In re the Foreclosure of the Deed of Trust of Vogler Realty, Inc.

722 S.E.2d 459, 365 N.C. 389, 2012 N.C. LEXIS 27
CourtSupreme Court of North Carolina
DecidedJanuary 27, 2012
DocketNo. 11A11
StatusPublished
Cited by26 cases

This text of 722 S.E.2d 459 (In re the Foreclosure of the Deed of Trust of Vogler Realty, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Foreclosure of the Deed of Trust of Vogler Realty, Inc., 722 S.E.2d 459, 365 N.C. 389, 2012 N.C. LEXIS 27 (N.C. 2012).

Opinions

JACKSON, Justice.

In this appeal we consider whether the clerk of superior court has the authority to determine the reasonableness of attorney’s fees that a trustee-attorney in a foreclosure proceeding pays to himself in addition to his trustee’s commission. Because we hold that the clerk of superior court lacks this authority, we affirm.

On 26 June 1997, Vogler Realty, Inc. (“debtor”) executed a promissory note payable to J.B. Lee & Company (“creditor”) in the principal amount' of $250,000.00. The promissoiy note was secured by a duly recorded deed of trust on commercial real estate owned by debtor. The deed of trust named Charles N. Stedman, a licensed attorney, as trustee. The deed of trust included a power of sale and provided for the payment of “reasonable” attorney’s fees as a cost thereof, stating in pertinent part: “The Trustee shall be authorized to retain an attorney to represent him in [foreclosure] proceedings. The proceeds of the Sale shall after the Trustee retains his commission, together with reasonable attorneys [sic] fees incurred by the Trustee in such proceeding, be applied to the costs of sale ....” The property also was encumbered by Robert J. Wishart as the second priority lienholder, CommunityOne Bank, N.A. as the third priority lienholder, and Fidelity Bank as the fourth priority lienholder.

Debtor defaulted on its obligations pursuant to the promissory note and deed of trust by failing to make payments to creditor after 13 January 2009. Creditor thereafter accelerated the entire outstanding balance owed in accordance with the promissory note and demanded payment in full. On 20 March 2009, Stedman, in his capacity as trustee, filed a petition and notice of hearing on foreclosure in the Superior Court, Alamance County pursuant to the power of sale contained in the deed of trust. The petition stated that Stedman was a neutral party and would not advocate for either debtor or creditor.

At a hearing before the Alamance County Clerk of Court (the “clerk”) on 21 April 2009, debtor admitted default and did not contest the foreclosure proceedings. Thereafter, the clerk made the required findings of fact and entered an order authorizing Stedman to proceed with the foreclosure sale. Stedman held the foreclosure sale on 13 May 2009 and subsequently filed a report of sale. Two upset bids were filed after the sale. Debtor’s right of redemption expired on 11 June 2009, [391]*391after which the final sale was consummated. On 26 June 2009, Stedman submitted the final report and account of foreclosure sale to the clerk for audit and approval in accordance with sections 45-21.31 and 45-21.33 of the North Carolina General Statutes. According to the final report, the final sale generated proceeds totaling $336,262.50.

From the proceeds Stedman, as trustee, paid the costs and expenses of the foreclosure proceeding, including: (1) a trustee’s commission of $16,813.12 (5% of the highest upset bid1 pursuant to section 45-21.15(a) of the North Carolina General Statutes); and (2) a trustee’s attorney’s fee of $33,573.82 (15% of the outstanding balance on the promissory note). The remaining proceeds were disbursed as follows: (1) $229,762.30 to creditor; (2) $31,685.61 to Wishart; and (3) $22,743.65 to CommunityOne. Fidelity Bank, the fourth priority lienholder, received nothing. The distributions fully satisfied the debts owed to creditor and Wishart, but CommunityOne still was owed a balance of $78,862.60.

On 13 July 2009, CommunityOne filed a motion before the Clerk of Superior Court, Alamance County, objecting to Stedman’s disbursement of the proceeds on the basis that Stedman failed to demonstrate any justification for paying himself attorney’s fees in addition to his trustee’s commission. In response to CommunityOne’s motion, Stedman filed an affidavit and itemization showing the services that he performed, his usual hourly rate ($300.00 per hour), and the time he spent working on the foreclosure proceeding (71.8 hours). Based upon the documentation submitted by Stedman, the value of his services amounted to $21,540.00.

On 27 July 2009, following a hearing on CommunityOne’s motion, the clerk approved the five percent (5%) trustee’s commission, but reduced Stedman’s attorney’s fees to $4,726.88. Pursuant to the clerk’s order, Stedman would receive $21,540.00 total, an amount equal to the total value of his trustee and attorney services according to the statements and figures Stedman provided in his affidavit and itemization. Stedman appealed to the superior court. After holding a hearing on 12 October 2009, the superior court affirmed the clerk’s order on 4 November 2009. Stedman appealed to the Court of Appeals.

The Court of Appeals, in a divided opinion, vacated the clerk’s and trial court’s orders, holding that the clerk lacked the statutory authority to determine the reasonableness of attorney’s fees paid in a foreclosure proceeding. In re Foreclosure of Vogler Realty, Inc., _ N.C. App. _, [392]*392_, 703 S.E.2d 159, 164 (2010). The dissenting opinion argued that section 32-61 Of the North Carolina General Statutes authorizes a clerk to determine the reasonableness of attorney’s fees that a trustee-attorney seeks to pay to himself in a foreclosure proceeding. Id. at _, 703 S.E.2d at 165-68 (Hunter, Jr., Robert N., J., dissenting). CommunityOne filed notice of appeal with this Court based upon the dissent.

CommunityOne argues that section 32-61 of the North Carolina General Statutes authorizes the clerk of superior court to determine the reasonableness of a trustee-attorney’s payment of attorney’s fees to himself in a foreclosure proceeding. We disagree.

We review matters of statutory interpretation de novo because they present questions of law. In re Ernst & Young, LLP, 363 N.C. 612, 616, 684 S.E.2d 151, 154 (2009). “[W]hen the language of a statute is ambiguous, this Court will determine the purpose of the statute and the intent of the legislature in its enactment.” Diaz v. Div. of Soc. Servs., 360 N.C. 384, 387, 628 S.E.2d 1, 3 (2006). In these situations, “the history of the legislation may be considered in connection with the object, purpose and language of the statute in order to arrive at its true meaning.” Lithium Corp. of Am. v. Town of Bessemer City, 261 N.C. 532, 536, 135 S.E.2d 574, 577 (1964). However, “[wjhen the language of a statute is clear and without ambiguity, it is the duty of this Court to give effect to the plain meaning of the statute, and judicial construction of legislative intent is not required.” Diaz, 360 N.C. at 387, 628 S.E.2d at 3.

Article 6 of Chapter 32 of the North Carolina General Statutes is titled, “Compensation of Trustees and Other Fiduciaries.” Section 32-61 states:

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Bluebook (online)
722 S.E.2d 459, 365 N.C. 389, 2012 N.C. LEXIS 27, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-foreclosure-of-the-deed-of-trust-of-vogler-realty-inc-nc-2012.