What s Trending Caselaw 1
Falk v. Fannie Mae 738 S.E. 2 nd 404 (N.C.App. March 5, 2013) Mortgages, Vendor and Purchaser, Constitutional Law, Contracts, Subrogation Facts: 1994 deed of trust to a Trust (Trust DT) payable on demand. 1999 deed of trust to Wachovia (Wachovia DT). Trust DT subordinates to Wachovia DT. In 2001 owner refinances Wachovia debt and grant a deed of trust to FNMA (FNMA DT). FNMA eventually forecloses of their DT and acquires title at sale. Trust demands payment of debt from FNMA and begins foreclosure proceedings. FNMA argues Trust DT expired under GS 45 37 or 45 36.24 and equitable subrogation. Held: Trust DT has priority and can be foreclosed : 1. GS 45 37(b) presumption of satisfaction does not arise until after 15 year period and does not benefit those who take title before presumption arises (cannot benefit from presumption if they did not rely upon it); 2. GS 45 36.24 Retroactive application impairs vested rights unconstitutionally applied; and 3. Subrogation only available to those who are excusably ignorant of an intervening lien 2
In re Bass 738 S.E. 2 nd 173 (N.C. March 8, 2013) Mortgages, Bills and Notes Facts: Bass executed a Promissory Note with Mortgage Lenders Network USA, Inc. Note was transferred four times to different holders. Transfers evidenced by stamped endorsement on Note. Two endorsements accompanied by handwritten signature, one endorsement accompanied by handwritten initials, and one was not accompanied by any handwritten signature or initials. Bass alleged the transfer without signature was invalid and that current holder was required to produce the original Note, not a photocopy. Held: Stamps are acceptable as a signature under UCC. Burden is upon Respondent (Bass) to produce evidence the endorsement was forged or unauthorized. UCC defines signature any symbol executed or adopted with present intention to adopt or accept a writing. GS 25 1 201(b)(37) Mortgagor s statement that I cannot confirm authenticity of the copy of the Note was insufficient to cast doubt upon the bank s status as holder of the Note 3
T.D. Bank, NA v. Crown Leasing Partners, LLC 737 S.E. 2 nd 738 (N.C. App. Dec. 31, 2012) Appeal and Error, Banks and Banking, Venue Facts: Bank sued defendants in Buncombe County for breach of terms of a promissory note alleging defendants were personally liable under terms of guaranty agreement. Defendants sought change of venue arguing that Bank was not resident of NC and all defendants were residents of Catawba County. Trial Court denied motion to change venue to Catawba County. Held: Proper venue where plaintiff is a nonresident National Bank and resident defendants is any county in which defendants reside at commencement of action. Notes: 1. Motion for change of venue affects a substantial right and is immediately appealable, even though interlocutory; 2. Even though created under an act of Congress and not required to maintain an agent in NC to receive service of process, TD Bank is considered a foreign corporation for purposes of determining venue. 4
Erthal v. May 736 S.E. 2 nd 514 (N.C. App. Nov. 20, 2012) Covenants, Judgment, Process Facts: Plaintiffs brought action to prevent defendants from making any commercial use of the their land to board horses. Both parties live in Stirrup Downs development, an equestrian community. Restrictive Covenants included residential purposes only, single family dwelling, no illegal, obnoxious or offensive activity, but permitted pasturing of horses. Held: Restrictions did not prohibit defendant s boarding of horses 1. Restrictions strictly construed, must be clear and unambiguous; 2. Court found no restriction on commercial use if used in conjunction with residential use; 3. No obnoxious or offensive activity void for vagueness restrictions lack sufficient guidance for court to make objective determination of what is annoying. 5
Barbour v. Tate 748 S.E. 2 nd 14 (N.C. App. Aug. 20, 2013) Easements, Appeal and Error Facts: Plaintiffs and defendants own adjoining land which can be traced to a plantation owned by a Dr. Watson (Not to be confused with legendary flatpicker, Doc Watson). Plaintiff s land relies upon access by a path across defendant s land. The path has been in use since at least 1853. Trial court found the existence of an easement implied by prior use and an easement by necessity, but limited the scope to historical uses (farming, timber and management). Trial court did not find an easement by prescription. Held: Vacated and remanded to determine scope of easement and the existence of hostile use. 1. Scope of implied easement is the probable expectations of grantor and grantee that an use would continue; 2. Scope of easement by necessity is what is required for convenient and comfortable enjoyment of the land; 3. Hostile use for determining the existence of an easement by prescription does not require heated controversy, rudeness, or ill will, but rather use of such a nature and exercised under such circumstance as to manifest and give notice that use is being made under a claim of right. 6
REO Properties Corporation v. Smith 743 S.E. 2 nd 230 (N.C. App. May 21, 2013) Facts: 1. 2002 DT by Smiths: 1. Correct address 2. Incomplete legal 2. 2008 REO (note holder) complaint to reform legal: 1. Notice of Lis Pendens 2. File later destroyed, but copied to Raleigh/microfilm 3. 2011 Deed to Burtons 1. Notified of LP 2. Seek to be BFP w/o notice of DT 3. Allege LP file was destroyed Lis Pendens Held: Burtons should have discovered Notice of Lis Pendens; considered subsequent purchasers; subject to reformation action LP correctly indexed Mere loss or destruction of notice will not affect its efficiency; still public record Could have asked for microfilm or to have file retrieved from Raleigh 7
Waterway Drive Property Owners Assoc. v. Town of Cedar Point 737 S.E. 2 nd 126 (N.C. App. Dec. 18, 2012) Dedication, Easements, Appeal and Error Facts: In 1936 Jones filed a plat dedicating Front Street to public use. Town never expressly accepted dedication. Town made/contracted for certain improvements (water main, fire hydrants, cable lines, minor street repairs) and added the street to town map. In 1990 plaintiffs paved a portion of road, renamed it Waterway Drive, and posted a Private sign. Plaintiffs paid for maintenance and repair of road. Plaintiffs brought declaratory judgment action to establish Town has no ownership interest and to withdraw dedication. Held: Evidence insufficient to establish any form of acceptance by Town. No document expressly accepted road Implied acceptance occurs when: Used by general public Control of road by public authorities for 20 years Inclusion on town map insufficient Withdrawal prevented if Accepted Portion of street used 8
McCrann v. Pinehurst, LLC 737 S.E. 2 nd 771 (N.C. App. Feb. 5, 2013) Covenants, Dedication, Easements, Antitrust and Trade Regulation Facts: Two lots of Village Green area in Pinehurst conveyed in two deeds containing restrictive covenants against constructing buildings/permanent structures. Pinehurst LLC waived restriction in 2008 and 2009. Plaintiffs own adjacent property and sought declaratory judgment that waivers were ineffective. Held: Plaintiffs lacked standing to maintain action. 1. Plaintiffs: not parties to deeds creating restriction not successors in title to land burdened 2. Village Green not impliedly dedicated as natural space/ not appurtenant easement (negative easement) 3. Equitable servitude not established for plaintiffs: Restrictions not part of common scheme No succession of interest to benefitted property No express intent to benefit property owned by party seeking enforcement 9
Glens of Ironduff v. Daly 735 S.E. 2 nd 445 (N.C. App. Dec. 4, 2012) Limitation of Actions Facts: Property Owners Association asserted claims for breach of implied warranty of workmanship and negligent construction against developers relating to subdivision road. Road widened and used for construction traffic in 2004. Road paved in 2005. Damaged by stream in in 2009. Erosion will continue to be a problem. Defendants summary judgment motion based on three year statute of limitations and six year statute of repose. Held: Action barred by statute of repose Six years from the later of the specific last act or omission of the defendant giving rise to cause of action or substantial completion of the improvement. Substantial completion occurs when road can be used (2004) not when paved (2005). Specific last act was widening (2004) of road. PCA tolls statute of limitations during declarant control (GS 47F 3 111). Statute of repose distinct from statute limitation. Statute of Limitations are procedural laws. Statutes of Repose are substantive laws. 10
Bissette v. Harrod 738 S.E. 2 nd 792 (N.C. App. March 19, 2013) Trusts, Limitation of Actions, Appeal and Error Facts: Bissettes owned two adjoining lots. They filed an Instrument of Combination and plat which reconfigured the lots. They then sold one resulting lot to the Riches. Owners Association brought action for violating restrictive covenant provision barring subdivision of lots. Bissettes and Riches entered agreement under which Riches would grant easement to Bissettes, if association action was successful. Riches later refused to grant easement. Held: Agreement did not create an express trust or a constructive/resulting trust. Express trust requires a transfer of title by the donor for the benefit of another. Gift must be executed rather than executory upon a contingency. Constructive/resulting trust requires an element of some fraud, breach of duty or wrongdoing by the holder of the property. 11
Other Interesting Cases Dallaire v. Bank of America, 738 S.E. 2d 731 (N.C. App. Dec. 18, 2012) Lender represented to borrower that a first priority lien was being provided. Error in title search resulted in loan not being first priority. Remanded on issue of whether fiduciary duty existed. Ramey Kemp & Associates, Inc. v. Richmond Hills Residential Partners, LLC, 737 S.E. 2d 420 (N.C. App. Feb 5, 2013) Proof of last furnishing of labor or materials under GS 44A 12(b). Court held one contract over extended period. Wells Fargo Bank, N.A. v. Arlington Hills of Mint Hill, LLC, 742 S.E. 2d 201 (N.C. A pp. March 19, 2013) Offset under GS 45 21.36 not available guarantor of loan in a deficiency action. Would erase duty as guarantor. In re Foreclosure of Young, 744 S.E. 2d 476 (N.C. App. June 4, 2013) Clerk s foreclosure hearing pursuant to GS 45 21.16 and appeal to Superior Court to six findings of fact (valid debt, default ). Cannot grant relief based upon equitable estoppel. Need separate action to enjoin foreclosure. 12
Other Interesting Cases Yeager v. Yeager, 746 S.E. 2d 427 (N.C. App. Aug. 6, 2013) Action to obtain declaratory judgment that two deeds of trust are invalid and void was moot as receiver had obtained cancellations for the deeds of trust. JPMorgan Chase, N.A. v. Browning, 750 S.E. 2d 555 (N.C. App. Nov. 19, 2013) Summary Judgment proper on claim for unjust enrichment where lender could not forecast evidence relating to an essential element of claim. State of North Carolina v. Alcoa Power Generating, Inc., 2013 WL 6199282, 5:13 CV 633 BO, US District Court for Eastern District of NC (Nov. 27, 2013) Order denying motion of State to remand case. Alcoa removed case to Federal Court on the basis of federal question jurisdiction. Removal changes the applicable test for determining ownership of the Yadkin river bed. 13
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