In re Razack
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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. COA13-342 NORTH CAROLINA COURT OF APPEALS Filed: 17 December 2013 IN THE MATTER OF THE FORECLOSURE by Tamara R. Cornish, Substitute Trustee of a Deed of Trust Executed by Zaheer Ahmad Razack and Salley Ann Razack a/k/a Sally A. Razack, dated May 30, 2007 and recorded on May 31, 2007, in Book 22302 at Page 536 of the Mecklenburg County Public Registry. Mecklenburg County No. 11 SP 8243 Appeal by Petitioners from order entered 17 October 2012 by Judge Timothy S. Kincaid in Mecklenburg County Superior Court. Heard in the Court of Appeals 10 September 2013. Elliott Law Firm, PC, by Adam G. Breeding, for Petitioners. Rogers Townsend Respondent. & Thomas, PC, by Renner St. John, for Cornish Law, PLLC, by Tamara R. Cornish, for Substitute Trustee. DILLON, Judge. -2Zaheer superior and Salley court s foreclosure Razack order proceeding (Petitioners) dismissing instituted Servicing, LLC (Green Tree). appeal without against them from prejudice by Green the a Tree For the following reasons, we affirm. I. Factual & Procedural Background On or about 30 May 2007, Petitioners executed a promissory note (the Note) in favor of Suntrust Mortgage, Inc. (Suntrust), in the original principal amount of $368,000.00. Petitioners granted Suntrust a Deed of Trust to secure the Note with real property located in Huntersville, North Carolina. ultimately successor defaulted in on interest the to Note, the prompting Deed of Petitioners Green Trust, Tree, to the initiate foreclosure proceedings against Petitioners. The matter came on for hearing before the clerk of court on 31 May 2012. After hearing evidence, the clerk entered an order authorizing Green Tree to proceed with foreclosure. Petitioners appealed the clerk s decision to the superior court, which, upon conducting a de novo review of the matter, entered an order which included the following pertinent findings: 1. On or about May 30, 2007, a promissory note was executed by Petitioners in favor of [Suntrust]. -32. [Green Tree] claimed to be the current holder of the Note. 3. Respondent produced what appeared to be the original Note, said Note containing a special indorsement without recourse from Suntrust [] to Green Tree [] at the foot of page 3. Attached to the Note was an allonge which contained a blank indorsement from Green Tree . . . . 4. In addition to the Note, [Green Tree] produced the affidavit of Thomas Clark, Foreclosure Specialist for Green Tree [] which stated [t]he Promissory Note is endorsed in blank and in the possession of Green Tree[.] 5. The affidavit submitted by [Green Tree] conflicts with the evidence on the Note, and as such creates doubt as to the validity of the Note and the affidavit. Based upon these findings, the court concluded that [g]iven the inconsistencies in the Note . . . and the affidavit produced, [Green Tree] failed to provide competent evidence capable of establishing that it was the holder of the Note ; and, [a]s such, [Green Tree] has failed to prove that it is the owner and holder of a valid indebtedness as required pursuant to N.C.G.S. 45-21.16(d) property. foreclosure and The therefore court proceedings cannot entered without foreclose its order prejudice on the subject dismissing to Green the Tree, effectively allowing Green Tree to bring a new proceeding upon curing its evidentiary deficiencies relating to the Note. From -4this order, Petitioners appeal. II. Analysis A. Standing We first address Green Tree s contention that Petitioners lack standing to aggrieved parties. decision to bring this appeal because they are not Green Tree argues that the superior court s dismiss Green Tree s foreclosure action, albeit without prejudice, meant that Petitioners won below and had no basis for an appeal to this Court. We disagree. It is well established that a party can appeal from a judgment in its favor if the judgment is not as favorable as the appealing party sought. H.R. Technologies, Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1381-82 (Fed. Cir. 2002) (citing Deposit Guar. Nat l Bank v. Roper, 445 U.S. 326, 333 34 (1980); Elec. Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 242 (1939); Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1339 40 (Fed. Cir. 2001)). The thrust of Petitioners appeal is that the trial court s order did not afford them the full extent of the relief sought, as the order merely dismissed the foreclosure proceeding without prejudice. Petitioners contend that the trial court erred in failing to dismiss the foreclosure proceedings with -5prejudice and that this error in itself was sufficient to render them aggrieved parties. We agree with Petitioners, superior court s dismissal without prejudice left as the Petitioners vulnerable to a subsequent action by Green Tree to foreclose on the same property, and, in this sense, the relief granted by the superior court was less than that which Petitioners sought in the proceedings below. We, accordingly, hold that Petitioners are aggrieved parties, and we proceed to address the merits of Petitioners appeal. B. Dismissal Without Prejudice The question presented is whether the trial court erred in dismissing the foreclosure without prejudice. proceedings against Petitioners We hold that it did not. The superior court dismissed the foreclosure proceedings on grounds that it was unclear, based upon the evidence presented at the 15 August 2012 hearing, whether Green Tree was in fact the holder of the note evidencing the underlying debt. Absent competent evidence demonstrating that it was the holder of the note, Green Tree was not entitled to proceed with foreclosure under N.C. Gen. Stat. § 45-21.16(d) (2011) (providing that the party seeking existence of foreclosure [a] valid must debt demonstrate, of which the inter alia, the party seeking to -6foreclose is the holder ); In re Adams, 204 N.C. App. 318, 321, 693 S.E.2d 705, 709 (2010). The trial court thus dismissed the proceeding, but did so without prejudice, thereby leaving open the possibility of Green Tree bringing a new foreclosure proceeding against Petitioners in the future. Petitioners contend that a dismissal without prejudice has no place in a power of sale foreclosure proceeding brought under N.C. Gen. Stat. § 45-21.16 and that, accordingly, the superior court should have dismissed the proceeding with prejudice. We disagree. Petitioners rely on Phil Mech. Constr. Co. v. Haywood, 72 N.C. App. 318, 325 S.E.2d 1 (1985), wherein we stated that issues decided [in a foreclosure hearing] as to the validity of the debt and the trustee s right to foreclose are res judicata and cannot be relitigated[.] Id. at 322, 325 S.E.2d at 3. Haywood, however, is distinguishable from the present case. In Haywood, the clerk dismissed a foreclosure proceeding filed by a mortgagee-creditor upon determining that the debtor s signature on the deed of trust had been forged. 2. Id. at 319, 325 S.E.2d at The mortgagee did not appeal the clerk s order, but rather instituted an action seeking a judicial foreclosure. 319-20, 325 S.E.2d at 2. Id. at The trial court dismissed the action -7on res judicata grounds based on the finding previously made by the clerk of court that the deed of trust had been forged. at 320, 325 S.E.2d at 2. instant case made no Id. In contrast, the superior court in the definitive finding that would preclude Green Tree from bringing a subsequent foreclosure proceeding. The court made no finding, for example, that the debtor did not actually sign the deed of trust or that the underlying debt had been paid in full. The court determined only that Green Tree had not met its burden of showing that it was the holder of the note evidencing the debt. The complexities often at play in establishing the legal holder of a note that has been transferred from one entity to another militate in favor of allowing the party seeking foreclosure to refile its proceeding where discrepancies arise in the first proceeding and clarification is needed. recognize, as Petitioners contend, that our Rules While we of Civil Procedure generally do not apply in the context of a foreclosure proceeding brought under N.C. Gen. Stat. § 45-21.16, see Furst v. Loftin, 29 N.C. App. 248, 224 S.E.2d 641 (1976), Petitioners do not cite any case law indicating that a trial court lacks the authority similar to the court s authority under Rule 41 in a civil action to enter an order vacating foreclosure -8proceedings without comprehensive foreclosure regime prejudice enacted proceedings in by expressly this context; our nor Legislature support such a does the regarding conclusion. We, accordingly, hold that the superior court did not err by affording Green Tree the opportunity to get its ducks in a row and prove through introduction of competent evidence that it is in fact the holder of the note in the instant case, and that, as such, it is authorized to foreclose on property which, the evidence indicates, is in fact subject to a valid debt held by some entity. III. Conclusion For the foregoing reasons, we affirm the trial court s 17 October 2012 order. AFFIRMED. Judges McGEE and McCULLOUGH. Report per Rule 30(e).
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