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In re Foreclosure by Rogers Townsend & Thomas, PC

Court of Appeals of North Carolina

June 2, 2015

IN THE MATTER OF THE FORECLOSURE by Rogers Townsend & Thomas, PC, Substitute Trustee, of a Deed of Trust Executed by Julia Weskett Beasley, dated February 12, 2007 and recorded on February 16, 2007 in Book No. 1211 at Page 169 of the Carteret County Registry, North Carolina; Substitute Trustees: Rogers Townsend & Thomas, PC

Heard in the Court of Appeals September 24, 2014

Editorial Note:

This Decision is not final until expiration of the twenty-one day rehearing period. [North Carolina Rules of Appellate Procedure 32(b)]

Carteret County, No. 13 SP 134.

Nelson Mullins Riley & Scarborough, LLP, by Joseph S. Dowdy, Donald R. Pocock, and D. Martin Warf; and Rogers Townsend & Thomas, PC, by Renner Jo St. John, for petitioner-appellants.

Shipman & Wright, LLP, by Gregory M. Katzman, for respondent-appellee.

CALABRIA, Judge. Judges STEELMAN and McCULLOUGH concur.

OPINION

Page 102

Appeal by petitioners from order entered 25 September 2013 by Judge Phyllis M. Gorham in Carteret County Superior Court. Heard in the Court of Appeals 24 September 2014.

CALABRIA, Judge.

FV-I, Inc. (" FV-I" ), in trust for Morgan Stanley Mortgage Capital Holdings, LLC (" Morgan Stanley" ), and substitute trustee Rogers Townsend & Thomas, PC (" RTT" ) (collectively with Morgan Stanley and FV-I, " petitioners" ), appeal from an order granting Julia Weskett Beasley's (" Mrs. Beasley" ) motion to dismiss, with prejudice, FV-I's foreclosure proceeding against her. We reverse.

On 12 February 2007, Mrs. Beasley executed a promissory note (" the note" ) in favor of Equity Services, Inc. in the original principal amount of one million dollars ($1,000,000). The purpose of the note was to finance the purchase of 109 Knollwood Drive located in the Pine Knoll Shores subdivision of Atlantic Beach, North Carolina (" the property" ). The note was secured by a Deed of Trust recorded on 16 February 2007 in Book 1211 at Page 169 in the Carteret County Public Registry (" the deed of trust" ).

On 15 June 2011, Philip A. Glass (" Mr. Glass" ), acting as substitute trustee for FV-I, the holder of the note, filed a Notice of Foreclosure Hearing (" first notice" ) alleging that Mrs. Beasley had defaulted for failing to make timely payments on the note. According to the first notice, FV-I intended to accelerate payment of the entire amount due on the note and deed of trust; however, Mrs. Beasley could cure the default and prevent the foreclosure by paying the past due indebtedness plus attorneys' fees and actual costs incurred if FV-I agreed to let her do so. On 17 January 2012, Mr. Glass filed a notice of voluntary dismissal in the foreclosure proceedings.

On 4 April 2013, RTT, a new substitute trustee, filed a second Notice of Foreclosure Hearing (" second notice" ) alleging that Mrs. Beasley was still in default on the note and stating that FV-I had accelerated the maturity of the debt. The second notice also stated Mrs. Beasley could cure her default and reinstate the loan obligation if the deed of trust provided her such a right. Mrs. Beasley's total debt of $1,208,025.18 included the amount of principal and interest $1,151,427.01 plus the amount of other fees, expenses, or disbursements. On 26 April 2013, Mrs. Beasley filed a motion to dismiss, alleging, inter alia, that RTT failed to refile the action within one year in accordance with Rule 41(a) of the North Carolina Rules of Civil Procedure (" Rule 41" ).

On 10 July 2013, the day before the scheduled foreclosure hearing, RTT filed a second voluntary dismissal without prejudice. On 11 July 2013, the matter was heard before the Carteret County Clerk of Court (" the Clerk of Court" ). The Clerk of Court subsequently entered a 16 July 2013 order which found, inter alia, that the second voluntary dismissal operated as an adjudication on the merits of the case pursuant to Rule 41(a). As a result, the Clerk granted Mrs. Beasley's motion to dismiss with prejudice.

Petitioners appealed to Superior Court. After conducting a hearing de novo, the Superior Court found that, because the new foreclosure by power of sale action was filed more than one year after the first voluntary dismissal, Rule 41(a) barred the claim. The Superior Court also concluded that the second voluntary dismissal operated as an adjudication on the merits pursuant to Rule 41(a). The court then struck the notice of voluntary dismissal and granted Mrs. Beasley's motion to dismiss the action with prejudice. Petitioners appeal.

On appeal, petitioners argue (1) that the Superior Court erred because it lacked jurisdiction to dismiss the matter, and (2) that the Superior Court's order was erroneous to the

Page 103

extent that it precluded further appropriate ...


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