Norkunas v. HP HOSPITALITY, LLC

Filing 28

ORDER denying 21 Motion for Summary Judgment. Signed by Magistrate Judge Dennis Howell on November 29, 2010. (jhg)

N o r k u n a s v. HP HOSPITALITY, LLC

D o c . 28

IN THE UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF NORTH CAROLINA A S H E V IL L E DIVISION 1 :1 0 cv 9 5 W IL L IA M NORKUNAS, P l a i n t if f , V s. H P HOSPITALITY, LLC, a Limited L ia b ility Company, D e fe n d a n t . _______________________________ ) ) ) ) ) ) ) ) ) ) )

ORDER

T H IS MATTER is before the court on defendant's Motion for Summary Ju d g m en t (#21). The theory of such motion is that because plaintiff released V & S H o s p ita lity , LLC, in another action brought under the Americans with Disabilities Act (h erein after "ADA"), that release operates as a bar to this ADA action against HP H o s p ita lity , LLC, because V & S Hospitality, LLC, and HP Hospitality, LLC, are a ff ilia te d or related companies. As discussed below, however, defendant has failed to satisfy its initial burden under Rule 56 of showing that these two separate legal en tities are either affiliated or related as a matter of law, inasmuch as common m e m b e r sh ip in separate corporations does not amount to a prima facie showing that th e companies are either related or affiliated. F IN D IN G S AND CONCLUSIONS
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Dockets.Justia.com

I.

B a c kg r o u n d W h ile the facts surrounding plaintiff's ADA claim against this defendant are

n o t in dispute for purposes of this motion, the court will briefly summarize plaintiff's co n ten tio n s for the limited purpose of providing context to the instant motion. P lain tiff is a resident of Jefferson, North Carolina, and is a self-described ADA tester, traveling throughout North Carolina to determine whether places of public acco m m o d atio n are ADA compliant. Complaint (hereinafter "Cmpl."), at ¶ 1. To d a te , plaintiff has filed nine ADA cases in the Western District of North Carolina.1 In an earlier action, Norkunas v. V & S Hospitality, LLC, 1:09cv371 (W.D.N.C. 2 0 0 9 ) , plaintiff alleged that the Best Western of Asheville - Biltmore East hotel o p erated by such defendant was non-compliant with the ADA. A settlement outside o f court was reached by the parties to that action and the case was dismissed May 16, 2 0 1 0 . On May 7, 2010, plaintiff filed this action and alleged that the Days Inn B iltm o re East, owned by HP Hospitality, LLC, is also non compliant with the req u irem en ts of the ADA. Relevant to the pending motion, defendant has submitted the release executed b y the parties in Norkunas v. V & S Hospitality, LLC, supra. Defendant argues that th is action cannot be maintained because plaintiff agreed to "`discharge[] and release[]

According to a search of the ECF docket of the Western District of North Carolina run on 11/9/2010. -2-

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in full the other Party and'" its "`affiliates, [and] related parties.'" Defendant's M em o ran d u m in Support (#22), at 4 (quoting the Mutual Release provision of the S ettlem en t Agreement). Defendant goes on to argue that: [b]ecause the Patel family members own and manage both V & S H o sp itality and HP Hospitality, there is an extremely close relationship an d connection between the two entities. To summarize, Motibhai M. P atel (along with his wife Kusum Patel) is an owner of V & S H o s p ita lity , and Motibhai Patel is an owner of HP Hospitality, and Hites M . Patel is an owner in both V & S Hospitality and HP Hospitality; Hites M . Patel is an officer of V & S Hospitality and is Manager of HP H o sp itality; and the remaining owners and members of HP Hospitality, L L C are family members of both Motisbhai [sic] Patel and Hites M. P atel. In addition, V & S Hospitality and HP Hospitality use the same a cc o u n ta n t ­ Sharon Gordon of Carolina Accountants, the same general co u n sel, David W. Cartner, of Cartner & Cartner Law Firm, P.A., and b o th entities employ the same general manager ­ Hites M. Patel, and the s am e assistant manager ­ Nirali Patel, the wife of Hites M. Patel. Hites M . Patel and Nirali Patel are each on the payroll of both entities. (Patel A ff., ¶ 7) Id ., at 6-7.2 I I. A p p lic a b le Standard O n a motion for summary judgment, the moving party has the burden of p ro d u ctio n to show that there are no genuine issues for trial. Upon the moving party's m eetin g that burden, the non-moving party has the burden of persuasion to establish th at there is a genuine issue for trial.

Defendant also details the refinancing of both hotels and points to the fact that the closings on such loans were conducted simultaneously as further evidence of the close connection between the two properties and such properties' owners. Id., at 7. -3-

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W h en the moving party has carried its burden under Rule 56(c), its o p p o n en t must do more than simply show that there is some m e ta p h y s ic al doubt as to the material facts. In the language of the Rule, th e nonmoving [sic] party must come forward with "specific facts s h o w in g that there is a genuine issue for trial." Where the record taken as a whole could not lead a rational trier of fact to find for the nonm o v in g party, there is no "genuine issue for trial." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citatio n s omitted; emphasis in the original) (quoting Fed. R. Civ. P. 56). There must b e more than just a factual dispute; the fact in question must be material and readily id en tifiab le by the substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1 9 8 6 ). By reviewing substantive law, the court may determine what matters constitute m aterial facts. Anderson, supra. "Only disputes over facts that might affect the o u tc o m e of the suit under governing law will properly preclude the entry of summary ju d g m en t." Id. at 248. A dispute about a material fact is "genuine" only if the ev id en ce is such that "a reasonable jury could return a verdict for the nonmoving p arty." Id. The court must credit factual disputes in favor of the party resisting s u m m a ry judgment and draw inferences favorable to that party if the inferences are reaso n ab le, however improbable they may seem. Cole v. Cole, 633 F.2d 1083, 1092 ( 4 th Cir. 1980). Affidavits filed in support of a Motion for Summary Judgment are to be used to determine whether issues of fact exist, not to decide the issues

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th e m s elv e s . United States ex rel. Jones v. Rundle, 453 F.2d 147 (3d Cir. 1971). W h en resolution of issues of fact depends upon a determination of credibility, s u m m a ry judgment is improper. Davis v. Zahradnick, 600 F.2d 458 (4th Cir. 1979). In determining whether a genuine issue of material fact exists, the admissible ev id en ce of the non-moving party must be believed and all justifiable inferences must b e drawn in his or her favor. Anderson, supra, at 255. In the end, the question posed b y a summary judgment motion is whether the evidence "is so one-sided that one p arty must prevail as a matter of law." Id., at 252. III. D is c u s s io n D efen d an t has moved for summary judgment on its affirmative defense of r ele as e. There is no dispute that the settlement agreement amounts to a contract b e tw e e n the parties to that agreement and that, as the parties therein agreed, the lan g u ag e of such agreement should be interpreted in accordance with North Carolina law . Under North Carolina law, [w]hen the language of the contract is clear and unambiguous, co n stru ctio n of the agreement is a matter of law for the court[,] and the co u r t cannot look beyond the terms of the contract to determine the in ten tio n s of the parties. P ied m o n t Bank & Trust Co. v. Stevenson, 79 N.C.App. 236, 240 (internal citations o m itted ), aff'd per curiam, 317 N.C. 330 (1986). Thus, `[i]t must be presumed the p arties intended what the language used clearly expresses, and the contract must be
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co n stru ed to mean what on its face it purports to mean." Hartford Accident & I n d e m n ity . Co. v. Hood, 226 N.C. 706, 710 (1946) (internal citations omitted). T h e court has carefully considered the litany of cases cited by defendant c o n c e r n in g the impact of a general release of all claims, and finds no fault with such d ec isio n s. Those cases, however, do not answer the basic question which defendant's M o tio n for Summary Judgment asks, which is whether there is a sufficient relatio n sh ip between the parties to the settlement agreement and the parties to this a ctio n to make the mutual release applicable herein. While a number of the cases cited deal with whether the plaintiff knew of the later-asserted claims when he ex ecu ted the settlement agreement, that does not appear to be an issue herein in a s m u c h as it is undisputed that plaintiff tested the hotel at issue in this case several m o n th s before executing the settlement agreement in Norkunas v. V & S Hospitality, L L C , supra. Thus, the issue comes down to whether defendant has satisfied its initial burden o f showing that HP Hospitality, LLC is a company "affiliated or related to" V &S H o sp itality, LLC. As what constitutes an "affiliated" entity is not defined in the s ettle m e n t agreement, the court has reviewed North Carolina law for a definition. In G le n n v. Wagner, 313 N.C. 450 (1985), the North Carolina Supreme Court held, as f o llo w s :

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T h e Court of Appeals, in its opinion, correctly recognized that the r ela tio n s h ip between B-Bom and D & S was that of affiliated co rp o r a tio n s, that is, corporations in which the controlling interest in b o th is owned by the same person or persons. Id ., at 455-56. The evidence submitted by defendant in support of its motion shows th e following: (1) th e controlling interest in V & S Hospitality, LLC, is held by Motibhai M . Patel and his spouse Kusum M. Patel, who own 70 percent of the sto ck , see Hites M. Patel Affidavit, at ¶ 4; (2 ) th e controlling interest in HP Hospitality, LLC, is held by a number of in d iv id u a ls , with Motibhai M. Patel owning only 30 percent of the stock an d Kusum M. Patel apparently owning none. Id., at ¶ 6. Thus, defendant has not presented evidence that HP Hospitality, LLC, is a n affiliated company with V & S Hospitality, LLC, as "affiliated corporations" has b e e n defined by the North Carolina Supreme Court. Indeed, the evidence presented is antithetical to defendant's motion. T h e court has also considered whether defendant has shown that there is no g en u in e issue of material fact as to whether HP Hospitality, LLC, is a corporation "related to" V & S Hospitality, LLC. Again, the settlement agreement contains no d e f in itio n of "related to" and the court will rely on North Carolina law to provide a d efin itio n . While the case from which such definition is derived is both dated and
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b ears little relationship to the case before this court, the definition is instructive as it is the only definition the court could find: w h en that individual or group having such control of a corporation lik e w is e has similar control of one or more affiliated and related co rp o ratio n s (as in the instant case), these corporations-using the plain, n atu ral and ordinarily-accepted meanings of the words -are said to be "c o n tr o lle d by the same interests." Unemployment Compensation Commission v. City Ice & Coal Co., 216 N.C. 6, 3 S .E .2 d 290, 292 (1939). Thus, it appears that "affiliated" and "related to" are syn o n ym o u s, and that defendant's evidence is equally antithetical to its Motion for S u m m ary Judgment based on the term "related to." F in a lly , the court has considered defendant's argument that the terms of the s ettlem e n t agreement are sufficiently broad to include the claim at issue herein. In rev iew in g such arguments, the court considered the opinion of the North Carolina C o u r t of Appeals in Stevens v. Dorenda, 66 N.C.App. 322 (1984), a decision that was n o t cited by the respective parties, but which addressed a nearly identical issue. The u n d e r sig n e d will quote at length from that decision, as it is most instructive: S ig n if ic an tly , the agreement, on its face, omits this action. Since th e inclusion of this action in the agreement would "vary, add to, or co n trad ict" the written agreement, parol evidence would only be ad m issib le to explain or construe any ambiguous terms. Vestal v. Vestal, 4 9 N.C.App. 263, 266-67, 271 S.E.2d 306, 309 (1980); see generally A n n o t., 40 A.L.R.3d 1384 (1971). "A statement is ambiguous if it is s u s c e p tib le of more than one meaning." Lineberry v. Lineberry, 59 N .C .A p p . 204, 206, 296 S.E.2d 332, 333 (1982). Dorenda perceives
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a m b ig u ity in the language of the introductory clauses: "certain disputes an d lawsuits ... including the following," and "the aforesaid disputes and law su its ...." Dorenda asserts that the above language fails to exclude this a ctio n from the terms of the agreement. We disagree. W e apply a long-recognized rule of construction in concluding th at the agreement unambiguously excluded this action. I f the apparent inconsistency is between a clause that is general and broadly inclusive in character and one that is m o re limited and specific in its coverage, the latter should g en erally be held to operate as a modification and pro tanto n u llif ic atio n of the former. 3 A. Corbin, Corbin on Contracts § 547, at 176-78 & n. 19 (1960); see a lso Wood-Hopkins Contracting Co. v. N.C. State Ports Auth., 284 N.C. 7 3 2 , 202 S.E.2d 473 (1974). Here, the broad language of "certain d is p u te s ... including the following" is modified by the list of named law su its. The listed lawsuits become the only subject matter of the ag reem en t. Under our view, the phrase "the aforesaid disputes and law su its ..." refers directly to the listed lawsuits. Further, the terms of p arag rap h s 1-11 and the final matching list of dismissed lawsuits in p a r a g r a p h 12, by omitting any reference to this action, support our in te r p r e ta tio n . T h e unambiguous language of the settlement agreement precluded th e admission of parol evidence. We hold that the trial court's admission o f parol evidence constituted reversible error. Moreover, "when a co n tract is plain and unambiguous the construction of the agreement is a matter of law for the court." East Coast Dev. Co. v. Alderman-250 C o rp ., 30 N.C.App. 598, 605, 228 S.E.2d 72, 78 (1976). In construing th e settlement agreement, the trial court should have found it irrelevant to this action, No. 80CVD23, and excluded it from evidence, since the ag reem en t would be likely to mislead the jury or prejudice Stevens. See 1 H. Brandis, North Carolina Evidence § 77, at 285-86 (2d rev. ed. 1 9 8 2 ). Therefore, the trial court's failure to exclude the settlement a g r ee m e n t is also reversible error. *** I d ., 324-25. Review of the settlement agreement proffered by defendant in support o f its motion for summary judgment likewise contains a specific provision citing by
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c as e number the action between plaintiff and V &S Hospitality, LLC, see (#23-1), at ¶ B, designating such to be the "Action," id., and thereinafter provided that "[u]pon ex ecu tio n of this Agreement, plaintiff shall file a Dismissal, with prejudice, of the A ctio n ." Id., at ¶ 3. While the Motion for Summary Judgment will be denied because d efen d an t has not made its initial showing under Rule 56 that it is a corporation "affiliate d or related to" V & S Hospitality, LLC, the court commends Stevens to r es p e ctiv e counsel for further consideration as they prepare for trial of this matter. ORDER IT IS, THEREFORE, ORDERED that defendant's Motion for Summary Ju d g m en t (#21) is DENIED.

Signed: November 29, 2010

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