Category: NC Courts

N.C. Ct. of Appeal: KB Aircraft v. Jack Berry- Period to seek Commence Voidable Transfer Action Determined as of Transfer Date not Discovery; Statute of Repose

 

Summary:

While factually complicated, this case presents two issues of first impression under North Carolina law, first regarding the interpretation of the term “transfer” the North Carolina Uniform Voidable Transactions Act, N.C.G.S. § 39-23.9, and secondly, whether this is a statute of limitations or repose.

The Court of Appeals held that based on both the plain language of the statute and the legislative history, the term “transfer” refers to the actual date on which an asset was transferred, rather than the date when its fraudulent nature became apparent to a creditor.

Further, and that the statute is one of repose and not limitation.… Read More

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N.C. Ct. of Appeals: HSBC Bank v. PRMC, Inc.- Representation of Corporation by Non-Attorney

Summary:

In 2004, PRMC, through its president and sole shareholder, Zulfiquar M. Khan, borrowed $1,950,000 from Business Loan Center, L.L.C. (“BLC”), with the note including an “Unconditional Guarantee” from Mr. Khan and a Deed of Trust against a hotel and all personal property. In September 2007, Mr. Khan, PRMC and BLC agreed to a four month reduced payment on the note, with the allonge including a release (in bold and all capitals) by both parties of all claims against each other. This same language was again included in a July 2008 payment deferral agreement. BLC filed a Chapter 11 bankruptcy in September 2008, with its reorganization being confirmed on November 12, 2010.… Read More

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N.C. Court of Appeals: In re Foreclosure of Cain- Appeal of Oral Orders and Substitute Trustee Fiduciary Duty to Borrower

Summary:
Ms. Cain granted a Deed of Trust against her home securing a mortgage note to Household Realty Corporation (“HRC”), which was first specially endorsed to Household Bank, but HRC later specially endorsed the not to Beal Bank, which, following Cain’s default, appointed Rogers, Townsend & Thomas (“RTT”) as substitute trustee to commence foreclosure. After the Cumberland County Clerk of Court allowed the foreclosure sale to proceed, Cain appealed to Superior Court and sent a Request for Admissions to RTT. RTT then was relieved as substitute trustee and commenced representing Beal Bank in the foreclosure suit. At that hearing, Cain presented an unfiled motion to dismiss the foreclosure due to a purported failure by RTT to respond to the Request for Admissions.… Read More

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N.C. Ct. of Appeals: U.S. Bank v. Pinkney- Chain of Indorsements of Note

Summary:

The Pinkneys executed a mortgage note (“the Note”) in favor of Ford Consumer Finance, secured by a Deed of Trust. The Note was later indorsed to Credit Based Asset Servicing and Securitization (“CBASS”), which, in turn, assigned the Note to U.S. Bank, as Indenture Trustee, and lastly to U.S. Bank, without recourse.

When U.S. Bank later sought to foreclose and a judgment for money owed, the Pinkney moved to dismiss that action on the basis that U.S. Bank was not the holder of the Note, which did not contain the “magic words” denoting a that it was, under the Uniform Commercial Code, N.C.G.S.… Read More

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N.C. Ct. of Appeals: In re Smith- Conditions Precedent to Confirmation of Plan

Summary:

Mr. Smith filed Chapter 11 bankruptcy after Wells Fargo commenced foreclosure on real property. The amended proposed plan provided for the cram-down of the secured claim held by Wells Fargo to $60,000.00. The Confirmation Order provided “that confirmation is expressly conditioned upon [Mr. Smith] providing for the payment of all claims assertable against [Mr. Smith’s] estate as specified in the Plan and in this Order.” The Chapter 11 case was, however, dismissed at Mr. Smith’s request two years later, after which Wells Fargo recommenced foreclosure. The Superior Court, hearing the foreclosure on appeal, held that the pursuant to 11 U.S.C.… Read More

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N.C. Ct. of Appeals: TM Construction, Inc. v. Marco Contractors, Inc.- Untimely Demand for Arbitration

Summary:

In a dispute between construction contractors, the Court of Appeals affirmed the trial court order denying a demand for arbitration as untimely. Holding normally a trial court should determine the validity of an arbitration agreement (namely that a valid agreement exists and that the dispute is within the scope of the agreement), here the trial court instead found that even assuming arguendo that there was an enforceable arbitration provision, the demand was untimely. While this placed “the cart before the horse”, the Court of Appeals held that such determination was appropriate. Recognizing that a party can implicitly waive a contractual right to arbitrate “if by its delay or by actions it takes which are inconsistent with arbitration, another party to the contract [would be] prejudiced by [an] order compelling arbitration.” Cyclone Roofing Co., Inc.… Read More

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N.C. Court of Appeals: In re Bober- Finality of Foreclosure Sale

Summary:

The Bobers sought to raise issues with the validity of the notarization of a Deed of Trust against property owned as tenants by the entireties on the basis that Mr. Bober had signed it for himself and under a Power of Attorney for his wife, but the notary did not expressly indicate that he was appearing in that capacity for Mrs. Bober.

The Court of Appeals did not need to reach this rather dubious argument, as the foreclosure sale had completed prior to the commencement of this action, precluding collateral attack and mooting the issue as the rights of the parties were now fixed.… Read More

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N.C. Court of Appeals: In re Powell- Sufficiency of Notice of Foreclosure

Summary:

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.… Read More

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N.C. Court of Appeals: Mazzone v. Bank of America- Res Judicata Effect of Foreclosure Hearing

Summary:

The Court of Appeals held that the finding by the Mecklenburg Clerk of Court at the foreclosure hearing that Bank of America was the holder of the mortgage note was res judicata and precluded the Mazzones from making an impermissible collateral attack on this question in a subsequent action to quiet title.

Commentary:

The Court of Appeals here relied completely on Phil Mechanic Const. Co., Inc. v. Haywood, 72 N.C. App. 318, 322, 325 S.E.2d 1, 3 (1985) which held that “when a mortgagee or trustee elects to proceed under G.S. 45-21.1 et seq., issues decided thereunder as to the validity of the debt and the trustee’s right to foreclose are res judicata and cannot be relitigated”.… Read More

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N.C. Court of Appeals: In re Clouse- Requirement for De Novo Foreclosure Hearing

Summary:

On October 21, 1998, the Clouses granted a Deed of Trust against their home originally to Homecomings Financial, later assigned to Deutsche Bank and serviced by GMAC. On June 22, 2012, Turnip Investments, following its suit against the Clouses, purchased the property at a judgment execution sale for $1,000. Subsequently, Deutsche Bank commenced foreclosure against the property and Turnip Investments appealed the foreclosure authorization by the Clerk first to the Superior Court, where Turnip Investments raised no objections to any evidence, and then a further appeal to the Court of Appeals.

There Turnip Investment argued that the Superior Court failed to conduct a proper de novo hearing and had insufficient evidence to show that Deutsche Bank was the holder of the Note.… Read More

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