Bank of Am., N.A. v. Charlotte Prop. Invs., LLC

• Court: Court of Appeals of North Carolina
• Decided: June 17, 2014
• Docket: 14-42
• Status: Unpublished

Opinion

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of A p p e l l a t e P r o c e d u r e .

NO. COA14-42 NORTH CAROLINA COURT OF APPEALS

Filed: 17 June 2014

BANK OF AMERICA, N.A., Plaintiff,

v. Mecklenburg County No. 13 CVS 2168 CHARLOTTE PROPERTY INVESTMENTS, LLC, and WILLIAM C. GATHINGS, Defendants.

Appeal by defendant Charlotte Property Investments, LLC

from order entered 17 October 2013 by Judge Robert C. Ervin in

Mecklenburg County Superior Court. Heard in the Court of

Appeals 5 May 2014.

Johnston, Allison & Hord, P.A., by Greg C. Ahlum and Ryan P. Hoffman, for plaintiff–appellee.

Cranford, Buckley, Schultze, Tomchin, Allen & Buie, P.A., by R. Gregory Tomchin, for defendant–appellant Charlotte Property Investments, LLC.

MARTIN, Chief Judge.

Defendant Charlotte Property Investments, LLC (“defendant

CPI”) appeals from an order which granted summary judgment in

favor of plaintiff Bank of America, N.A. (“plaintiff Bank”) on -2- plaintiff Bank’s claim to quiet title, and decreed that

plaintiff Bank’s Deed of Trust is a valid encumbrance on the

property at issue from the date of recordation and that this

property——which is now owned by defendant CPI——is subject to

plaintiff Bank’s Deed of Trust. We affirm.

The evidence in the record tended to show that, on 31 July

2001, a North Carolina General Warranty Deed (“the Warranty

Deed”) was recorded in the Mecklenburg County Register of Deeds,

which conveyed to Grantee William C. Gathings (“defendant

Gathings”) the property described as follows:

BEING all of Lot 39 of BELMEADE GREEN, Phase 1, Map 1, as same is shown on a revised map thereof recorded in Map Book 33, page 679, in the office of the Register of Deeds for Mecklenburg County, North Carolina.

The physical address for the property was designated in the

Warranty Deed as 2816 Oasis Lane, Charlotte, North Carolina

28214, the brief description for the real estate index listing

was “Lot 39 of Belmeade Green,” and the parcel ID number was

“053-074-33.”

On 13 June 2003, a Deed of Trust was recorded in the

Mecklenburg County Register of Deeds, in which defendant

Gathings was designated as the Borrower and Countrywide Home

Loans, Inc. (“Countrywide”) as the Lender. In exchange for a

loan of $117,000.00, defendant Gathings, as the Borrower on a -3- note that was dated 5 June 2003, “irrevocably grant[ed] and

convey[ed]” property described in the Deed of Trust as follows:

Lying and being in Crab Orchard Township, Mecklenburg County, North Carolina, and being all of Lot No. 149 of Hickory Ridge 6B, Map #5, and being on file in the Office of the Register of Deeds for Mecklenburg County, North Carolina, in Map Book 21, Page 150, specific reference thereto being made for a more complete description thereof by metes and bounds.

The description of the property in the Deed of Trust further

indicated that the parcel ID number was “053 074 33,” and that

the property description “currently has the address of”

2816 Oasis Lane, Charlotte, North Carolina 28214, both of which

are the same as the parcel ID number and the physical address of

the property that is the subject of the Warranty Deed.

According to plaintiff Bank, in July 2010, the Belmeade

Green Homeowners’ Association, Inc. (“the HOA”) filed a claim of

lien for past due homeowners’ association dues in the amount of

$110.00, and this claim of lien referenced the same physical

address to which both the Warranty Deed and the Deed of Trust

refer: 2816 Oasis Lane, Charlotte, North Carolina 28214. The

parties agree that the HOA subsequently foreclosed on this claim

of lien, that defendant CPI was the highest bidder for this

property at the foreclosure with an upset bid of $3,253.25, and

that this property was conveyed to defendant CPI. In June 2011, -4- the Association Lien Foreclosure Deed (“the Foreclosure Deed”),

later filed in the Mecklenburg County Register of Deeds,

described the property conveyed by the HOA to defendant CPI as

“the same property described in the [Warranty Deed] recorded in

Deed Book 12508, at Page 753 of the Mecklenburg County Public

Registry,” and included the same description as that which was

included in the Warranty Deed:

Being all of Lot 39 of Belmeade Green, Phase 1, Map 1, as same is shown on a revised map thereof recorded in Map Book 33, Page 679, in the Office of the Register of Deeds for Mecklenburg County, North Carolina.

Daoshan Sun, a manager for defendant CPI, stated in an

affidavit that, prior to submitting the upset bid for this

property on behalf of defendant CPI, he searched the real estate

index of the Mecklenburg County public records, and that his

search “did not reveal a Deed of Trust against William C.

Gaithing’s [sic] property with the legal description of Lot 39,

Belmead [sic] Green.” The brief legal description for the Deed

of Trust that appears in the Mecklenburg County Register of

Deeds’ real estate index search reads “LT 149 HICKORY

RIDGE 6 B,” whereas the brief legal description for the Warranty

Deed that appears in the index reads “LT 39 BELMEADE GREEN

PH 1.”

Plaintiff Bank filed a Complaint against defendants CPI and -5- Gathings alleging that: “[d]ue to an error on the part of the

draftsman, the lot and block legal description in the Deed of

Trust does not describe the Property but, rather, describes

Lot 149 of Hickory Ridge Subdivision (‘Lot 149’)”; “[defendant]

Gathings has never owned an interest in Lot 149”; “[t]he

inclusion of the lot and block legal description of Lot 149 in

the Deed of Trust instead of the lot and block legal description

of the property was a mutual mistake of fact as between the

parties to the Deed of Trust”; and the Deed of Trust is now held

by plaintiff Bank. Plaintiff Bank prayed that the trial court

enter an order “reforming the Deed of Trust to replace the lot

and block legal description of Lot 149 with the Lot and Block

legal description of the Property”; or, in the alternative,

enter an order “declaring a constructive trust upon title to the

Property granting [plaintiff Bank] a first position lien on the

Property” relating back to the date on which the Deed of Trust

was recorded; enter an order “quieting title to the Property in

the name of [defendant] CPI subject to the Deed of Trust”; or,

in the alternative, enter judgment in favor of plaintiff Bank

and against defendant Gathings for plaintiff Bank’s “actual

damages arising from Gathings’ breach of the warranties

contained in the Deed of Trust.”

Plaintiff Bank and defendant CPI filed cross-motions for -6- summary judgment, which motions were heard in October 2013. In

support of its motion for summary judgment and in opposition to

plaintiff Bank’s motion, defendant CPI submitted affidavits from

its manager, Daoshan Sun, in which Mr. Sun described his search

of the real estate index in the Mecklenburg County Register of

Deeds for property “with the legal description of Lot 39,

Belmead [sic] Green,” and attested that neither his search of

the index nor his personal examination of the real property gave

him any “reason to be aware of [plaintiff Bank’s] claim against

the real property.” In support of its motion for summary

judgment, plaintiff Bank submitted affidavits from William C.

Parise, an attorney with six years’ of experience performing

“thousands of title searches,” who conducted his own title

search of the property that is the subject of the Warranty Deed.

Mr. Parise attested that: although the Warranty Deed and the

Deed of Trust “contain different lot and block references, they

contain the same property address (2816 Oasis Lane, Charlotte)

and the same parcel ID number (053-074-33)”; his search of the

property referenced by lot and block in the Deed of Trust

“showed that [defendant] Gathings has never owned an interest in

the property referenced by lot and block in the Deed of Trust”;

because the two deeds contained the same property address and

parcel ID number, and because defendant Gathings “never owned -7- the property referenced by lot and block in the Deed of Trust,”

he included the Deed of Trust as “a possible encumbrance of the

Property”; and “[u]sing the proper standard of care, a title

searcher cannot rely solely on the index with regard to recorded

documents.”

On 17 October 2013, the trial court entered an order in

which it decreed that plaintiff Bank’s Deed of Trust is a valid

encumbrance on the property from the date of recordation,

adjudged that the property is owned by defendant CPI subject to

plaintiff Bank’s Deed of Trust, granted summary judgment in

favor of plaintiff Bank on its claim for quiet title, and denied

defendant CPI’s motion for summary judgment. Defendant CPI

appeals.

_________________________

Defendant CPI first contends the trial court erred by

determining that the Deed of Trust is a valid encumbrance on the

property at issue because it contains an “erroneous legal

description.” Defendant CPI asserts that this description was

not sufficient to have put it on notice that the Deed of Trust

encumbered the property.

“A deed purporting to convey an interest in land is void

unless it contains a description of the land sufficient to

identify it or refers to something extrinsic by which the land -8- may be identified with certainty.” Overton v. Boyce, 289 N.C.

291, 293, 221 S.E.2d 347, 349 (1976). Moreover, “[a] deed of

trust containing a defective description of the subject property

is a defective deed of trust and provides no notice, actual or

constructive, under our recordation statutes.” Fifth Third

Mortg. Co. v. Miller, 202 N.C. App. 757, 761, 690 S.E.2d 7, 9–

10, disc. review denied, 364 N.C. 601, 703 S.E.2d 445 (2010).

Nevertheless, it has long been recognized that “[a] purchaser

. . . has constructive notice of all duly recorded documents

that a proper examination of the title should reveal.” Stegall

v. Robinson, 81 N.C. App. 617, 619, 344 S.E.2d 803, 804, disc.

review denied, 317 N.C. 714, 347 S.E.2d 456 (1986). Such an

examination has been said to “charge[] purchasers with

constructive notice of all that could be discovered by a search

of the deeds and records, whether within the direct chain of

conveyances or outside the direct chain of conveyances,” id. at

621, 344 S.E.2d at 805 (internal quotation marks omitted), so

that “the title examiner must look at each deed of any tract of

land of both immediate and prior grantors that was executed

during each one’s ownership of the land in question.” Id. at

621, 344 S.E.2d at 805–06 (internal quotation marks omitted).

In the present case, defendant CPI urges that Fifth Third

Mortgage Co. requires us to conclude that the trial court erred -9- by determining that the property at issue is encumbered by the

Deed of Trust. See Fifth Third Mortg. Co., 202 N.C. App. at

758, 760–61, 690 S.E.2d at 9–10 (affirming the trial court’s

order which determined that a subsequent purchaser of property

did not have constructive notice of a deed of trust because the

deed contained an erroneous description of the property securing

the debt that described the property as being located in a

different county from both the county in which the property was

actually located and the county in which the deed was

registered). Although a deed of trust containing an inaccurate

description of the subject property is “defective” and “provides

no notice, actual or constructive, under our recordation

statutes,” see id. at 761, 690 S.E.2d at 9–10, here, the record

indicates that the Deed of Trust contained the correct physical

address and parcel ID number, thereby referring to extrinsic

sources from which the land could be identified with certainty.

See Overton, 289 N.C. at 293, 221 S.E.2d at 349. Moreover,

defendant CPI conducted an inadequate title examination, relying

solely on the brief description in the real estate index, rather

than examining all duly recorded documents “executed during

[Gathings’] ownership of the” subject property. See Stegall,

81 N.C. App. at 621, 344 S.E.2d at 805–06 (internal quotation

marks omitted); see also Waters v. N.C. Phosphate Corp., -10- 310 N.C. 438, 441–42, 312 S.E.2d 428, 432 (1984) (“The law

contemplates that a purchaser of land will examine each recorded

deed and other instrument in his chain of title and charges him

with notice of every fact affecting his title which an accurate

examination of the title would disclose.”). For this reason, we

conclude the Deed of Trust, by referring to the correct physical

address and parcel ID number, was sufficient to identify the

parcel with certainty and to provide constructive notice of the

lien.

Defendant CPI next contends plaintiff Bank has failed to

establish that it holds the Deed of Trust and, therefore, is not

entitled to prevail at summary judgment on its quiet title

action.

An action to quiet title is controlled by N.C.G.S. § 41-10,

which provides, in part, that “[a]n action may be brought by any

person against another who claims an estate or interest in real

property adverse to him for the purpose of determining such

adverse claims . . . .” N.C. Gen. Stat. § 41-10 (2013). “The

beneficial purpose of this section is to free the land of the

cloud resting upon it and make its title clear and indisputable,

so that it may enter the channels of commerce and trade

unfettered and without the handicap of suspicion.” Heath v.

Turner, 309 N.C. 483, 488, 308 S.E.2d 244, 247 (1983). “In an -11- action to quiet title, the burden of proof is on the plaintiff

to establish his title,” id., which may be done “by traditional

methods or by reliance on the Real Property Marketable Title

Act.” Id.; see also Mobley v. Griffin, 104 N.C. 112, 115–16,

10 S.E. 142, 142–43 (1889) (setting out the traditional methods

of proving title). To make a prima facie showing of title

through traditional methods, plaintiffs “may offer a connected

chain of title.” Heath, 309 N.C. at 489, 308 S.E.2d at 247.

In the present case, the record includes the Deed of Trust,

which identifies Countrywide as the Lender and defendant

Gathings as the Borrower. Plaintiff Bank supplemented the

record on appeal pursuant to Appellate Rule 9(b)(5)(a) with an

Assignment of Deed of Trust, which provides that the same Deed

of Trust for property with the address of 2816 Oasis Lane in

Charlotte, North Carolina, recorded with the Mecklenburg County

Register of Deeds on 13 June 2003 has since been assigned and

transferred from Countrywide to “BAC Home Loans Servicing, LP

FKA Countrywide Home Loans Servicing, LP,” of which plaintiff

Bank is a “successor by merger.” There is no transcript of the

summary judgment hearing before the trial judge included in the

record on appeal. Rule 9(a)(1)(j) of the North Carolina Rules

of Appellate Procedure provides that copies of “papers filed”

“in the trial court which are necessary to an understanding of -12- all issues presented on appeal” “shall” be contained in the

record on appeal. N.C.R. App. P. 9(a)(1)(j). Appellate

Rule 9(b)(5)(a) provides that a party “may supplement the record

on appeal with any items that could otherwise have been included

pursuant to this Rule 9” “[i]f the record on appeal as settled

is insufficient to respond to the issues presented in an

appellant’s brief.” N.C.R. App. P. 9(b)(5)(a). Thus, the

record is only to contain documents that were before the trial

court and, in the absence of any objection from defendant CPI to

plaintiff Bank’s supplement to the record, we must assume that

the Assignment of Deed of Trust was before the trial court.

Therefore, plaintiff Bank had standing, pursuant to the

assignment, to file the claims brought in this action, and this

argument is without merit.

Affirmed.

Judges STEELMAN and DILLON concur.

Report per Rule 30(e).