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Wells Fargo Bank, N.A. v. Stocks

Court of Appeals of North Carolina

July 2, 2019

WELLS FARGO BANK, N.A., Plaintiff,
FRANCES J. STOCKS, in his capacity as the executor of the estate of LEWIS H. STOCKS AKA LEWIS H. STOCKS, III, TIA M. STOCKS and JEREMY B. WILKINS, in his capacity as commissioner, Defendants.

          Heard in the Court of Appeals 25 April 2019.

          Appeal by Defendant Tia M. Stocks from summary judgment entered 25 April 2018 by Judge Henry W. Hight in Wake County, No. 17 CVS 6521 Superior Court.

          The Law Office of John T. Benjamin, Jr., P.A., by John T. Benjamin, Jr., and Aleksandra E. Anderson, for Plaintiff-Appellee.

          Janvier Law Firm, PLLC, by Kathleen O'Malley, for Defendant-Appellant Tia M. Stocks.

          Howard, Stallings, From, Atkins, Angell & Davis, P.A., by Douglas D. Noreen and Rebecca H. Ugolick, for Defendant-Appellant Frances J. Stocks, in his Capacity as the executor of the estate of Lewis H. Stocks.

          No brief filed by Defendant Jeremy B. Wilkins.

          INMAN, JUDGE

         Defendant-Appellant Tia M. Stocks ("Ms. Stocks") appeals from the trial court's entry of summary judgment reforming a deed of trust and ordering judicial foreclosure in favor of Plaintiff-Appellee Wells Fargo, N.A. ("Wells Fargo"). Following careful review, we reverse the trial court's entry of summary judgment and hold Wells Fargo's reformation action is barred by the applicable statute of limitations.

         I. Factual and Procedural History

         On 22 March 2002, Ms. Stocks' father, Lewis H. Stocks ("Mr. Stocks"), executed a Limited Power of Attorney naming Ms. Stocks attorney-in-fact for the limited purpose of executing certain documents necessary to purchase a house in Garner, North Carolina (the "Property"), for Ms. Stocks' use as a residence. Mr. Stocks arranged to purchase the property through a loan with First Union National Bank ("First Union"), and a general warranty deed conveying the Property to Ms. Stocks- as sole owner-was filed on 26 March 2002. Consistent with her father's loan arrangement, Ms. Stocks executed a promissory note as attorney-in-fact for Mr. Stocks in First Union's favor in the amount of $88, 184.50 (the "First Note") on 27 March 2002; she also recorded a deed of trust for that amount (together with the First Note as the "First Loan") that same day, which named herself and her father as borrowers and listed First Union as the beneficiary.

         Before the First Note was paid off, First Union became Wachovia; Wachovia, in turn, became holder of the First Note. In late 2004, Mr. Stocks sought to refinance the First Loan with Wachovia and, on 12 January 2005, executed a new promissory note for $83, 034.00 in Wachovia's favor (the "Note"). Ms. Stocks was not named as a borrower on the Note. On 19 January 2005, Ms. Stocks executed a new deed of trust with Wachovia under seal (the "Deed of Trust"), listing her as the borrower and stating she was "indebted to [Wachovia] in the principal sum of U.S.$ 83034.00 which indebtedness is evidenced by Borrower's Note dated 01/12/05." Because Ms. Stocks was not a signatory to or debtor under the Note, the language of the Deed of Trust mistakenly secured a non-existent debt. Ms. Stocks, however, made payments on the Note.

         By 2016, Wachovia had merged with Wells Fargo, Mr. Stocks had passed away, and Ms. Stocks had ceased paying the Note. Wells Fargo sent a right to cure letter to Mr. Stocks' estate (the "Estate") on 2 March 2016, but no further payments were forthcoming. Wells Fargo thereafter commenced non-judicial foreclosure proceedings on the Property; during the course of those proceedings, Wells Fargo learned for the first time that, because of the mistake in the Deed of Trust, the Note was not secured by the Property.

         To correct the error, Wells Fargo filed a complaint on 26 May 2017 requesting reformation of the Deed of Trust and a judicial sale of the Property; in the alternative, Wells Fargo requested imposition of an equitable lien on the Property. The complaint also alleged a breach of contract against the Estate for its default on the Note, as well as claims for quiet title and declaratory judgment that would establish the Deed of Trust as a valid lien on the Property as security for the Note.[1]

         Ms. Stocks filed an answer to Wells Fargo's complaint asserting the statute of limitations as a defense to reformation. The Estate filed its answer and crossclaims against Ms. Stocks for breach of contract, unjust enrichment, and unfair and deceptive trade practices. Following further pleading and discovery, Wells Fargo moved for summary judgment on all claims.

         At the summary judgment hearing, Wells Fargo contended that Ms. Stocks' statute of limitations defense, premised on Section 1-52(9), failed as a matter of law. That statute, which applies to claims arising from mistake, does not begin to run until the claimant "actually learns of [the mistake's] existence or should have discovered the mistake in the exercise of due diligence[, ]" Wells Fargo Bank, N.A. v. Coleman, 239 N.C.App. 239, 244, 768 S.E.2d 604, 608 (2015) (citation omitted), and Wells Fargo asserted that Ms. Stocks had failed to forecast any evidence demonstrating that the mistake was or should have been discovered more than three years prior to suit. Counsel for Ms. Stocks argued that Wells Fargo should have discovered the mistake at the time the Deed of Trust was executed. The trial court rejected Ms. Stocks' statute of limitations argument and entered summary judgment for Wells Fargo on its claims for reformation and judicial foreclosure. Ms. Stocks appeals.

         II. Analysis

         A. ...

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