N.C. Ct. of Appeals: Irish Creek HOA v. Rogers - Foreclosure Set Aside as Covid-Era Service was Insufficient

Summary:

Trenita Rogers bought her Winterville home in 2010, subject to the Irish Creek HOA. In 2021, after allegedly failing to pay $1,391.23 in assessments, the HOA filed liens and moved forward with foreclosure. Notice was attempted by certified mail during the USPS’s Covid-19 “contactless” protocol—where carriers often signed “C19” themselves instead of obtaining the addressee’s signature—and by sheriff posting without a proper court order. Rogers never appeared at the foreclosure hearing, and the property was sold at auction in 2022 after a lengthy upset bid process, ultimately bringing over $221,000. Rogers claimed she had never actually been served, that she did not recall receiving HOA bills, and that she would have cured the arrears had she known of the hearing.

She moved to set aside the foreclosure under Rule 60, but both the Clerk and Superior Court rejected her arguments, finding service sufficient and her neglect “inexcusable.” The trial court even ordered her to pay over $26,000 in attorney’s fees to the HOA, the trustee, and the purchaser for bringing a “meritless” motion. When Rogers attempted appeal, the Superior Court dismissed it for failure to timely serve the proposed record on appeal under Rule 11(b), citing her supposed lack of diligence and candor.

Holding:
The Court of Appeals reversed. First, it found the trial court abused its discretion by dismissing the appeal without applying the Dogwood framework for whether a procedural violation was a “substantial failure” or “gross violation.” More importantly, it held that USPS Covid-19 contactless protocols did not satisfy the strict requirements of Rule 4 service by certified mail. With no signature of Rogers or even her initials, there was no valid service, and thus no jurisdiction for the foreclosure order. The Court reversed the denial of Rogers’ Rule 60 motion, vacated the attorney fee awards, and remanded for consideration of remedies, including whether the purchaser was a good-faith buyer and whether the foreclosure price was adequate.

Commentary:

This case illustrates how procedural shortcuts in service can unravel an entire foreclosure years later, especially when courts and trustees relied on the USPS’s makeshift Covid protocols. The appellate court rightly emphasized that the purpose of certified mail service is to prove actual notice, and “Covid-19” scrawled by a mail carrier does not create jurisdiction.

It is also a cautionary tale about the tendency of trial courts to punish homeowners with crushing attorney fee awards when they contest foreclosures. Rogers was saddled with nearly $30,000 in fees for daring to argue she had not been served—a position ultimately vindicated by the Court of Appeals. The panel’s decision to vacate those awards restores some balance.

Finally, the case tees up important questions on remand: what happens to the purchaser, who paid over $220,000 in upset bids, and whether the sale price was “grossly inadequate” under North Carolina law. This tension between protecting homeowners from defective process and protecting finality for bidders will continue to play out.