Petri v. Bank of Am., N.A.

• Court: Court of Appeals of North Carolina
• Decided: February 4, 2014
• Docket: 13-907
• Status: Unpublished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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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 Appellate Procedure.

NO. COA13-907 NORTH CAROLINA COURT OF APPEALS

Filed: 4 February 2014

NEAL C. PETRI Plaintiff,

v. Macon County No. 12 CVS 805 BANK OF AMERICA, N.A. and BANK OF AMERICA, N.A. S/B/M To Countrywide Bank, FSB & BROCK AND SCOTT, PLLC Defendants.

Appeal by plaintiff from order entered 10 April 2013 by

Judge James U. Downs in Macon County Superior Court. Heard in

the Court of Appeals 7 January 2014.

Attorney David R. Payne, for plaintiff.

McGuire Woods L.L.P., by Lauren B. Loftis, for defendant.

ELMORE, Judge.

Neil C. Petri (plaintiff) appeals from an order entered on

10 April 2013 granting Bank of America, N.A.’s (defendant)

motions to dismiss plaintiff’s complaint with prejudice. After

careful consideration, we affirm the trial court’s order.

I. Facts -2- On 6 May 2004, plaintiff executed a deed of trust and

promissory note (note) to receive a mortgage from Luxury

Mortgage Corporation (Luxury) to assist in the purchase of a

home (the property) located at 651 Viewpoint Road in Highlands.

In 2009, Brock & Scott, P.L.L.C. (Brock), the substitute trustee

in the foreclosure action, notified plaintiff that it had begun

foreclosure proceedings on the property due to plaintiff’s

default on the mortgage loan. Plaintiff believed that his loan

was held with Luxury, but Brock’s letter indicated that “the

creditor to whom the debt [was] owed [was defendant].”

Thereafter Brock filed a Notice of Hearing on 23 June 2009 for a

special proceeding before the Macon County Clerk of Court.

Pursuant to N.C. Gen. Stat. § 45-21.16(d), the Clerk of Court

entered an order allowing the foreclosure, and plaintiff

appealed de novo to Macon County Superior Court with a “PETITION

TO CANCEL FORECLOSURE SALE” (the petition). Plaintiff argued

that defendant was not the true holder of the note authorizing a

right of foreclosure. Superior Court Judge Marvin P. Pope, Jr.

(Judge Pope) disagreed, finding that on or prior to 9 March

2006, Luxury transferred the note to Countrywide Bank, N.A.,

which eventually merged with defendant. Judge Pope also found

that the note was in the continuous possession of defendant -3- since 9 March 2006. On 12 March 2012, he entered an order

concluding that “[e]ach element of N.C. Gen. Stat. § 45-21.16

[had] been satisfied” because (a) defendant was the holder of

valid debt (the note); (b) plaintiff defaulted on his mortgage

payments; (c) defendant had the right to foreclose under the

debt note; and (d) proper notice was given to all entitled

persons. Accordingly, Judge Pope allowed Brock to “complete the

foreclosure.” Nothing in the record indicates that plaintiff

appealed Judge Pope’s order.

On 29 November 2012, plaintiff filed a complaint (the

complaint) to enjoin the foreclosure, assert agency and

negligent non-disclosure, and allege unfair and deceptive trade

practices (UDTPA) by defendant. In response, defendant filed a

motion to dismiss plaintiff’s claims pursuant to Rule 12(b)(1)

for lack of subject matter jurisdiction to the extent that those

claims “attempted to invoke the trial court’s jurisdiction” to

enforce a federal consent judgment. Defendant also filed a

motion to dismiss under Rule 12(b)(6) for failure to state a

claim upon which relief can be granted. In its motion,

defendant argued that the complaint was barred by res judicata.

After a hearing on the motions, Judge Downs entered an order on

10 April 2013 granting defendant’s motions to dismiss -4- plaintiff’s complaint with prejudice. Plaintiff filed timely

notice of appeal on 17 April 2013 to this Court from Judge

Down’s order.

II. Analysis

a.) Jurisdiction

Plaintiff argues that the trial court erred in granting

defendant’s motion to dismiss for lack of subject matter

jurisdiction. For the reasons that follow, we fail to reach the

merits of this issue on appeal.

The North Carolina Rules of Appellate Procedure “are

mandatory and . . . failure to follow these rules will subject

an appeal to dismissal.” Steingress v. Steingress, 350 N.C. 64,

65, 511 S.E.2d 298, 299 (1999) (citations omitted). Rule

28(b)(6) states that “[i]ssues not presented in a party’s brief,

or in support of which no reason or argument is stated, will be

taken as abandoned.” N.C.R. App. P. 28(b)(6).

Here, plaintiff argues that “[t]he trial court erred in its

grant of [defendant’s] motion to dismiss pursuant to Rule

12(b)(1), because the [trial court’s] subject matter

jurisdiction encompassed the state law claims complained of[,]”

and the trial court “had power to hear the UDTPA and negligent

non-disclosure claims” along with the action to enjoin the -5- foreclosure sale. However, the trial court did not dismiss

plaintiff’s state law claims under the UDTPA, negligent non-

disclosure, or foreclosure enjoinment on jurisdictional grounds,

but rather dismissed only the claim that sought to “enforce a

federal [consent] judgment out of the Federal District of

Columbia[.]” On appeal, plaintiff does not mention the federal

consent judgment, nor does he set forth legal arguments as to

why the trial court had subject matter jurisdiction to enforce

the federal consent judgment. Thus, we do not address the

merits of this issue on appeal, and we treat it as abandoned.

See Viar v. N. Carolina Dep't of Transp., 359 N.C. 400, 402, 610

S.E.2d 360, 361 (2005) (dismissing appeal where the arguments in

appellant’s brief in the Court of Appeals did not “address the

issue upon which the [trial court’s] conclusion of law was

based.”).

b.) Res Judicata/Collateral Estoppel

Next, plaintiff argues that the trial court erred in

granting defendant’s motion to dismiss pursuant to Rule

12(b)(6). We disagree.

“The motion to dismiss under N.C. R. Civ. P. 12(b)(6) tests

the legal sufficiency of the complaint. In ruling on the motion

the allegations of the complaint must be viewed as admitted, and -6- on that basis the court must determine as a matter of law

whether the allegations state a claim for which relief may be

granted.” Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d

611, 615 (1979) (citations omitted). “This Court must conduct a

de novo review of the pleadings to determine their legal

sufficiency and to determine whether the trial court’s ruling on

the motion to dismiss was correct.” Leary v. N.C. Forest

Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4, aff’d per

curiam, 357 N.C. 567, 597 S.E.2d 673 (2003).

Under the doctrine of res judicata, “a final judgment on

the merits in one action precludes a second suit based on the

same cause of action between the same parties or their privies.”

Williams v. Peabody, ___ N.C. App. ___, ___, 719 S.E.2d 88, 92

(2011) (citation and quotations omitted). Res judicata also

applies to “issues which could have been raised in the prior

action but were not.” Clancy v. Onslow Cnty., 151 N.C. App.

269, 271-72, 564 S.E.2d 920, 923 (2002) (citation and internal

quotation marks omitted). The party seeking to assert res

judicata has the burden of establishing its elements. Bluebird

Corp. v. Aubin, 188 N.C. App. 671, 679, 657 S.E.2d 55, 62

(2008). A party must show “(1) a final judgment on the merits

in an earlier suit, (2) an identity of the causes of action in -7- both the earlier and the later suit, and (3) an identity of the

parties or their privies in the two suits” in order to prevail

on a theory of res judicata. Herring v. Winston-Salem/Forsyth

Cnty. Bd. of Educ., 188 N.C. App. 441, 444, 656 S.E.2d 307, 310

(2008) (citation and quotation omitted).

In the issue at bar, the determinative question is whether

the petition and subsequent complaint have identical causes of

action. The petition requested that the trial court cancel the

foreclosure sale based on a failure of defendant to satisfy the

elements of N.C. Gen. Stat. § 45-21.16(d) (2011). However, the

complaint’s causes of action consist of: 1.) a “TRO AND

INJUNCTION” to preclude the foreclosure; 2.) “AGENCY AND

NEGLIGENT NON DISCLOSURE” based on defendant’s agents filing

untruthful documents[;]” and 3.) “CHAPTER 75” UDTPA. Clearly,

the causes of action in the complaint and the petition are not

the same, and therefore plaintiff’s complaint is not barred by

res judicata.

However, plaintiff also contends that the complaint is not

barred by the doctrine of collateral estoppel. We disagree.

Collateral estoppel bars re-litigation of issues determined

in a prior suit if “(1) the earlier action resulted in a final

judgment on the merits, (2) the issue in question is identical -8- to an issue actually litigated in the earlier suit, (3) the

judgment on the earlier issue was necessary to that case and (4)

both parties are either identical to or in privity with a party

or the parties from the prior suit.” Bee Tree Missionary

Baptist Church v. McNeil, 153 N.C. App. 797, 799, 570 S.E.2d

781, 783 (2002) (citations omitted).

Here, the petition and complaint involved identical

parties, and the petition resulted in a final judgment on the

merits as Judge Pope concluded that plaintiff showed “no valid

legal reason why the foreclosure should not proceed” and “[t]he

[s]ubstitute [t]rustee was . . . entitled to foreclose or

complete the foreclosure under the terms of the Deed of Trust.”

Furthermore, Judge Pope’s ruling on the merits as to defendant

being the true debt note owner was necessary to the resolution

of the petition because plaintiff averred that defendant could

not “satisfy two of the four prongs of NCGS [sic] 45-21.16(d) in

order to maintain [the] foreclosure action.” Those prongs

require the party seeking to foreclose to be the holder of valid

debt and have “the right to foreclose under the instrument[.]”

Thus, our inquiry is limited to whether the issue argued by

plaintiff in the complaint was actually litigated in the earlier

petition. The underlying issue presented by plaintiff in the -9- complaint is solely based on the assertion that defendant

effectuated the foreclosure without being the true owner and

holder of the debt note. In plaintiff’s complaint, his first

cause of action sought to enjoin the foreclosure because

plaintiff “assert(s) that [he] never entered into any agreements

with MERS with respect to the subject loan; nor did they bargain

for or agree to be passed through a myriad of unrecorded

assignments or the securitization of their note to the point

where the same has been so genuinely diluted that no one could

ever tell who actually owns the corpus of the original note.”

(emphasis added). Plaintiff further supported his first cause

of action by stating that fraudulent documents were filed by

defendant to foreclose property upon which they have no legal

right, and actions by defendant “lulled” plaintiff into false

sense of security with respect to who actually owns the loan.

His second and third causes of action alleged “AGENCY AND

NEGLIGENT NON DISCLOSURE” and 3.) “CHAPTER 75” UDTPA based on a

theory that defendant’s agents purposefully filed untruthful

filings with this state by manipulating data and false reporting

since defendant was not the owner of the debt note. The issue

of who owned the note was conclusively established by Judge Pope

in response to the petition as he concluded that “[defendant] is -10- the holder of the [n]ote sought to be foreclosed. The

indorsment into the [defendant] from the prior [h]older was

valid in all respects and signed by an officer of the previous

[h]older. [Defendant] was in possession of the [o]riginal [n]ote

at the [h]earing.” Thus, plaintiff’s complaint is barred by

collateral estoppel because the issues raised therein simply

attempt to re-litigate the issues already determined by Judge

Pope in the prior petition.

III. Conclusion

In sum, we do not address the merits of plaintiff’s claim

with regard to the trial court’s grant of defendant’s motion to

dismiss pursuant to Rule 12(b)(1) because that argument is

abandoned on appeal. Additionally, the trial court did not err

in granting defendant’s motion to dismiss under Rule 12(b)(6)

because the doctrine of collateral estoppel bars plaintiff’s

complaint. Thus, we affirm the trial court’s order.

Affirmed.

Judge McGEE and Judge HUNTER, Robert C., concur.

Report per Rule 30(e).