# HOLLY HILL MALL, LLC v. DUNHAM'S ATHLEISURE CORPORATION

> District Court, M.D. North Carolina · January 31, 2025

URL: https://www.frixlaw.com/law-library/cases/10792204

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** January 31, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10792204

## How later opinions describe it (automated extraction)

- noting that a court “may not, under the guise of construing an ambiguous term, rewrite the contract or impose liabilities on the parties not bargained for and found therein” (internal citations omitted)
- noting that “disputes over facts that affect the outcome of the suit under the governing law . . . preclude[s] the entry of summary judgment.”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

HOLLY HILL MALL, LLC, )
)
Plaintiff, )
)
v. ) 1:23CV547
)
DUNHAM’S ATHLEISURE CORP. )
d/b/a DUNHAM’S SPORTS, )
)
Defendant. )
)

MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Plaintiff, Holly Hill Mall, LLC (hereinafter “Holly Hill Mall”) brought this action
against Defendant, Dunham’s Athleisure Corporation d/b/a Dunham’s Sports (hereinafter
“Dunham’s Sports”). (ECF No. 8.) Holly Hill Mall brought a claim seeking relief for an
alleged Breach of Contract and also seeking Declaratory Relief. (Id.) Dunham’s Sports
subsequently brought a counterclaim also seeking Declaratory Relief. (ECF No. 11.) Before
the Court is Dunham’s Sports’ Motion for Summary Judgment. (ECF No. 33 (Sealed)).1

1 Because the parties filed joint motions to seal certain information in their respective briefs in
support of and opposition to the instant motion, (ECF Nos. 37, 42), the parties filed both sealed
and redacted versions of the same. The Defendant’s sealed Motion for Summary Judgment,
accompanying brief, and exhibits therein, (ECF Nos. 33, 34), are duplicated in redacted form, (ECF
Nos. 35, 36). Similarly, Plaintiff’s Response, (ECF No. 41), has a redacted version, (ECF No. 40).
The Court has granted the parties’ Motions to Seal by separate Order. Thus, in this Order, while
this Court is addressing the outstanding motion, (ECF No. 33), it will refer to the substance of the
Plaintiff filed its Response. (ECF No. 40.)2 For the reasons stated herein, Dunham’s Sports’
Motion for Summary Judgment will be denied.
I. BACKGROUND
Holly Hill Mall is a limited liability company organized under the laws of the state of
North Carolina that operates a mall in Burlington, North Carolina (hereinafter “the Shopping

Center”). (ECF No. 36-6 at 6; see also ECF No. 8 ¶¶ 1, 3.) Dunham’s Sports is a retail company
that sells a variety of sporting goods in over 250 stores across 25 states. (ECF No. 36-1 at ¶
6.) Dunham’s Sports is organized under the laws of the state of Delaware, and its principal
place of business is in Waterford, Michigan. (ECF No. 36-6 at 6.) In January 2012, the parties
executed a lease agreement (hereinafter “the Lease”) governing Dunham’s Sports’ rental of a
parcel in the Shopping Center. (Id. at 6, 15.) The parties based the Lease on a form lease

drafted by Dunham’s Sports and negotiated several of the Lease terms.3 (ECF Nos. 36-1 ¶ 9;
36-2 at 20:21-23.) The Lease term began February 2012, to last for seven years, with options
to renew the lease for four consecutive terms that were each five years long. (ECF No. 36-6
at 6, 10.) According to the Lease, Dunham’s Sports was obligated to pay “Gross Rent”4 and,
under certain conditions, “Percentage Rent”5 to Holly Hill Mall. (Id. at 7.)

2 For reasons set out below, this filing will be construed as a Response to Dunham’s Sports’ Motion
for Summary Judgment rather than a cross-motion for summary judgment.

3 A rule of contract interpretation under North Carolina law is that a written contract is construed
against the party who drafted it. State v. Philip Morris USA Inc., 618 S.E.2d 219, n. 14 (N.C. 2005)
(citation omitted). However, the parties agreed in their lease that “the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party, shall not be
employed.” (ECF No. 36-6 at 13.)

4 Gross Rent is defined as the monthly rent that Dunham’s Sports owed to Holly Hill Mall
regardless of Dunham’s Sports gross sales for any lease year. (ECF No. 36-6 at 7.)
The central issue before this Court is whether Dunham’s Sports owes Holly Hill Mall
additional rent based on certain provisions of the Lease. The parties, however, dispute how
to construe the sections of the Lease that pertain to Dunham’s Sports’ co-tenants in the
Shopping Center. The section of the Lease that exclusively pertains to co-tenancy (hereinafter
“the Co-Tenancy Clause”) is as follows:

Tenant has entered into this Lease based on the representation by Landlord that
Co-Tenants, Sears and fifty percent (50%) of the small shop space (herein, “Co-
Tenants” are open for business in the Shopping Center in which the Demised
Promises is located. If at any time during the term of this Lease and any
extensions thereof, Landlord or Co-Tenant terminate its lease, vacate the
Shopping Center or cease to conduct its operation in the Shopping Center, and
is not replaced with, a retail tenant of the same size within one hundred eighty
(180) days of such event or if fifty percent (50%) of the small shop space is not
occupied by retail tenants, Tenant shall have the right, at its option, to terminate
and cancel this Lease upon giving Landlord thirty (30) days written notice of
termination, and upon such termination and cancellation, Tenant shall be
automatically relieved of and from any and all liabilities and obligations under
this Lease. Furthermore, Tenant’s only obligation with respect to Gross Rent
shall be the payment of the lesser of (i) one-half (1/2) the Base/Gross Rent
(with no reduction to the Percentage Rent Breakpoint) or (ii) two percent (2%)
of Tenant’s gross sales. Tenant’s right under this Article shall not be exclusive
of any other rights or remedies that Tenant may have under this Lease.
(ECF No. 36-6 at 9.) The parties negotiated the terms of the Co-Tenancy Clause, specifically
the percentage of small shop space that qualified as a Co-Tenant. (Compare ECF No. 36-4 at
10 with ECF No. 36-6 at 9.) The Lease does not define the Clause term “size”, nor does it
define what a Co-Tenant the “same size” as Sears would be. However, the parties make
arguments about how these terms are to be defined.
As early as September 2017, Holly Hill Mall notified Dunham’s Sports in writing that
the Sears property would be demolished and replaced with a Publix. (ECF No. 36-26 at 2.)
Holly Hill Mall notified Dunham’s Sports of this information in writing at least twice following
the original notification, in October 2018 and February 2019. (ECF Nos. 36-27 at 2; 36-28 at
2.) In the parties’ February 2019 communication, Holly Hill Mall specifically notified
Dunham’s Sports that the deal had closed. (ECF No. 36-28 at 2.) None of these emails
represent the planned size of Publix, when Sears would close or vacate the premises, or when
Publix would open. (See ECF Nos. 36-27; 36-28.)

In July 2019, the parties proceeded to negotiate the first option to extend the Lease.
(See ECF Nos. 36-9 at 2; 36-10 at 2.) In anticipation of its upcoming option to renew its’ lease,
Dunham’s Sports wrote to Holly Hill Mall to report that its store in the Shopping Center was
experiencing a “negative sales trend” that was “extremely concerning,” with “overall sales [that
ran] significantly below the chain average.” (ECF No. 36-9 at 2.) Given this “very deep
negative turn” Dunham’s Sports proposed to exercise this upcoming renewal option, but with

an amendment to significantly reduce its Gross Rent owed to Holly Hill Mall. (Id.) Holly Hill
Mall proposed an alternate reduction in Gross Rent, noting that “retail storefront sales are
down nationwide” but acknowledging Dunham’s Sports “decline in sales.” (ECF No. 36-10
at 2.) Following further negotiations, on July 25, 2019, the parties executed a document that
exercised the first lease renewal option and incorporated reductions in Gross Rent and
Percentage Rent due from Dunham’s Sports (hereinafter “the Amended Lease terms”). (ECF

No. 36-11 at 2–3.) The vast majority of the terms of the Lease were not amended by this
document, including the Co-Tenancy Clause. (See id. at 3.)
On January 15, 2020, Sears ceased operations in the Shopping Center, vacating the
premises “several weeks later.” (ECF No. 36-29 at 4.) The record reflects that from January
2020 until March 2020, Dunham’s Sports paid the full amount of Gross Rent due. (See ECF

No. 8 ¶¶ 30–31, 33–35.) In April 2020, Dunham’s Sports asked Holly Hill Mall to lower its
rent by half because of the COVID-19 pandemic and its adverse effect on its business. (ECF
No. 8 ¶¶ 33–34; see ECF No. 11 ¶¶ 33–34.) Holly Hill Mall agreed and from April 2020 until
May 2020 it reduced Dunham’s Sports monthly Gross Rent obligations by half. (ECF No.
36-12 at 2; see also ECF No. 8 ¶ 35; ECF No. 11 ¶ 35.) There are no allegations that Dunham’s
Sports failed to pay the half-rent from April until May 2020 or the full amount of rent due

from June to August 2020.
As of July 13, 2020, one-hundred and eighty days had passed since Sears ceased
operations in the Shopping Center. On August 26, 2020, Dunham’s Sports sent a letter to
Holly Hill Mall as “written notice of the co-tenancy violation . . . due to the closure of
Sear’s[sic] at the mall.” (ECF No. 36-7 at 2.) In that letter, Dunham’s Sports also noted that
it “reserve[d] all rights and remedies under the Lease due to the co-tenancy violation, including

its right to reduce rent in accordance with the Lease.” (Id.) A representative from Holly Hill
Mall sent an email to a Dunham’s Sports representative responding to the reduced rent,
referencing the impending Publix development and Holly Hill Mall’s previous reduction in
rent to Dunham’s Sports due to COVID-19. (See ECF No. 36-12 at 2.) Nevertheless,
beginning in September 2020, Dunham’s Sports began paying reduced rent according to the
formula listed in the Co-Tenancy Clause of the Lease. (ECF No. 36-2 at 84:16-23.)

On December 8, 2021, Publix opened in the area Sears once occupied. (ECF No. 36-
29 at 4.) Ten other businesses have since opened in the same area, with the earliest tenant
opening on December 7, 2021, and the latest opening in about February 2024. (Id. at 4, 5.)
Publix’s square footage is 49,098 square feet and Sears occupied 65,000 square feet. (Id. at 5.)
The other ten businesses vary in square footage and none of these businesses individually or

collectively are the same square footage as Sears. (See id.) However, when combined, Publix
and the ten other businesses now encompass an area of square footage that is greater than
Sears. (See id.) Since December 2021, Dunham’s Sports has continued to pay reduced rent
according to the formula listed in the Co-Tenancy Clause of the Lease. (See ECF No. 36-2 at
84:16-23.) Dunham’s Sports maintains the Co-Tenancy Clause is being violated. (ECF Nos.
36-13 at 2; 36-18 at 2.) Holly Hill Mall maintains that Dunham’s Sports owes it the full amount

of Gross Rent, and its representatives have sent multiple formal and informal writings
regarding that rent. (ECF Nos. 36-12; 36-14; 36-17; 36-19; 36-20; 36-21; 36-22; 36-23.)
On May 30, 2023, Holly Hill Mall initiated this action by filing a complaint in Alamance
County Superior Court, and, thereafter, Dunham’s Sports filed a petition for removal of the
case to this Court on June 30, 2023. (ECF No. 1 ¶ 1.) On July 12, 2023, Holly Hill Mall filed
its Amended Complaint (hereinafter “Complaint”) alleging breach of contract and seeking

Declaratory Relief. (ECF No. 8.) On August 22, 2023, Dunham’s Sports filed an Amended
Answer (hereinafter “Answer”) and Amended Counterclaim (hereinafter “Counterclaim”)
seeking Declaratory Relief. (ECF No. 11 at 16–17.) Following discovery, Dunham’s Sports
filed the instant Motion for Summary Judgment. (ECF Nos. 33 (Sealed); 35 (Redacted).) Holly
Hill Mall responded that Dunham’s Sports is not entitled to summary judgment. (ECF No.
40.)

II. PLAINTIFF’S RESPONSIVE FILING
Rule 83 of the Federal Rules of Civil Procedure provides that “a district court . . . may
adopt and amend rules governing its practice.” Fed. R. Civ. P. 83(a)(1). Such rules “have the
force and effect of law, and are binding upon the parties and the court which promulgated
them.” Jackson v. Beard, 828 F.2d 1077, 1078 (4th Cir. 1987) (internal quotation marks omitted)
(citation omitted). The United States District Court for the Middle District of North Carolina
has promulgated such rules which are featured prominently on its website. Local Rule 7.3
provides that “[e]ach motion shall be set out in a separate document” and “[a]ll motions . . .
shall be accompanied by a brief.” L.R. 7.3(a). This rule also provides that “[a]ll motions shall
state with particularity the grounds therefor.” L.R. 7.3(b).
Holly Hill Mall’s Response (ECF No. 40) was filed as “Holly Hill Mall, LLC’s Brief in

Response to Dunhams’ [sic] Sports’ Motion for Summary Judgment.” (ECF No. 40 at 1.) Yet
in the body of the document, Holly Hill Mall requests “partial summary judgment on its claim
for breach of contract and summary judgment on [Dunham’s Sports’] Motion for Summary
Judgment.” (Id.) Dunham’s Sports made only one additional filing, (ECF No. 46), in response
to Holly Hill Mall’s filing (ECF No. 40). Dunham’s Sports’ brief, (ECF No. 46), was delineated
as a “Reply Brief in Further Support of Dunham’s Sports’ Motion for Summary Judgment.”

(ECF No. 46 at 1.)
Holly Hill Mall’s filings suffer from the following Local Rules violations and defects.
Holly Hill Mall’s purported motion for partial summary judgment was included in the same
document as its Response to Dunham’s Sports’s Motion for Summary Judgment. (ECF No.
40); see also L.R. 7.3(a). Holly Hill Mall’s purported motion for summary judgment was
submitted without any separate explanation or accompanying brief as required by the Local

Rules. (ECF No. 40); see also L.R. 7.3(a)–(b). Further, Holly Hill Mall, after Dunham’s Sports
did not respond in opposition to their purported motion for summary judgment, did not
object or ask this Court for leave to make additional filings. For these reasons, Holly Hill
Mall’s purported motion for summary judgment will be construed as it was filed, which was
as a Response to Dunham’s Sports’ Motion for Summary Judgment.6 L.R. 7.3(k).
III. DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
A. Defendant’s Motion for Summary Judgement Under Rule 56(a)
Summary judgment is appropriate when “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). “A dispute is genuine if a reasonable jury could return a verdict for the
nonmoving party.” Jacobs v. N.C. Admin. Off. of the Cts., 780 F.3d 562, 568 (4th Cir. 2015)
(internal quotations omitted) (internal citations omitted). “[I]n deciding a motion for summary
judgment, a district court is required to view the evidence in the light most favorable to the
nonmovant” and to “draw all reasonable inferences in his favor.” Harris v. Pittman, 927 F.3d
266, 272 (4th Cir. 2019) (citing Jacobs, 780 F.3d at 568). A court “cannot weigh the evidence

or make credibility determinations,” Jacobs, 780 F.3d at 569 (citations omitted), and thus must
“usually” adopt “the [nonmovant’s] version of the facts,” even if it seems unlikely that the
nonmoving party would prevail at trial. Witt v. W. Va. State Police, Troop 2, 633 F.3d 272, 276
(4th Cir. 2011) (internal quotation marks omitted) (quoting Scott v. Harris, 550 U.S. 372, 378
(2007)).
Where the nonmovant will bear the burden of proof at trial, the party seeking summary

judgment bears the initial burden of “pointing out to the district court . . . that there is an
absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477 U.S.

6 Under Rule 56(f) this Court has the authority to grant a motion for summary judgment sua sponte
when there is no cross-motion filed by the nonmovant. Fed. R. Civ. P. 56(f). Plaintiff also asked for
this remedy in its filing. (ECF No. 40 at 1.) This Court declines to grant this relief given the limited
evidence and briefing from Plaintiff and lack of notice. Moore v. Equitrans, L.P., 27 F.4th 211, 224 (4th
317, 325 (1986). If the moving party carries this burden, then the burden shifts to the
nonmoving party to point out “specific facts showing that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ.
P. 56(e)). In so doing, “the nonmoving party must rely on more than conclusory allegations,
mere speculation, the building of one inference upon another, or the mere existence of a

scintilla of evidence.” Dash v. Mayweather, 731 F.3d 303, 311 (4th Cir. 2013) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986) (additional citation omitted). Instead, the
nonmoving party must support its assertions by “citing to particular parts of . . . the record”
or “showing that the materials cited do not establish the absence . . . of a genuine dispute.”
Fed. R. Civ. P. 56(c)(1)(A)–(B); see also Celotex, 477 U.S. at 324.
In a matter involving contract interpretation, “summary judgment is

only appropriate ‘when the contract in question is unambiguous or when an ambiguity can be
definitively resolved by reference to extrinsic evidence.’” Sheridan v. Nationwide Ret. Sols., Inc.,
313 F. App’x 615, 617 (4th Cir. 2009) (quoting Washington Metro. Area Transit Auth. v. Potomac
Invest. Props., Inc., 476 F.3d 231, 235 (4th Cir. 2007) (internal citation omitted)). “[T]he first
step for a court asked to grant summary judgment based on a contract’s interpretation is,
therefore, to determine whether, as a matter of law, the contract is ambiguous or unambiguous

on its face.” Goodman v. Resol. Trust Corp., 7 F.3d 1123, 1126 (4th Cir. 1993); accord id. If the
Court finds that “the contract is unambiguous on the dispositive issue, it may then properly
interpret the contract as a matter of law and grant summary judgment because no interpretive
facts are in genuine issue.” Goodman, 7 F.3d at 1126. If the Court determines the contract is
ambiguous, “it may yet examine evidence extrinsic to the contract that is included in the

summary judgment materials, and, if the evidence is, as a matter of law, dispositive of the
interpretative issue, grant summary judgment on that basis.” Id. (citing Jaftex Corp. v. Aetna
Cas. and Sur. Co., 617 F.2d 1062, 1063 (4th Cir. 1980)). If, when resorting to the extrinsic
evidence, the Court still finds “genuine issues of fact respecting the contract's proper
interpretation, summary judgment must of course be refused and interpretation left to the trier
of fact.” Id.

Defendant filed a Motion for Summary Judgment arguing that it is entitled to Summary
Judgement as to Holly Hill Mall’s claims and its counterclaim. (ECF No. 35 at 15, 22.)
Defendant argues that Holly Hill Mall’s claim for Breach of Contract fails as a matter of law
because: (1) Dunham’s Sports’ interpretation of the Co-Tenancy Clause controls; and (2)
under this interpretation, Dunham’s Sports did not breach its contract obligations. (See id. at
15–16, 19, 21, 22.) Because Dunham’s Sports argues it was entitled to pay reduced rent it

further argues that it, rather than Holly Hill Mall, is entitled to Declaratory Relief. (Id. at 21–
22.) Holly Hill Mall counters that Dunham’s Sports is not entitled to summary judgement on
either party’s claims. (ECF No. 40 at 8, 9, 23.) Holly Hill Mall argues that the plain language
interpretation of the Co-Tenancy Clause is controlling, and this interpretation does not give
Dunham’s Sports the right to reduce its rent. (ECF No. 40 at 8–9.)
1. Dunham’s Sports fails to show that there are no genuine issues of
material fact that remain related to Holly Hill Mall’s Breach of Contract
claim.
The elements of a breach of contract claim under North Carolina law are: first, the
existence of a valid contract; and second, a breach of the terms of that contract. Recon Grp.
LLP v. Lowe's Home Ctrs. LLC, No. 5:23-CV-00163-KDB-DCK, 2024 WL 3658846, at *4
(W.D.N.C. Aug. 5, 2024) (citations omitted). “Non-performance of a valid contract is a breach
thereof . . . unless the person charged . . . shows some valid reason which may excuse the non-
performance; and the burden of doing so rests upon him.” Cater v. Barker, 617 S.E.2d 113,
117 (N.C. Ct. App. 2005), aff'd, 625 S.E.2d 778 (N.C. 2006) (internal quotation marks omitted)
(quoting Blount–Midyette v. Aeroglide Corp., 119 S.E.2d 225, 228 (N.C. 1961) (internal quotation
omitted in original)). The parties agree that a valid lease governed the relationship between
them from 2012 until the present. (See ECF Nos. 8 ¶ 59; 11 ¶ 59.) With no arguments to the

contrary, the Court concludes that a valid contract exists, that is the Lease, and it governs the
relationship between the parties. The second element, breach, is the object of dispute between
the parties.
First, both parties argue that the Co-Tenancy Clause in the Lease is unambiguous.
(ECF Nos. 35 at 16–19; 40 at 8–10.) Dunham’s Sports argues that on July 13, 2020, 180 days
after Sears ceased operations in the Shopping Center, it was entitled to pay reduced rent and

remains entitled to pay reduced rent because no replacement tenants have the same indoor
square footage as Sears. (See ECF No. 35 at 11.) Holly Hill Mall responds that the plain
language of Co-Tenancy Clause unambiguously does not allow rent reduction; it allows
Dunham’s Sports to terminate its lease and pay reduced rent for the time it remains in
possession of the premises. (ECF No. 40 at 10.)
Whether the Co-Tenancy Clause is to be interpreted as Dunham’s Sports desires or

Holly Hill Mall desires is the issue of fact that must be determined in this suit; such a dispute
by its nature often precludes this Court’s ability to grant summary judgment. See Hooven-Lewis
v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001) (noting that “disputes over facts that affect the
outcome of the suit under the governing law . . . preclude[s] the entry of summary judgment.”)
(citing Liberty Lobby, 477 U.S. at 247–48). Although both parties argue the Co-Tenancy Clause

is unambiguous, both parties also argue that it leads to different results: unjustified breach of
contract on the one hand and lawful exercise of an option on the other. (ECF Nos. 35 at 11;
40 at 10.) This disagreement between the parties suggests contract ambiguity. Dockery v.
Quality Plastic Custom Molding, Inc., 547 S.E.2d 850, 852(N.C. Ct. App. 2001) (“The fact that a
dispute has arisen as to the parties’ interpretation of the contract is some indication that the
language of the contract is, at best, ambiguous.” (quoting St. Paul Fire & Marine Ins. Co. v.

Freeman–White Assoc., Inc., 366 S.E.2d 480, 484 (N.C. 1988))). Despite this Court’s obligation
to view the facts in the light most favorable to the non-movant, in this case Holly Hill Mall,
the Court is unable to conclude that either party’s interpretation of the Co-Tenancy Clause is
controlling. See Hooven-Lewis, 249 F.3d at 265.
In addition, the plain language of the contract does not manifestly align with Dunham’s
Sports’ interpretation of the Lease. Under North Carolina law, when a court is tasked to

interpret a contract, “[i]t 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, 40 S.E.2d 198, (N.C. 1946) (citations omitted).
On its face, the language of the Co-Tenancy Clause is unclear, and it is difficult to discern
when the remedies it offers are invoked. (ECF No. 36-6 at 9.) Likewise, one cannot read the
Co-Tenancy Clause and straightforwardly conclude, as Dunham’s Sports desires, that

Dunham’s Sports is entitled to either terminate the Lease or receive rent reduction. (Id.) To
accommodate either party’s reading of the Co-Tenancy Clause, a strained reading of the word
“furthermore,” as utilized in the clause, is required. (Id.) Also, this reading would allow
Dunham’s Sports to reduce its rent at its option at virtually any time and perhaps multiple times.
(Id.) Indeed, this reading would allow Dunham’s Sports to invoke rent reduction whenever
Co-Tenants cease operations in the Shopping Center. (Id.) It would also allow Dunham’s
Sports to invoke rent reduction whenever, in its view, its Co-Tenant is not the right size. (Id.)
Moreover, there is limited evidence to suggest that the parties’ current interpretations
of the Co-Tenancy Clause reflect their intent at the time the Lease was executed. See Fredeking
v. Triad Aviation, Inc., 647 F. Supp. 3d 419, 440 (M.D.N.C. Dec. 27, 2022) (quoting State v. Philip

Morris USA Inc., 618 SE.2d 219, 225 (N.C. 2005)). Based on this Court’s review of the record,
Dunham’s Sports has provided one exhibit that suggests that Holly Hill Mall understood the
Co-Tenancy Clause as Dunham’s Sports interprets it. (ECF No. 36-3.) In a letter to Dunham’s
Sports from Holly Hill Mall’s former counsel, the Co-Tenancy Clause, which was still being
negotiated, was stated to contain a “termination and or rent reduction clause.” (Id. at 2
(emphasis added).) This letter was dated November 12, 2010, and was responding to

Dunham’s Sports’ interest in leasing space in the Shopping Center. (Id.) The remaining
evidence regarding interpretation of the contract arose at the time of the rent dispute or during
litigation. Accordingly, this Court finds that there are genuine issues of material fact as to the
meaning of the Co-Tenancy Clause, and it is therefore ambiguous. See Goodman, 7 F.3d at
1126. Therefore, this Court cannot properly interpret the contract as a matter of law, and is
unable, therefore, to grant summary judgment. See id.

As earlier stated, summary judgment may be granted when reviewing an ambiguous
contract if the extrinsic evidence from the record allows the Court to determine the dispositive
interpretative issue as a matter of law. Goodman, 7 F.3d at 1126. However, if the Court still
finds genuine issues of material fact regarding the contract’s proper interpretation, then
interpretation must be left to the trier of fact. Id. Defendant argues that if this Court finds

that the Co-Tenancy Clause is ambiguous, the Court “should still grant summary judgement
[to Dunham’s Sports] because all the extrinsic evidence supports Dunham’s Sports’
interpretation.” (ECF No. 35 at 19.) Dunham’s Sports points to the parties’ course of dealing,
arguing that “Dunham’s Sports acted consistent with its current interpretation of the Lease by
immediately invoking its rent reduction remedy . . . and repeatedly articulating its interpretation
of the Co-Tenancy Clause.” (Id. (citing ECF Nos. 36-7, 36-13, 36-18).) Dunham’s Sports

further argues that “Holly Hill Mall’s course of dealing is entirely inconsistent with its current
interpretation of the Co-Tenancy Clause,” (Id. (emphasis in original)), and “Holly Hill Mall
admits it has no extrinsic evidence to support its interpretation.” (Id. at 20.) Holly Hill Mall
concedes that it finds “[e]xtrinsic evidence . . . unhelpful to determine the [Co-Tenancy
Clause’s] meaning.” (ECF No. 40 at 11.) Holly Hill Mall also responds that its course of
dealing did not contradict its “plain language” interpretation of the Co-Tenancy Clause and

the common law rules of construction also favor its interpretation of the Clause. (Id. at 11–
12, 12.)
There are facts before this Court that suggest that the Co-Tenancy Clause is reasonably
susceptible to both parties’ stated interpretation, making the Clause ambiguous. See Longphre
v. KT Fin., LLC, 898 S.E.2d 354, 357 (N.C. Ct. App. 2024) (quoting Philip Morris, 685 S.E.2d
at 96 ((internal citations omitted)). The Court acknowledges Dunham’s Sports’ argument that

the parties’ course of dealing supports its contention that both parties operated under the same
interpretation of the Co-Tenancy Clause. (ECF No. 35 at 19.) However, upon review of the
record evidence, this Court cannot come to the same conclusion. See Hodgin v. Brighton, 674
S.E.2d 444, 446 (N.C. Ct. App. 2009) (noting that a court “may not, under the guise of
construing an ambiguous term, rewrite the contract or impose liabilities on the parties not

bargained for and found therein” (internal citations omitted)). When reviewing a summary
judgment motion, this Court may only use extrinsic evidence to interpret an ambiguous
contract as a matter of law when that evidence is dispositive of the interpretive issue. See
Goodman, 7 F.3d at 1126. The extrinsic evidence before this Court does not so resolve the Co-
Tenancy Clause’s interpretation.
Once Dunham’s Sports invoked its alleged right to reduce its rent obligations, the

course of dealing between the parties over the four years that followed only seems to show
the depth of the parties’ disagreement about the parties’ interpretations of the Lease. (ECF
Nos. 36-12, 36-13; 36-14; 36-17, 36-18; 36-19; 36-20; 36-23.) This is precisely the scenario in
which summary judgment is not appropriate, “when there are conflicting versions of the
events giving rise to the action.” Griffith v. Glen Wood Co., Inc., 646 S.E.2d 550, 554 (N.C. Ct.
App. 2007) (citation omitted); accord Krider v. Marshall, 11 F. App’x. 217, 218 (4th Cir. 2001)

(citing Anderson, 477 U.S. at 250). Summary judgment is also inappropriate when extrinsic
evidence, like that which has been submitted to this Court, “is subject to conflicting
interpretations, or where reasonable [persons] might differ as to the significance of any
particular piece of evidence.” Gregorino v. Charlotte–Mecklenburg Hosp. Auth., 468 S.E.2d 432,
433 (N.C. Ct. App. 1996) (citing Smith v. Currie, 253 S.E.2d 645, 647, review denied 257 S.E.2d
219 (N.C. 1979)); see also Celotex, 477 U.S. at 325. Accordingly, the extrinsic evidence available

does not resolve the interpretive issue that arises from the ambiguous language of the Co-
Tenancy Clause. This issue must be resolved by the trier of fact. Mayo v. N. Carolina State
Univ., 608 S.E.2d 116, 120 (N.C. Ct. App. 2005), aff'd, 619 S.E.2d 502 (N.C. 2005) (citing Crider
v. Jones Island Club, Inc., 554 S.E.2d 863, 866 (N.C. Ct. App. 2001)).
The Court is not persuaded that the Co-Tenancy Clause is unambiguous or that it must

be unambiguously read in one party’s favor. See Goodman, 7 F.3d at 1126. Further, Defendant
has not resolved the Co-Tenancy Clause’s ambiguity by way of extrinsic evidence. See id.
Because Dunham’s Sports has failed to demonstrate that a reasonable juror could not find that
it violated the terms of the Lease, it is not entitled to summary judgment on Holly Hill Mall’s
breach of contract claim. See Hooven-Lewis, 249 F.3d at 265 (quoting Celotex, 477 U.S. at 322).
2. Dunham’s Sports fails to show that it is entitled to summary judgment
on Holly Hill Mall’s or its own claim for Declaratory Relief
“The propriety of summary judgment in a declaratory judgment action is governed by
the same considerations applicable to any other action and therefore may be entered when
there is no issue of material fact and a party is entitled to prevail as a matter of law.” Smith v.

HBE Corp., 655 F. Supp. 59, 63 (E.D.N.C. Apr. 18, 1986), aff'd, 811 F.2d 1505 (4th Cir. 1987)
(citing Blades v. City of Raleigh, 187 S.E.2d 35, 43 (N.C. 1972)); see also Threatte v. Threatte, 296
S.E.2d 521, 522 (N.C. Ct App. 1982) (citing Blades, 187 S.E.2d at 43). Both parties’ claims for
Declaratory Relief ask that this Court validate its interpretation of the Co-Tenancy Clause over
the other’s. (ECF No. 35 at 22–23.) Further, the parties ask that this Court, after determining
the controlling interpretation of the Co-Tenancy Clause, make additional declarations related

to any alleged past due rent and interest on that rent. (Id. at 22.) Because this Court has
concluded that neither party has established as a matter of law that its interpretation of the
Co-Tenancy Clause is controlling, summary judgment on the declaratory relief claims likewise
must also be denied.
B. Holly Hill Mall’s Unaddressed Defenses to Dunham’s Sports
Counterclaim
Under Federal Rule of Civil Procedure 56(e), this Court is entitled to consider a fact to
be undisputed or grant summary judgment when “a party fails to properly support an assertion
of fact or fails to properly address another party's assertion of fact as required by Rule 56(c).”
judgment motion, the court should only grant summary judgment if the movant “is entitled
to it.” Fed. R. Civ. P. 56(e)(3). To determine if it is appropriate, the district court must review
the record to determine whether the movant is entitled to summary judgment on those
unaddressed issues. Cf. Riddle v. Auto-Owners Ins. Co., No. 2:08-CV-1-F, 2009 WL 2151386, at
*3 (E.D.N.C. July 17, 2009) (citing Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 416 (4th Cir.

1993)).
As earlier stated, Dunham’s Sports’ Answer asserted a counterclaim seeking
Declaratory Relief. (ECF No. 11 at 16–17.) Holly Hill Mall asserted ten defenses in its Answer
to Dunham’s Sports’ counterclaim. (ECF No. 12 at 6–7.) Following discovery, Holly Hill
Mall submitted a Response to Dunham’s Sports Motion for Summary Judgment that only
reasserted three of those ten defenses. (ECF No. 40 at 21–23.) Dunham’s Sports then

submitted a reply brief which argued it was entitled to summary judgment on seven of Holly
Hill Mall’s defenses to its counterclaim. (ECF No. 46 at 8–9.) Dunham’s Sports argued that
in Holly Hill Mall’s Response, (ECF No. 40), it “abandoned” these defenses and therefore
Dunham’s Sports argued it was “entitled to summary judgment” on those issues. (ECF No.
46 at 8.) However, Dunham’s Sports did not show that Holly Hill Mall’s “abandon[ment]” of
these defenses entitled it to judgment as a matter of law on those issues, it simply noted that

they were left unexamined in Holly Hill Mall’s Response. (ECF No. 46 at 8–9); see also Custer,
12 F.3d at 416 (“Although the failure of a party to respond to a summary judgment motion
may leave uncontroverted those facts established by the motion, the moving party must still
show that the uncontroverted facts entitle the party to ‘a judgment as a matter of law.’”
(quoting Fed. R. Civ. P. 56(a)). Therefore, in the absence of evidence that would demand the
contrary, this Court will allow Holly Hill Mall to proceed with all the defenses it pled in its
Answer to Dunham’s Sports’ Counterclaim.
IV. CONCLUSION
Accordingly, this Court finds that there are genuine issues of fact regarding the Co-
Tenancy Clause and how it is to be properly interpreted. Therefore, Defendant has not

established that it is entitled to summary judgment on Plaintiff’s claims for relief from
Dunham’s Sports alleged breach of contract and for Declaratory Relief as a matter of law.
Neither has Dunham’s Sports established that it is entitled to summary judgment on its
counterclaim for Declaratory Relief.
For the reasons stated herein, the Court enters the following:

ORDER
IT IS THEREFORE ORDERED that Defendant’s Motion for Summary Judgment,
(ECF No. 33 (Sealed)), is DENIED.

This, the 31st day of January 2025.
/s/ Loretta C. Biggs
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10792204. Public record. Not legal advice.