BALOGH ASSOCIATES VII LLC v. DICK'S SPORTING GOODS, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

BALOGH ASSOCIATES VII LLC, )

)

Plaintiff, )

)

v. ) 1:20CV872

)

DICK’S SPORTING GOODS, INC., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

Before this court is a Motion for Summary Judgment filed by

Plaintiff Balogh Associates VII LLC (“Balogh” or “Plaintiff”),

(Doc. 23). Also before this court is Defendant Dick’s Sporting

Goods, Inc.’s motion for supplemental briefing, (Doc. 40), and

cross-motion for summary judgment, (Doc. 40–1).

This court will deny Plaintiff’s motion for summary

judgment on its breach of contract claim and Defendant’s motion

for supplemental briefing. Defendant’s cross-motion for summary

judgment will be granted in part and denied in part. This court

will grant the motion insofar as Defendant was permitted to pay

Substitute Rent for May 2020 and deny the motion as to all other

claims.

I. FACTUAL BACKGROUND

This court reviews the facts and draws all reasonable

inferences in the light most favorable to nonmoving party when

considering a motion for summary judgment. See Scott v. Harris,

550 U.S. 372, 378 (2007). The following facts are uncontested.

In 2005, Defendant, as tenant, signed a lease with JG

Winston-Salem, LLC, as landlord (“Lease”). (Compl. (Doc. 3) ¶ 6;

Lease (Doc. 23–1) at 4.)1 On January 28, 2019, JG Winston-Salem

assigned its rights in the Lease to Hanes Mall Parcels, LLC.

(Compl. (Doc. 3) ¶ 8; Ex. B (Doc. 23–2) at 1.) On September 27,

2019, Hanes Mall Parcels assigned its rights in the Lease to

Plaintiff. (Compl. (Doc. 3) ¶ 9; Ex. C (Doc. 23-3) at 1.)

Under the Lease, Defendant was required to pay “Minimum

Rent” each month. (Lease (Doc. 23–1) § 4.1.) Minimum Rent was

determined based on the year of the Lease and was payable “in

advance, without notice or demand and without offset or

abatement except as expressly set forth herein, upon the first

day of each calendar month included within the term of [the]

Lease.” (Lease (Doc. 23–1) § 4.1(a)–(b).) In March, April, and

May 2020, Minimum Rent was $90,750 a month. (See Compl. (Doc. 3)

1 All citations in this Memorandum Opinion and Order to

documents filed with the court refer to the page numbers located

at the bottom right-hand corner of the documents as they appear

on CM/ECF.

¶ 11; compare Lease (Doc. 23–1) § 4.1(a)(ii), with Lease (Doc.

23–1) § 6.1).)

The Lease also provided that, in certain circumstances,

Substitute Rent could be paid in lieu of Minimum Rent and

defined Substitute Rent as “two percent (2%) of Gross Sales, but

never more than the Minimum Rent for that month that would have

otherwise been payable . . . .” (Lease (Doc. 23–1) § 1.5(c)(i).)

On March 19, 2020, Defendant sent Plaintiff a letter.

(Ex. D (“March 19 Letter”) (Doc. 23–4) at 1.) The letter stated

that “[t]he COVID-19 (Coronavirus) Pandemic constitutes a force

majeure event. As such, any store closures resulting from or in

response to the COVID-19 (Coronavirus) Pandemic are permitted

under the terms of the Lease.” (Id.) Defendant sent Plaintiff

another letter on March 27, 2020. (Ex. E (“March 27 Letter”)

(Doc. 23–5) at 1–2). This letter stated that Defendant had

“temporarily closed all of [its] stores . . . effective March

19, 2020” because of the COVID-19 pandemic. (Id. at 1.) It also

stated that

[b]ased on the language of our lease, and our

rights at law and in equity, we have determined that

DSG has the right to abate all rent beginning as of

the date of this closure, including, without

limitation, minimum rent, percentage rent, substitute

rent, co-tenancy rent, charges for taxes, common area

costs and insurance (collectively, “Rent”). Legal

rights aside, we recognize the significant and mutual

financial pain caused by this unprecedented situation.

In that light, DSG is prepared to offer the following:

 At locations where we closed in response to

Governmental Mandates or Landlord Mandates, all

Rent will abate from the date of this closure

until the later of June 30, 2020, or the date

that DSG re-opens for business; and

 At locations where our closure was not in

response to Governmental Mandates or Landlord

Mandates, all Rent that would otherwise have been

due under the lease for the period from the date

of this closure through June 30, 2020, shall be

deferred and paid back, interest free, in equal

monthly installments over a twelve-month period

commencing January 1, 2021.

(Id. at 1–2.)

On April 3, 2020, Pauline Balogh, a co-owner of Plaintiff,

(Ex. 1, Zoom Dep. of Pauline Balogh (“Def.’s Excerpts Balogh

Dep.”) (Doc. 25–1) at 8), emailed Brandon Barnett, a Director of

Real Estate at Dick’s, memorializing a phone call from earlier

that morning, (Ex. 10 (“Email Chain”) (Doc. 23–8) at 3–4).

Balogh wrote that she was “willing to defer [Defendant’s] base

rent from $90750.00 each month to $80000.00 per month for March,

April and June. The difference would be paid back starting Jan.

2021 . . . . If this proposal is not accepted, please e-mail me

your counter proposal as soon as possible.” (Id. at 4.) Barnett

replied a few days later with a “revised proposal,” (id. at 3),

which Balogh declined, (id. at 2).

On April 9, 2020, Balogh and Barnett had a second call to

discuss reducing April rent. (See Def.’s Excerpts Balogh Dep.

(Doc. 25–1) at 29.) Barnett confirmed the call’s substance in an

email, stating that “[p]er our conversation we will pay the

April rent at a 25% reduction and pay back starting 1/1/2021.

Please confirm and I will submit to my team.” (Email Chain (Doc.

23-8) at 2.) Balogh replied “confirming that Dicks can reduce

the April rent by 25 percent and defer the difference in full

with [sic] Jan 1st 2021.”2 (Id. at 1–2.) Barnett responded that

“[w]e will process on our end.” (Id. at 1.)

Defendant paid Minimum Rent of $90,750 in March. (See

Def.’s Answer to Compl. (“Answer”) (Doc. 7) at 19.) Defendant

did not pay any rent in April. (See Compl. (Doc. 3) ¶ 15; Answer

(Doc. 7) at 14.) Defendant paid $13,712.85 in May rent. (Compl.

(Doc. 3) ¶ 15; Answer (Doc. 7) at 14.)

II. PROCEDURAL BACKGROUND

Plaintiff filed its Complaint in North Carolina state court

alleging one claim for breach of contract. (See Compl.

2 It is unclear whether Barnett or Balogh first emailed to

memorialize the April 9, 2020, call. Balogh’s email has a

9:49 a.m. timestamp; Barnett’s has a 10:04 a.m. timestamp (Email

Chain (Doc. 23-8) at 1–2.) This suggests Balogh’s email was sent

first. However, as noted by Plaintiff, “the threading, the text

of the three emails and the time stamps on Barnett’s emails

suggest that [Balogh’s] email was actually sent at 10:49 am, in

response to. [sic] Barnett’s 10:04 email with Barnett replying a

minute later.” (Pl.’s Reply Mem. of Law in Supp. of Mot. for

Summ. J. (“Pl.’s Reply”) (Doc. 27) at 3 n.1)(emphasis in

original).) This court finds this issue does not constitute a

material fact since the ordering of Balogh and Barrett’s emails

does not impact the substance of the parties’ alleged agreement.

(Doc. 3).) Defendant removed to federal court. (See Doc. 1.)

Defendant also answered Plaintiff’s Complaint and alleged six

counterclaims against Plaintiff. (Answer (Doc. 7) at 19–23.)

After discovery concluded, Plaintiff filed a motion for

summary judgment, (Doc. 23), and a brief in support, (Pl.’s Mem.

of Law in Supp. of Mot. for Summ. J. (“Pl.’s Br.”) (Doc. 24)).

Defendant responded, (Def.’s Resp. to Mot. for Summ. J. (“Def.’s

Resp.”) (Doc. 25)), and Plaintiff replied, (Pl.’s Reply

(Doc. 27). More than five months after the end of briefing,

Defendant filed a motion to (1) accept its response to

Plaintiff’s motion for summary judgment as a cross-motion for

summary judgment and (2) for leave to file a supplemental

submission, (Doc. 40), as well as a brief in support, (Def.’s

Mem. of Law in Supp. of Mot. (“Def.’s Mem.”) (Doc. 41)).

Plaintiff filed a response in opposition. (Pl.’s Resp. to Def.’s

Mot. to File Mot. for Summ. J. (“Pl.’s Resp. to Def.’s Mot.”)

(Doc. 42.) This court granted Defendant’s motion to accept its

response as a cross-motion for summary judgment and reserved

judgment on the remainder of the motion. (Order (Doc. 45) at 4–

5.)

This court now addresses Plaintiff’s motion for summary

judgment, (Doc. 23), Defendant’s motion for supplemental

briefing, (Doc. 40), and Defendant’s cross-motion for summary

judgment, (Doc 40–1).

III. STANDARD OF REVIEW

Summary judgment is appropriate when “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); see Celotex

Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). This court’s

summary judgment inquiry is whether the evidence “is so one-

sided that one party must prevail as a matter of law.” Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The moving

party bears the initial burden of demonstrating “that there is

an absence of evidence to support the nonmoving party’s case.”

Celotex, 477 U.S. at 325. If “the moving party discharges its

burden . . ., the nonmoving party then must come forward with

specific facts showing that there is a genuine issue for trial.”

McLean v. Patten Cmtys., Inc., 332 F.3d 714, 718–19 (4th Cir.

2003).

A factual dispute is genuine and triable when “the evidence

is such that a reasonable jury could return a verdict for the

nonmoving party.” Anderson, 477 U.S. at 248; see also First

Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289–90

(1968) (recognizing that a dispute is not genuine for summary

judgment purposes when one party rests solely on allegations in

the pleadings and does not produce any evidence to refute

alternative arguments). This court must look to substantive law

to determine which facts are material because only those “facts

that might affect the outcome of the suit under the governing

law will properly preclude the entry of summary judgment.”

Anderson, 477 U.S. at 248.

In addition, “the mere existence of some alleged factual

dispute between the parties will not defeat an otherwise

properly supported motion for summary judgment.” Id. at 247–48

(emphasis in original). “[T]he non-moving party must do more

than present a ‘scintilla’ of evidence in its favor.” Sylvia

Dev. Corp. v. Calvert Cnty., Md., 48 F.3d 810, 818 (4th Cir.

1995) (quoting Anderson, 477 U.S. at 252). “What Rule 56(e) does

make clear is that a party cannot rest on the allegations

contained in his complaint in opposition to a properly supported

summary judgment motion made against him.” First Nat’l Bank of

Ariz., 391 U.S. at 289. Summary judgment should “be granted

unless a reasonable jury could return a verdict for the

nonmovant on the evidence presented.” McLean, 332 F.3d at 719.

When facing cross-motions for summary judgment, this court

reviews “each motion separately on its own merits to determine

whether either of the parties deserves judgment as a matter of

law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003)

(citations and internal quotation marks omitted). “When

considering each individual motion, the court must take care to

resolve all factual disputes and any competing, rational

inferences in the light most favorable to the party opposing

that motion.” Id. (citation and internal quotation marks

omitted).

IV. ANALYSIS

Plaintiff seeks summary judgment on its breach of contract

claim. (Compl. (Doc. 3) ¶ 20; see also Pl.’s Br. (Doc. 24) at 5–

9.) Defendant raises several affirmative defenses in response:

(1) that Plaintiff’s claim is barred by the nonoccurrence of

conditions precedent; (2) that rent was equitably abated under

Sections 3.6 and 17.16 of the Lease; (3) that Plaintiff breached

its own obligations under the Lease and; (4) that Defendant’s

obligation to pay rent was excused pursuant to the doctrines of

frustration of purpose and impossibility. (Answer (Doc. 7) at 5–

6.) Defendant also asserts six counterclaims that overlap with

its affirmative defenses: (1) declaratory judgment that the Co-

Tenancy Requirement was not met as of late March 2020, that

Defendant was entitled to pay Substitute Rent in lieu of Minimum

Rent while the Co-Tenancy Requirement was not satisfied, and

that the Force Majeure clause does not affect Defendant’s rights

with regard to the Co-Tenancy Requirement; (2) declaratory

judgment that rent was equitably abated while Defendant was

closed from March 19, 2020 through May 8, 2020, pursuant to

Sections 3.6 and 17.16 of the Lease, and that Defendant is

entitled to a partial rebate for rent paid for March; (3)

frustration of purpose; (4) breach of contract; (5) return of

money had and received; and (6) attorneys’ fees. (Id. at 19–23.)

Defendant’s Cross-Motion seeks summary judgment on four

issues: (1) for Declaratory Judgment that (a) the Co-Tenancy

Requirement of the Lease was violated, such that Defendant was

entitled to pay Substitute Rent, (b) the Force Majeure

provisions of Section 17.3 do not impact Defendant’s rights

under the Co-Tenancy Requirement, and (c) Defendant is not in

default under the Lease; (2) for Declaratory Judgment that

Defendant was entitled to abate its rent under Sections 3.6 and

17.16 of the Lease; (3) that Defendant’s purpose in entering the

Lease was frustrated by the COVID-19 Pandemic; and (4) on a

counterclaim for breach of contract. (Def.’s Cross-Mot. for

Summ. J. (Doc. 41–1) at 1.)

This memorandum addresses only the issues raised by the

parties that are necessary for this court to rule on Plaintiff’s

motion for summary judgment and Defendant’s cross-motion for

summary judgment. This memorandum will first consider

Defendant’s request for supplemental briefing. This court will

then consider Plaintiff’s breach of contract claim. Ruling on

Plaintiff’s claim requires considering whether Defendant was

permitted to abate its rent under Section 3.6 or 17.16, whether

the Co-Tenancy Requirement was violated, whether the parties

entered into a rent deferral agreement for April 2020 rent, and

whether the purpose of the Lease was frustrated. Finally, this

court will consider Defendant’s cross-motion for summary

judgment for breach of contract.

A. Defendant’s Request for Supplemental Briefing

Defendant seeks leave to file a supplemental submission in

opposition to grounds Plaintiff allegedly raised for the first

time in its reply. (Doc. 40.) Defendant argues that it lacked

notice that Plaintiff “was moving for summary judgment regarding

breach of an alleged settlement agreement.” (Def.’s Mem. (Doc.

41) at 5.) Plaintiff counters that Defendant “first raised the

[settlement] [a]greement” issue, (Pl.’s Resp. to Def.’s Mot.

(Doc. 42) at 9), so, Plaintiff was entitled to respond to those

arguments in its reply, (see id.).

In this district, Local Rule 7.3(h) governs reply briefs

and states that they are “limited to discussion of matters newly

raised in the response.” Local Rule 7.3(h). “Courts in this

district interpreting Local Rule 7.3(h) have consistently held

that ‘[r]eply briefs . . . may not inject new grounds’ for

argument.” Pouncey v. Guilford Cnty., No. 1:18CV1022, 2020 WL

1274264, at *5 (M.D.N.C. Mar. 17, 2020) (alteration in original)

(cleaned up) (quoting Triad Int’l Maint. Corp. v. Aim Aviation,

Inc., 473 F. Supp. 2d 666, 670 n.1 (M.D.N.C. 2006)). “In sum,

Local Rule 7.3(h) exists to give the replying party a chance to

rebut newly raised arguments, not to give the replying party an

unfair advantage in having a chance to make new arguments that

should have been raised initially.” Id. (citations omitted).

The parties dispute whether Plaintiff’s reply brief

“injected new grounds” for argument. (Compare Def.’s Mem. (Doc.

41) at 5–6, with Pl’s Resp. to Def.’s Mot. (Doc. 42) at 9–10.)

Plaintiff first raised the issue of the rent deferral agreement

in its brief where it states that Balogh

[N]egotiated a rental abatement agreement with Brandon

Barnett . . . . The parties’ agreed that that[sic] 25%

of Dick’s April, 2020 rent would be deferred and

repaid on January 1, 2021. Dick’s, however, reneged

upon this agreement, paid no rent for April, 2020 and

unilaterally paid only $13,712.85, in arrears, for

May, 2020.

(Pl.’s Br. (Doc. 24) at 3.) Defendant’s response included a

section responding to this allegation titled: “The Parties Did

Not Reach Any Settlement Agreement, Let Alone One that

[Defendant] Breached.” (Def.’s Resp. (Doc. 25) at 18–19.)

Plaintiff’s reply went on to highlight evidence establishing the

parties reached an enforceable contract, that Barnett accepted

the agreement, and that Barnett had authority to do accept. See

infra Section IV.B.4.

Thus, Plaintiff did not “inject new grounds,” Pouncey, 2020

WL 1274264, at *5, by arguing in its reply that the parties

executed a rent deferral agreement. (See Pl.’s Reply (Doc. 27)

at 1–5.) Instead, Plaintiff’s reply responded to Defendant’s

argument that no settlement agreement was reached, (See Def.’s

Resp. (Doc. 25) at 18–19), by presenting further facts and

evidence about the existence of the agreement, (See Pl.’s Reply

(Doc. 27) at 1–6). Since Plaintiff’s reply did not inject new

grounds for argument, see Pouncy, 2020 WL 1274264, at *5,

Defendant is not entitled to file a response pursuant to Local

Rule 1.7(h).

Defendant points to two cases in support of its argument

for supplemental briefing. (Def.’s Mem. (Doc. 41) at 6.)

However, those cases arise in the context of a district court

granting summary judgment sua sponte. See Moore v. Equitrans,

L.P., 27 F.4th 211, 224 (4th Cir. 2022) (“[D]istrict courts are

widely acknowledged to possess the power to enter summary

judgments sua sponte, so long as the losing party was on notice

that she had to come forward with all of her evidence.”)

(emphasis in original); see also U.S. Dev. Corp. v. Peoples Fed.

Sav. & Loan Ass’n, 873 F.2d 731, 735 (4th Cir. 1989) (“The

district court entered summary judgment against appellant[] . .

. sua sponte. . . . [T]hat power is contingent on giving the

losing party notice that it must come forward and defend its

claim.”) (emphasis in original). Here, this court is not

deciding on summary judgment sua sponte. Instead, this court is

acting with the benefit of motions and briefing supplied by the

parties. Furthermore, Defendant was on notice about Plaintiff’s

position regarding the agreement because Plaintiff included that

argument in their brief. (See Pl.’s Br. (Doc. 24) at 3.)

Therefore, this court will deny Defendant’s motion for

leave to file a supplemental submission. (Doc. 41).

B. Plaintiff’s Breach of Contract Claim3

Under North Carolina law, “[a] lease is a contract which

contains both property rights and contractual rights.” Strader

v. Sunstates Corp., 129 N.C. App. 562, 570, 500 S.E.2d 752, 756

(1998). “Interpreting a contract requires the court to examine

the language of the contract itself for indications of the

parties’ intent at the moment of execution.” State v. Philip

Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005).

3 Plaintiff argues this court “should apply North Carolina

law to the interpretation of the Lease provisions.” (Pl.’s Br.

(Doc. 24) at 4–5.) Defendant does not respond to this argument

but relies on North Carolina law in its response memorandum.

(See Def.’s Resp. (Doc. 25).) Therefore, this court will apply

North Carolina law in determining whether summary judgment

should be granted.

“It must be presumed the parties intended what the language used

clearly expresses, and the contract must be construed to mean

what on its face it purports to mean.” Hartford Accident &

Indem. Co. v. Hood, 226 N.C. 706, 710, 40 S.E.2d 198, 201 (1946)

(internal citation omitted). “When the language of a contract is

plain and unambiguous then construction of the agreement is a

matter of law for the court.” Whirlpool Corp. v. Dailey Constr.,

Inc., 110 N.C. App. 468, 471, 429 S.E.2d 748, 751 (1993).

If, however, the language of a contract “is ambiguous and

the intention of the parties is unclear, interpretation of the

contract is for the [finder of fact],” and summary judgment is

not appropriate. Glover v. First Union Nat’l. Bank of N.C., 109

N.C. App. 451, 456, 428 S.E.2d 206, 209 (1993). A contract is

ambiguous “when either the meaning of words or the effect of

provisions is uncertain or capable of several reasonable

interpretations.” Register v. White, 358 N.C. 691, 695, 599

S.E.2d 549, 553 (2004). In determining whether a contract is

ambiguous, “words are to be given their usual and ordinary

meaning and all the terms of the agreement are to be reconciled

if possible.” Piedmont Bank and Tr. Co. v. Stevenson, 79 N.C.

App. 236, 241, 339 S.E.2d 49, 52 (1986). Here, both parties

assert the language of the Lease is unambiguous.4 (Compare Pl.’s

Br. (Doc. 24) at 3, with Def.’s Resp. (Doc. 25) at 1.)

The elements of a North Carolina breach of contract claim

are “(1) existence of a valid contract and (2) breach of the

terms of that contract.” Poor v. Hill, 138 N.C. App. 19, 26, 530

S.E.2d 838, 843 (2000). The parties do not dispute a valid

contract existed; rather, both argue the other has breached the

Lease. (See Pl.’s Br. (Doc. 24) at 6; see also Def.’s Resp.

(Doc. 25) at 9–19.)

1. Abatement under Section 3.6

Section 3.6 is titled “Landlord’s Construction

Representations.” (Lease (Doc. 23-1) § 3.6.) It contains several

warranties made by Plaintiff. (Id.) Defendant argues subsection

(b) provides authority for equitable abatement. (See Def.’s

Resp. (Doc. 25) at 13–15.) That subsection states

[I]f, at any time, any governmental or quasi-

governmental entity or insurance rating bureaus having

jurisdiction shall determine that Landlord’s portion

of the Shopping Center, including Landlord’s Work,

shall not have been performed or constructed or

Landlord’s operation of the Shopping Center is not in

compliance with any applicable law, code, ordinance or

regulation or insurance rating standard and shall

request compliance with the same or if Landlord’s

failure to comply shall in any way adversely affect

4 As explained hereafter, this court finds the relevant

provisions are ambiguous. That conclusion is confined to some

degree by the parties’ respective positions. While they both

contend the provisions are unambiguous, they reasonably argue

that the provisions have different meanings and effect.

the use of the Demised Premises, the Tenant Service

Area, the Service Drive or the Protected Parking Areas

by Tenant or adversely affect any other rights of

Tenant under this Lease or impose any obligation upon

Tenant not contained in this Lease, then Landlord

shall, upon receipt of notice of such complaint, or

determination of non-compliance, promptly, at its sole

cost and expense, cause such repairs, alterations or

other work to be done or action to be taken so as to

bring about the compliance requested and/or otherwise

eliminate the adverse effect upon the Tenant. If by

reason of such failure of compliance or by reason of

such repairs, alterations or other work done by

Landlord, Tenant shall be deprived of the use or

enjoyment of the whole or any part of the Demised

Premises, the Tenant Service Area, the Protected

Parking Areas or the interior Common Areas, all Rent

or Substitute Rent shall abate on a per diem basis in

proportion to such deprivation. Further, if at any

time the applicable zoning and other applicable laws

shall not permit the retail sale of any and all types

of wearing apparel, sporting goods or hunting

equipment in the Demised Premises, then, in addition

to the aforesaid Rent abatement, Tenant, without

waiving any other rights that Tenant may have on

account thereof, may terminate this Lease, by giving

Landlord notice thereof, provided, however, that

Landlord shall have thirty (30) days within which to

cure such non-compliance with zoning and/or other

applicable laws prior to Tenant’s exercising such

right to terminate. Notwithstanding the foregoing, the

rights of Tenant under the preceding sentence shall be

inapplicable if it shall hereafter become unlawful to

sell firearms and/or ammunition from the Demised

Premises.

(Lease (Doc. 23-1) § 3.6(b)(emphasis added).)

Defendant argues that its obligation to pay rent was

equitably abated under Section 3.6(b) of the Lease. (Def.’s

Resp. (Doc. 25) at 13–15.) Defendant argues that the “and other

applicable laws” language applies to the North Carolina

governor’s executive orders regarding COVID-19 and that those

orders prohibited the sale of items in Defendant’s store. (Id.)

Plaintiff argues that Defendant’s rent was not abated under

Section 3.6 because the parties intended to limit the scope of

that section “to situations where construction defects, and laws

and ordinances pertaining to land use and construction . . .

deprived [Defendant] of the ability to use of the premises.”

(Pl.’s Br. (Doc. 24) at 12.)5

North Carolina’s rules of contract interpretation require

an agreement to be construed as a whole and to determine the

intent of the parties “from the entire instrument and not from

detached portions. Individual clauses are to be considered in

context. All parts of the contract will be given effect if

possible.” Int’l Paper Co. v. Corporex Constructors, Inc., 96

N.C. App. 312, 316, 385 S.E.2d 553, 555–56 (1989) (internal

citation omitted). A contract is ambiguous if “the meaning of

words or the effect of provisions is uncertain or capable of

several reasonable interpretations.” Register, 358 N.C. at 695,

599 S.E.2d at 553. When a court is asked to interpret an

5 Plaintiff occasionally cites Section 3.7 as the section of

the Lease at issue. (See Pl.’s Br. (Doc. 24) at 12.) This court

will assume that Plaintiff intended to cite Section 3.6 since

that is the section relied upon by Defendant. (See Def.’s Resp.

(Doc. 25) at 13.)

ambiguous contract, summary judgment is not appropriate. Glover,

109 N.C. App. at 456, 428 S.E.2d at 209.

Under Defendant’s interpretation of Section 3.6, “other

applicable laws” includes the governor’s executive orders

because they prohibited the sale of retail items offered by

Defendant in the Demised Premises. (See Def.’s Resp. (Doc. 25)

at 14.) This court finds it is reasonable to interpret “other

applicable laws” as stated in Section 3.6 of the Lease to

include executive orders issued by the governor that affect “the

retail sale of any and all types of wearing apparel, sporting

goods or hunting equipment.” (Lease (Doc. 23-1) § 3.6(b).) It is

reasonable to interpret “applicable” to mean applicable to the

Demised Premises. Executive orders, such as those issued by the

governor in response to COVID-19, that affect whether Defendant

can operate its retail business are “applicable” to Defendant.

Likewise, it is reasonable to interpret “other applicable

laws” to mean “situations where construction defects, and laws

and ordinances pertaining to land use and construction . . .

deprive[] Dick’s of the ability to use of [sic] the premises” as

argued by Plaintiff. (Pl.’s Br. (Doc. 24) at 12.) Article III of

the Lease is titled “Construction,” so it is reasonable to

interpret “applicable” to limit the types of laws to those

related to construction.

Plaintiff argues Defendant’s interpretation renders the

Force Majeure provision in Section 17.3 of the Lease

meaningless. (See id.) This court disagrees. Section 17.3 of the

Lease defines a Force Majeure Event to

mean any act or event that wholly or partially

prevents the affected Party from performing any of its

obligations (other than the payment of money) if such

act or event is beyond the reasonable control of and

does not arise out of the negligent act or omission

of, the affected Party . . . .

(Lease (Doc. 23-1) § 17.3 (emphasis added).)

Section 17.3 concerns force majeure events that affect a

party’s ability to perform their contractual obligations “other

than the payment of money.” (Id.) As Defendant notes, this

provision could be read to prevent a party from relying “on the

Force Majeure provisions themselves to excuse payments under the

Lease. For example, if there was a flood at [Defendant’s]

corporate headquarters or bank that prevented [Defendant] from

making payments, it could not rely on Section 17.3, which does

not excuse the ‘payment of money.’” (Def.’s Resp. (Doc. 25) at

11.) Therefore, Defendant’s interpretation does not render

Section 17.3 meaningless.

Where the words or effect of a contract are uncertain or

capable of multiple reasonable interpretations, summary judgment

is inappropriate. Glover, 109 N.C. App. at 456, 428 S.E.2d at

209. Here, because both Plaintiff’s and Defendant’s

interpretations are reasonable, the contract is “capable of

multiple reasonable interpretations.” Id. Therefore, this court

finds Section 3.6 is ambiguous on the question of whether

Defendant’s obligation to pay rent is equitably abated when a

law unrelated to construction or land use deprives the tenant of

use of the Demised Premises. Since the language of Section 3.6

is ambiguous, this court will deny both parties’ motions for

summary judgment insofar as they concern Defendant’s ability to

abate rent under Section 3.6.

2. Abatement under Section 17.16

Defendant further argues that its obligation to pay rent

was equitably abated under Section 17.16 of the Lease.6 (Def.’s

Resp. (Doc. 25) at 15–18.) Subsection 17.16 is titled

“Representations and Warranties,” and the relevant portion

states

If at any time there is a breach or default of

any of Landlord’s representations, warranties or

agreements under this Section 17.16 which results in

deprivation or impairment in any material respect in

the use and enjoyment of the Demised Premises, or if

for any other reason Tenant shall be deprived of or

impaired in the use and enjoyment of the Demised

6 Defendant occasionally cites Section 17.6 as the section

of the Lease Defendant contends provides authority for equitable

abatement. (See Def.’s Answer (Doc. 7) at 8, 11, 20; see also

Def.’s Resp. (Doc. 25) at 8). This court will assume Defendant

intended to cite Section 17.16 since that is the section of the

Lease Defendant quotes in its argument. (See, e.g., Def.’s

Answer (Doc. 7) at 7, 11, 17; see also Def.’s Resp. (Doc. 25) at

8.)

Premises and Common Areas as herein provided, the Rent

to be paid by Tenant shall be equitably abated during

any such period. If such period continues for more

than thirty (30) days after notice from Tenant and

such additional period as is reasonably necessary to

cure same so long as Landlord is pursuing with due

diligence, but not longer than one hundred eighty

(180) days, Tenant may, at its option, cancel this

Lease by notice to Landlord while reserving all rights

which Tenant may have for Landlord’s breach of this

Lease.

(Lease (Doc. 23–1) § 17.16(a) (emphasis added).)

Plaintiff asks this court to read the language “any reason”

as limited to reasons related to the representations and

warranties provided in Section 17.16. (See Pl.’s Br. (Doc. 24)

at 12–14.) Under this interpretation, because Section 17.16

arguably made no representations or warranties regarding

closures from an unanticipated public health emergency,7 (see

7 It is arguable, but not obvious, that Section 17.16 makes

no representations about public health emergencies. Section

17.16(a)(ii) says

Tenant's use of the Common Areas of the Shopping

Center for access to the Demised Premises, accessory

automobile parking, signage (subject to Section 8.4)

and service facilities contemplated by this Lease

shall not be prevented or materially impaired by any

current. . . health [or] safety, . . . governmental

law or regulation . . . .”

(Lease (Doc. 23-1) § 17.16(a)(ii).) This court reads this

section of the contract to only provide representations

concerning “current” laws, meaning laws that applied when the

contract was entered into in 2005, (Pl.’s Br. (Doc. 24) at 2;

Def.’s Resp. (Doc. 25) at 4). Thus, it would not apply to laws

arising from the COVID-19 pandemic. Therefore, it does not

appear to impact the analysis that Section 17.16 made no

representations concerning a public health emergency declared in

2020.

Lease (Doc. 23–1) § 17.16), closing due to COVID-19 was not a

reason that would permit Defendant to equitably abate its rent.

Under Defendant’s interpretation of Section 17.16, if the

Tenant is deprived of the use and enjoyment of the Demised

Premises for “any reason,” its rent obligations are equitably

abated. (Def.’s Answer (Doc. 7) at 11 (emphasis in original).)

Defendant argues that when the Demised Premises was closed due

to COVID-19 Defendant “was both deprived of and impaired in the

use and enjoyment of the Demised Premises because it was wholly

unable to use the Demised Premises as a retail sporting goods

store.” (Def.’s Resp. (Doc. 25) at 16.) Defendant claims that

since its use of the Demised Premises was impaired by the COVID-

19 closure, this qualifies as a “reason” under Section 17.16

that allows it to equitably abate its rent payments. (See id.)

Defendant responds to Plaintiff’s argument that the phrase

“any reason” should be limited by the context of representations

and warranties by noting that parties make representations and

warranties in contracts “to allocate risks between the parties.”

(Id. at 17 n.4.) Defendant argues its interpretation is

consistent with the parties’ intent in the Lease “to provide

[Defendant] a space to operate its retail store.” (Id.) To

further this purpose, the “Landlord represents and warrants

that” if the Tenant’s “use and enjoyment of the Demised Premises

is impaired, for any reason, its Rent obligations shall be

equitably abated.” (Id.)

Defendant also notes that Plaintiff’s reading would

effectively require this court to substitute the word “reason”

for the phrase “violation of the [re]presentations and

warranties.” (Id. at 16 (emphasis and internal quotation marks

omitted).) Therefore, its interpretation is at odds with the

Lease’s plain language. (See id. at 16–17.)

This court finds it reasonable to interpret “any reason” to

mean just that—any reason that impairs Tenant’s use and

enjoyment of the premises. Moreover, it is reasonable to find

that the closure impaired Defendant’s use of the Demised

Premises because it prevented Defendant from making in-person

retail sales. (See id. at 16.)

Furthermore, Plaintiff’s interpretation, which effectively

interprets “any reason” to mean any reason related to the

aforementioned representations and warranties, (Pl.’s Br. (Doc.

24) at 12–13), is also reasonable. Section 17.16 is titled

“Representations and Warranties,” (Lease (Doc. 23–1) § 17.16),

so it is reasonable to interpret “any reason” as constrained to

reasons arising out of the representations and warranties the

parties set out elsewhere in Section 17.16.

Plaintiff argues that Defendant’s interpretation would

render several sections of the Lease superfluous including the

Force Majeure provision, the Representations and Warranties

section, the Co-Tenancy provision, the section on partial

abatement if the premises are damaged or destroyed, and the

provision allowing for partial abatement if the premises are

partially condemned. (See Pl.’s Reply (Doc. 27) at 10.) This

court finds that while these arguments may strengthen

Plaintiff’s interpretation, they do not demonstrate that

Defendant’s interpretation is unreasonable.

When a contract’s language “is fairly and reasonably

susceptible to either” party’s interpretation, it is ambiguous.

Glover, 109 N.C. App. at 456, 428 S.E.2d at 209. Interpretation

of an ambiguous contract is an issue for the jury. Id. Here,

because the parties have each advanced contrary, reasonable

interpretations of the abatement language in Section 17.16,

summary judgment on this issue is inappropriate.

3. Co-Tenancy Requirement

Defendant argues that the Co-Tenancy Requirement is a

condition precedent to its obligation under the Lease to pay

Minimum Rent. (See Def.’s Resp. (Doc. 25) at 9–10.) “A condition

precedent is an event which must occur before a contractual

right arises, such as the right to immediate performance. Breach

or non-occurrence of a condition prevents the promisee from

acquiring a right, or deprives him of one, but subjects him to

no liability.” Handy Sanitary Dist. v. Badin Shores Resort

Owners Ass’n, 225 N.C. App. 296, 301–02, 737 S.E.2d 795, 800

(2013) (quoting In re Foreclosure of Goforth Props., Inc., 334

N.C. 369, 375, 432 S.E.2d 855, 859 (1993)).

Plaintiff does not directly address whether the Co-Tenancy

Requirement is a condition precedent to Defendant’s obligation

to pay Minimum Rent. (See Pl.’s Reply (Doc. 27) at 7–9.)

Nevertheless, this court finds the language of the Co-Tenancy

Requirement to be a condition precedent to Defendant’s

obligation to pay Minimum Rent. Specifically, Section 1.7(b)

states that if “the Co-Tenancy Requirement is not satisfied

. . . Tenant shall then pay to Landlord monthly, in lieu of

Minimum Rent, . . . Substitute Rent . . . .” (Lease (Doc. 23-1)

§ 1.7(b).) This language indicates that the Co-Tenancy

Requirement must be met for Defendant to become obligated to pay

Minimum Rent—if the requirement is not satisfied, Defendant does

not have to pay Minimum Rent.

Having determined that the Co-Tenancy Requirement is a

condition precedent to Defendant’s obligation to pay Minimum

Rent, this court will turn to the question of whether the Co-

Tenancy Requirement was satisfied. Defendant argues that the Co-

Tenancy Requirement was not met, so it was entitled to pay

Substitute Rent from April 2020 through June 2020. (See Def.’s

Resp. (Doc. 25) at 9–13.) Plaintiff argues that the Co-Tenancy

Requirement was not violated because that provision does not

apply to force majeure events. (See Pl.’s Br. (Doc. 24) at 14–

16.)

Section 1.7 of the Lease contains a Co-Tenancy Requirement,

which says

(a) As used in this Section 1.7, the term “Co-

Tenancy Requirement” shall mean (i) that at least

three (3) Department Stores shall be open and

operating (i.e., conducting business operations in at

least eighty-five percent (85%) of the [Leasable Floor

Area or “LFA”] available for such stores); and (ii)

that at least sixty-five percent (65%) of the LFA of

the Shopping Center, excluding the Demised Premises,

the Department Stores and any outparcels, shall be

open for the operation of a retail business by one or

more Required Tenant(s). A Department Store shall not

be deemed to have ceased operations until such

Department Store is not open for a period in excess of

one hundred eighty (180) consecutive days. A

Department Store shall not be deemed to have ceased

operations if such Department Store is not open for

reasons of casualty, a Force Majeure Event, repairs,

remodeling or renovation. A “Required Tenant” shall

mean a single national, regional or local Occupant of

the type typically found in first (1st) class regional

shopping centers.

(Lease (Doc. 23-1) § 1.7(a) (emphasis omitted).) Defendant does

not argue that the first requirement was not met; rather,

Defendant argues that “prong (ii) was not satisfied.” (Def.’s

Resp. (Doc. 25) at 10.)

The second prong of the Co-Tenancy Requirement requires

that “at least sixty-five percent (65%) of the LFA of the

Shopping Center, excluding the Demised Premises, the Department

Stores and any outparcels, shall be open for the operation of a

retail business by one or more Required Tenant(s).” (Lease

(Doc. 23-1) § 1.7(a).) Leasable Floor Area, or LFA, is defined

as

the number of gross square feet of leasable floor area

(whether occupied or unoccupied) of the Shopping

Center Buildings intended for the exclusive use by any

tenant, subtenant, assignee, licensee, concessionaire

or other occupant of the Shopping Center (“Occupant”)

thereof including mezzanines or other levels if used

for retail sales or if leased for offices not related

to the retail use thereon. The LFA of any premises

shall be measured from the exterior face of exterior

walls and the exterior face of service corridor walls,

the line along the front of such premises where it

abuts the sidewalk: or other Common Areas, and the

center line of any wall that such premises shares with

an adjoining premises. Notwithstanding the

foregoing, the Demised Premises shall be deemed to

contain 66,000 square feet of LFA.

(Id. § 1.2(d)(emphasis omitted).)

Pauline Balogh, one of Plaintiff’s owners, acknowledged

that none the Shopping Center was open from the end of March to

the beginning of May (when the Shopping Center was allowed to

reopen). (Def.’s Excerpts Balogh Dep. (Doc. 25-1) at 8, 24.)

Although the form of the question asked to Balogh was vague,

(see id. at 24), Plaintiff does not dispute that Hanes Mall was

completely closed from the end of March to the beginning of May

2020 due to the North Carolina governor’s executive order, (see

Ex. 3 Executive Order No. 121 (“March Order”) (Doc. 25-3); Ex. 4

Executive Order No. 138 (“May Order”) (Doc. 25-4); see also Zoom

Dep. of Pauline Balogh (“Pl.’s Excerpts Balogh Dep.”) (Doc. 23-

6) at 22 (discussing the March shutdown notice from the

governor)).

Thus, Plaintiff’s own evidence indicates there is no

dispute that at least sixty-five percent of the LFA of the

Shopping Center, excluding the Demised Premises, the Department

Stores, and any outparcels, was not open for the operation of

retail business while the governor’s executive order was in

effect. Therefore, there is no genuine dispute of material fact

that the second prong of the Co-Tenancy Requirement was not met

from March 30, 2020, when the order went into effect, (see March

Order (Doc. 25–3)), until May 8, 2020, when the shutdown ended,

(see May Order (Doc. 25–4)).

Plaintiff’s argument that a force majeure event precludes a

finding that the Co-Tenancy Requirement was not met has merit as

to prong one. Assuming, without deciding, that the COVID-19

pandemic qualifies as a force majeure event, the plain language

of the Lease indicates that Department Stores have not ceased

operations when they are closed due to a force majeure event.

(Lease (Doc. 23-1) § 1.7(a).) But Section 1.7(a) does not

contain similar language with respect to closure of the Shopping

Center LFA, which is the subject of the second prong. (See id.)

Because the modifying language applies to Department Stores and

not the Shopping Center, closures of the Shopping Center’s LFA

from force majeure-type events (where sixty-five percent or more

of the LFA is not open) violate the Co-Tenancy Requirement.

Therefore, this court finds a force majeure event does not

modify the language of the second prong of the Co-Tenancy

Requirement.8

Plaintiff argues this interpretation would render Section

17.3 of the Lease, the Force Majeure provision, superfluous

because the Force Majeure provision “exclude[s] payment of money

from the obligations that could be suspended by a force majeure

event. (See Pl.’s Br. (Doc. 24) at 16.) However, when a force

majeure event triggers a violation of the Co-Tenancy Requirement

and results in Defendant paying Substitute Rent, Section 17.3 is

not meaningless, (see Lease § 1.7(b)), because the payment of

rent generally is not excused. (See id.) Instead, only the

8 Plaintiff argues that “a Co-Tenancy violation occurs if

(i) the mall has fewer than three Department Stores or if less

than 65% of the leasable floor area (‘LFA’) of the mall not

occupied by Dick’s or a Department Store is not filled by

Required Tenants.” (Pl.’s Reply (Doc. 27) at 8 (emphasis in

original).) This interpretation of the Co-Tenancy Requirement is

squarely at odds with the plain language of the Co-Tenancy

Requirement, which requires both prong one and prong two to be

satisfied. (See Lease (Doc. 23-1) § 1.7.)

payment of Minimum Rent is excused, and the Tenant is obligated

to pay Substitute Rent in lieu of Minimum Rent. (See id.)

If the co-tenancy requirement is violated, the Lease

provides that the Tenant pays, “in lieu of Minimum Rent, . . .

Substitute Rent.” (Lease (Doc. 23-1) § 1.7(b).) Substitute Rent

is defined as “two percent (2%) of Gross Sales, but never more

than the Minimum Rent for that month that would have otherwise

been payable for such calendar month.” (Id. § 1.5(c)(i).) Gross

Sales means

the total amount of all sales of merchandise and

services made, sold or rendered in, upon or from the

Demised Premises during such lease year or partial

lease year in each case whether the same shall be made

by Tenant or by any subtenant, licensee or

concessionaire of Tenant, whether for cash or on a

charge or credit basis, whether delivered from the

Demised Premises or elsewhere. . . .

(Id. § 6.2.) Gross Sales must occur “upon or from the Demised

Premises” and do not include “[i]nternet or catalog sales.”

(Id.)

Because the Co-Tenancy Requirement was violated, Defendant

was entitled to pay Substitute Rent in lieu of Minimum Rent. The

remaining question is for how long the Co-Tenancy Requirement

was violated, and relatedly, how long Defendant was entitled to

pay Substitute Rent. Section 1.7(b) of the Lease states that in

the event of a Co-Tenancy violation, the Tenant shall pay

“Substitute Rent, during the period which extends from the

beginning of the first full calendar month following the

Co-Tenancy Violation and continuing until the end of the

calendar month in which such Co-Tenancy Requirement is

satisfied.” (Id. §1.7(b).) Since the governor’s executive order

went into effect in March, Defendant was entitled to pay

Substitute Rent beginning in April 2020. That entitlement would

expire at the end of the month in which the Co-Tenancy

Requirement was again satisfied.

Plaintiff does not dispute that Hanes Mall was completely

closed from March 30, 2020 until May 8, 2020. (See March Order

(Doc. 25-3); see also May Order (Doc. 25-4); see also Pl.’s

Excerpts Balogh Dep. (Doc. 23-6) at 22 (discussing the March

shutdown notice from the governor).) Therefore, under the terms

of the Lease, Defendant was entitled to pay Substitute Rent for

April and May 2020.9

Defendant argues the Co-Tenancy Requirement remained unmet

for some period after the conclusion of the shutdown. (See Decl.

of Kristen Boscarino (“Boscarino Decl.”) (Doc. 26) ¶ 6).

9 This does not foreclose the possibility that a subsequent

agreement, for example the alleged rent deferral agreement,

could have supplanted Defendant’s ability to pay rent for some

of these months. Furthermore, the parties have not addressed how

the closure for two days in March and eight days in May might

affect the damages calculation. Because issues remain for trial

regardless, the court does not resolve the March and May issues

here.

Presumably, this is why Defendant seeks a declaratory judgment

that the Co-Tenancy Requirement was not met “between, at least,

March 2020 and June 2020.” (Def.’s Cross-Mot. for Summ. J. (Doc.

41–1) at 1.) To prove this allegation, Defendant asks this court

to rely on Kristen Boscarino’s Affidavit, which claims the Co-

Tenancy Requirement was not met even after the Shopping Center

reopened on May 8, 2020. (Boscarino Decl. (Doc. 26) ¶ 6). This

court declines to do so.

An affidavit which is “conclusory, . . . does not set forth

facts of which the [affiant] has personal knowledge[,] and . . .

does not give specific facts, but only generalities” does

“not measure up to the requirements of Rule 56(e).” Barwick v.

Celotex Corp., 736 F.2d 946, 960 (4th Cir. 1984).

Though Boscarino states she has “personal knowledge of the

facts and matters herein,” (Boscarino Decl. (Doc. 26) ¶ 1), the

allegation “that the Co-Tenancy Requirement . . . remained

unsatisfied after the Shopping Center reopened,” (Id. ¶ 6), is

unsupported by reference to any evidence. Defendant does not

provide its calculations for determining that the requisite

number of tenants were closed, identify which stores remained

closed after the shutdown ended, or provide dates for when they

reopened. Since the relevant language of the affidavit is

“conclusory” and lacks “specific facts,” Barwick, 736 F.2d at

960, this court declines to rely on it to prove the Co-Tenancy

Requirement remained unmet after May 8, 2020.

Similarly, defendant argues that “[Plaintiff] does not . .

. dispute that from March 2020 through June 2020,” the Co-

Tenancy Requirement was not met. (Def. Resp. (Doc. 25) at 7.)

However, more accurately, Balogh stated that Plaintiff did not

perform any calculations to determine whether the Co-Tenancy

requirement was met between March and June 2020. (Def.’s

Excerpts Balogh Dep. (Doc. 25–1) at 76:15–76:23). The fact that

Plaintiff does not have Co-Tenancy calculations to rebut

Defendant’s allegations does not absolve Defendant of the

responsibility to provide evidence demonstrating when the Co-

Tenancy Requirement was violated.10

Therefore, at this stage of the proceedings, there is no

genuine issue of fact as to Plaintiff’s violation of the Co-

Tenancy requirement from March 30, 2020, through May 8, 2020. As

10 Plaintiff’s reply also states “[i]f the Court accepts

Dick’s counterclaims asserting a breach of the Lease’s Co-

Tenancy (Section 1.7), Construction Representations (Section

3.6) or Representations and Warranties (Section 17.16) sections

as to its May and June, 2020 rent, Dick’s is still in breach of

the Rent Deferral Agreement and thus owes full Minimum Rent for

April, 2020.” (Pl.’s Reply (Doc. 27) at 2 (emphasis added).)

This court declines to read this statement as a concession by

Plaintiff that, if this court accepts Dick’s arguments regarding

the Co-Tenancy Requirement, then it must necessarily find that

Defendant was entitled to pay Substitute Rent for June 2020.

a result of that violation, Defendant was presumptively entitled

to pay Substitute Rent for April and May 2020.

However, Plaintiff argues Defendant was not entitled to pay

Substitute Rent in lieu of Minimum Rent for April 2020, (see

Pl.’s Reply (Doc. 27) at 1–5), because the parties had executed

a rent deferral agreement for April 2020 rent, and Defendant

breached that agreement. (See id.) This court must therefore

determine whether the parties entered into a valid contract

regarding April 2020 rent before it can determine the effect of

the Co-Tenancy Requirement violation on April Rent. See infra

Section IV.B.4.

Therefore, this court finds that due to the violation of

the Co-Tenancy Requirement, Defendant was permitted to pay

Substitute Rent for May 2020. This court will grant Defendant’s

motion for summary judgment so far as it requests declaratory

judgment that, for May 2020, Defendant was entitled to pay

Substitute Rent in lieu of Minimum Rent.

4. Rent Deferral Agreement

Defendant argues it did not enter into an agreement

regarding April 2020 rent with Plaintiff. (Def.’s Resp.

(Doc. 25) at 18–19.) Specifically, Defendant argues that Pauline

Balogh’s counterproposal regarding April 2020 rent was never

accepted by Defendant’s employee, Brandon Barnett. (Id. at 18.)

Defendant also appears to argue that Barnett lacked authority to

accept any offer from Plaintiff. (See id.) In the alternative,

Defendant argues the purported agreement was made before the

parties were aware of the failure of the Co-Tenancy conditions

and the agreement did not purport to reach Substitute Rent. (Id.

at 19.)

A valid contract requires an agreement based on a meeting

of the minds and sufficient consideration. See Creech ex rel.

Creech v. Melnik, 147 N.C. App. 471, 477, 556 S.E.2d 587, 591

(2001). Further, to be enforceable, a contract must be

sufficiently definite. McClean v. Duke Univ., 376 F. Supp. 3d

585, 606 (M.D.N.C. 2019) (citing Brooks v. Hackney, 329 N.C.

166, 170, 404 S.E.2d 854, 857 (1991)). However, a “contract need

not definitely and specifically contain in detail every fact to

which the parties are agreeing.” Sides v. Tidwell, 216 N.C. 480,

480 5 S.E.2d 316, 318 (1939).

This court finds the alleged agreement between Balogh and

Barnett was sufficiently definite. Barnett stated “[Defendant]

will pay the April rent at a 25% reduction and pay back starting

[January 1, 2021].” (Email Chain (Doc. 23-8) at 2.) There is no

genuine dispute that the parties understood “April rent” to mean

Minimum Rent of $90,750 and that 75% of April rent would be due

immediately, with the remainder due on January 1, 2021. As

Defendant notes, the parties were not aware of any alleged

failure of the Co-Tenancy Requirement when Barnett and Balogh

were communicating. (Def.’s Resp. (Doc. 25) at 19.) Thus, the

parties believed Defendant would owe Minimum Rent for April, not

Substitute Rent and there was no reason for them to discuss

Substitute Rent. Additionally, Balogh’s April 3, 2020 email

refers to “base rent” as $90,750, (Email Chain (Doc. 23-8) at

3–4), and Minimum Rent for the Demised Premises in April was

$90,750, (Compl. (Doc. 3) ¶ 11; compare Lease (Doc. 23–1)

§ 4.1(a)(ii), with Lease (Doc. 23–1) § 6.1), demonstrating that

the parties were discussing Minimum Rent. Barnett’s April 7,

2020 response to Balogh’s email also referenced “base rent” and

made no mention of Substitute Rent. (See Email Chain (Doc. 23-8)

at 3.) Thus, this court finds that there was a sufficiently

definite agreement to reduce April 2020 Minimum Rent by twenty-

five percent with the deferred portion to be paid back

January 1, 2021.

The next question is whether Barnett accepted this

agreement. Acceptance “manifests the offeree’s intent to be

bound by the terms of the offer. Intention is the key element.”

Exec. Leasing Assocs. v. Rowland, 30 N.C. App. 590, 592, 227

S.E.2d 642, 644 (1976). A party may communicate its acceptance

“by any means sufficient to manifest intent” which “may include

a signature, silence, or conduct.” Id. (citing Albemarle Educ.

Found., Inc. v. Basnight, 4 N.C. App. 652, 167 S.E.2d 486

(1969)).

Defendant contends Barnett never accepted Balogh’s

counterproposal. (Def.’s Resp. (Doc. 25) at 18–19.) The record

contradicts this argument. On April 9, 2020, Barnett wrote

Balogh that, “[Defendant] will pay the April rent at a 25%

deduction.” (Email Chain (Doc. 23-8) at 2.) He asked Balogh to

“[p]lease confirm,” and said he would, “submit [the agreement]

to my team.” (Id.) Contrary to Defendant’s argument, this did

not condition Barnett’s acceptance on subsequent approvals from

Defendant. Instead, it manifested Barnett’s intention to bind

Defendant to the rent deferral agreement. Barnett stated

Defendant would pay the agreed upon sum at the agreed upon time.

(See id.) He did not state or imply that acceptance was

conditioned on approval from other members of his team or that

he intended to further negotiate with Balogh. (See id.) Since

this court finds Barnett accepted the agreement, the remaining

question is whether he possessed authority to do so.

Plaintiff contends that Barnett possessed both actual and

apparent authority to bind Defendant to the rent deferral

agreement. (See Pl.’s Reply (Doc. 27) at 4–5). A principal is

liable for a contract made by his agent with a third party if

(1) “the agent acts within the scope of his actual authority;”

(2) the principal ratifies an otherwise unauthorized contract;

or (3) “the agent acts within the scope of his apparent

authority, unless the third person has notice that the agent is

exceeding his actual authority.” Morpul Rsch. Corp. v. Westover

Hardware, Inc., 263 N.C. 718, 721, 140 S.E.2d 416, 418-19

(1965).

“Actual authority is that authority which the agent

reasonably thinks he possesses, conferred either intentionally

or by want of ordinary care by the principal. Actual authority

may be implied from the words and conduct of the parties and the

facts and circumstances attending the transaction in question.”

Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 830, 534

S.E.2d 653, 655 (2000). An agent’s authority to bind his

principal must be demonstrated by the principal’s conduct; “[a]n

agent’s authority to bind his principal cannot be shown by the

agent’s acts or declarations.” Stainless Valve Co. v. Safefresh

Techs., LLC, 231 N.C. App. 286, 289–90, 753 S.E.2d 331, 334

(2013) (quoting Simmons v. Morton, 1 N.C. App 308, 310, 161

S.E.2d 222, 233 (1968)).

By contrast, apparent authority “includes authority to do

whatever is usual and necessary to carry into effect the

principal power conferred upon the agent and to transact the

business which he is employed to transact.” Morpul Rsch. Corp.,

263 N.C. at 721, 140 S.E.2d at 419. “When a corporate agent acts

within the scope of his apparent authority, and the third party

has no notice of the limitation on such authority, the

corporation will be bound by the acts of the agent.” Zimmerman

v. Hogg & Allen, Pro. Ass’n, 286 N.C. 24, 30, 209 S.E.2d 795,

799 (1974). Put another way, a principle is liable for contracts

his agent enters into with a third party if the “third [party,]

in the exercise of reasonable care[,] was justified in believing

that the principal had . . . conferred [authority] upon his

agent.” Bookman v. Britthaven, Inc., 233 N.C. App. 454, 458, 756

S.E.2d 890, 894 (2014) (quoting Munn v. Haymount Rehab. &

Nursing Ctr., 208 N.C. App. 632, 639, 704 S.E.2d 290, 295

(2010)).

Plaintiff argues that Barnett was clothed with actual and

apparent authority to bind Defendant to the agreement with

Balogh. (See Pl.’s Reply (Doc. 27) at 4–5.) Plaintiff claims

Barnett possessed actual authority based on his title of real

estate manager, the ”unconditional offer of performance” in his

April 9, 2020 email, and because he initiated negotiations with

Balogh. (Pl.’s Reply (Doc. 27) at 4–5.) While these facts

suggest Barnett possessed actual authority, they do not answer

the relevant legal inquiry—whether Barnett reasonably thought he

had authority to unilaterally enter the agreement on Defendant’s

behalf. Balogh’s response to a question about internal approvals

at Dick’s bolster’s this conclusion.

Q. You don’t know how approvals or authority work at

Dick’s Sporting Goods --

A. That I don’t, no.

(Pl.’s Excerpts Balogh Dep. (Doc. 23-6) at 23.) Plaintiff cites

no evidence regarding Barnett’s job description or statements

from Defendant to Barnett about what authority he had to

negotiate rent abatement contracts with Defendant’s landlords.

While the facts Plaintiff marshals all suggest Barnett believed

he had authority, they are not dispositive on the question of

actual authority at the summary judgment stage.

Plaintiff’s claims regarding Barnett’s apparent authority

rely on the same facts. (See Pl.’s Reply (Doc. 24) at 4–5.)

Again, Plaintiff fails to show these factors satisfy the test

for apparent authority. To prove apparent authority, Plaintiff

must show that it reasonably believed Barnett possessed

authority to bind Defendant to a contract with Plaintiff. See

Brookman, 233 N.C. App. at 458, 756 S.E.2d at 894.

Relevant to this question is Balogh’s impression of

Barnett’s authority to enter the agreement. In her deposition,

Balogh said Barnett, “is in charge of real estate, usually . . .

the [real estate] manager is the one that tells his team this is

what we’re going to do, this [has been] my experience with all

the real estate I’ve ever owned.” (Pl.’s Excerpts Balogh Dep.

(Doc. 23-6) at 23.) This demonstrates that Balogh believed,

based on Barnett’s title and her own past real estate

transactions, that Barnett possessed authority to bind

Defendant. While it shows Balogh believed Barnett possessed

authority, it does not prove her belief was reasonable. This

court was not provided information about whether it is industry

practice for real estate managers to possess authority to enter

into binding rent deferral agreements or how many real estate

managers Balogh made agreements with in the past. Therefore,

this court finds that Plaintiff is not entitled to judgment as a

matter of law at this stage in the proceedings.

Additionally, it appears Defendant has raised a genuine

issue of material fact about whether Barnett possessed authority

to enter the agreement. Defendant’s response makes two

statements about Barnett’s authority, “Barnett stated that he

would have to submit the proposal to his internal team. He did

not express authority to accept on the phone or via e-mail . . .

. Barnett did not state [to Balogh] that he accepted, or even

that he had authority to do so.” (Def.’s Resp. (Doc. 25) at 3,

18.) One interpretation of Defendant’s statements is that

Barnett lacked the authority to unilaterally enter a rent

deferral agreement, and therefore did not affirmatively inform

Balogh that he possessed authority. Under this interpretation,

there is a genuine dispute of material fact about whether

Barnett possessed authority.

However, if Defendant argues that Barnett never

affirmatively informed Balogh that he possessed authority, but

admits that Barnett did have such authority, then there is no

genuine issue of material fact. When an agent acts within the

scope of their actual authority, they bind the principal

regardless of whether they inform the third party that they

possess such authority. See Stainless Valve Co., 231 N.C. App.

at 289–90, 753 S.E.2d at 334 (noting that the acts of the

principal, not the agent, are dispositive in determining whether

an agent has authority). Therefore, if Barnett did possess

actual authority, Defendant is bound to the agreement with

Balogh.

However, as this is a motion for summary judgment, this

court is bound to make “rational inferences in the light most

favorable to the party opposing that motion.” Rossignol v.

Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (citations and

internal quotation marks omitted). Taken in the light most

favorable to Defendant, the statements in its response brief

that Barnett never told Balogh he possessed authority are an

assertion that he lacked the authority to bind Defendant.

Therefore, this court will deny Plaintiff’s motion for summary

judgment insofar as it seeks recognition the rent deferral

agreement existed and controls the amount Defendant owed for

April Rent.

Since the issue of whether there was a rent deferral

agreement in place has not been conclusively established, the

proper measure of Defendant’s April rent—be it Minimum Rent,

Substitute Rent, or rent under the rent deferral agreement—is an

issue for trial.

5. Frustration of Purpose

Defendant also argues it did not breach the Lease because

its obligations under the contract were excused under the

doctrine of frustration of purpose. (Answer (Doc. 7) at 5.)

Defendant contends it entered the Lease to use the “Demised

Premises for [its] retail purposes” and that “purpose was

frustrated by the events surrounding the COVID-19 pandemic.”

(Answer (Doc. 7) at 21.) Plaintiff argues frustration of purpose

is inapplicable because the subject of the Lease, the Demised

Premises, was not destroyed and because the Force Majeure

provisions of the Lease “allocated the economic risk to

[Defendant].” (Pl.’s Br. (Doc. 24) at 17.) Defendant did not

argue the issue further in its response, (see Def.’s Resp. (Doc.

27)), but sought summary judgment on the issue in its cross-

motion, (Def.’s Cross-Mot. for Summ. J. (Doc. 41–1) at 1).

Under North Carolina law, the purpose of a contract is

frustrated when “performance remains possible[] but is excused”

by “a fortuitous event [that] supervenes to cause a failure of

the consideration or a practically total destruction of the

expected value of the performance.” Brenner v. Little Red Sch.

House, Ltd., 302 N.C. 207, 211, 274 S.E.2d 206, 209 (1981)

(quoting 17 Am. Jur. 2d Contracts § 401 (1964)). The doctrine’s

“fundamental premise” is to “giv[e] relief in a situation where

the parties could not reasonably have protected themselves by

the terms of the contract against contingencies which later

arose.” Id. (quoting 17 Am. Jur. 2d Contracts § 401 (1964)).

Frustration of purpose is not a defense “[i]f the

frustrating event was reasonably foreseeable” or “if the parties

have contracted in reference to the allocation of the risk

involved in the frustrating event . . . .” Id. Additionally,

“[i]n order for the doctrine of frustration of purpose to

constitute a defense to the obligation to pay rent under a valid

lease, the subject of the contract must be destroyed.” Tucker v.

Charter Med. Corp., 60 N.C. App. 665, 670-71, 299 S.E.2d 800,

804 (1983) (finding the purpose of a commercial lease was not

frustrated after the city of Raleigh denied the defendant’s

request to build a 40,000 square foot building on the property).

This court finds Defendant’s reliance on the defense of

frustration of purpose unpersuasive. A tenant may only invoke

frustration of purpose as a defense when “the subject of the

contract . . . [is] destroyed.” Id. Here, neither party disputes

the validity of the Lease, (compare Def.’s Resp. (Doc. 25) at 9–

18 (arguing Defendant did not breach the valid Lease agreement),

with Pl.’s Br. (Doc. 24) at 6), or that the Demised Premises was

not destroyed, (compare Answer (Doc. 7) at 1–2, 14 (describing

the Demised Premises and noting that it reopened to the public

on May 8, 2020), with Pl.’s Br. (Doc. 24) at 17). Since this

court finds the defense of frustration of purpose is

inapplicable to these facts, it does not reach the question of

whether the Force Majeure provision allocated the risk to

Defendant.11 Thus, Defendant’s cross-motion for summary judgment

will be denied insofar as it seeks a “Declaratory Judgment

regarding Frustration of Purpose.” (Def.’s Cross-Mot. for Summ.

J. (Doc. 41–1) at 2.)

11 This finding is consistent with other courts that have

held that COVID-19 did not create a valid defense of frustration

of purpose. See e.g., Gap Inc. v. Ponte Gadea N.Y. LLC, 524 F.

Supp. 3d 224, 235 (S.D.N.Y. 2021).

C. Defendant’s Breach of Contract Claim

Defendant seeks summary judgment on its counterclaim for

breach of contract. (Def.’s Cross-Mot. for Summ. J. (Doc. 41–1)

at 2). Defendant alleges Plaintiff breached the Lease by: (1)

“failing to provide premises suitable for [Defendant’s] intended

use;” (2) “demand[ing] payments it was not entitled to;” and (3)

“fail[ing] to return overpayments under the lease.” (Id.)

District courts may deny a motion for summary judgment

“where there is reason to believe that the better course would

be to proceed to a full trial.” Anderson, 477 U.S. at 255; see

also Andrew v. Clark, 561 F.3d 261, 271 (4th Cir. 2009) (noting

district courts have “discretion . . . to deny summary judgment

motions even when the standard appears to have been met”);

Forest Hills Early Learning Ctr., Inc. v. Lukhard, 728 F.2d 230,

245 (4th Cir. 1984) (“A court may properly decline, for a

variety of reasons, to grant” summary judgment.)

The substance of Defendant’s counterclaim first appears in

its answer where it recites the three points quoted above

without any providing additional context. (See Answer (Doc. 7)

at 21–22.) Similarly in its response, Defendant makes the same

assertion it is entitled to summary judgment because it “has not

breached the Lease[,] . . . it has paid all amounts due under

the Lease, and in fact has overpaid for amounts not due.” (See

Def.’s Resp. (Doc. 25) at 4.)

As noted supra Section IV.b.3, this court finds that the

Co-Tenancy Requirement was not satisfied and Defendant was

entitled to pay Substitute Rent for May 2020. However, Defendant

does not argue that the failure of the Co-Tenancy Requirement

constituted breach of the Lease. Instead, Defendant notes that

its “obligation to pay full Rent [was] conditioned on whether

certain co-tenancy conditions are met.” (Def.’s Resp. (Doc. 25)

at 5 (emphasis added).) If the Co-Tenancy Requirement was met,

Minimum Rent was owed. If it was not, Substitute Rent was owed.

However, Plaintiff did not breach the Lease in either case.

This court is not persuaded Defendant is entitled to

summary judgment on its claim for breach of contract because it

has failed to make arguments beyond a bare recitation of these

grievances. Without further evidence and argument from the

parties on these issues, this court finds “that the better

course would be to proceed to a full trial.” Anderson, 477 U.S.

at 255. Therefore, this court will deny Defendant’s motion for

breach of contract.

V. CONCLUSION

For the reasons stated herein, Plaintiff’s motion for

summary judgement, (Doc. 23), will be denied, Defendant’s motion

for summary judgment, (Doc. 40–1), will be granted in part and

denied in part, and Defendant’s motion for supplemental

briefing, (Doc. 40), will be denied.

Specifically, this court finds that Sections 3.6 and 17.16

of the Lease are ambiguous on the question of whether Defendant

was permitted to abate rent due to closures from COVID-19. The

court also finds the Co-Tenancy Requirement was unmet from March

30, 2020, through May 8, 2020, which permitted Defendant to pay

Substitute Rent in lieu of Minimum Rent. The court further finds

there is a genuine issue of material fact as to whether the

parties entered into a binding rent deferral agreement for April

rent. Finally, this court finds Defendant’s obligations under

the Lease were not frustrated by the COVID-19 pandemic.

For the reasons set forth herein,

IT IS ORDERED that Plaintiff’s Motion for Summary Judgment

(Doc. 23) is DENIED.

IT IS FURTHER ORDERED that Defendant’s Cross-Motion for

Summary Judgment (Doc. 41–1) is GRANTED IN PART AND DENIED IN

PART, it is GRANTED insofar as Defendant was entitled to pay

Substitute Rent for May 2020 because the Co-Tenancy Requirement

was not met. The remaining elements of the Cross-Motion are

DENIED.

IT IS FURTHER ORDERED that Defendant’s Motion for

Supplemental Briefing, (Doc. 40), is DENIED.

This the 30th day of September, 2022.

WUinm Lb. hon

United States District Ju

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