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Town of Black Mountain v. Lexon Ins. Co.

Court of Appeals of North Carolina

December 16, 2014

THE TOWN OF BLACK MOUNTAIN, NORTH CAROLINA and THE COUNTY OF BUNCOMBE, NORTH CAROLINA, Plaintiffs,
v.
LEXON INSURANCE COMPANY and BOND SAFEGUARD INSURANCE COMPANY, Defendants

Heard in the Court of Appeals October 20, 2014

Cannon Law, P.C., by William E. Cannon, Jr. and Ronald E. Sneed, P.A., by Ronald E. Sneed, for plaintiffs-appellees.

Shumaker, Loop & Kendrick, LLP, by William H. Sturges and Daniel R. Hansen, for defendants-appellants.

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

OPINION

Page 303

Appeal by defendants from order entered 4 March 2014 by Judge Gary M. Gavenus in Buncombe County Superior Court, No. 12 CVS 05118.

Page 304

HUNTER, Robert C., Judge.

The Town of Black Mountain, North Carolina (" the Town" ) and the County of Buncombe, North Carolina (" the County" ) (collectively " plaintiffs" ) filed suit against Lexon Insurance Company and Bond Safeguard Insurance Company (" defendants" ) seeking to enforce a series of subdivision performance bonds.

The trial court entered summary judgment in plaintiffs' favor. On appeal, defendants argue that summary judgment for plaintiffs was improper because: (1) neither the Town nor the County has standing to enforce the bonds; and (2) the statute of limitations for plaintiffs' claim has run.

After careful review, we affirm the trial court's order.

Background

From March 2005 through February 2007, defendants entered into four subdivision performance bonds (" the bonds" ) as sureties for The Settings of Black Mountain, LLC and Richmarc Black Mountain, LLC (collectively " developers" ).[1] Approval from the County for the developers to begin construction on a residential subdivision was conditioned on obtaining the performance bonds to secure completion of the project. Thus, the obligee on each of the bonds in question was the County, not the Town. Each of the bonds contained a clause indicating that defendants, as sureties, would not be required to complete the infrastructure or pay the principal amount of the bond until they received a resolution from the obligee indicating that the improvements had not been installed or completed by the developers. The bonds also contained a provision holding defendants and the developers jointly and severally liable for any amounts due upon default.

The real property that was secured by the bonds was annexed by the Town at varying times between May 2005 and February 2007. Defendants assert that they lacked knowledge of the annexation until 5 January 2012. In 2009, the Town sought confirmation from the developers that they intended and had the means to complete the infrastructure secured by the bonds. In a letter dated 23 October 2009, attorneys for the developers indicated that they were working toward closing a recapitalization loan. On 18 December 2009, a principal in one of the development companies stated via e-mail that " we still believe we have viable entities, though obviously troubled. We are committed to finishing our communities without need of the bonds[.]" Indeed, construction activity by the developers continued into 2010. ...


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