PROPST BROS. DISTS., INC., Plaintiff,
SHREE KAMNATH CORP., Defendant, and McDONALD'S CORP., Third Party Intervenor.
in the Court of Appeals 15 October 2018.
Appeals by Defendant and Third Party Intervenor from
declaratory judgment entered 5 February 2018 by Judge Martin
B. McGee in Superior Court No. 17 CVS 2387, Cabarrus County.
Moore Leatherwood LLP, by Matthew Nis Leerberg and Kip D.
Nelson, for Plaintiff-Appellee.
Robison Lee & Bennett, P.A., by R. Kenneth Helms, Jr. and
Stephen M. Bennett, for Defendant-Appellant.
Bond Dickinson (US) LLP, by Mark P. Henriques and Michael A.
Ingersoll, for Third Party Intervenor.
Factual and Procedural History
Distributing Company sold a 6.31-acre tract of real property
(the "Tract"), located in Cabarrus County, to
Catawba Oil Company, Inc. ("Catawba Oil"), on 8
June 1990. The Tract was located directly northeast of the
intersection of North Carolina Highway 73 and Interstate 85.
Catawba Oil subdivided the Tract in February 1998, which
resulted in three separate lots: Lot 1, consisting of 3.06
acres; Lot 2, consisting of 2.55 acres; and Lot 3, consisting
of 0.67 acres. The Tract is bisected by a non-exclusive
private right-of-way granted to a landowner whose property
borders the north end of the Tract. Lots 2 and 3 are on the
western side of the right-of-way, while Lot 1 is on the
eastern side. Lot 3 is adjacent to Lot 2, and makes up the
easterly part of the southern border of Lot 2. The southern
border of Lot 3 adjoins Highway 73. The 1998 survey of the
subdivision of the Tract indicates that Propst Brothers
Distributors, Inc. ("Propst") owned property
adjoining the western border of Lot 3 and the southern border
of Lot 2 at that time.
Oil conveyed the entirety of Lot 3 to Hillcrest Foods, Inc.
("Hillcrest") on 23 February 1998. The general
warranty deed conveying Lot 3 to Hillcrest included two
restrictive covenants (the "Deed Restrictions"):
Grantee, or Waffle House, Inc., . . . or any subsequent
grantee of theirs may not operate a drive-thru type food
service restaurant on the real property granted by this deed
so long as Grantor, or its successors, operates a drive-thru
type food service restaurant in its convenience store on the
tract adjacent to this property [Lot 1].
No motor vehicle fuels may be sold or disposed from this real
property so long as Grantor or any Grantee of Grantor sells
or disposes motor vehicle fuels on [Lot 1.
time Lot 3 was conveyed to Hillcrest, Catawba Oil was
operating a drive-thru type restaurant in a convenience store
and selling motor vehicle fuels on Lot 1. A Waffle House was
built on Lot 3 and operated for a number of years. Hillcrest
then conveyed Lot 3 to the North Carolina Department of
Transportation ("DOT") on 2 October 2013, and a
portion of the southernmost part of Lot 3 was used by DOT for
a "new right of way," and a "permanent utility
easement for [a] N.C. Highway Project" involving Highway
73 and I-85. At some point in time, the Waffle House building
and all related structures were razed.
Oil conveyed Lot 1 to Shree Kamnath Corp. ("Shree")
on 10 March 2015. Shree operates a convenience store that
sells motor vehicle fuels and includes a McDonald's
Corporation ("McDonald's") restaurant franchise
on Lot 1.
Oil conveyed Lot 2 to Propst on 28 May 2015. Catawba Oil did
not add any restrictive covenants to the general warranty
deed conveying Lot 2 to Propst. DOT conveyed the remaining
portion of Lot 3 to Propst on 13 June 2017-being 0.434 acres
that was not used for the "Highway Project."
Therefore, at the time of this action, Propst owned all of
the Tract on the western side of the private right-of-way.
Propst anticipated that development of Lot 2 would involve
construction of a "QuickTrips" convenience store
and gas station, which might include a "QT Kitchen"
("QT")-a walk-in made-to-order food service
business located inside the convenience store. Although the
QuickTrips would be located entirely on Lot 2, a portion of
Lot 3 would be used for ingress and egress, and include some
parking spaces for QuickTrip's use.
filed a complaint for declaratory judgment on 9 August 2017,
seeking a declaration that its proposed uses of Lot 3-the
construction of a driveway and parking spaces to service the
QuickTrip on Lot 2-would not violate the Deed Restrictions.
Shree filed an answer and counterclaim on 25 September 2017
seeking a declaratory judgment that the Deed Restrictions
prohibited Propst's proposed uses of Lot 3.
McDonald's alleged that, as a tenant of Lot 1, it had a
substantial legal interest in the proceeding, and was allowed
to intervene in this action with the consent of Propst and
Shree. The matter was heard on 9 October 2017. The trial
court entered a declaratory judgment on 5 February 2018,
ruling that the Deed Restrictions did not prohibit
Propst's proposed uses of Lot 3. Shree and McDonald's
Standard of Review
standard of review of a declaratory judgment is the same as
in other cases." Calhoun v. WHA Med. Clinic,
PLLC, 178 N.C.App. 585, 596, 632 S.E.2d 563, 571 (2006)
(citing N.C. Gen. Stat. § 1-258). "Accordingly, in
a declaratory judgment action where the trial court decides
questions of fact, we review the challenged findings of fact
and determine whether they are supported by competent
evidence. . . . . We review the trial court's conclusions
of law de novo." Id. at 596-97, 632
S.E.2d at 571 (citations omitted). In the present case, the
relevant facts have been stipulated to by Propst, Shree, and
sole argument is that Propst's "proposed use of Lot
3 as access and parking to serve the sale or disposal of
motor vehicle fuels on Lot 2 violates the Deed
Restrictions" and, therefore, the trial court erred in
ruling otherwise in the declaratory judgment. We disagree.
undisputed that the Deed Restrictions apply to Lot 3.
Therefore, our review is limited to whether the Deed
Restrictions prevent the intended use of Lot 3. The Deed
Restriction relevant to Shree's appeal reads as follows:
"No motor vehicle fuels may be sold or disposed from
[Lot 3] so long as Grantor or any Grantee of Grantor sells or
disposes motor vehicle fuels on [Lot 1]" (the "Fuel
Restriction"). Shree has stipulated that "[t]he
intended construction on Lot 3 by Propst  will only
establish parking and egress for Lot 2." Therefore, the
intended uses of Lot 3- parking, ingress, and egress-standing
alone, do not violate the Fuel Restriction. Propst intends to
sell "motor vehicle fuels" ...