Stay Out of My Tiki Hut! Court of Appeals Explores Extent of Access Easements in Recent Case

The Fiorentino home as seen from the street,
with the beach access boardwalk.

The North Carolina Court of Appeals issued an entertaining decision in Sea Watch at Kure Beach Homeowners' Association v. Fiorentino in November 2019.  In this case, a developer of a seaside residential community had reserved an access easement across a homeowner's lot, Lot 6, for other residents to access the beach.  Eventually, the access area was expanded to include not only a wooden boardwalk, but also a deck area, bathrooms, and a tiki bar.  After these improvements had been in place and in use for approximately 10 years, a homeowner who bought Lot 6 demanded that the improvements be removed and the easement area returned to its original documented use as set forth in the easement agreement for access to the beach only.  The homeowners association eventually filed suit and requested a declaratory judgment, which is a request for the court to declare the respective rights and obligations of the various parties.

The Fiorentino home in question is at top in this picture with what admittedly looks like a pretty large tiki hut on the walkway between the two homes shown.

             After a Superior Court trial, the trial court ruled in favor of the HOA and dismissed the counterclaims of the owner of Lot 6. The court stated that the improvements were allowed to remain, and the association was allowed to continue to use of the deck, bathrooms and tiki bar even though the written easement agreement only provided for an access easement.

            The trial court analyzed the history of the use of this area and made the legal determination that an "access easement" "is not merely one of ingress and egress; public representations made by the developer expanded the easement to one involving use of the improvements" as well.  The court seemed to also feel that it was important that the improvements had been in use for a substantial period of time and in fact, it appeared that the owners of  Lot 6 had had the use of them along with all of the other homeowners in the community for about 5 years, which was the amount of time that the owners of Lot 6 had lived in the neighborhood prior to purchasing Lot 6.

            This case is important for a couple of reasons.  First of all, it underlines the need for easements and other similar documents to be very specific as to the use which is intended by the original parties.  In this case, the court refused to interpret the phrase "access easement” strictly and ruled that an access easement could include the use of these types of pretty significant improvements since the easement document itself provided no specific limitations on what was meant by "access".  Homeowners associations, developers, and others entering into easements or placing restrictions on land should be explicit in describing what their intentions are in entering into the agreement as well as very specifically describing the various rights and duties granted in the document itself.

            In addition, the court found it important that the tiki bar and other improvements had been in existence for approximately 10 years  and were apparently well known to the Lot 6 owners even before they purchased Lot 6.  This brings up a couple of other important points.  The doctrine of estoppel is very important in understanding contract law and homeowners association law.  This is the doctrine of the enforcement of reasonable expectations between contracting parties.  In this case, the Lot 6 owners had purchased Lot 6 well knowing of the existence of these substantial improvements and therefore, the court found that they were estopped from later complaining about them. Estoppel is a key legal concept which prevents a party from reneging upon an expectation it reasonably induces in another party to the bargain.

            This decision also highlights that real property purchases are almost always a "buyer beware" transaction.  Notwithstanding the fact that sellers in North Carolina are required to fill out lengthy disclosures in residential real estate transactions, the law of the state of North Carolina with regard to the purchase of residential property is generally very buyer adverse. In other words, it is very difficult to sue a seller, or in this case a third party developer, for any condition on a piece of land which the buyer was aware of, or should have been aware of, or could have discovered using reasonable due diligence. Generally, even if the seller completely lies in a real property disclosure, that lie will not be actionable unless there is no way the buyer could have detected the true state of the property using reasonable due diligence prior to closing.  This decision further exemplifies the rule that a buyer generally buys property subject to any and all conditions that they could have reasonably discovered prior to closing.

            Please reach out to us if we can assist your homeowners association with any legal matters, or if you are a developer who prefers to stay out of court!

Virus Check: What do Businesses Need to Know About COVID-19 Liability?

Virus Check: What is Your Liability as a Business?

The current situation we are facing is unprecedented from a legal standpoint. The ability to enforce contracts, loans, leases and all manner of legal relationships is now in question based on financial hardships as well as our court system working at greatly diminished capacity. Reasonableness, negotiation and working cooperatively are now more important than ever before.

Businesses of all types are concerned about being sued. What do you need to know?

Negligence is your first concern.Can a business be sued if an employee or customer were to contract a communicable disease at the employer’s workplace, or from a co-worker or customer? It depends on whether the business took reasonable actions to protect its employees and customers in light of the information available to it – in other words, whether the business was negligent.

Tort law, or the law of negligence, applies in this situation. It holds that a person can be liable to another person to whom the first person owes a duty if the first person commits an act which is unreasonable (or fails to take a reasonably necessary action) which could reasonably be anticipated to cause damage to the second person, and the second person did not help cause the wrongful act or omission.

For example, the Governor of North Carolina had previously prohibited all “mass gatherings” of 50 or more people (since reduced to 10); therefore, it was legal at that time (at least in most counties) to have mass gatherings of less than 50. But would this be reasonable in light of the CDC’s warnings against gatherings of more than 10 people? It depends on the situation, but a strong argument could be made that such would not be reasonable - in other words, we could not assure you that you would not get sued if someone got sick from such a gathering.

You owe a duty of reasonable care to your members, customers and employees; failure to take reasonable care to protect these parties from infection could result in liability. Reasonableness is the touchstone, based upon all the facts and circumstances involved. Failure to abide by local orders or regulations when they are directly intended to preserve public safety, as well as customary standards of care, have been held to constitute actionable negligence in other contexts. Cruise ship operators are already facing numerous lawsuits from those sickened while onboard based on this legal theory. Please contact us if we can help you work through liability issues of concern.

Workplace safety is also obviously very much in play today. In addition to the above negligence standards, workplaces of all types must abide by federal and state occupational health and safety requirements, typically as determined by OSHA. Employers must take efforts to maintain a hazard-free workplace, while still safeguarding the privacy rights of any affected employee.

OSHA requires that employers provide a safe workplace for all employees which is "free from recognized hazards … likely to cause death or serious bodily harm."

OSHA has not adopted specific regulations regarding COVID-19 in the general workplace at this time, but has instead recommended that employers follow CDC guidelines regarding personal safety, as well as any state or local guidelines or requirements - North Carolina's being found here.

The North Carolina Department of Labor, like OSHA, has not adopted specific regulations, but has emphasized the need to follow social distancing guidelines, maintain a clean workplace, and work from home where possible, and has emphasized the importance of proper personal protective equipment. Both the

NC Department of Labor and OSHA have especially emphasized worker safety with regard to respiration - in other words, being sure workers working with the public wear face masks, or more intensive respirators for those in healthcare, janitorial staff working with hazardous cleaning materials, and the like.

OSHA’s "free from recognized hazards" standard places much discretion in the hands of federal and state regulators if they feel an employer has not taken all reasonable steps to provide a hazard-free workplace for its employees. To be safe, employers should also implement procedures designed to promptly identify and isolate potentially infectious workers, per OSHA guidance. Illness or potential illness by employee must be kept confidential to the extent possible per federal ADA requirements; contact us if you run into this issue.

Contract law and force majeure clauses. Many contracts contain a force majeure clause, which translates from French as “superior force.”  It refers to uncontrollable events that are not the fault of any party and which interfere with a party’s ability to complete its end of the bargain or receive what it bargained for in the deal. Common examples are hurricanes, riots, labor stoppages and war. At first blush, it would appear that a pandemic would constitute a force majeure, but the terms of the contract control. You must review the specific language of the contract in question. Language such as “circumstances outside our control” is very broad and will cover the current situation and allow the party benefited by the provision to avoid the contract.  More specific language such as the common “acts of God, war, insurrection, civil strife, riots or labor disturbances” may not be as helpful depending since the list arguably excludes pandemics. If you are facing language which may not cover the current situation, you may have to negotiate and reach an agreement with your opposing party. If you do so, please, please document the agreement. Obviously, we can help. But even an exchange of emails can be sufficient to amend a contract if both parties agree.

Common law force majeure, or the doctrine of impossibility, may also apply if it is impossible or illegal for the parties to carry out the purpose and intent of the contract. Send your contract to us for review if you have issues or concerns. If upon reviewing your contracts, you find provisions which do not suit your needs in the current climate, do not forget that you may amend the current contract or at least change it going forward.  We can quickly supply you with alternative language and have already done so for some of our business clients.