Ram of Eastern North Carolina, LLC v. Weyerhaeuser Real Estate Dev. Co.
| Decision Date | 23 August 2011 |
| Docket Number | No. 4:09-CV-20-D,4:09-CV-20-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | RAM OF EASTERN NORTH CAROLINA, LLC, Plaintiff, v. WEYERHAEUSER REAL ESTATE DEVELOPMENT COMPANY, Defendant. |
On December 30, 2008, RAM of Eastern North Carolina, LLC ("RAM" or "plaintiff") filed suit in Craven County Superior Court against Weyerhaeuser Real Estate Development Company ("WREDCO" or "defendant") [D.E. 1-1]. The dispute arises out of RAM's contract to purchase certain real property in Craven County, North Carolina from WREDCO. On January 30, 2009, WREDCO removed the action to this court [D.E. 1], On November 2, 2009, the court dismissed four counts of the complaint, but allowed RAM to proceed on its claims for breach of the covenants of seisin and the right to convey, breach of the covenant against encumbrances, breach of the covenants of warranty and quiet enjoyment, breach of contract, rescission, and unjust enrichment [D.E. 19]. On October 1, 2010, WREDCO filed a motion for summary judgment on the remaining claims [D.E. 26]. On October 29, 2010, RAM responded in opposition [D.E. 38]. On November 15, 2010, WREDCO replied [D.E. 46]. As explained below, the court grants in part and denies in part WREDCO's motion for summary judgment.
I.
Summary judgment is appropriate when, after reviewing the record taken as a whole, no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issueof material fact. Celotex Corp. v. Catrett, 477 U.S. 317. 325 (19861. Once the moving party has met its burden, the nonmoving party may not rest on the allegations or denials in its pleading, Anderson, 477 U.S. at 248^9, but "must come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis removed) (quotation omitted). A trial court reviewing a motion for summary judgment should determine whether a genuine issue of material fact exists for trial. Anderson, 477 U.S. at 249. In making this determination, the court must view the evidence and the inferences drawn therefrom in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
RAM acquires and develops real property. Brydge Dep. Tr. 13. RAM consists of Mitchell Brydge ("Brydge"), his wife, his sister, and his brother-in-law. Id. at 12-13. In April of 2003, Brydge enlisted Thomas Ensley ("Ensley"), a licensed real estate broker, to assist in locating real property suitable for residential development. Ensley Dep. Tr. 9-11. Ensley located a 10. 21 acre tract of land offered for sale by WREDCO ("the property"), located in Craven County adjacent to U.S. Highway 70 and directly abutting tracks owned by the North Carolina Railroad ("NCRR"), which leases the tracks to Norfolk Southern Railway ("Norfolk Southern"). Id. at 11, 44; Peregoy Dep. Tr. 13; Brydge Dep. Tr. 21. Ensley contacted WREDCO's representative, Kenneth Peregoy ("Peregoy") to ask about the price and zoning of the property. Ensley Dep. Tr. 12; Peregoy Dep. Tr. 23. In June of 2003, Ensley, on behalf of RAM, began negotiating a sales contract with WREDCO. Ensley Dep. Tr. 14; Peregoy Dep. Tr. 22. The property consisted of four blocks. PL's Mem. Opp'n Summ. J., Ex. 42. Because the tract abutted the site of the Battle of New Bern,1 the New BernHistorical Society negotiated acquisition of the southern most block. Brydge Dep. Tr. 27-28, 32; Ensley Dep. Tr. 23; Pergoy Dep. Tr. 25-28; compare PL's Mem. Opp'n Summ. J., Ex. 26 with Mi, Ex. 42. On June 9, 2003, Ensley drafted a purchase contract for only the northern three blocks using a pre-printed real estate form, and submitted it to WREDCO for the purchase of the property. Thomspon Dep., Ex. 4 at 4. The parties agreed to make the sale contingent on the homeowner's association's approval and settled on a purchase price of $170,000; however, WREDCO refused RAM's request to construct a road along the east edge of the property, abutting NCRR's right of way. Id. at 3; Ensley Dep. Tr. 14-16; Peregoy Dep. Tr. 25, 49-50. On June 18, 2003, Pergoy signed the contract on behalf of WREDCO. Thompson Dep., Ex. 4. The contract required conveyance by a general warranty deed Id. at 2.
Although the purchase contract does not require one, the parties agree a "due diligence" period followed the signing of the contract. Brydge Dep. Tr. 34-35; Peregoy Dep. Tr. 28. During this period, the homeowner's association panted approval for multi-family home construction, the property was rezoned, and WREDCO commissioned Bob Chiles to create a map delineating the partition line between the property to be purchased by RAM and the property to be transferred to the Historical Society. Peregoy Dep. Tr. 28-31. Chiles delivered this map to Peregoy, who delivered it to Ensley, who delivered it to RAM. Id. at 32; Ensley Dep. Tr. 23; PL's Mem. Opp'n Summ. J., Ex. 26.
During the due diligence period, RAM hired an attorney who performed a truncated title examination of the real property, using a method known as "tacking." Atkins Dep. Tr. 85, 88; see N.C. Revised Rules of Prof 1 Conduct RPC 99 (1991). RAM chose to rely on the map provided by WREDCO rather than commissioning a separate survey of the property. Brydge Dep. Tr. 52-54.Brydge personally walked the property before closing. Id. at 54-55. Following the due diligence period, RAM proceeded to close the sale of the property. Atkins Dep. Tr. 71. On December 19, 2003, a deed granting title to RAM ("the deed") was registered in Craven County. Thompson Dep., Ex. 3 at 1. The deed stated that the property was "conveyed subject to a non-exclusive, permanent and perpetual easement for access and utilities and said easement is shown on the map .. . and identified as follows: '50' ACCESS & UTILITY EASEMENT.'" Id. at 2; see also Ex. 2 (map). The deed also stated that the property was conveyed "subject to those easements of record and utility rights-of-way." Id., Ex. 3 at 3. Finally, the deed included covenants of seisin, right to convey, against encumbrances, warranty, and quiet enjoyment. Id. at 4.
After purchasing the property, RAM built the road WREDCO refused to construct and installed utility lines along the east portion of the track, directly next to the railroad right of way. Brydge Dep. Tr. 73. RAM intended to construct high-end townhomes on speculation. Id. at 86, 91-92, 104-05. However, vertical construction did not begin until 2007. Id. at 82. In January 2008, a Norfolk Southern lineman called Brydge, and told him that a berm recently altered by RAM obscured the sight line of a nearby crossing. Id. at 22-25. Shortly after the phone call, RAM received a letter from NCRR asserting that NCRR owned a 200 foot right of way which included the land upon which RAM had constructed its road. Id. at 22-25; Thompson Dep., Ex. 9. Although NCRR has demanded RAM cease any additional construction within its claimed right of way and requested that RAM's access road be removed, RAM has not removed the road. Id. at 83-84. However, NCRR has not filed suit against RAM. Id. Furthermore, it is unclear whether RAM will be required to move the utility infrastructure below the road. Id. at 101-02.
RAM asked its title attorney to determine NCRR's interest in the land. The attorney's research revealed multiple records in the property's chain of title indicating the right of way as only 100 feet in width. See Adtkins Dep. Tr., Exs. 12, 13, 14, 15. However, a map depicting an "out" conveyance of another property one mile south indicates the easement is 200 feet in width. Id., Ex.38. Other documents in the public record are ambiguous. See, e.g.. id., Exs. 16, 20 (). Although NCRR has not conceded the point, RAM's title attorney concluded that NCRR does not own the claimed right of way, but rather holds an easement. See Adtkins Dep. Tr. 41-42, 4S-47.2
After receiving NCRR's letter, RAM completed the townhouses it had begun constructing. Brydge Dep. Tr. 84. However, the potential inaccessibility of the townhouses caused RAM to postpone marketing the townhouses. Id. at 89. In January 2009, RAM secured alternative access to the property across the frontage owned by the homeowner's association and directly adjacent to the existing road. Id. at 90. However, the "worst real estate slump for new house sales this country's seen in 25 years" prevented the sale of the completed townhouses, even at "the give-away price" of $265,000 per unit. Id. at 91- 92. Market conditions also have prevented additional construction on the 28 lots unaffected by the dispute with NCRR. Id. at 85. In total, RAM invested $2.175 million in developing the property. Id. at 94.
On December 30, 2008, RAM filed suit against WREDCO. On January 30, 2009, WREDCO removed the action to this court. On November 2, 2009, the court dismissed four counts of the complaint. RAM's remaining claims allege that WREDCO breached the deed's covenant of seisin and right to convey (count one), breached the deed's covenant against encumbrances (count two), breached the deed's covenant of warranty and quiet enjoyment (count three), and breached the June 18, 2003 contract of sale (count four). Alternatively, RAM seeks rescission of the transfer (count nine) and compensation for unjust enrichment should the rescission be panted (count ten).?.
As for RAM's claims for breaches of the deed's...
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