Estate of Scurlock v. Wells Fargo Home Mtge., Inc. ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-1254
NORTH CAROLINA COURT OF APPEALS
Filed: 19 August 2014
ESTATE OF ILA T. SCURLOCK,
Plaintiff
Durham County
v.
No. 12 CVS 5773
WELLS FARGO HOME MORTGAGE, INC. and
SHAPIRO & INGLE, LLP,
Defendants
Appeal by plaintiff from order entered 26 April 2013 by
Judge Orlando F. Hudson in Durham County Superior Court. Heard
in the Court of Appeals 19 March 2014.
Russell, Goetcheus, & Associates, by Kathie Russell and
Jennifer Probasco, for Plaintiff.
Womble Carlyle Sandridge & Rice, LLP, by Kenneth B.
Oettinger and Amanda G. Ray, for Wells Fargo Bank, N.A.
Shapiro & Ingle, LLP, by Jason K. Purser, for Sharpiro &
Ingle (no brief).
ERVIN, Judge.
Plaintiff Estate of Ila T. Scurlock appeals from an order
dismissing its complaint, in which the estate asserted numerous
claims arising from the alleged failure of Defendant Wells Fargo
Home Mortgage, Inc., to honor a loan modification alleged to
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have been previously in effect and Defendant’s alleged refusal
to respond to Plaintiff’s request for an additional loan
modification. On appeal, Plaintiff contends that the trial
court erred by dismissing its complaint on the grounds that its
complaint properly asserted a request for equitable and other
relief based upon “negligence, negligent misrepresentation,
breach of contract, violations of N.C. Gen. Stat. § 25-3-204 and
§ 45-21.16(d)(i), breach of [the] implied covenant of good faith
and fair dealing and violations of the North Carolina Secure and
Fair Enforcement Mortgage Licensing Act, as well as violations
of N.C. Gen. Stat. § 75 et seq.” After careful consideration of
Plaintiff’s challenges to the trial court’s order in light of
the record and the applicable law, we conclude that the trial
court’s order should be affirmed.
I. Factual Background
A. Substantive Facts
In 1998, Ila T. Scurlock executed a promissory note and
deed of trust in favor of Accredited Home Lenders, Inc., for the
purpose of securing a $61,530 loan used to purchase a home
situated at 2406 Shirley Street in Durham. Ms. Scurlock’s note
was subsequently assigned to TMS Mortgage, Inc., and then to
Home Eq Loan Servicing.
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Ms. Scurlock died on 30 March 2005. She was survived by
two daughters, Deborah and Mabel Scurlock. In her will, Ms.
Scurlock named Nikki S. Scurlock, Deborah Scurlock’s daughter
and Ms. Scurlock’s granddaughter, as her executor with the power
to, among other things, “pay [her] legally enforceable debts . .
. except for debt . . . secured by real . . . property which
[was] to be assumed by the recipient of such property.” Ms.
Scurlock devised the residue of her estate, which included “all
of [her] property and assets not specifically bequeathed or
otherwise required for the payment of any debts owed” and “all
[her] personal belongings,” to Deborah Scurlock1.
Nikki Scurlock filed an application for the issuance of
letters testamentary and the admission of Ms. Scurlock’s will to
probate on 6 April 2005. According to this application, Ms.
Scurlock owned real property having a value of $77,677 as of the
date of her death. On the same date, the Clerk of Superior
Court issued letters testamentary to Nikki Scurlock and admitted
Ms. Scurlock’s will to probate.
After Ms. Scurlock’s death, Home Eq allowed Plaintiff to
make payments on the obligation evidenced by the promissory note
1
As a result of the fact that Ms. Scurlock made no specific
bequests in her will, all of her property, including the real
property at issue in this case, passed to Deborah Scurlock under
the residuary clause quoted in the text.
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associated with the deed of trust that was applicable to the
Shirley Street property. In May 2010, Plaintiff reached an
agreement with Home Eq to add approximately $5,000 to the
principal balance of the loan and reduce the required monthly
payments by eliminating tax and insurance escrow payments. As a
result, Plaintiff made the payments required under the note and
deed of trust in the reduced amount specified in this agreement.
In August of 2010, Home Eq transferred the note to
Defendant,2 which “reneged” on the prior agreements between
Plaintiff and Home Eq. Instead, Defendant offered to enter into
a “temporary forbearance agreement” with Plaintiff that did not
reflect the reduced monthly payments established in the May 2010
agreement. In addition, Defendant failed to respond to
Plaintiff’s written requests for a loan modification.
At some point that is not clearly revealed in the record,
Defendant initiated foreclosure proceedings applicable to the
Shirley Street property. On 26 October 2011, the Clerk of
Superior Court of Durham County entered an order authorizing the
sale of the Shirley Street property. In its order, the Clerk
found as fact that (1) notice had been properly served upon all
parties entitled to receive it; (2) Defendant was the holder of
the note, which represented a valid debt; (3) the debtor was in
2
As the result of a subsequent merger, Wells Fargo Bank,
N.A., succeeded to the rights of Wells Fargo Home Mortgage, Inc.
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default; and (4) the deed of trust contained a power of sale.
No appeal was taken from the order authorizing the foreclosure
sale.
On 3 January 2012, Deborah Scurlock filed a bankruptcy
petition in which she listed the note associated with the
Shirley Street property as one of her debts and acknowledged
that she was in default under this note. A motion filed by the
bankruptcy trustee seeking the dismissal of Deborah Scurlock’s
bankruptcy petition on 14 August 2012 was granted on 19 October
2012. Prior to the entry of this dismissal order, Nikki
Scurlock successfully petitioned to have Ms. Scurlock’s estate
reopened for the purpose of “resolving the mortgage and deed,”
with letters testamentary reflective of that decision having
been issued on 8 November 2012.3 After Deborah Scurlock’s
bankruptcy petition was dismissed, the foreclosure sale was
rescheduled for 26 November 2012.
B. Procedural History
3
A final accounting of the estate, which reflected a zero
balance, was filed on the same date. The record does not
clearly reflect the date upon which Ms. Scurlock’s estate was
originally closed or the nature of the proceedings that took
place on that occasion.
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On 26 November 2012, Plaintiff filed a complaint against
Defendant and Defendant Shapiro & Ingle, LLP,4 asserting claims
sounding in negligence, negligent misrepresentation, breach of
contract, violations of N.C. Gen. Stat. §§ 25-3-204 and 45-
21.16(d)(i), breach of an implied covenant of good faith and
fair dealing, violations of the North Carolina Secure and Fair
Enforcement Mortgage Licensing Act, and violations of N.C. Gen.
Stat. § 75 et seq.; alleging that Defendant was precluded from
foreclosing upon the Shirley Street property in light of its
decision to participate in the Home Affordable Modification
Program; and seeking compensatory and punitive damages,
attorneys’ fees, and costs. On that same day, Plaintiff filed a
motion seeking to obtain the issuance of an injunction
precluding the conducting of the scheduled foreclosure sale.5
On 22 January 2013, Shapiro & Ingle filed a responsive
pleading in which it denied the material allegations contained
in the complaint, asserted various affirmative defenses, and
sought dismissal of Plaintiff’s complaint on a number of
grounds. On 8 February 2013, Defendant filed a separate
4
Although Plaintiff asserted that Defendant Shapiro & Ingle
served as substitute trustee under the deed of trust applicable
to the Shirley Street property, Defendant Shapiro & Ingle denied
that it was serving as substitute trustee at the time that the
foreclosure proceeding was commenced.
5
On 18 February 2013, Defendant consented to the entry of a
temporary restraining order precluding the conducting of the
foreclosure sale.
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dismissal motion in which it asserted, among other things, that
Plaintiff lacked standing to maintain the present action, that
Plaintiff had failed to join a necessary party, that Plaintiff’s
claims were barred by res judicata considerations, that
Defendant did not owe any duty to Plaintiff to modify the loan,
and that no private right of action was available under the Home
Affordable Modification Program. After holding a hearing on 11
April 2013 for the purpose of considering all pending motions,
the trial court entered an order dismissing Plaintiff’s
complaint on 26 April 2013 for failure to state a claim upon
which relief could be granted. Plaintiff noted an appeal to
this Court from the trial court’s order.
II. Legal Analysis
Although Plaintiff has advanced a number of challenges to
the trial court’s order in its brief, we need not address those
arguments in detail given our determination that Plaintiff
lacked standing to initiate the present proceeding. As a
result, we conclude that the trial court did not err by
dismissing Plaintiff’s complaint.
In order to establish that it has standing to bring a legal
action, a party must show:
(1) ‘injury in fact’—an invasion of a
legally protected interest that is (a)
concrete and particularized and (b) actual
or imminent, not conjectural or
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hypothetical; (2) the injury is fairly
traceable to the challenged action of the
defendant; and (3) it is likely, as opposed
to merely speculative, that the injury will
be redressed by a favorable decision.
Neuse River Found. v. Smithfield Foods, Inc., 155 N.C. App. 110,
114, 574 S.E.2d 48, 52 (2002) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136, 119 L.
Ed. 2d 351, 364 (1992)), disc. review denied, 356 N.C. 675, 577
S.E.2d 628 (2003). “Standing most often turns on whether the
party has alleged ‘injury in fact’ in light of the applicable
statutes or caselaw.” Id. As a result of the fact that the
existence of standing is necessary in order for the judicial
system to have jurisdiction over a particular action, Munger v.
State, 202 N.C. App. 404, 409, 689 S.E.2d 230, 235 (2010), disc.
review improvidently granted, 365 N.C. 3, 705 S.E.2d 734 (2011),
the fact that this Court is required to determine the extent to
which subject matter jurisdiction exists regardless of the
extent to which that issue was discussed in the court below or
addressed in the parties’ briefs, Whittaker v. Furniture Factory
Outlet Shops, 145 N.C. App. 169, 172, 550 S.E.2d 822, 824
(2001), and the fact that “matters outside the pleadings . . .
may be considered and weighed in determining the existence of
jurisdiction over the subject matter,” Tart v. Walker, 38 N.C.
App. 500, 502, 248 S.E.2d 736, 737 (1987) (citation omitted), we
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are required to evaluate the extent to which Plaintiff has
standing to maintain this action regardless of the extent to
which the parties discussed this issue in their brief based upon
an examination of all relevant information. In the course of
making this determination, “we view the allegations as true and
the supporting record in the light most favorable to the non-
moving party.” Mangum v. Raleigh Bd. of Adjustment, 362 N.C.
640, 644, 660 S.E.2d 279, 283 (2008). After conducting the
required analysis, we conclude, given that all of Plaintiff’s
claims are predicated on the assumption that it had a legally
protected interest in the property and would suffer a legally
recognized injury in the event that the foreclosure proceeded6
and given the complete absence of any record or legal support
for either of those propositions, Plaintiff lacked standing to
maintain the present action.
Pursuant to N.C. Gen. Stat. § 28A-15-2(b), “the title to
real property of a decedent devised under a valid probated will
becomes vested in the devisees and shall relate back to the
decedent’s death.” As a result of the fact that Nikki Scurlock
sought and obtained the entry of an order admitting Ms.
6
For example, the first claim alleged in Plaintiff’s
complaint asserts that Defendant “owed Plaintiff a duty of due
care while servicing Plaintiff’s loan.” Similarly, Plaintiff
alleged in its complaint that Defendant’s actions caused “damage
to Plaintiffs by, among other things, causing Plaintiffs to lose
title to her home and her interest in its equity.”
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Scurlock’s will to probate on 6 April 2005, title to the Shirley
Street property vested in Deborah Scurlock on that date, with
her title relating back to the date of Ms. Scurlock’s death.
Although the Shirley Street property was potentially “available
for the discharge of debts and other claims against [Ms.
Scurlock’s] estate,” N.C. Gen. Stat. § 28A-15-1(a), Plaintiff
never sought to have the property returned to the estate for
that purpose. As a result, the real property that was the
subject of this action was never owned by or otherwise contained
in Ms. Scurlock’s estate.
In addition, we note that, although Plaintiff was
statutorily authorized to pay any debts owed by Ms. Scurlock at
the time of her death, N.C. Gen. Stat. § 28A-13-3(a)(29)
(authorizing the personal representative to “[p]ay or satisfy
the debts and claims against the decedent’s estate” in the order
and manner provided by law), the personal representative’s
authority in this respect is specifically subject to any
“express limitations imposed in a will of the decedent.” N.C.
Gen. Stat. § 28A-13-3(a). As we have already noted, Ms.
Scurlock’s will authorized the estate to “pay [her] legally
enforceable debts . . . except for . . . debt secured by real
and/or personal property[,] which [was] to be assumed by the
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recipient of such property.”7 Thus, Ms. Scurlock’s will
specifically provided that her estate was not to assume
responsibility for any obligation arising from or relating to
her ownership of real property, with any such obligations to be
assumed instead by the individual to whom the property had been
devised.
In light of the fact that the relevant tract of property
was never owned by Ms. Scurlock’s estate and the fact that Ms.
Scurlock’s will required the recipient of any real property
transferred under that instrument to assume responsibility for
any related debts, we are unable to understand how Plaintiff was
in any way injured by Defendant’s failure to honor agreements
that it had allegedly entered into with Defendant’s predecessors
or to respond to Plaintiff’s request for an additional
modification of the note and deed of trust applicable to the
Shirley Street property. Based upon the same logic, we are
unable to see how Plaintiff had the authority to negotiate any
sort of loan modification relating to the Shirley Street
property with Defendant or its predecessors that would be in any
way binding upon Defendant. As a result, given the absence of
7
Although the parties appear to have assumed at the hearing
held before the trial court that title to the property was
transferred to Deborah Scurlock while the necessity to pay the
obligation reflected in the note and deed of trust remained with
Plaintiff, that assumption is inconsistent with the provisions
of Ms. Scurlock’s will.
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any showing that the estate had any authority to act on Deborah
Scurlock’s behalf and the absence of any indication that the
estate, as compared to Deborah Scurlock, suffered any injury as
a result of Defendant’s conduct, Plaintiff is simply not
entitled to maintain any claim against Defendant stemming from
Defendant’s alleged refusal to honor prior agreements between
Plaintiff and Defendant’s predecessors and Defendant’s alleged
refusal to respond to Plaintiff’s request for an additional loan
modification. As a result, since the record clearly establishes
that Plaintiff lacked standing to assert the claims set out in
the complaint against Defendant, we necessarily conclude that
the trial court did not err by dismissing Plaintiff’s complaint.
III. Conclusion
Thus, for the reasons set forth above, we conclude that
Plaintiff lacked standing to initiate and maintain the present
action. As a result, the trial court’s order should be, and
hereby is, affirmed.
AFFIRMED.
Judges GEER and STEPHENS concur.
Report per Rule 30(e).