply brief, they assert that plaintiff “had actual or constructive

notice of the shed and parking issues prior to purchase.” As plaintiff’s counsel stated

at the hearing, though, “the notice that [plaintiff] had was that there was a shed that

the Davises claimed they owned that sat in the middle of a parking place, so what

does that tell [plaintiff]? ‘Oh, we’re good. We’ve got the other side, so we got what

we want, no problem[.]’ ” Regardless of whether plaintiff had notice of “parking

issues,” such fact does not waive plaintiff’s right, under the Declaration, to one full

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Opinion of the Court

parking space.

B. Quasi-Estoppel

Defendants argue that plaintiff’s complaint is barred by the doctrine of quasi-

estoppel or estoppel by benefit because plaintiff has used the shed and is now taking

an inconsistent position after accepting a benefit.

Under a quasi-estoppel or estoppel by benefit theory, “a party who accepts a

transaction or instrument and then accepts benefits under it may be estopped to take

a later position inconsistent with the prior acceptance of that same transaction or

instrument.” Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1, 18, 591 S.E.2d 870, 881–

82 (2004) (citations omitted).

Here, it is undisputed that the Davises, as owners of Unit 1A, own the shed.

There is no evidence, however, that plaintiff accepted a benefit under a transaction

or an instrument. The record reveals only that plaintiff’s purchase agreement stated

that “the storage shed immediately adjacent to unit 1A is the property of unit 1A.”

The record does not reveal that plaintiff received a benefit under the purchase

agreement or that plaintiff is taking a position inconsistent with a prior acceptance

of that or any other instrument. Accordingly, plaintiff is not estopped from seeking

a declaration of its right to one parking space.

C. Standing

Defendants claim that plaintiff lacks standing to sue the Association, citing

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Opinion of the Court

N.C. Gen. Stat. § 55A-7-40(a). Plaintiff responds by citing the Declaration, which

provides that relief may be brought by any aggrieved unit owner.

Chapter 55A of our General Statutes contains the North Carolina Nonprofit

Corporation Act, and N.C. Gen. Stat. § 55A-7-40 covers derivative proceedings. “A

derivative proceeding is a civil action brought by a shareholder in the right of a

corporation, . . . while an individual action is one a shareholder brings to enforce a

right which belongs to him personally.” Norman v. Nash Johnson & Sons’ Farms,

Inc., 140 N.C. App. 390, 395, 537 S.E.2d 248, 253 (2000) (citations and quotations

omitted). As this is not a derivative proceeding, N.C. Gen. Stat. § 55A-7-40 does not

apply. As stated above, the Bylaws specifically provide that any aggrieved unit owner

may seek relief for failure to comply with any of the condominium instruments, rules,

and regulations, including injunctive relief and any other relief afforded by a court of

competent jurisdiction. Accordingly, defendants’ argument fails.

D. Doctrine of Laches

Defendants argue that the doctrine of laches bars plaintiff’s claims because

plaintiff waited nearly four years after purchasing the unit to bring suit.

This Court has previously stated,

To establish the affirmative defense of laches, our case law
recognizes that 1) the doctrine applies where a delay of
time has resulted in some change in the condition of the
property or in the relations of the parties; 2) the delay
necessary to constitute laches depends upon the facts and
circumstances of each case; however, the mere passage of

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Opinion of the Court

time is insufficient to support a finding of laches; 3) the
delay must be shown to be unreasonable and must have
worked to the disadvantage, injury or prejudice of the
person seeking to invoke the doctrine of laches; and 4) the
defense of laches will only work as a bar when the claimant
knew of the existence of the grounds for the claim.

MMR Holdings, LLC v. City of Charlotte, 148 N.C. App. 208, 209–10, 558 S.E.2d 197,

198 (2001) (citations omitted).

Here, defendants argue, “Plaintiff could have easily raised this issue at the

time of their purchase, or at any time shortly thereafter. Instead, Plaintiff waited

until nearly four (4) years after the Davis Defendants purchased their unit to bring

this action.” Defendants focus only on the passage of time. It is well established,

however, that “the mere passage of time is insufficient to support a finding of laches.”

MMR Holdings, LLC, 148 N.C. App. at 209, 558 S.E.2d at 198. Defendants fail to

allege that plaintiff’s delay worked to their disadvantage, injury, or prejudice.

Rather, as counsel for defendants conceded at the hearing, the shed was built “fifteen

years ago before [the Davises] ever owned it.” Accordingly, defendants’ defense fails.

E. Statute of Limitations

Lastly, defendants claim that the trial court erred in granting plaintiff’s motion

because its complaint is barred by the statute of limitations. Defendants state that

the statute of limitations for an action for injury to any incorporeal hereditament

under N.C. Gen. Stat. § 1-50(a)(3) is six years. Defendants reason that, because the

shed has existed for more than six years, the statute of limitations has run, citing

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Opinion of the Court

Duke Energy Carolinas, LLC v. Gray, ___ N.C. App. ___, 766 S.E.2d 354 (COA 14-

283) (Dec. 2, 2014), review allowed, 772 S.E.2d 857 (2015) and 773 S.E.2d 57 (2015).

Plaintiff argues that an incorporeal hereditament is a restriction on use and does not

apply here. Further, plaintiff claims that even if it did apply, plaintiff brought suit

within six years of purchasing unit 1B.

“The application of any statutory or contractual time limit requires an initial

determination of when that limitations period begins to run. A cause of action

generally accrues when the right to institute and maintain a suit arises.” Duke

Energy Carolinas, LLC, ___ N.C. App. at ___, 766 S.E.2d at 358 (quoting Register v.

White, 358 N.C. 691, 697, 599 S.E.2d 549, 554 (2004)) (quotations omitted).

The term “incorporeal hereditament” has been defined as:

Anything, the subject of property, which is inheritable and
not tangible or visible. A right issuing out of a thing
corporate (whether real or personal) or concerning or
annexed to or exercisable within the same. A right growing
out of, or concerning, or annexed to, a corporeal thing, but
not the substance of the thing itself.

Karner v. Roy White Flowers, Inc., 134 N.C. App. 645, 649, 518 S.E.2d 563, 567 (1999)

(quoting Black’s Law Dictionary 726 (6th ed. 1990)), rev’d in part on other grounds,

351 N.C. 433, 527 S.E.2d 40 (2000).

In Duke Energy Carolinas, LLC v. Gray, the plaintiff was granted a 200-foot

easement in 1951. ___ N.C. App. at ___, 766 S.E.2d at 356. In 2006, Wieland Homes

built a house on a lot, which included a strip of land located within the plaintiff’s

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Opinion of the Court

easement. Id. The house was complete by 11 October 2006, the date the County

issued a Certificate of Occupancy for the house, and the defendant purchased the

house in 2007. Id. The plaintiff wrote to the defendant in 2010, informing him of the

encroachment, however, the plaintiff did not file suit until 12 December 2012. Id. at

___, 766 S.E.2d at 356–57. This Court affirmed the trial court’s grant of summary

judgment in favor of the defendant, holding “that the statute of limitations for a claim

based on injury to an easement runs from the time that the claim accrues, even if a

plaintiff is not aware of the injury at that time.” Id. at ___, 766 S.E.2d at 359.

Accordingly, we rejected the plaintiff’s argument that “the statute of limitations does

not begin to run until the encroachment on an easement is known or should

reasonably be known.” Id.

Relying on that holding, defendants claim “the Shed has been in existence at

its current location for more than six (6) years. In fact, the Shed has existed for some

fifteen (15) year period prior to Plaintiff’s purchase of its unit. As such, the statute

of limitations on Plaintiff’s Complaint has run.” (Internal citations omitted). We

acknowledge that plaintiff’s primary relief requested was its right to one full parking

space. A significant distinction between the facts of Duke Energy Carolinas, LLC

and the facts of this case is that here, plaintiff did not own its unit when the shed was

built. Unlike in Duke Energy Carolinas, LLC where the plaintiff had continuously

maintained the easement when the encroachment occurred, here plaintiff did not

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Opinion of the Court

acquire an ownership interest in its unit until roughly fifteen years after the shed

was built.

We agree with plaintiff that, assuming the six year statute of limitations

applies, it could not begin to run until plaintiff purchased unit 1B, which was in May

2011. As counsel for plaintiff stated, when the shed was built, “[t]here was unity of

ownership, so there was no damage to anybody. The same guy owned both places.”

Accordingly, because plaintiff filed its complaint within six years of purchasing unit

1B, its claim is not barred by the statute of limitations.

F. Motion to Dismiss

Defendants briefly argue that the trial court erred in denying their motion to

dismiss. An order denying a motion to dismiss, however, is generally not appealable.

Thompson v. Norfolk S. Ry. Co., 140 N.C. App. 115, 121, 535 S.E.2d 397, 401 (2000)

(citing Country Club of Johnston County, Inc. v. U.S. Fidelity and Guar. Co., 135 N.C.

App. 159, 519 S.E.2d 540 (1999)). Accordingly, this portion of defendants’ appeal is

not properly before us, and we are precluded from reviewing the merits.

III. Conclusion

For the reasons stated throughout, the trial court did not err in granting

plaintiff’s motion for judgment on the pleadings.

AFFIRMED.

Judges DILLON and ZACHARY concur.

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