                                   NO. COA13-1096

                        NORTH CAROLINA COURT OF APPEALS

                             Filed: 15 April 2014


CURTIS RAY HOLMES,
     Plaintiff,

    v.                                        Guilford County
                                              No. 12 CVS 10238
NORTH CAROLINA FARM BUREAU MUTUAL
INSURANCE CO., INC.,
     Defendant.


    Appeal by      plaintiff from Order          entered 10 July 2013       by

Judge John O. Craig, III, in Superior Court, Guilford County.

Heard in the Court of Appeals 6 February 2014.


    Cahoon & Swisher, North & Cooke, by A. Wayland Cooke, for
    plaintiff-appellant.

    Nelson Levine De Luca & Hamilton, LLC, by David L. Brown
    and David G. Harris II, for defendant-appellee.


    STROUD, Judge.


    Dr.   Curtis    Holmes     (“plaintiff”)      appeals   from    an   order

denying his motion for summary judgment and granting summary

judgment in favor of North Carolina Farm Bureau Mutual Insurance

Co., Inc. We affirm.

                              I.     Background

    Plaintiff      is    a   dentist    and    property   owner    living   in

Greensboro. He owns several office buildings in the Greensboro
                                                 -2-
area, including one at 5415 Friendly Avenue (“5415 Friendly”)

and    one     across     the    street          at    5411       Friendly          Avenue     (“5411

Friendly”).         Plaintiff        purchased         an        office-lessor’s            insurance

policy       from   defendant         to     cover      his       property.            The     policy

excludes from coverage any building that has been vacant for

more than 60 consecutive days before a loss, including loss by

theft.       The policy defines a vacant building for property owner

policies      under     section       9(a)(1)(b)            of    the       policy.       Under    this

section, a building is vacant “when 70% or more of its total

square      footage:      (i)   Is     not    rented;            or    (ii)    Is     not    used    to

conduct       customary      operations.”                  The        policy    clarifies          that

“[w]hen      this    policy      is    issued         to    the       owner     of    a     building,

building means the entire building.”

       In    November      2011,       someone         stole       eight       heating       and    air

conditioning         units      from       outside         5415       Friendly.             Plaintiff

informed      the     police,        but     the      perpetrator            was     never    found.

Plaintiff also made a claim to defendant for the loss under the

office-lessor         policy.        Defendant         refused         to     cover    plaintiff’s

loss    because      it   believed         that       the    vacancy          provision       of    the

policy applied.

       Plaintiff      filed      a    complaint         in       Guilford       County       Superior

Court    alleging       breach       of    the     insurance           contract       and    seeking
                                    -3-
recovery in excess of $40,000 for the stolen heating units plus

attorney’s fees and costs. Defendant answered, contending that

plaintiff’s recovery was barred by the vacancy provision of the

insurance contract.     Defendant also filed a counterclaim for

declaratory judgment concerning the rights and obligations of

the parties under this policy. The parties conducted discovery

and   filed   cross-motions   for   summary   judgment.   The   evidence

forecast by the parties tended to show the following:

      5415 Friendly has five separate units: named “A,” “B,” “C,”

“D,” and “G.” Unit A was 1,344 square feet; Unit B was 1,064

square feet; Unit C was either 2,688 or 2,577 square feet1; Unit

D was 2,128 square feet; and Unit G was 1,064 square feet. The

total square footage of 5415 Friendly was thus either 8,288

square feet or 8,177 square feet. As of November 2011, only one

of the five units at 5415 Friendly was rented—Unit A.           Units B,

D, and G were all vacant.2 The classification of Unit C was the

primary point of contention at the summary judgment hearing.

      The evidence showed that Unit C was not leased in the sixty

days before the theft. However, plaintiff had been allowing one

1
   In his deposition, plaintiff stated that Unit C was
approximately 2,688 square feet.         In his responses to
defendant’s requests for admission, however, he claimed that
Unit C was 2,577 square feet.
2
  The evidence showed that plaintiff used Unit D to store excess
furniture, but he agreed that it should be considered “vacant.”
                                         -4-
of the tenants of 5411 Friendly, two independent real estate

attorneys named Charles McNeil III and Ken Lucas, to use Unit C

as    storage   for   their    old   files     and   excess    furniture.        The

attorneys had a key to Unit C and could have used the entire

space until plaintiff found a regular tenant. Mr. McNeil and Mr.

Lucas kept their files in one 144 square foot room in Unit C.

They did not use two additional 144 square foot rooms which

contained various furniture of uncertain provenance.                      The rest

of the space was not used.

       Mr. McNeil testified that he, Mr. Lucas, or one of their

employees would go to Unit C once or twice a week to store,

retrieve, or review files.            He further stated that they would

sometimes sit in one of the chairs in Unit C to review the

stored files, but that they normally only stayed five to ten

minutes.     None of them used any of the space on the second floor

of Unit C.      Mr. McNeil stated that the storage and review of old

files was a “customary operation” of his law practice.

       After reviewing the discovery and hearing arguments from

the   parties,    the   trial    court    allowed    defendant’s        motion   for

summary    judgment,     and    denied     plaintiff’s        motion,    by   order

entered 10 July 2013.          Plaintiff filed notice of appeal to this

Court on 31 July 2013.
                                       -5-
                            II.   Summary Judgment

       On appeal, plaintiff argues that the trial court erred in

granting summary judgment to defendant and denying his motion

for summary judgment because the undisputed facts showed that

over    30%    of   5415   Friendly    was   either   rented   or   used    for

customary operations.

A.     Standard of Review

              We review a trial court order granting or
              denying a summary judgment motion on a de
              novo basis, with our examination of the
              trial court’s order focused on determining
              whether there is a genuine issue of material
              fact and whether either party is entitled to
              judgment as a matter of law. As part of that
              process, we view the evidence in the light
              most favorable to the nonmoving party.

Cox v. Roach, ___ N.C. App. ___, ___, 723 S.E.2d 340, 347 (2012)

(citation and quotation marks omitted), disc. rev. denied, 366

N.C. 423, 736 S.E.2d 497 (2013).

B.     Analysis

       Both parties agree that there are no genuine issues of

material fact. They only disagree on the proper interpretation

of     the    vacancy   provision     of   the   insurance   contract.     That

provision states:

              9. Vacancy

              a.    Description of Terms
                               -6-
         (1) As used in this Vacancy Condition, the
         term building and the term vacant have the
         meanings set forth in (1)(a) and (1)(b)
         below:

         (a) When this policy is issued to a tenant,
         and with respect to that tenant’s interest
         in Covered Property, building means the unit
         or suite rented or leased to the tenant.
         Such building is vacant when it does not
         contain enough business personal property to
         conduct customary operations.

         (b) When this policy is issued to the owner
         of a building, building means the entire
         building. Such building is vacant when 70%
         or more of its total square footage:

         (i) Is not rented; or
         (ii) Is   not  used  to     conduct   customary
              operations.

         . . . .

         b.    Vacancy Provisions

         If the building where loss or damage occurs
         has been vacant for more than 60 consecutive
         days before that loss or damage occurs:

         (1)   We will not pay for any loss or damage
               caused by any of the following even if
               they are Covered Causes of Loss:

         . . . .

         (e) Theft;

    Defendant contends that under the definition in subsection

(a)(1)(b), which applies to plaintiff as an owner, if either 30%

or less of the entire covered building is rented, or if 30% or
                                              -7-
less of the building is used to conduct customary operations,

then        the   building        is      considered          vacant.          Under    this

interpretation, a building could be 30% rented and have another

30% used for customary operations, but the building would still

be considered vacant. Plaintiff argues, by contrast, that this

provision means that if more than 30% of the building is either

rented or used to conduct customary operations, then it is not

vacant. Under this interpretation, that same building with 30%

rented and 30% used for customary operations would be considered

60% occupied, and therefore not vacant. We conclude that we need

not    resolve    this     issue       here    because       even    under      plaintiff’s

interpretation of the contract, 5415 Friendly was vacant for

more than sixty days before the theft.

       It is uncontested that all of Unit A, 1,344 square feet,

was    rented     during    the    relevant          period.       Unit    A    constitutes

approximately 16% of the total square footage of the building.

Unit C has been the sole point of contention in this case. There

was    no     evidence     that    it     was       rented    at    a     relevant     time.

Therefore, the only question is whether Unit C was used for

“customary operations” and how much of Unit C was so used.

       The evidence showed that Mr. McNeil and Mr. Lucas only

stored files in one 144 square foot room of Unit C. The evidence
                                       -8-
did show that Mr. McNeil and Mr. Lucas used that room on a

fairly regular basis, once or twice a week. They would store and

retrieve client files in the room and sometimes sit in the chair

in that room to review the files.              Mr. McNeil opined that the

storage and review of these archived files was a part of his

customary operations.         Nevertheless, that 144 square foot room

was the only portion of Unit C that they used as part of these

operations.      Although there was evidence that some pieces of

furniture were     stored in two additional rooms, there was no

evidence that Mr. McNeil and Mr. Lucas ever used those rooms.

Mr. McNeil stated that he was unsure who owned the furniture,

but that he did not think it was his.

    Plaintiff argues that we should count the entirety of Unit

C as being      “used for customary operations”         because one room

within   that    unit   was    being    used   and   those   using   it   had

permission to occupy the entire unit. But that interpretation is

contrary to the plain language of the contract.

          The court is to interpret a contract
          according to the intent of the parties to
          the contract, unless such intent is contrary
          to law. If the plain language of a contract
          is clear, the intention of the parties is
          inferred from the words of the contract.
          When the language of the contract is clear
          and   unambiguous,   construction   of   the
          agreement is a matter of law for the court,
          and the court cannot look beyond the terms
                                       -9-
             of the contract to determine the intentions
             of the parties.

Williams v. Habul, ___ N.C. App. ___, ___, 724 S.E.2d 104, 111

(citations and quotation marks omitted).

    Subsection       (b)   of    the     definitional       section    defines

“building” as the “entire building” and defines “vacancy” in

relation to the total square footage of the building.                       While

plaintiff contends that not considering all of Unit C “occupied”

is “like being a little bit pregnant,” the plain language of the

contract directs us to consider only the portion of the total

square   footage      “used     to     conduct       customary   operations.”

Therefore,    the   relevant    question     under    the   contract   is   what

percentage of the total square footage was actually so used, not

what amount could have been used.

    Here, only 144 square feet of Unit C were used to conduct

customary operations of Mr. McNeil’s law practice. Combined with

the area of Unit A, which was 1344 square feet, the total square

footage either rented or used to conduct customary operations

was 1488 square feet. Using either measure of the total square

footage—8288 square feet or 8177 square feet—this area does not

exceed 30%.3     We conclude that the uncontested facts show that



3
  Using either measure of total square footage, the percentage
rented or used was approximately 18%.
                                         -10-
5415    Friendly     was     “vacant”    for     purposes    of   the    insurance

contract for more than 60 days prior to the theft.

       As   a    result,     under     that     contract,   plaintiff       was   not

entitled to compensation for his loss and defendant did not

breach the contract by refusing to pay the $40,000 to replace

the stolen heating units. We hold that there are no genuine

issues of material fact and defendant is entitled to judgment as

a matter of law. Therefore, we affirm the trial court’s order

allowing    defendant’s       motion    for     summary   judgment    and    denying

plaintiff’s motion.

                                III. Conclusion

       For the foregoing reasons, we hold that the trial court

correctly       determined    that     there     are   no   genuine     issues    of

material fact and that defendant is entitled to judgment as a

matter of law. Therefore, we affirm the trial court’s order

allowing defendant’s motion for summary judgment.

       AFFIRMED.

       Judges CALABRIA and DAVIS concur.
