CHAPEL H.O.M. ASSOCIATES, LLC and CHAPEL HILL MOTEL ENTERPRISES, INC., Plaintiffs,
RME MANAGEMENT, LLC, Defendant.
in the Court of Appeals 8 March 2017.
by plaintiffs from order entered 9 June 2016 by Judge R.
Allen Baddour, Jr. in Orange County Superior Court. No. 15
Troutman Sanders LLP, by Ashley H. Story and D. Kyle Deak,
Hedrick Gardner Kincheloe & Garofalo, LLP, by Patricia P.
Shields and James R. Baker, for defendant-appellee.
H.O.M. Associates, LLC ("H.O.M.") and Chapel Hill
Motel Enterprises, Inc. ("Chapel Hill")
(collectively "Plaintiffs") appeal from an order
filed June 9, 2016 granting the motion to dismiss of RME
Management, LLC ("Defendant") made pursuant to Rule
12(b)(6) of the North Carolina Rules of Civil Procedure.
Plaintiffs argue the complaint states claims for which relief
may be granted, and the trial court erred by granting
Defendant's motion. We affirm in part and reverse in
& Procedural Background
entered into a forty-nine year lease on March 17, 1966 for a
parcel of land in Chapel Hill, North Carolina. The lease
contained a renewal option for an additional forty-nine years
that, if written notice was given at least six months before
lease termination, would have allowed the renewal lease term
to begin on January 1, 2016. Chapel Hill sublet the property
from H.O.M. beginning on January 9, 1967 for the operation
and management of a hotel, and after exercising renewal
options, continues to sublet the property.
it is unclear when Defendant acquired the subject property
from the original landowner, Defendant was the owner of the
property as early as January 2014. In accordance with the
terms of the original lease, the parties began negotiating
renewal of the lease and sublease as early as December 3,
2013 when Chapel Hill communicated its intent to H.O.M. to
extend the sublease, and on September 16, 2014 when H.O.M.
notified Defendant that it intended to renew its lease. Both
parties gave notice to renew well before the six month
requirement of the lease and sublease.
for renewal of the lease broke down because the parties could
not agree on the method by which the price terms for the
renewal of the lease would be set. To establish this price
term for the lease contract, the parties were to each appoint
a commercial property appraiser, and these two appraisers
would appoint a third appraiser. These three appraisers would
then negotiate to reach an equitable and fair value of the
property and its corresponding lease value to be paid monthly
to RME. However, the parties could not agree on the appraisal
methodology, and the third appraiser was never appointed.
renewal negotiations broke down, Plaintiffs filed a complaint
in the United States District Court for the Middle District
of North Carolina on September 29, 2014. This complaint was
dismissed on jurisdictional grounds. Plaintiffs refiled their
complaint in Orange County Superior Court on August 28, 2015
stating causes of action for declaratory judgment, equitable
estoppel, and unfair and deceptive trade practices. Defendant
filed a motion on October 2, 2015 requesting the case be
heard in the North Carolina Business Court, and seeking to
dismiss Plaintiffs' complaint for failure to state a
claim on which relief could be granted. On October 23, 2015,
the Superior Court refused to designate the case as a complex
business case, and so the case proceeded in Orange County
Superior Court. Following a May 31, 2016 hearing on
Defendant's motion to dismiss, the trial court entered an
order on June 9, 2016 granting the motion with prejudice. It
is from this order dismissing each of its causes of action
that Plaintiffs have timely appealed.
trial court considers a Motion to Dismiss under Rule
12(b)(6), the court must determine "whether, as a matter
of law, the allegations of the complaint, treated as true,
are sufficient to state a claim upon which relief may be
granted under some legal theory, whether properly labeled or
not." Leary v. N.C. Forest Prods., Inc., 157
N.C.App. 396, 400, 580 S.E.2d 1, 4 (citation and internal
quotation marks omitted), aff'd per curiam, 357
N.C. 567, 597 S.E.2d 673 (2003). "[A] complaint should
not be dismissed for insufficiency unless it appears to a
certainty that plaintiff is entitled to no relief
under any state of facts which could be proved in support of
the claim." Stanback v. Stanback, 297 N.C.
181, 185, 254 S.E.2d 611, 615 (1979) (citation and internal
quotation marks omitted), disapproved of on other grounds
by Dickens v. Puryear, 302 N.C. 437, 448, 276
S.E.2d 325, 332 (1981). "[A]ll the Rules require is a
short and plain statement of the claim that will give the
defendant fair notice of what the plaintiff's claim is
and the grounds upon which it rests." Sutton v.
Duke, 277 N.C. 94, 102, 176 S.E.2d 161, 165 (1970)
(citation and internal quotation marks omitted).
North Carolina, the elements of equitable estoppel are:
(1) conduct on the part of the party sought to be estopped
which amounts to a false representation or concealment of
material facts; (2) the intention that such conduct will be
acted on by the other party; and (3) knowledge, actual or
constructive, of the real facts. The party asserting the
defense must have (1) a lack of knowledge and the means of
knowledge as to the real facts in question; and (2) relied
upon the conduct of the party sought to be estopped to his
Friedland v. Gales, 131 N.C.App. 802, 807, 509
S.E.2d 793, 796-97 (1998) (quoting Parker v.
Thompson-Arthur Paving Co., 100 N.C.App. 367, 370, 396
S.E.2d 626, 628-29 (1990)). Generally, equitable estoppel is
not a cause of action, and may not be used as a ...