C Invs. 2, LLC v. Auger

• Decision Date: 18 May 2021
• Docket Number: No. COA19-976,COA19-976
• Citation: 860 S.E.2d 295
• Court: North Carolina Court of Appeals
• Parties: C INVESTMENTS 2, LLC, Plaintiff, v. Arlene P. AUGER, Herbert W. Auger, Eric E. Craig, Gina Craig, Laura Dupuy, Stephen Ezzo, Janice Huff Ezzo, Anne Carr Gilman Wood, as Trustee of the Francis Davidson Gilman, III TRUST fbo Pets UW dated June 20, 2007, Lauren Heaney, Bridget Holdings, LLC, Ginner Hudson, Jack Hudson, Chad Julka, Sabrina Julka, Arthur Maki, Ruth Maki, Jennie Raubacher, Matthew Raubacher, as Co-Trustees of the Raubacher/Cheung Family Trust dated November 11, 2018, Lawrence Tillman, Linda Tillman, Ashfaq Uraizee, Jabeen Uraizee, Jeffrey Stegall and Valerie Stegall, Defendants.

860 S.E.2d 295

C INVESTMENTS 2, LLC, Plaintiff,

v.Arlene P. AUGER, Herbert W. Auger, Eric E. Craig, Gina Craig, Laura Dupuy, Stephen Ezzo, Janice Huff Ezzo, Anne Carr Gilman Wood, as Trustee of the Francis Davidson Gilman, III TRUST fbo Pets UW dated June 20, 2007, Lauren Heaney, Bridget Holdings, LLC, Ginner Hudson, Jack Hudson, Chad Julka, Sabrina Julka, Arthur Maki, Ruth Maki, Jennie Raubacher, Matthew Raubacher, as Co-Trustees of the Raubacher/Cheung Family Trust dated November 11, 2018, Lawrence Tillman, Linda Tillman, Ashfaq Uraizee, Jabeen Uraizee, Jeffrey Stegall and Valerie Stegall, Defendants.

No. COA19-976

Court of Appeals of North Carolina.

Filed May 18, 2021

Parker Poe Adams & Bernstein LLP, Charlotte, by Michael G. Adams and Morgan H. Rogers, for plaintiff-appellee.

Law Office of Kenneth T. Davies, P.C., by Kenneth T. Davies, for defendants-appellants Arlene Auger, Herbert Auger, Eric Craig, Gina Craig, Stephen Ezzo, Janice Huff Ezzo, Ashfaq Uraizee, and Jabeen Uraizee.

Tillman Wright, PLLC, by Chad D. Tillman and Jeremy C. Doerre, Charlotte, for defendants-appellees Lawrence and Linda Tillman.

Jordan Price Wall Gray Jones & Carlton PLLC, Raleigh, by H. Weldon Jones, III, for amicus curiae Community Associations Institute.

Offit Kurman, P.A., Charlotte, by Zipporah Basile Edwards, for amicus curiae North Carolina Land Title Association.

Law Office of Kenneth T. Davies, P.C., by Kenneth T. Davies ; Robinson, Bradshaw & Hinson, P.A., by Richard A. Vinroot ; and Nexsen Pruet, PLLC, Charlotte, by James C. Smith, for amici curiae C.E. Williams, III, et al.

Offit Kurman, P.A., Charlotte, by Amy P. Hunt and Robert B. McNeill, for amici curiae Michael and Karyn Reardon.

Roberson Haworth & Reese, PLLC, High Point, by Alan B. Powell and Andrew D. Irby, for amicus curiae Lori Postal.

Ball Barden & Cury P.A., by J. Boone Tarlton, and Roberts & Stevens, P.A., Asheville, by Kenneth R. Hunt, for amici curiae Daniel Kayser et al.

DIETZ, Judge.

¶ 1 For much of our State's history, a title search in North Carolina was a costly, often risky endeavor. Buyers—typically through their real estate attorneys—had to carefully comb back through deeds and other property records, sometimes going back for centuries, to ensure they found every recorded interest in the property, including things like easements and restrictive covenants attached to the land.

¶ 2 In the early 1970s, our State enacted the Real Property Marketable Title Act to simplify these title searches and reduce the costs they imposed on our society. Now, if a property owner has an unbroken chain of title dating back thirty years, earlier rights and interests in the land are extinguished, barring a few narrow exceptions.

¶ 3 This case involves one of these statutory exceptions. The Marketable Title Act does not extinguish a covenant that is part of a scheme of development and that restricts the property to residential use only, or more narrowly to multi-family or single-family residential use only.

¶ 4 The parties in this case own property in a residential subdivision created in the 1950s. The lots are subject to a restrictive covenant limiting them to residential use only, as well as a number of other covenants that govern the number, size, location, and various design elements of structures located on each lot. The trial court entered a declaratory judgment holding that only the first covenant—the one restricting the properties to residential use—survives under the Marketable Title Act and that the remaining challenged covenants were extinguished.

¶ 5 We affirm the trial court's order. Applying the plain and unambiguous language of the Act, the covenants governing the type of structures that can be erected on the property, where they are located, and what they look like are not covenants concerning residential use or, more narrowly, multi-family or single-family residential use. This is confirmed by long-standing precedent from our Supreme Court interpreting language in covenants nearly identical to those at issue in this case.

¶ 6 Defendants urge this Court to depart from the Act's plain language—to, in essence, rewrite the statute—because, in their view, our General Assembly could not have intended this result. This is so, Defendants argue, because following the Act's plain language would destroy the character of many older neighborhoods that have long been governed by these types of aging restrictive covenants.

¶ 7 What Defendants ask of us is beyond the role of the judicial branch. We interpret statutes as they are written; we do not rewrite statutes to ensure they achieve what we believe is the legislative intent. If our interpretation of the plain language of a statute yields unintended results, the General Assembly can amend the statute to ensure it achieves the intent of the legislative branch of our government.

Facts and Procedural History

¶ 8 Country Colony is a residential subdivision in Mecklenburg County developed in the 1950s. In 1952, before selling any lots, the developer recorded nine restrictive covenants. The covenants limit the properties to residential use only and provide further restrictions on the number, size, location, and design elements of the structures located on each lot:

1. All lots in the tract shall be known and described and used for residential lots only.

2. No structure shall be erected, altered, placed or permitted to remain on any residential building plot other than one detached single-family dwelling not to exceed two and one-half stories in height and a private garage, and other outbuildings incidental to residential use of the plot.

3. No building shall be erected on any residential building plot nearer than 100 feet to the front lot line nor nearer than 20 feet to any side line.

4. No noxious or offensive trade or activity shall be carried on upon any lot nor shall anything be done thereon which may be or become an annoyance or nuisance to the neighborhood.

5. No trailer, basement, tent, shack, garage, barn or other outbuilding erected in the tract shall at any time be used as a residence temporarily or permanently, nor shall any structure of a temporary character be used as a residence.

6. No dwelling costing less than $10,000.00 shall be permitted on any lot in the tract. The ground floor area of the main structure, exclusive of one story open porches and open car ports, shall be not less than 1200 square feet in case of a one story structure. In the case of a one and one-half, two or two and one-half story structure, the ground floor area of the main structure, exclusive of one-story open porches or open car ports, shall not be less than nine hundred square feet. (It being the intention to require in each instance the erection of such a dwelling as would have cost not less than the minimum cost provided if same had been erected in January, 1952.)

7. A right of way is and shall be reserved along the rear of each lot and along the side line of each lot where necessary, for pole lines, pipes and conduits for use in connection with the supplying public utilities service to the several lots in said development.

8. In the event of the unintentional violation of any of the building line restrictions herein set forth, the parties hereto reserve the right, by and with the mutual written consent of the owner or owners, for the time being of such lot, to change the building line restrictions set forth in this instrument; provided, however, that such change shall not exceed ten percent of the original requirements of such building line restrictions.

9. None of the lots shown on said plat shall be subdivided to contain less than two acres, and only one residence shall be erected on each of said lots.

¶ 9 Plaintiff is the owner of seven of the lots. Defendants are the owners of the other lots. Plaintiff brought a declaratory judgment action seeking to extinguish many of these covenants based on our State's Marketable Title Act. The trial court entered summary judgment declaring that the first covenant, which restricts the lots to residential use, is enforceable but the remaining covenants challenged by Plaintiff are extinguished by operation of the Marketable Title Act. Defendants appealed.

Analysis

¶ 10 Under the common law, owners of real property acquired and held title to their real property subject to any covenants and other nonpossessory interests that appeared in their property's chain of title. As a result, owners and prospective owners of real property, typically through their real estate attorneys, were required to trace the title to property back for centuries to ensure all enforceable interests in that property were identified. This was often a complicated and time-consuming process that injected significant cost, delay, and uncertainty into our State's real property market.

¶ 11 In 1973, our General Assembly passed the Real Property Marketable Title Act to simplify title searches and render our State's real estate more marketable. See N.C. Gen. Stat. § 47B-1 et seq. The Marketable Title Act functions by creating "marketable record title" to real property upon a showing of an unbroken, thirty-year chain of title to real property. Hill v. Taylor , 174 N.C. App. 415, 420–21, 621 S.E.2d 284, 288–89 (2005). Once the owner establishes marketable record title, the Act extinguishes "all rights, estates, interests, claims or charges whatsoever, the existence of which depends upon any act, title transaction, event or omission that occurred prior to such 30–year period," including restrictive covenants like the ones at issue in this case, unless those restrictive covenants fall within the exceptions to the Act contained in Section 47B-3. Id. (citing N.C. Gen. Stat. §§ 47B-2(c), 47B-3 ).

¶ 12 The crux of this case is the proper interpretation of one of the exceptions in Section 47B-3, which provides that the Act does not extinguish a covenant applicable to a general or uniform scheme of development which restricts the property to residential use, or...