Currie v. Poteat

• Court: Court of Appeals of North Carolina
• Decided: April 1, 2014
• Docket: 13-814
• Status: Unpublished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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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 a ccordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-814 NORTH CAROLINA COURT OF APPEALS

Filed: 1 April 2014

CLEON CURRIE, as Executor of the Estate of Della Brown, Plaintiff,

v. Caswell County No. 04 CVS 336 ISAAC POTEAT and wife, ROSETTA POOLE POTEAT, Defendants,

and

GEORGE B. DANIEL, P.A., Intervenor Defendant.

Appeal by Plaintiff from order entered 28 May 2013 by Judge

Michael Gentry in Caswell County Superior Court.1 Heard in the

Court of Appeals 8 January 2014.

1 The underlying action from which this appeal is taken was in the superior court in Caswell County. The clerk of superior court referred the matter to Judge Michael Gentry, an elected judge of the district court in Caswell County, for a hearing pursuant to N.C. Gen. Stat. § 1C-1603(e)(7) (2013) (“If the judgment creditor objects to the schedule filed or claimed by the judgment debtor, the clerk [of superior court] must place the motion for hearing by the district court judge, without a jury, at the next civil session.”). We also note that Plaintiff erroneously captioned his notice of lis pendens in a preceding and related case involving the same parties, 03 CVS 43, as being in the district court although that matter was also in the -2-

Carruthers & Roth, P.A., by Kenneth R. Keller, for Plaintiff.

No brief for Defendants.

George B. Daniel, P.A., by Amy Scott Galey, for Intervenor Defendant.

STEPHENS, Judge.

Procedural History and Factual Background

Plaintiff Cleon Currie, in his capacity as Executor of the

Estate of Della Brown, appeals from a 28 May 2013 order

determining the relative priority as between a deed of trust

obtained by Intervenor George B. Daniel, P.A., (“the law firm”)

from its clients, Defendants Isaac Poteat, Jr., and his wife,

Rosetta Poole Poteat, and a judgment subsequently obtained

against the Poteats by Currie on behalf of Brown’s estate. The

law firm obtained the deed of trust to secure its legal fees

associated with the representation of the Poteats on a claim

brought by Currie for, inter alia, conversion of funds to

purchase the home on which the law firm took the deed of trust.

Della Brown died testate in March 2002. Her will named

Currie, her great-nephew, as executor of her estate, file number

superior court. This apparent clerical error has no bearing on our resolution of this appeal. -3- 02 E 213 (“the estate matter”). In July 2002, having found no

property in Brown’s name, Currie filed final account documents

as to Brown’s estate and was discharged as executor.

Thereafter, Currie learned that, at a time when Currie believed

Brown lacked mental capacity, Isaac Poteat had caused Brown to

transfer $92,000 to the Poteats. Currie also learned that the

Poteats had used $75,000 of that money to purchase a home in

Yanceyville, North Carolina (“the home”). Currie hired attorney

Powell W. Glidewell IV to pursue possible claims on behalf of

Brown’s estate, unaware that his signing of the final account as

to her estate and his discharge as executor of the estate might

affect his right to undertake such action.

In February 2003, Glidewell filed a complaint in the

superior court in Caswell County on Currie’s behalf asserting

various claims against the Poteats, file number 03 CVS 43 (“the

first case”). On 13 March 2003, Glidewell filed notice of lis

pendens. The law firm represented the Poteats in that action.

The case was set for trial in September 2004, and, at the pre-

trial conference on 7 September 2004, the law firm advised the

court and Glidewell of its contention that Currie’s discharge as

executor of Brown’s estate constituted a fatal defect to his

claims on Brown’s behalf against the Poteats. Upon hearing the -4- law firm’s contentions, Glidewell stated in open court his

intention to dismiss the action without prejudice the following

day so that Currie could be re-qualified as executor of Brown’s

estate, after which he would refile a complaint against the

Poteats. The trial court announced in open court that the first

case was voluntarily dismissed.2

On 8 September 2004, the Poteats, through the law firm,

filed a deed of trust on the home to secure a promissory note to

the law firm in the amount of $40,000. On the same day, a

general warranty deed (“the Poteat deed”) was filed,

transferring a remainder interest in the home to the Poteats’

daughters and retaining a life estate to the Poteats. On 22

September 2004, a series of filings occurred: (1) Currie signed

an amended petition to reopen the estate matter, which he took

to the clerk of superior court in Rockingham County; (2) the

clerk filed the petition and order to re-open the estate matter,

re-qualified Currie as executor, and issued letters

testamentary; (3) Glidewell filed a written dismissal without

prejudice of the first case; and (4) Glidewell filed a second

2 A voluntary dismissal announced in open court becomes effective immediately and terminates all adversary proceedings in the case. Walker Frames v. Shively, 123 N.C. App. 643, 646, 473 S.E.2d 776, 778 (1996). Accordingly, as Currie and the law firm agree, the first case was dismissed on 7 September 2004. -5- civil action against the Poteats, file number 04 CVS 336 (“the

second case”), and a second notice of lis pendens. The

complaint in the second case was virtually identical to the

first, except for updated references to the reissued letters

testamentary.

The second case was tried in September 2005 and the jury

returned a verdict that Currie, on behalf of the Brown estate,

was entitled to recover $75,000 from the Poteats for

constructive fraud and conversion. The Poteats appealed, and

this Court affirmed that judgment in an unpublished opinion,

Currie v. Poteat, 185 N.C. App. 158 (2007), available at 2007

N.C. App. LEXIS 1757. However, execution of the judgment was

returned unsatisfied.

Thereafter, Currie learned of the Poteat deed and filed an

action seeking to set aside that conveyance as fraudulent, file

number 08 CVS 320 (“the third case”). On 7 July 2009, the

superior court entered a default judgment in favor of Currie,

setting aside the Poteat deed and declaring it void ab initio.

In August 2009, Isaac Poteat filed a motion to claim exempt

property which listed, inter alia, the lien owed to the law

firm. Currie objected, and, on 21 August 2009, the trial court

set aside the order designating exempt property and set the -6- matter for hearing. The law firm intervened in the third case

and, on 15 October 2009, filed an answer that asserted various

defenses, each based upon its assertion that Currie had lacked

standing to file the notice of lis pendens in the first case

because he had been discharged as executor of Brown’s estate at

the time. The answer did not claim any defect in service of the

notice of lis pendens in the first case.

On 11 December 2009, Currie filed a petition in the estate

matter to date his requalification as executor nunc pro tunc to

2 April 2002. The clerk of superior court allowed the petition

on 14 January 2010. The law firm appealed to superior court,

and after hearing arguments, on 22 April 2010, the superior

court filed an order affirming the clerk’s order allowing the

petition to date Currie’s requalification as executor nunc pro

tunc to 2 April 2002 (“the nunc pro tunc order”). The law firm

did not appeal from that order, and the time in which it could

do so has passed.

In November 2012, the clerk of superior court referred the

matter to the district court in Caswell County for determination

of the relative priorities of the judgment Currie had obtained

in the second case and the deed of trust held by the law firm.

See N.C. Gen. Stat. § 1C-1603(e)(7). -7- On 26 May 2013 nunc pro tunc to 27 November 2012, the court

entered an “Order Determining Priority of Liens” which declared

that the law firm’s deed of trust had priority over Currie’s

judgment against the Poteats. In the order, the court concluded

that: (1) because the first case was voluntarily dismissed on 7

September 2004 and the deed of trust was recorded the following

day, the law firm was not a purchaser pendente lite3; (2)

although a complaint can serve as a notice of lis pendens,

because the first case had been dismissed at the time the deed

of trust was recorded, the complaint in that case became a

nullity which could no longer serve as notice of lis pendens;

and (3) because “Currie did not follow his [n]otice of [l]is

[p]endens with either the first publication of notice of the

summons, or by an affidavit therefor[e] pursuant to Rule

4(j)(1)c of the Rules of Civil Procedure, or by personal service

on the defendant within 60 days after the cross-indexing, as

required by [N.C. Gen Stat. §] 1-110(a),” the notice of lis

pendens in the first case “was void.” (Italics added). From

that order, Currie appeals.

Discussion

3 “One who buys an interest in something that is the subject of a pending lawsuit.” Black’s Law Dictionary 1271 (8th ed. 2004). -8- On appeal, Currie argues that (1) the lis pendens filed in

the first case was sufficient to constitute legal notice of

Currie’s claims on the home at the time the law firm obtained

its deed of trust and, (2) even if the notice of lis pendens in

the first case was not effective, the law firm had actual notice

of pending litigation affecting the home such that the law firm

took the deed of trust subject to the judgment subsequently

rendered. We are constrained to disagree.

I. Standard of Review

“The standard of review on appeal from a judgment entered

after a non-jury trial is whether there is competent evidence to

support the trial court’s findings of fact and whether the

findings support the conclusions of law and ensuing judgment.”

Cartin v. Harrison, 151 N.C. App. 697, 699, 567 S.E.2d 174, 176

(citation and internal quotation marks omitted), disc. review

denied, 356 N.C. 434, 572 S.E.2d 428 (2002). “[F]indings of

fact made by the trial judge are conclusive on appeal if

supported by competent evidence, even if there is evidence to

the contrary.” Sisk v. Transylvania Cmty. Hosp., Inc., 364 N.C.

172, 179, 695 S.E.2d 429, 434 (citation, internal quotation

marks, and ellipsis omitted), reh’ing denied, 364 N.C. 442, 702

S.E.2d 65 (2010). “Conclusions of law drawn by the trial court -9- from its findings of fact are reviewable de novo on appeal.”

Carolina Power & Light Co. v. City of Asheville, 358 N.C. 512,

517, 597 S.E.2d 717, 721 (2004).

II. Notice of lis pendens in the first case

In arguing that the notice of lis pendens in the first case

was effective on 8 September 2004 when the deed of trust was

recorded, Currie asserts that (1) his discharge as executor of

Brown’s estate before the filing of the first case was cured

when the clerk of superior court re-qualified him nunc pro tunc

to the date of his initial qualification, (2) the method of

service of the notice of lis pendens was statutorily sufficient,

and (3) because the first case was dismissed without prejudice,

the second case was a continuation of the first case.

A. The nunc pro tunc order in the estate matter

We agree with Currie’s contention that the nunc pro tunc

order was effective to cure Currie’s discharge as executor of

Brown’s estate and reject the law firm’s arguments to the

contrary as impermissible collateral attacks on the nunc pro

tunc order in the estate matter.

A collateral attack is one in which a plaintiff is not entitled to the relief demanded in the complaint unless the judgment in another action is adjudicated invalid. A collateral attack on a judicial proceeding is an attempt to avoid, defeat, -10- or evade it, or deny its force and effect, in some incidental proceeding not provided by law for the express purpose of attacking it. North Carolina does not allow collateral attacks on judgments.

Pinewood Homes, Inc. v. Harris, 184 N.C. App. 597, 601, 646

S.E.2d 826, 830 (2007).

“Nunc pro tunc is defined as now for then. It signifies a

thing is now done which should have been done on the specified

date.” Whitworth v. Whitworth, __ N.C. App. __, __, 731 S.E.2d

707, 712 (2012) (citations and internal quotation marks omitted)

(unpublished opinion), available at 2012 N.C. App. LEXIS 1077.

The law firm cites Whitworth in support of its argument that

entry of the nunc pro tunc order was erroneous:

Nunc pro tunc orders are allowed only when [1] a judgment has been actually rendered, or decree signed, but not entered on the record, [2] in consequence of accident or mistake or the neglect of the clerk provided that the fact of its rendition is satisfactorily established and [3] no intervening rights are prejudiced.

Id. at 712-13 (citations, internal quotation marks, and ellipsis

omitted). The law firm argues that the second two requirements

for entry of the requalification order nunc pro tunc were not

present in the estate matter.

We note that, although the law firm intervened in the

estate matter and appealed the clerk’s order to the superior -11- court, the law firm chose not to appeal from the nunc pro tunc

order and, therefore, the validity of that order is not before

this Court. Accordingly, in resolving this appeal, we will not

consider arguments regarding the invalidity of an order in the

estate matter. Pinewood Homes, Inc., 184 N.C. App. at 601, 646

S.E.2d at 830.

We agree that the nunc pro tunc order cured Currie’s

discharge such that he had standing to file the complaint and

notice of lis pendens in the first case. However, we do not

consider the sufficiency of service of the notice of lis pendens

because, at the time the law firm recorded its deed of trust,

there was no pending action affecting the title to real

property. Our General Statutes providing for constructive

notice of pending litigation via notice of lis pendens are

inapplicable in such circumstances.

The firmly-established doctrine of lis pendens is that: When a person buys property pending an action of which he has notice, actual or presumed, in which the title to it is in issue, from one of the parties to the action, he is bound by the judgment in the action, just as the party from whom he bought would have been.

Hill v. Pinelawn Mem. Park, 304 N.C. 159, 163-64, 282 S.E.2d

779, 782 (1981) (citation and internal quotation marks omitted;

italics added). Our General Statutes provide a scheme for -12- giving notice of lis pendens. See N.C. Gen. Stat. § 1-116 et

seq. (2013). However,

lis pendens notice under our statute is not exclusive. It serves only to provide constructive notice of pending litigation. . . . The lis pendens statutes enable a purchaser for a valuable consideration who has no actual notice of the pendency of litigation affecting the title to the land to proceed with assurance when the lis pendens docket does not disclose a cross- indexed notice disclosing the pendency of such an action.

Our registration statute does not protect all purchasers, but only innocent purchasers for value. While actual notice of another unrecorded conveyance does not preclude the status of innocent purchaser for value, actual notice of pending litigation affecting title to the property does preclude such status. Where a purchaser claims protection under our registration laws, he has the burden of proving by a preponderance of the evidence that he is an innocent purchaser for value, i.e., that he paid valuable consideration and that he had no actual notice, or constructive notice by reason of lis pendens, of pending litigation affecting title to the property.

Hill, 304 N.C. at 164-65, 282 S.E.2d at 783 (citations and

internal quotation marks omitted; italics and some emphasis

added).

Voluntary dismissals are covered by Rule 41(a) of our Rules

of Civil Procedure. N.C. Gen. Stat. § 1A-1, Rule 41(a) (2013). -13- The effect of a judgment of voluntary dismissal is to leave the plaintiff exactly where he or she was before the action was commenced. After a plaintiff takes a Rule 41(a) dismissal, there is nothing the defendant can do to fan the ashes of that action into life, and the court has no role to play. . . . [O]nce a party voluntarily dismisses its action pursuant to . . . Rule 41(a)(1)[], it is as if the suit had never been filed[.]

Hous. Auth. v. Sparks Eng’g, PLLC, 212 N.C. App. 184, 187, 711

S.E.2d 180, 182 (2011) (citations, internal quotation marks, and

some brackets omitted). In sum, “a voluntary dismissal . . .

terminate[s] the action, and no suit is pending thereafter on

which the court can enter a valid order.” Renner v. Hawk, 125

N.C. App. 483, 489, 481 S.E.2d 370, 373, disc. review denied,

346 N.C. 283, 487 S.E.2d 553 (1997).

Here, it is undisputed that the law firm, which represented

the Poteats in the first case (in addition to later litigation),

had actual notice of the claims Currie asserted in that case

which affected title to the home. Further, the law firm was

present at the pretrial conference on 7 September 2004 where the

matter of Currie’s standing to bring the first case was

questioned and Currie, through counsel, stated his intent to

take a voluntary dismissal to reopen Brown’s estate and be re-

qualified as executor so that he could refile the case. -14- Unquestionably, then, the law firm had actual notice of Currie’s

claims, his need to voluntarily dismiss the first case, his plan

to cure the matter of his discharge as executor, and his intent

to refile the case asserting the same claims. However, as noted

supra, the voluntary dismissal was effective when announced in

open court on 7 September 2004, and Currie did not initiate the

second case until the complaint was filed on 22 September 2004.

Thus, on 8 September 2004, as the law firm well knew, there

was no litigation pending that affected title to the home. For

this reason, the doctrine of lis pendens, whether by actual

notice or by constructive notice via a notice of lis pendens,

was inapplicable. Currie’s citations to numerous cases

involving actual notice of pending litigation are unavailing

because the law firm’s “actual notice” here was only of Currie’s

intent to file a new complaint. In simple terms, there was no

pending litigation for any party to have notice of on 8

September 2004, and actual or constructive notice of an

intention to bring litigation is of no legal effect in real

estate transactions.

Currie cites Goodson v. Lehmon, 225 N.C. 514, 35 S.E.2d 623

(1945), for the proposition that a notice of lis pendens filed

in the original case remains effective if the initial proceeding -15- is voluntarily dismissed without prejudice and a second

proceeding is then filed on substantially the same claims. In

that case, the appellees first brought an action in 1943 against

certain of the appellants to set aside a deed to real property

on the ground of mental incompetency of the grantor and duress

and undue influence on the part of the grantees. Id. at 515, 35

S.E.2d at 623. In addition to their complaint, the appellees

filed a separate notice of lis pendens. Id. The appellees

prevailed at trial, but on appeal, our Supreme Court reversed.

Id. at 515, 35 S.E.2d at 623-24 (citing Goodson v. Lehmon, 224

N.C. 616, 31 S.E.2d 756 (1944)).

The opinion was certified to the Superior Court of Catawba County, and appears to have been received there on or about 5 December[] 1944. . . . [J]udgment in accordance with the opinion was rendered and entered in the Superior Court 15 January[] 1945. Meantime, on 5 December[] 1944, the [appellants], holding under the [original] deed, conveyed the lands to [various other parties (“defendants”)] in separate lots.”

On 15 January[] 1945, the [appellees] began a new proceeding . . . upon the same cause of action, seeking the same relief. . . . [but also alleging] that the defendants purchased pendente lite, setting up the notice of lis pendens as part of the complaint, and that each of them had not only constructive notice given by the lis pendens on file, but actual notice of the rights and equities of the plaintiffs respecting the lands. -16-

The defendants demurred to the complaint as not stating a cause of action for that, it is contended, it appears upon the face of the pleading that at the time defendants took title, lis pendens was not in force, as the judgment of reversal in this Court was final, ending the case, and with it the effectiveness of notice of lis pendens, and giving them the status of innocent purchasers without notice; or, if the suit did not end then, it necessarily terminated on 15 January, with a like effect, making valid the deeds they had already taken, notwithstanding the original notice of lis pendens.

Id. at 516, 35 S.E.2d at 624. Our Supreme Court noted that

“[t]he judgment of reversal was not final until its entry in the

Superior Court on 15 January [1944]. [The defendants] were

therefore, at the time they acquired title, purchasers pendente

lite.” Id. at 518, 35 S.E.2d at 625. The Court then held that,

“where there is identity between the causes of action, and a

procedural continuity arising out of the legal right to renew

the litigation on the merits, the original lis pendens will be

effective in the ‘new action,’ where the defendants were

pendente lite purchasers in the original proceeding.” Id.

(emphasis in original).

Here, in contrast, as discussed supra, the deed of trust

was filed in the window between the voluntary dismissal of the

first case and initiation of the second case, a time when there -17- was no pending action. Accordingly, unlike the defendants in

Goodson, the law firm was not a purchaser pendente lite, and we

must affirm the order of the trial court.

AFFIRMED.

Judges STEELMAN and DAVIS concur.

Report per Rule 30(e).