Joseph and Michelle Drury owned the real property at issue in Mecklenburg County. In 2009, BB&T agreed to loan the Drurys $2,000,000.00 in exchange for a first position lien on the Property, with the Drurys executing a deed of trust to BB&T. The BB&T deed of trust was inadvertently recorded in the Union County Registry on August 18, 2009. The Drurys later executed another deed of trust to “GPAR FF, LLC, a North Carolina limited liability company” as the sole “Payee” for $500,000, which was recorded in the Mecklenburg County Registry on September 9, 2015. The BB&T deed of trust was not correctly recorded in the Mecklenburg County Registry until August 18, 2016.
GPAR FF, LLC was administratively dissolved as a North Carolina corporation on June 25, 2014, with its registered agent executing the same day a certificate of formation to incorporate GPAR FF, LLC in the State of Delaware.
BB&T filed suit against "GPAR FF, LLC", shortly thereafter amending its complaint to name GPAR FF, LLC as a limited liability company organized and existing in the State of North Carolina, and stated that upon information and belief, GPAR FF, LLC had been dissolved. As such, BB&T asserted that as “GPAR FF, LLC, a North Carolina limited liability company” ceased to exist on June 25, 2014, it could not be granted a deed of trust on September 9, 2015. GPAR FF instead sought reformation of the September 9, 2015, deed of trust to name its existent Delaware iteration as the beneficiary due to mutual mistake in its drafting.
The Court of Appeals, while affirming the strong presumption in favor of the correctness of deeds of trust as written, nonetheless found that here "there was strong, cogent, and convincing evidence" that the parties intended GPAR FF, LLC, as incorporated in Delaware, to be the beneficiary of the deeds of trust and promissory note.
Both because GPAR FF, LLC is the primary defendant in this action and because the first captioned defendant, SunTrust, has merged with BB&T, for clarity I have captioned this case as BB&T v. GPAR FF, LLC.
The result in case followed particularly as BB&T had failed to object to the introduction of evidence by GPAR FF, LLC at trial regarding mutual mistake.
Had there been a bankruptcy case filed before (or even shortly after) the recordation of the BB&T deed of trust in Mecklenburg County, not only would that deed of trust have been unperfected and ineffective, but GPAR FF, LLC would also have been precluded from reforming its deed of trust.
For a copy of the opinion, please see: