September 13, 2016
by Graham H. Kidner
Hutchens Law Firm – USFN Member (North Carolina, South Carolina)
Earlier this year, the North Carolina Court of Appeals affirmed the dismissal of an action brought by a former borrower seeking to enjoin the sale of the foreclosed property. [Thompson v. Nationstar Mortgage, 785 S.E.2d 186, at *2 (Table) (N.C. Ct. App. Apr. 5, 2016)].
In Thompson, the plaintiff had sought to challenge whether Nationstar held a valid debt and had the right to foreclose under the deed of trust — two findings that the clerk must make in order to authorize the foreclosure sale pursuant to N.C.G.S. § 45-21.16(d). Because the plaintiff did not appeal the clerk’s order within the 10 days required by § 45-21.16(d1), the clerk’s findings were final. Moreover, the plaintiff’s opportunity to raise any equitable claims, or any legal claims outside the findings required by § 45-21.16(d), was lost because he failed to file a separate action and to obtain an injunction under § 45-21.34 before the rights of the parties became fixed.
While not breaking any new legal ground, the Thompson opinion is a reminder of the following legal principles:
1. Once the rights of the parties to the foreclosure proceeding are fixed, after the expiration of the upset-bid period following the foreclosure sale, the doctrine of collateral estoppel “bars all claims in the present appeal based on issues already decided by the clerk in the previous foreclosure proceeding, and ‘our analysis begins with the premise that [the] plaintiff [ ] [was] in default and the foreclosure [ ] [was] proper.’ Funderburk, __ N.C. App. at __, 775 S.E.2d at 5-6.” Thompson, at *3.
2. The Court of Appeals also overruled the plaintiff’s assignment of error that the trial court failed to make findings of fact when it dismissed the case pursuant to N.C. R. Civ. P. 12(b)(6). While an action “tried upon the facts” requires the court to “find the facts specially” (N.C. R. Civ. P. 52), “the requirements of Rule 52 are inapplicable to summary dispositions under Rules 12 and 56, as the resolution by the trial court of contested evidentiary matters is not contemplated under either Rule. G & S Bus. Servs., Inc. v. Fast Fare, Inc., 94 N.C. App. 483, 489-90, 380 S.E.2d 792, 796 (1989).” Thompson, at *3.
3. Finally, the court rejected the plaintiff’s contention that the alleged joint representation of the defendants (Nationstar Mortgage and the foreclosure trustee) by the same attorneys could form the basis for civil liability. Thompson, at *3, citing McGee v. Eubanks, 77 N.C. App. 369, 374, 335 S.E.2d 178, 181-82 (1985). And even if the alleged dual representation was prohibited by the State Bar’s ethics rules (which the court did not decide) (see Rev. R. Prof. Conduct N.C. St. B. 1.7(a)), “we hold that the trial court did not err in failing to conclude that such a dual representation prevented it from ruling in favor of Defendants on their motions to dismiss.” Thompson, at *4.
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