Reo Properties Corp. v. Smith

743 S.E.2d 230, 227 N.C. App. 298, 2013 WL 2179283, 2013 N.C. App. LEXIS 537
CourtCourt of Appeals of North Carolina
DecidedMay 21, 2013
DocketNo. COA12-860
StatusPublished
Cited by1 cases

This text of 743 S.E.2d 230 (Reo Properties Corp. v. Smith) 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
Reo Properties Corp. v. Smith, 743 S.E.2d 230, 227 N.C. App. 298, 2013 WL 2179283, 2013 N.C. App. LEXIS 537 (N.C. Ct. App. 2013).

Opinion

CALABRIA, Judge.

Servertis REO Pass-Through Trust I (“SRT”), REO Properties Corporation (“REO”), Grady I. Ingle and Elizabeth B. Ells, solely in their capacities as Substitute Trustees, (collectively “plaintiffs”) appeal from an order granting intervening defendants Alan C. Burton and Julie Benier Burton’s (“the Burtons”) motion for summary judgment and dismissing the action. We reverse and remand.

I. Background

On 5 August 1986, Rondal Ralph Smith and Robin M. Smith (“the Smiths”) acquired title to Lot #184 of Crestview Subdivision, 106 Crestview Terrace, in Davidson County, Thomasville, North Carolina (“the property”) and recorded the Deed. The Smiths executed and delivered a promissory note in the principal amount of $96,000 (“the Note”) to New Century Mortgage Corporation (“New Century”) secured by a Deed of Trust on the property that was recorded on 16 December 2002. The Deed of Trust included the correct address of the property as 106 Crestview Terrace, Thomasville, North Carolina. However, the legal description attached as exhibit A to the Deed of Trust did not fully and completely describe the property.

Subsequently, plaintiffs discovered the mistake in the legal description of the Deed of Trust and on 26 June 2008, plaintiffs filed a complaint in Davidson County Superior Court, seeking to reform the Deed of Trust on the property. The complaint alleged that REO currently held the Note secured by the Deed of Trust and since the description of the property in the Deed of Trust was inaccurate, it should be reformed to include the full and correct legal description and relate back to the date of the original recording. Plaintiffs also sought a resulting or constructive trust and other equitable remedies. On this same date, plaintiffs also filed a Notice of Lis Pendens (ulis pendens”) in Davidson County. According to plaintiffs, the lis pendens was properly indexed in the Davidson County Clerk’s office under file number “08 M 343.” On 4 September 2008, the Smiths filed a letter responding to plaintiffs’ complaint.

On 13 April 2009, the Smiths filed a petition for bankruptcy. The petition included, inter alia, Schedules with a Notice to Creditors and a Proposed Plan regarding plaintiffs’ secured claim in the amount of $92,077.90 on the property. The trial court ordered the case regarding the reformation of the Deed of Trust (“the reformation case”) to remain inactive during the pendency of the Smiths’ bankruptcy case. After a public auction was conducted, Judge Thomas W. Waldrep, Jr. (“Judge [300]*300Waldrep”), United States Bankruptcy Judge for the Middle District of North Carolina determined that the bid of $10,000 would not benefit the estate. Judge Waldrep entered an Order on 9 November 2010 abandoning the Smiths’ estate’s interest in the property located at 106 Crestview Terrace. The property was returned to the Smiths. Plaintiffs filed a motion for an order to remove the reformation case from inactive status and re-open it. Since the bankruptcy case was converted from Chapter 13 to Chapter 7, Judge Waldrep’s order abandoning the Smiths’ interest in the property, in effect, lifted the automatic stay. The motion to re-open the reformation case was granted by the trial court on 23 December 2010. After the property was condemned by the City of Thomasville, the Smiths conveyed the property to the Burtons by General Warranty Deed (“the Burton Deed”) and executed a lien waiver. The Burton Deed was recorded on 12 April 2011.

When plaintiffs discovered that the Burtons owned the property, they informed the Burtons’ attorneys about the lis pendens. Subsequently, on 16 May 2011, the Burtons filed a motion to intervene in the reformation case and the trial court granted the motion. On 24 May 2011, the Burtons filed an answer alleging, inter alia, that prior to purchasing the property a “due, proper, diligent and prudent title search” was conducted which “did not reveal the existence of The Deed of Trust with a legal description of The Property.” The Burtons also alleged that the Judgment Index in the office of the Clerk of Superior Court of Davidson County reflected that a lis pendens had been filed which was indexed as file number 08 M 343 concerning the Smiths and the Judgment Index with file number 08 M 343 was attached. According to the Burtons, the lis pendens “index entry was not cross indexed to disclose the pendency of the” reformation case. The Burtons further alleged that plaintiffs’ claim was not brought within the applicable statute of limitations, and should be dismissed.

The Burtons filed a motion for Judgment on the pleadings. After it was denied, the Burtons amended their answer and filed a motion for Summary Judgment, alleging, inter alia, their status as bonafide purchasers for value of the property without notice of any claim by plaintiffs and that the statute of limitations on plaintiffs’ claim for reformation of the Deed of Trust expired before the filing of the action.

On 26 January 2012, plaintiffs filed a motion for summary judgment, claiming that the error in the Deed of Trust was a result of a mutual mistake of fact and thus should be reformed by the court. In addition, plaintiffs argued, under the doctrine of lis pendens, that the Deed of Trust in the reformation case should have been located by “a reasonably [301]*301prudent and careful examination of title” and that the Burtons were not bona fide purchasers without notice of the Deed of Trust.

On 22 February 2012, the trial court granted the Burtons’ motion for summary judgment, denied plaintiffs’ motion for summary judgment and dismissed the action. On 21 March 2012, the trial court also denied the Burtons’ motion for attorneys’ fees. Plaintiffs appeal and the Burtons cross-appeal.

II. Standard of Review

“Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows that ‘there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation omitted). Summary judgment shall be allowed “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2011). When the parties have filed cross-motions for summary judgment, the parties have conceded that there are no disputed issues of material fact. Kessler v. Shimp, 181 N.C. App. 753, 756, 640 S.E.2d 822, 824 (2007). If there are no disputed issues of material fact, we only need to determine whether summary judgment was entered properly or whether the trial court should have entered summary judgment in favor of the other party. Self-Help Ventures Fund v. Custom Finish, LLC, 199 N.C. App. 743, 745, 682 S.E.2d 746, 748 (2009).

The dispositive legal issue the court determined was the issue regarding the statute of limitations. The Brutons claimed that the statute of limitations had expired prior to plaintiffs’ initiation of the reformation case.

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Bluebook (online)
743 S.E.2d 230, 227 N.C. App. 298, 2013 WL 2179283, 2013 N.C. App. LEXIS 537, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reo-properties-corp-v-smith-ncctapp-2013.