JEFFERSON-PILOT LIFE INSURANCE CO. v. Smith Helms Mulliss & Moore

• Decision Date: 04 May 1993
• Docket Number: No. 9118SC1289.,9118SC1289.
• Citation: 429 S.E.2d 183,110 N.C. App. 78
• Court: North Carolina Court of Appeals
• Parties: JEFFERSON-PILOT LIFE INSURANCE COMPANY, Plaintiff, v. SMITH HELMS MULLISS & MOORE, a North Carolina Partnership, Defendant and Third Party Plaintiff, v. NORTH GREENE ASSOCIATES LIMITED PARTNERSHIP, a North Carolina Limited Partnership, Third Party Defendant.

429 S.E.2d 183

110 N.C. App. 78

JEFFERSON-PILOT LIFE INSURANCE COMPANY, Plaintiff, v. SMITH HELMS MULLISS & MOORE, a North Carolina Partnership, Defendant and Third Party Plaintiff, v. NORTH GREENE ASSOCIATES LIMITED PARTNERSHIP, a North Carolina Limited Partnership, Third Party Defendant.

No. 9118SC1289.

Court of Appeals of North Carolina.

May 4, 1993.

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Elrod & Lawing, P.A. by Frederick K. Sharpless, Greensboro, for plaintiff-appellee.

Bell, Davis & Pitt by William K. Davis, Winston-Salem, for defendant and third party plaintiff-appellant.

Adams, Kleemeier, Hagan Hannah & Fouts by Daniel W. Fouts, Greensboro, for third party defendant-appellant.

Troutman, Sanders Lockerman & Ashmore by Robert W. Webb, Jr., Atlanta, GA, for third party defendant-appellant.

ARNOLD, Chief Judge.

Apparently there is no dispute over the calculation of the increased operating expenses nor over defendant's liability for those costs under the 1977 lease. Instead, the issue raised by appellants' assignment of error is did the lease termination agreement, specifically the release language, eliminate defendant's obligation to pay the increased operating expenses. Therefore, the decision in this case boils down to a matter of contract interpretation. Appellants contend that the plain language of the release releases them from any obligation to pay the increased operating expenses, and that the trial court erred by considering parol evidence of the parties' intent. In the alternative, appellants argue that any ambiguity in the release merely raises a question of fact for the jury.

We address the parol evidence problem first. If there is a latent ambiguity in the contract, preliminary negotiations and surrounding circumstances may be used to determine what the parties intended. Miller v. Green, 183 N.C. 652, 654, 112 S.E. 417, 417-18 (1922). "A latent ambiguity may arise where the words of a written agreement are plain, but by reason of extraneous facts the definite and certain application of those words is found impracticable." Id. at 654, 112 S.E. at 418. Although the words of the agreement at hand seem clear and unambiguous, their meaning is less than certain when viewed in the context of all the surrounding circumstances. It is unclear whether the release was intended to eliminate rent and expense obligations only for 1990 through 1992, or to absolve defendant of its obligation for 1988 and 1989 as well. In light of this ambiguity, the trial court did not err in considering extrinsic evidence regarding the parties' intent.

The next question is did the trial court err in granting summary judgment for plaintiff, which resulted in the judgment establishing defendant's liability for the 1988 and 1989 increased operating expenses sought by plaintiff. Summary judgment is proper only where there is no genuine issue as to any material fact. In North Carolina it is well settled that "whenever a court is called upon to interpret a contract its primary purpose is to ascertain the intention of the parties...."...