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H/S Wilson Outparcels, LLC v. Kroger Ltd. Partnership I

United States District Court, E.D. North Carolina, Western Division

September 27, 2017

H/S WILSON OUTPARCELS, LLC, Plaintiff/Counter Defendant,
KROGER LIMITED PARTNERSHIP I, Defendant/Counter Claimant.


          Robert B. Jones, Jr., United States Magistrate Judge.

         This matter is before the court on the motion for summary judgment of Kroger Limited Partnership I ("Defendant" or "Kroger"). [DE-36]. H/S Wilson Outparcels, LLC ("Plaintiff' or "H/S Wilson") filed a response in opposition [DE-48], and Kroger filed a reply [DE-52]. For the reasons that follow, the motion for summary judgment is granted in part and denied in part.


         On November 12, 2015, this action was removed from Wilson County Superior Court. [DE-1]. H/S Wilson asserts claims against Kroger for breach of contract and waste and seeks specific performance, monetary damages, and attorney's fees [DE-11] at 3-6, and Kroger asserts a counterclaim for breach of contract against H/S Wilson. [DE-5] at 4. The parties consented to magistrate judge jurisdiction, and the case was first assigned to Judge Swank and later to the undersigned. [DE-13]; Dec. 16, 2015 Text Order; Jan. 4, 2017 Text Order. After a period of discovery, Kroger filed the instant motion for summary judgment. [DE-36].


         On May 2, 2000, H/S Wilson, the owner of the Wilson Mall in Wilson, North Carolina, entered into an agreement to lease property (the "premises") to Kroger. [DE-11] ¶¶ 1, 3. A grocery store was constructed on the premises, which Kroger operated until June 24, 2004, and despite the store closing, Kroger is obligated to continue maintaining the premises as required by the lease. Id. ¶¶ 7-8, 10. The lease agreement provides in relevant part that Kroger, as tenant,

shall keep the Demised Premises in good order, condition and repair, ordinary wear and tear excepted, and shall promptly make or cause to be made any and all necessary or appropriate maintenance and repairs (herein collectively referred to as "Repairs"). All Repairs shall be at least equal in quality and class to the original work.

Id. ¶ 10 (quoting Ex. A [DE-11-1] ¶ 29).

         In 2011, the store roof sustained damage from a severe storm. Dep. James Cooper ("Cooper Dep.") [DE-48-4] at 16:2-5, 35:3-7. By letter of June 30, 2011, H/S Wilson notified Kroger that the roof of the store was damaged and demanded that Kroger return the premises to "good order, condition and repair" as required under the lease. [DE-48-1]. Kroger obtained repair proposals in July and August of 2011, but apparently due to an oversight, no repairs were made to the roof until late in 2014. Cooper Dep. [DE-48-4] at 25:12-14, 36:11-17, 85:13-86:1; PL's Ex. 2 [DE-48-2]; PL's Ex. 3 [DE-48-3]. H/S Wilson sent a another letter to Kroger dated June 26, 2015, indicating it believed the repairs were insufficient and that Kroger was in violation of the lease. [DE-11-2] at 1-3. In September 2015, Kroger hired a contractor to "clean-up" the interior of the store, which included some mold remediation. Cooper Dep. [DE-48-4] at 30:10-24; Def.'s App'x to Reply, Ex. 1 [DE-52-1] at 4. However, H/S Wilson was not satisfied with Kroger's response and alleges Kroger failed to maintain the premises as required by the lease, resulting in active roof leaks, standing water, and excessive mold growth on the premises. [DE-11] ¶¶ 11-12. H/S Wilson further alleges there are other signs of failure to maintain the premises, including rust, stained walls, peeled paint, and cracked windows. Id. 13.


         Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The party seeking summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has met its burden, the nonmoving party then must affirmatively demonstrate, with specific evidence, that there exists a genuine issue of material fact requiring trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Only disputes between the parties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).


         Kroger contends that H/S Wilson can present no facts to support its contention that Kroger failed to keep the premises in "good order, condition and repair" as required by the lease. Def.'s Mem. [DE-37] at 5-8. Specifically, Kroger argues that the grounds for the breach of contract claims are the failure to repair the roof resulting in active water leaks and the failure to remediate mold on the premises, and expert testimony is required regarding the "penetrability of the subject roof, or whether the subject premises required mold remediation, because such subjects are not within full understanding of lay persons." Id. at 6.

         In response, H/S Wilson offers the sworn affidavit of Elizabeth Wilson, the Director of Property Management for Hull Property Group, who manages the premises for H/S Wilson. Pl.'s Mem. [DE-48] at 7-8; Aff. of Elizabeth Wilson ("Wilson Aff.") [DE-51]. Wilson was present for two inspections of the property in January and September 2016 and personally observed and photographed the condition of the building, including rust on the steel decking and rust holes, rusted and broken gutter, rust on steel columns, water stains on cinderblock walls, mold on interior painted surfaces, saturated roofing insulation, and displaced and buckled insulation boards. Wilson Aff. [DE-51] ¶¶ 5-8. H/S Wilson argues that Wilson's testimony, the photographic evidence, and the testimony of Kroger's own expert creates a question of material fact and that a reasonable person could conclude that the roof needs to be replaced. Pl.'s Mem. [DE-48] at 8. H/S Wilson further argues that an expert is not necessary to understand that rain exposure and ...

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