After falling delinquent on her mortgage in September of 2012, Nationstar sent a notice of default to Powell on March 5, 2013. This was followed by a notice of her right to dispute the debt. On April 26, 2013, the Substitute Trustee commenced foreclosure attempting service through the Sheriff’s office. Unable to serve Powell, the deputy posted the foreclosure notice on her door. Further notice was attempted through certified mail on May 1, 2013, but this was returned as unclaimed. After the foreclosure was final, Powell sought to have it set aside, asserting she had not received notice.
Powell appealed arguing N.C.G.S. § 1A-1 Rule 4(j1) requires that “when a party cannot with due diligence be served by personal delivery, registered or certified mail, or by a designated delivery
service,” (Emphasis added) the party may be served by publication (here posting of the Notice). Powell first asserted that the emphasized “or” was conjunctive, requiring attempted by all three methods, viz. personal delivery, registered/certified mail, and designated delivery service. The majority opinion rejected this, finding, based on case law that interpreted an earlier iteration of the statute, that the “or” is disjunctive. As, the majority held that attempted service by certified mail and personal service was sufficient to satisfy the “due diligence” requirement of Rul 4(j1).
In a concurring opinion, Judge Dillon agreed that normally a list an “or” should be read in the disjunctive, except, following DeMorgan’s Law, when the list begins with the words “not” or “cannot.” Then the or is conjunctive. His example is very illustrative:
if a father tells his daughter that she is not allowed to go to the movies or to the football game, the parent has effectively told the child that she is not allowed to do either activity; that is, she may not go to the movies and she may not go to the football game. However, if the father tells his daughter that she is not allowed to go to the movies and to the football game, the parent has only stated that she may not do both activities, but that she could do one or the other.
Despite this grammar lesson, Judge Dillon concluded that Rule 4(j1) only requires that the party show that with “due diligence” none of the three methods would have succeeded. Obviously, attempting and failing to obtain service in all three ways would suffice, but here with both personal service unsuccessful and certified mail refused, it was proper to conclude that service on Powell by “designated delivery service” would also have failed.
It is clear that, even with Judge Dillon’s grammatical logic, the Court of Appeals did not want to put parties into a strict service regime requiring three attempts, but there does not appear to have been any evidence introduced that “designated delivery service” would have been rejected.
Perhaps the Substitute Trustee should have used Frank Drake’s infamous “Buffy Mail” tactic, where the Notice is sent by certified mail (and of course rejected) and at the same time sent in a hand-addressed (preferably with purple ink and hearts dotting the i’s and j’s) envelope to the same address. When that is not returned, it serves as evidence of due diligence. Care would need to be taken to avoid violating 15 U.S.C. § 1692e(14) and this presumes that mortgage servicers actually care about notice.
For a copy of the opinion, please see: