JEFFERSON-PILOT LIFE INSURANCE CO. v. Smith Helms Mulliss & Moore

429 S.E.2d 183 (1993)

110 N.C. App. 78

JEFFERSON-PILOT LIFE INSURANCE COMPANY, Plaintiff, v. SMITH HELMS MULLISS & MOORE, a North Carolina Partnership, Defendant and Third Party Plaintiff, v. NORTH GREENE ASSOCIATES LIMITED PARTNERSHIP, a North Carolina Limited Partnership, Third Party Defendant.

No. 9118SC1289.

Court of Appeals of North Carolina.

May 4, 1993.

*185 Elrod & Lawing, P.A. by Frederick K. Sharpless, Greensboro, for plaintiff-appellee.

Bell, Davis & Pitt by William K. Davis, Winston-Salem, for defendant and third party plaintiff-appellant.

Adams, Kleemeier, Hagan Hannah & Fouts by Daniel W. Fouts, Greensboro, for third party defendant-appellant.

Troutman, Sanders Lockerman & Ashmore by Robert W. Webb, Jr., Atlanta, GA, for third party defendant-appellant.

ARNOLD, Chief Judge.

Apparently there is no dispute over the calculation of the increased operating expenses nor over defendant's liability for those costs under the 1977 lease. Instead, the issue raised by appellants' assignment of error is did the lease termination agreement, specifically the release language, eliminate defendant's obligation to pay the increased operating expenses. Therefore, the decision in this case boils down to a matter of contract interpretation. Appellants contend that the plain language of the release releases them from any obligation to pay the increased operating expenses, and that the trial court erred by considering parol evidence of the parties' intent. In the alternative, appellants argue that any ambiguity in the release merely raises a question of fact for the jury.

We address the parol evidence problem first. If there is a latent ambiguity in the contract, preliminary negotiations and surrounding circumstances may be used to determine what the parties intended. Miller v. Green, 183 N.C. 652, 654, 112 S.E. 417, 417-18 (1922). "A latent ambiguity may arise where the words of a written agreement are plain, but by reason of extraneous facts the definite and certain application of those words is found impracticable." Id. at 654, 112 S.E. at 418. Although the words of the agreement at hand seem clear and unambiguous, their meaning is less than certain when viewed in the context of all the surrounding circumstances. It is unclear whether the release was intended to eliminate rent and expense obligations only for 1990 through 1992, or to absolve defendant of its obligation for 1988 and 1989 as well. In light of this ambiguity, the trial court did not err in considering extrinsic evidence regarding the parties' intent.

The next question is did the trial court err in granting summary judgment for plaintiff, which resulted in the judgment establishing defendant's liability for the 1988 and 1989 increased operating expenses sought by plaintiff. Summary *186 judgment is proper only where there is no genuine issue as to any material fact. In North Carolina it is well settled that "[w]henever a court is called upon to interpret a contract its primary purpose is to ascertain the intention of the parties...." Cleland v. The Children's Home, Inc., 64 N.C.App. 153, 156, 306 S.E.2d 587, 589 (1983) (citation omitted). If the agreement is ambiguous and the intention is unclear, interpretation of the contract is for the jury. Id. "[I]f the writing itself leaves it doubtful or uncertain as to what the agreement was, parol evidence is competent ... to show and make certain what was the real agreement between the parties; and in such a case what was meant, is for the jury, under proper instructions from the court." Root v. Allstate Ins. Co., 272 N.C. 580, 590, 158 S.E.2d 829, 837 (1968).

Defendant's and North Greene's forecast of evidence tends to show that the increased operating expenses may have accrued after the termination date of 1977 lease, depending on the interpretation of the 1977 lease where those increased operating expenses are charged to defendant, and that the obligation to pay increased operating expenses was eliminated by the lease termination agreement. Plaintiff on the other hand, presented facts showing that the expenses sought by plaintiff were never considered and never intended to be released in the lease termination agreement. "Ambiguities in contracts are to be resolved by the jury upon consideration of `the expressions used, the subject matter, the end in view, the purpose sought, and the situation of the parties at the time.'" Cleland, 64 N.C.App. at 157, 306 S.E.2d at 590. Because the question of the parties' intent exists, and extrinsic evidence is required to determine that intent, summary judgment should not have been granted. Therefore the judgment of the trial court is reversed, and the case is remanded for trial on the issue of the parties' intent as to the agreement to terminate leases.

Reversed and remanded.

JOHNSON and ORR, JJ., concur.