NC Court of Appeals: GMAC Mortgage v. Miller- Ambiguous and/or Conflicting Description of Real Property in a Deed of Trust

Summary: William Miller, Russell Grogan and Stephanie Grogan purchased a 21.394 acre tract (Tract I) in 1997 and subsequently a 0.15 acre tract (Tract II) to provide access to a road.  In 2003, the owners granted a Deed of Trust to GMAC.  The Deed of Trust included a tax parcel number that encompassed both Tract I and Tract II, but the legal description only referenced Tract II.  In 2005, the owners subdivided Tract I into Tract IA, consisting of 10.932 acres owned by all three,  and Tract IB, consisting of 10.389 acres which was henceforth to be owned solely by the Grogans.  In 2006, the owners granted a Deed of Trust against Tract IA, currently assigned to Wells Fargo. The owners subsequently defaulted on the mortgage with GMAC, which brought a judicial foreclosure asserting that it should be allowed to foreclose against Tract IA and an easement to use the private drive, as those had been the intended collateral.  (GMAC abandoned its action to reform the Deed of Trust for reasons that are not clear from the opinion.)  Well Fargo intervened asserting that GMAC did not have a superior lien against Tract IA. The trial court found that based on the "four corners" of the Deed of Trust,  GMAC was entitled to a judicial foreclosure against Tract IA, but was judicially estopped from proceeding against Tract IB and Tract II, since it had failed to seek foreclosure against those tracts.  Wells Fargo appealed. Distinguishing this case from Fifth Third Mortgage Co.  v.  Miller, 690 S.E.2d 7 (N.C. Court of Appeals 2010), the Court of Appeals here held that the Deed of Trust did not contain a totally erroneous description of the property, as in Fifth Third.  Instead the GMAC Deed of Trust contained a conflicting description in that the tax parcel number describes Tract I and Tract II, where the legal description only references Tract II.  Based on the tax parcel number, the fact that the Deed of Trust was a for a single family residential home and the amount of the original loan, the trial court properly held that the GMAC Deed of Trust encumbered both tracts. Comments: This would not necessarily be the same result had the owners filed bankruptcy, as the Trustee could have avoided the lien of GMAC pursuant to 11 U.S.C. §544. This case conflicts rather directly  with Sun Trust Bank, N.A. v. Northen, 433 B.R. 532 (M.D.N.C.  2010)   GMAC Mortgage v. Miller- Ambiguous andor Conflicting Description of Real Property in a Deed of Trust.PDF