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Wilmington Savings Fund Society v. Mortgage Electronic Registration Systems, Inc.

Court of Appeals of North Carolina

May 21, 2019

WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a CHRISTIANA TRUST AS OWNER TRUSTEE OF THE RESIDENTIAL CREDIT OPPORTUNITIES TRUST III, Plaintiff,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR ACOPIA, LLC, SOUTHAMPTON COMMONS HOMEOWNERS ASSOCIATION, INC., ROSSABI BLACK SLAUGHTER, PA, KEITH H. PROPERTY, LLC, KEITH LAMANCE HARRELL, IH6 PROPERTY NORTH CAROLINA, LP and DOE DEFENDANTS A-Z, Defendants.

          Heard in the Court of Appeals 26 March 2019.

          Appeal by plaintiff from orders entered 4 December 2017 and 16 January 2018 by Judge Eric L. Levinson in Mecklenburg County Superior Court No. 16 CVS 16352.

          Bradley Arant Boult Cummings LLP, by Brian M. Rowlson, Mark S. Wierman and G. Benjamin Milam, for plaintiff-appellant.

          Roberson Haworth & Reese, P.L.L.C., by Alan B. Powell and Christopher C. Finan, for defendant-appellee IH6 Property North Carolina, LP.

          TYSON, JUDGE.

         Wilmington Savings Fund Society ("Plaintiff") appeals from an order granting IH6 Property North Carolina, LLC's ("Defendant") motion for judgment on the pleadings pursuant to Rule 12(c) of the N.C. Rules of Civil Procedure and an order denying Plaintiff's motion for reconsideration. We reverse and remand.

         I. Background

         Keith Harrell purchased property located at 9007 Holland Park Lane in Charlotte, North Carolina, in February 2009. Harrell borrowed $171, 830 from Acopia, LLC, as evidenced by a promissory note. To secure the note, Harrell executed a deed of trust in favor of Mortgage Electronic Registration Systems ("MERS"), solely as nominee for Acopia and its successors and assigns. Through a series of assignments, LSF9 Master Participation Trust ("LSF9") acquired the note and deed of trust in July 2015. Harrell subsequently defaulted on payments due under the terms of the note and deed of trust.

         The Southampton Commons Homeowners Association, Inc. ("HOA") filed a lien against Harrell's property at 9007 Holland Park Lane for unpaid assessments. Following a hearing in August 2015, the property was sold at auction to Keith H. Property, LLC ("Keith Property"). The HOA conveyed the property via a quitclaim deed with title expressly "subject to any and all superior liens," which was recorded in the Mecklenburg County Public Registry on 18 December 2015.

         Kondaur Capital Corporation ("Kondaur") acquired the note and deed of trust on 28 October 2015 through assignment from LSF9. This assignment was recorded on 3 December 2015. A purported satisfaction of the deed of trust was executed by a vice president of MERS, without any authority, and was recorded on 2 December 2015 in the Mecklenburg County Public Registry.

         Keith Property conveyed its interest in the property to Defendant via general warranty deed, recorded on 7 March 2016. Kondaur initiated action against Defendant; MERS; the HOA; the substitute trustee that handled the HOA sale; Harrell; and Keith Property on 15 September 2016. Kondaur's complaint requested the trial court to issue a judgment declaring, inter alia, the deed of trust remained a valid, enforceable first priority lien on the property, and that Defendant had acquired its interest in the property subject to Kondaur's prior lien. A notice of lis pendens was filed 26 September 2016. Defendant served its affirmative defenses, answer, and counterclaim on 21 November 2016, seeking to quiet the title of the property pursuant to N.C. Gen. Stat. §§ 41-10 and 1-253.

         Plaintiff acquired the note and deed of trust from Kondaur in a pool of loans it purchased on or about 25 November 2016. An assignment evidencing the transaction was executed on 8 December 2016 and recorded on 21 July 2017. Plaintiff filed a motion to substitute as a party and an answer to Defendant's counterclaim on 10 January 2017.

         The trial court entered a consent final judgment concerning MERS on 3 April 2017. The court's consent judgment found and concluded MERS no longer held any interest in the deed of trust at the time the purported satisfaction was executed and recorded, it was without authority to execute the satisfaction, and the satisfaction was void.

         Following discovery, Plaintiff filed a motion for summary judgment in August 2017. In September 2017, Defendant filed a motion for judgment on the pleadings. After a hearing, the trial court entered an order granting Defendant's motion for judgment on the pleadings on 4 December 2017. Plaintiff made a motion for reconsideration, which was denied without a hearing on 16 January 2018. Plaintiff timely appealed both orders.

         II. ...


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