Hodgin v. United Community Bank

734 S.E.2d 630, 223 N.C. App. 408, 2012 N.C. App. LEXIS 1309
CourtCourt of Appeals of North Carolina
DecidedNovember 20, 2012
DocketNo. COA12-383
StatusPublished

This text of 734 S.E.2d 630 (Hodgin v. United Community Bank) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hodgin v. United Community Bank, 734 S.E.2d 630, 223 N.C. App. 408, 2012 N.C. App. LEXIS 1309 (N.C. Ct. App. 2012).

Opinion

ELMORE, Judge.

United Community Bank, Franklin (defendant) appeals from an order denying its motion for reconsideration and granting an amended motion for appropriate relief in favor of Bechard P. Hodgin and his wife Willine P. Hodgin (plaintiffs). After careful consideration, we reverse the decision of the trial court.

T. Background

The dispute between the parties to this appeal began in 2003 when plaintiffs entered into an agreement with defendant to finance a loan for the construction of a new home on a 1.62 acre parcel of land owned by plaintiffs. At that time, plaintiffs also owned an adjacent 2.09 acre tract of land. Plaintiffs borrowed $168,000.00 from defendant, and they secured the loan by executing a Deed of Trust (the 2003 DOT) in favor of defendant. Plaintiffs only intended for the 1.62 acre parcel of land to be collateral for the loan, but the 2003 DOT adjoined the 2.09 acre tract of land as well.

Later, in 2004, plaintiffs required additional funds to complete their home construction, and they borrowed $18,050.00 from defendant in the form of an unsecured loan. Plaintiffs then failed to make their loan payments. However, to avoid default, the parties agreed to refinance plaintiff’s total debt, thus covering both the $168,000.00 loan and the $18,050.00 loan with a new Deed of Trust (the 2006 DOT). Again, plaintiffs intended to encumber only the 1.62 parcel of land as collateral, but the 2006 DOT adjoined the 2.09 acre tract of land as well. After the 2006 DOT was executed, defendant recorded a satisfaction of the 2003 DOT in the Macon County Registry.

Soon thereafter, plaintiffs discovered that both the 2003 DOT and the 2006 DOT encumbered their 2.09 acre tract of land. Plaintiffs informed defendant of this fact, and on 16 March 2006, defendant executed and recorded a release deed in the Macon County Register of Deeds. Plaintiffs thought that the release deed released the 2.09 acre tract of land from the 2006 DOT. However, the release deed actually only released the 2.09 acre tract of land from the 2003 DOT, which had been satisfied and was no longer in effect.

Plaintiffs then again defaulted on their loan, and defendant initiated foreclosure proceedings on both parcels of land, pursuant to the 2006 DOT. At the foreclosure sale, defendant purchased both the 1.62 acre parcel of land and the 2.09 acre tract of land and later sold both pieces of property to a bona fide purchaser.

[410]*410On 22 April 2010, plaintiffs filed suit against defendant for 1) breach of contract, 2) fraud, 3) unfair and deceptive trade practices, 4) unjust enrichment, and 5) punitive damages. In that suit, plaintiffs argued that defendant agreed to release the 2.09 acre tract of land, and that plaintiffs had been fraudulently led to believe that the 2.09 acre tract of land had been released from the 2006 DOT by the release deed. On 10 June 2010, defendant filed a motion to dismiss and motion to stay proceedings pending arbitration. In that motion, defendant argued that the loan agreement and 2006 DOT contained arbitration provisions, and defendant asked the trial court to enter an order referring the case to binding arbitration.

On 16 August 2010, the trial court held a hearing regarding defendant’s motion. At that hearing, the trial court told Plaintiff Bechard P. Hodgin that defendant “is saying that you have to go to arbitration.” Plaintiff Bechard P. Hodgin then replied “Okay. I’ll go to arbitration.” The trial court then entered an order granting defendant’s motion and referring the case to arbitration.

The arbitration hearing was held on 22 November 2010 at the Macon County Courthouse. After the hearing, the arbitrator issued a final award on 21 December 2010. In that award, the arbitrator found that “it is clear that the intent of the parties was to rely upon the 1.62 acre tract... as collateral” for the loan and that “there was no intent to include the 2.09 acre parcel... as collateral for any of those loans.” But since the bank sold the 2.09 acre tract of land “to a bona fide purchaser, the 2.09 acre tract cannot be returned to the Plaintiffs.” The arbitrator then awarded plaintiffs “only the fair market value of the 2.09 acres at the time of the foreclosure,” $16,040.00.

However, plaintiffs believed that the actual value of the 2.09 acre tract of land was substantially greater than the amount awarded in arbitration. Thus, plaintiffs sought to appeal the arbitration award by filing a request for trial de novo with the trial court on 22 December 2010. That trial was scheduled for 1 March 2011, but later continued to the next jury term of 6 June 2011.

However, in the interim, defendant filed a motion to confirm the arbitration award on 3 February 2011. On 2 June 2011, two days before the de novo trial was to occur, the trial court entered an order granting defendant’s motion to confirm the arbitration award. Plaintiffs then filed a motion for appropriate relief on 20 June 2011. On 29 July 2011, plaintiffs filed an amended motion for appropriate relief pursuant to Rule 60 of the North Carolina Rules of Civil [411]*411Procedure. In that motion, plaintiffs requested 1) that the 2 June 2011 order be vacated, 2) that the 16 August 2011 order be vacated, and 3) that the trial court allow plaintiffs to proceed with a de novo trial by jury.

On 23 August 2011, a hearing was conducted regarding plaintiffs’ amended motion for appropriate relief. At that hearing, the trial court orally granted the motion on the grounds that plaintiff’s claims fell outside of the scope of the contractual arbitration clauses found in the agreement and the 2006 DOT.

Defendant then filed a motion for reconsideration on 14 September 2011. On 28 November 2011, the trial court entered an order denying defendant’s motion for reconsideration and granting plaintiff’s amended motion for appropriate relief. There, the trial court concluded that “the claims in this case do not fall within the scope of the parties’ agreement to arbitrate.” Specifically, “the question of whether the Deeds of Trust erroneously included acreage that the parties did not intend to be included is not a dispute ‘arising from this Deed of Trust.’” Accordingly, the order 1) vacated the trial court’s 16 August 2010 order staying proceedings pending arbitration, 2) declared the arbitration award a nullity without force or effect, 3) declared the 2 June 2011 order confirming the arbitration award to be moot, and 4) granted plaintiffs a de novo trial by jury on all of their claims. Defendant now appeals.

II. Arguments

Defendant presents four arguments on appeal: 1) that the trial court abused its discretion in granting plaintiffs’ motion for Rule 60(b) relief, 2) that plaintiffs are estopped from challenging the arbitrability of their claims by their consent in open court and voluntary participation in the arbitration proceedings, 3) that the trial court erred as a matter of law in failing to apply well established principles of limited judicial review of final arbitration awards, and 4) that the trial court erred as a matter of law in its resolution of the underlying arbitrability issue. We agree that the trial court erred in granting plaintiffs’ motion for appropriate relief, but we reach this decision because a Rule 60(b) motion cannot in any circumstances be used to collaterally attack a final order from which a party chose not to appeal.

“Rule 60(b) provides no specific relief for errors of law.

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Bluebook (online)
734 S.E.2d 630, 223 N.C. App. 408, 2012 N.C. App. LEXIS 1309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hodgin-v-united-community-bank-ncctapp-2012.