WRI/Raleigh LP v. Richardson
Annotate this Case
Download PDF
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of A p p e l l a t e P r o c e d u r e . NO. COA13-291 NORTH CAROLINA COURT OF APPEALS Filed: 15 October 2013 WRI/RALEIGH LP, Plaintiff, v. Wake County No. 10 CVS 13451 TIMOTHY L. RICHARDSON d/b/a Nu Dimensions Fitness Center, Inc., Defendant. Appeal by defendant and cross-appeal by plaintiff from judgment entered 17 August 2012 by Judge Howard E. Manning, Jr. in Wake County Superior Court. Heard in the Court of Appeals 26 August 2013. Williams Mullen, by Elizabeth Sims Hedrick and Gilbert C. Laite III, for plaintiff appellee/cross-appellant. Ewing Law Center, P.C., by Carey L. Ewing, for defendant appellant. MARTIN, Chief Judge. Defendant, Timothy L. Richardson, appeals from a 17 August 2012 judgment following a bench trial finding him liable under the terms of a personal guaranty, but not personally liable on -2the underlying lease contract. Plaintiff, cross-appeals from the same judgment. WRI/Raleigh LP, We affirm in part, and reverse in part. On or about 5 February 2004, plaintiff WRI/Raleigh LP leased commercial space in the Capital Square Shopping Center in Wake County, North Carolina, for a term of seven years to Nu Dimensions Fitness Center, Inc. Defendant Timothy L. Richardson signed the lease as President of Nu Dimensions Fitness Center, Inc. However, Nu Dimensions Fitness Center, Inc. was not and is not a legal entity. Richardson contemporaneously also with signed the lease. a personal Richardson guaranty negotiated to change the proposed terms of the personal guaranty from all of the rents, additional charges, and any improvement allowance that s due at the end of the lease for the entire term of the lease to a more limited amount that was roughly equal to twelve months rent plus the unamortized portion of the improvement allowance. Once the lease term began, defendant soon fell behind on the monthly lease payments. Beginning in March 2005 and continuing throughout the lease term, plaintiff sent numerous notices of default to defendant opportunity to cure those defaults. granting defendant the Defendant made payments -3after each notice until a notice was given on 30 September 2009, indicating defendant was in default for partial rent due in July 2009, and for full rents due in August 2009 and September 2009. Following additional plaintiff the 30 September payments. terminated In 2009 a notice, letter defendant s right defendant dated to 8 made October possession no 2009, of the premises and soon thereafter defendant vacated the premises. _________________________ On appeal, defendant argues that the trial court erred in interpreting the provision of the personal guaranty that limited defendant s liability and argues that the trial court s findings of fact and conclusions of law do not support the trial court s verdict. When the trial court sits without a jury, . . . the standard of review on appeal is whether there was competent evidence to support [the trial court s] findings of fact and whether its conclusions of law were proper in light of such facts. Hollywood, Chem. Realty Corp. v. Home Fed. Sav. & Loan Ass n of 84 N.C. App. 27, 37, 351 S.E.2d 786, 792 (1988) (quoting In re Norris, 65 N.C. App. 269, 275, 310 S.E.2d 25, 29 (1983), cert. denied, 310 N.C. 744, 315 S.E.2d 703 (1984)). [F]indings of fact made by the trial court in a non-jury trial have the force and effect of a jury verdict and are conclusive on appeal if there is evidence to support them. Hunt v. Hunt, -485 N.C. App. 484, 488, 355 S.E.2d 519, 521 (1987) (citing Henderson Cnty. v. Osteen, 297 N.C. 113, 120, 254 S.E.2d 160, 165 (1979)). However, conclusions of law reached by the trial court are reviewable de novo. Biemann & Rowell Co. v. Donohoe Cos., 147 N.C. App. 239, 242, 556 S.E.2d 1, 4 (2001) (citing Mann Contr rs Inc. v. Flair with Goldsmith Consultants II, Inc., 135 N.C. App. 772, 775, 522 S.E.2d 118, 121 (1999)). Whenever a court is called upon to interpret a contract its primary purpose is to ascertain the intention of the parties at the moment of its execution. 407, 409 10, 200 S.E.2d 622, Lane v. Scarborough, 284 N.C. 624 (1973) (citing Bowles Bowles, 237 N.C. 462, 465, 75 S.E.2d 413, 415 (1953)). language of a contract is clear and only one v. If the reasonable interpretation exists, the courts must enforce the contract as written and cannot, under the guise of interpretation, rewrite the contract or impose [terms] on the parties not bargained for and found within the contract. Crider v. Jones Island Club, Inc., 554 147 N.C. App. 262, 266, S.E.2d 863, 866 (2001) (alteration in original) (quoting Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500, 506, 246 S.E.2d 773, 777 denied, 356 N.C. 161, 568 S.E.2d 192 (2002). is ambiguous, matter for the however, finder interpretation of fact. of Dockery the v. (1978)), cert. If the agreement contract Quality is a Plastic -5Custom Molding, Inc., 144 N.C. App. 419, 422, 547 S.E.2d 850, 852 (2001). Ambiguity exists where the contract s language is reasonably susceptible to either of the interpretations asserted by the parties. Glover v. First Union Nat l Bank, 109 N.C. App. 451, 456, 428 S.E.2d 206, 209 (1993). In this case, the language of the personal guaranty reads, in pertinent part: [T]he maximum liability of Guarantor hereunder shall be limited to a sum equal to (i) the total monetary obligations due under the Lease measured from the date of Tenant s default which has remained uncured, and for which demand has been made upon Guarantor, through and including the next succeeding twelve (12) calendar months plus (ii) any unamortized portion of the [construction allowance] paid to Tenant pursuant to . . . the Construction Rider . . . . Defendant contends that his liability was strictly limited by the terms of this personal guaranty to payment of rent for the twelve months following the first notice of default in 2005, which defendant claims to have satisfied by the business s continued occupancy and rent payments through 2009. Defendant arrives at this interpretation by referencing a provision of the lease contract that provides that the landlord will not be deemed to have waived its right to remedies under the contract absent a written waiver of such remedies. Defendant surmises, without citation to authority, that this provision requires that -6before a default can be considered cured, the landlord must have notified the considered cured. tenant in writing that the default was Defendant also reads into the language of the guaranty the word first preceding the word default, such that the landlord may only collect from the guarantor a sum equal to twelve months rent following the first uncured default, rather than twelve months of rent following any uncured default or the last uncured default. Defendant s interpretation would also require applying the rent payments made by defendant during its continued occupancy, instead, as credit for money due by defendant personally through his guaranty of the breached lease. These interpretations defy both common sense and the plain language of the contract. The contract in question is not reasonably susceptible to defendant s proffered interpretation and this Court will not rewrite the contract or impose [terms] on the parties contract. not bargained for and found within the See Crider, 147 N.C. App. at 266, 554 S.E.2d at 866 (quoting Woods, 295 N.C. at 506, 246 S.E.2d at 777). Even assuming defendant s arguendo interpretation that the advances a provision reading is that ambiguous, the trial court, sitting as the finder of fact, did not believe was the intention of the parties. concerning the personal The trial court s findings of fact guaranty are supported by competent -7evidence from plaintiff s employees about the intention of the agreement. See Shear v. Stevens Bldg. Co., 107 N.C. App. 154, 160, 418 S.E.2d 841, 845 (1992). The trial court s conclusions of law are, in turn, supported by those findings of fact. id. See Therefore, defendant s arguments are overruled. Next, we consider plaintiff/cross-appellant s contention that defendant is personally liable for the breach of the lease agreement by Nu recognized entity. and the following defendant is Dimensions because it is not a legally Based on the trial court s findings of fact, reasoning, personally liable we agree for the with plaintiff breach of the that lease agreement. In North Carolina, an officer or director of a corporation is personally liable for contracts entered into, due to their affirmative actions or acquiescence, when they are aware that the corporation on whose behalf they claim to act is not a legally recognized corporation at the time of contracting. Charles A. Torrence Co. v. Clary, 121 N.C. App. 211, 213, 464 S.E.2d 502, 504 (1995) (holding that an officer of a corporation was not personally liable for a corporation s debt because he was unaware that the corporation s charter was suspended at the time the debt was incurred); Pierce Concrete, Inc. v. Cannon Realty & Constr. Co., 77 N.C. App. 411, 414, 335 S.E.2d 30, 31- -832 (1985) (noting that corporate officers have a duty not to continue to incur ordinary business obligations on behalf of the corporation when they have knowledge that the corporation s charter has been suspended ). The trial court found that Nu Dimensions Fitness Center, Inc. is not a legal entity, and that defendant signed the lease as President of Nu Dimensions Fitness Center, Inc. Furthermore, defendant s trial testimony demonstrates that he knew he was signing the lease as the president of a corporation that did not exist. Q. Why did you sign the lease if it had an incorrect name on it? A. Well, number one, because I had told them, and I figured since they had got it wrong on the letter of intent and they corrected it, that was just a minor thing they d correct it. As a result, defendant is personally liable for the breach of the lease because he signed the lease as the president of a corporation that he knew did not legally exist. Affirmed in part, reversed in part. Judges ELMORE and HUNTER, JR. concur. Report per Rule 30(e).
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
