Summary:
In February 2003, Currie, serving as the executor for the Estate of Della Brown, brought suit against the Poteats, for conversion of funds which were used to purchase their home, filing a notice of lis pendens on March 13, 2003. This action was subsequently voluntarily dismissed without prejudice in open court on September 7, 2004, so that Currie could be re-qualified as the executor of the estate. On September 8, 2004, the Potent’s attorneys recorded a Deed of Trust against their home, securing the unpaid attorneys’ fees, and transferring a remainder interest to the Potent’s daughter, with a reservation of a life estate. On September 22, 2004, Currie was re-qualified as the executor, filed a written dismissal of the first complaint and commenced an identical second case, again filing a notice of lis pendens. Currie eventually, after appeal to the North Carolina Court of Appeals, obtain a judgment against the Poteats. Discovering the September 8th Deed, Currie successfully brought a third action to set aside the transfer as a fraudulent conveyance ab initio. Poteat then claimed the property as exempt, listing the lien owed to his lawyers and Currie objected to the exemption. The law firm intervened and argued that as Currie had been discharged as the executor of the estate at the time the first lis pendens had been filed, he lacked standing to take such action. In response, Currie sought and was allowed to be re-qualified nunc pro tunc as the executor to April 2002, to which the law firm appealed to superior court, which affirmed the nunc pro tunc re-qualification. The matter then went before the district court for a determination of the priorities of the liens, which held that the first lis pendens was void, both because the first case had been voluntarily dismissed and as Currie had failed to provide proper notice of the lis pendens.
The Court of Appeals held that the nunc pro tunc re-qualification of Currie did cure the defective qualification, as the law firm did not appeal that superior court order. Further, while the law firm had actual notice of Currie’s intent to refile a second complaint, the deed of trust filed by the law firm in the gap between voluntary dismissal of the first action and commencement of the second, was irrelevant as “there was no pending action for any party to have notice of” during that time.
Commentary:
This does not leave Currie without a lien, only a second priority lien, so perhaps liquidation is still feasible. Even if Currie had obtained priority over the law firm’s Deed of Trust, the Poteats could still have filed bankruptcy and avoided that judgment as impairing their exemptions as 11 U.S.C. § 522(f)(2)(A)(ii) includes in that calculation “all other liens on the property.” See In re Gilmer: http://www.ncmb.uscourts.gov/sites/default/files/opinions/gilmer.pdf
For a copy of the opinion, please see:
Currie v. Poteat- Nunc Pro Tunc and Lis Pendens
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