Bank of Am., N.A. v. Charlotte Prop. Invs., LLC

An unpublished opinion of the North Carolina Court of Appeals does not constitute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
A p p e l l a t e P r o c e d u r e .
NO. COA14-42
NORTH CAROLINA COURT OF APPEALS
Filed: 17 June 2014
BANK OF AMERICA, N.A.,
Plaintiff,
v. Mecklenburg County
No. 13 CVS 2168
CHARLOTTE PROPERTY INVESTMENTS,
LLC, and WILLIAM C. GATHINGS,
Defendants.
Appeal by defendant Charlotte Property Investments, LLC
from order entered 17 October 2013 by Judge Robert C. Ervin in
Mecklenburg County Superior Court. Heard in the Court of
Appeals 5 May 2014.
Johnston, Allison & Hord, P.A., by Greg C. Ahlum and Ryan
P. Hoffman, for plaintiff–appellee.
Cranford, Buckley, Schultze, Tomchin, Allen & Buie, P.A.,
by R. Gregory Tomchin, for defendant–appellant Charlotte
Property Investments, LLC.
MARTIN, Chief Judge.
Defendant Charlotte Property Investments, LLC (“defendant
CPI”) appeals from an order which granted summary judgment in
favor of plaintiff Bank of America, N.A. (“plaintiff Bank”) on
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plaintiff Bank’s claim to quiet title, and decreed that
plaintiff Bank’s Deed of Trust is a valid encumbrance on the
property at issue from the date of recordation and that this
property——which is now owned by defendant CPI——is subject to
plaintiff Bank’s Deed of Trust. We affirm.
The evidence in the record tended to show that, on 31 July
2001, a North Carolina General Warranty Deed (“the Warranty
Deed”) was recorded in the Mecklenburg County Register of Deeds,
which conveyed to Grantee William C. Gathings (“defendant
Gathings”) the property described as follows:
BEING all of Lot 39 of BELMEADE GREEN,
Phase 1, Map 1, as same is shown on a
revised map thereof recorded in Map Book 33,
page 679, in the office of the Register of
Deeds for Mecklenburg County, North
Carolina.
The physical address for the property was designated in the
Warranty Deed as 2816 Oasis Lane, Charlotte, North Carolina
28214, the brief description for the real estate index listing
was “Lot 39 of Belmeade Green,” and the parcel ID number was
“053-074-33.”
On 13 June 2003, a Deed of Trust was recorded in the
Mecklenburg County Register of Deeds, in which defendant
Gathings was designated as the Borrower and Countrywide Home
Loans, Inc. (“Countrywide”) as the Lender. In exchange for a
loan of $117,000.00, defendant Gathings, as the Borrower on a
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note that was dated 5 June 2003, “irrevocably grant[ed] and
convey[ed]” property described in the Deed of Trust as follows:
Lying and being in Crab Orchard Township,
Mecklenburg County, North Carolina, and
being all of Lot No. 149 of Hickory
Ridge 6B, Map #5, and being on file in the
Office of the Register of Deeds for
Mecklenburg County, North Carolina, in Map
Book 21, Page 150, specific reference
thereto being made for a more complete
description thereof by metes and bounds.
The description of the property in the Deed of Trust further
indicated that the parcel ID number was “053 074 33,” and that
the property description “currently has the address of”
2816 Oasis Lane, Charlotte, North Carolina 28214, both of which
are the same as the parcel ID number and the physical address of
the property that is the subject of the Warranty Deed.
According to plaintiff Bank, in July 2010, the Belmeade
Green Homeowners’ Association, Inc. (“the HOA”) filed a claim of
lien for past due homeowners’ association dues in the amount of
$110.00, and this claim of lien referenced the same physical
address to which both the Warranty Deed and the Deed of Trust
refer: 2816 Oasis Lane, Charlotte, North Carolina 28214. The
parties agree that the HOA subsequently foreclosed on this claim
of lien, that defendant CPI was the highest bidder for this
property at the foreclosure with an upset bid of $3,253.25, and
that this property was conveyed to defendant CPI. In June 2011,
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the Association Lien Foreclosure Deed (“the Foreclosure Deed”),
later filed in the Mecklenburg County Register of Deeds,
described the property conveyed by the HOA to defendant CPI as
“the same property described in the [Warranty Deed] recorded in
Deed Book 12508, at Page 753 of the Mecklenburg County Public
Registry,” and included the same description as that which was
included in the Warranty Deed:
Being all of Lot 39 of Belmeade Green,
Phase 1, Map 1, as same is shown on a
revised map thereof recorded in Map Book 33,
Page 679, in the Office of the Register of
Deeds for Mecklenburg County, North
Carolina.
Daoshan Sun, a manager for defendant CPI, stated in an
affidavit that, prior to submitting the upset bid for this
property on behalf of defendant CPI, he searched the real estate
index of the Mecklenburg County public records, and that his
search “did not reveal a Deed of Trust against William C.
Gaithing’s [sic] property with the legal description of Lot 39,
Belmead [sic] Green.” The brief legal description for the Deed
of Trust that appears in the Mecklenburg County Register of
Deeds’ real estate index search reads “LT 149 HICKORY
RIDGE 6 B,” whereas the brief legal description for the Warranty
Deed that appears in the index reads “LT 39 BELMEADE GREEN
PH 1.”
Plaintiff Bank filed a Complaint against defendants CPI and
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Gathings alleging that: “[d]ue to an error on the part of the
draftsman, the lot and block legal description in the Deed of
Trust does not describe the Property but, rather, describes
Lot 149 of Hickory Ridge Subdivision (‘Lot 149’)”; “[defendant]
Gathings has never owned an interest in Lot 149”; “[t]he
inclusion of the lot and block legal description of Lot 149 in
the Deed of Trust instead of the lot and block legal description
of the property was a mutual mistake of fact as between the
parties to the Deed of Trust”; and the Deed of Trust is now held
by plaintiff Bank. Plaintiff Bank prayed that the trial court
enter an order “reforming the Deed of Trust to replace the lot
and block legal description of Lot 149 with the Lot and Block
legal description of the Property”; or, in the alternative,
enter an order “declaring a constructive trust upon title to the
Property granting [plaintiff Bank] a first position lien on the
Property” relating back to the date on which the Deed of Trust
was recorded; enter an order “quieting title to the Property in
the name of [defendant] CPI subject to the Deed of Trust”; or,
in the alternative, enter judgment in favor of plaintiff Bank
and against defendant Gathings for plaintiff Bank’s “actual
damages arising from Gathings’ breach of the warranties
contained in the Deed of Trust.”
Plaintiff Bank and defendant CPI filed cross-motions for
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summary judgment, which motions were heard in October 2013. In
support of its motion for summary judgment and in opposition to
plaintiff Bank’s motion, defendant CPI submitted affidavits from
its manager, Daoshan Sun, in which Mr. Sun described his search
of the real estate index in the Mecklenburg County Register of
Deeds for property “with the legal description of Lot 39,
Belmead [sic] Green,” and attested that neither his search of
the index nor his personal examination of the real property gave
him any “reason to be aware of [plaintiff Bank’s] claim against
the real property.” In support of its motion for summary
judgment, plaintiff Bank submitted affidavits from William C.
Parise, an attorney with six years’ of experience performing
“thousands of title searches,” who conducted his own title
search of the property that is the subject of the Warranty Deed.
Mr. Parise attested that: although the Warranty Deed and the
Deed of Trust “contain different lot and block references, they
contain the same property address (2816 Oasis Lane, Charlotte)
and the same parcel ID number (053-074-33)”; his search of the
property referenced by lot and block in the Deed of Trust
“showed that [defendant] Gathings has never owned an interest in
the property referenced by lot and block in the Deed of Trust”;
because the two deeds contained the same property address and
parcel ID number, and because defendant Gathings “never owned
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the property referenced by lot and block in the Deed of Trust,”
he included the Deed of Trust as “a possible encumbrance of the
Property”; and “[u]sing the proper standard of care, a title
searcher cannot rely solely on the index with regard to recorded
documents.”
On 17 October 2013, the trial court entered an order in
which it decreed that plaintiff Bank’s Deed of Trust is a valid
encumbrance on the property from the date of recordation,
adjudged that the property is owned by defendant CPI subject to
plaintiff Bank’s Deed of Trust, granted summary judgment in
favor of plaintiff Bank on its claim for quiet title, and denied
defendant CPI’s motion for summary judgment. Defendant CPI
appeals.
_________________________
Defendant CPI first contends the trial court erred by
determining that the Deed of Trust is a valid encumbrance on the
property at issue because it contains an “erroneous legal
description.” Defendant CPI asserts that this description was
not sufficient to have put it on notice that the Deed of Trust
encumbered the property.
“A deed purporting to convey an interest in land is void
unless it contains a description of the land sufficient to
identify it or refers to something extrinsic by which the land
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may be identified with certainty.” Overton v. Boyce, 289 N.C.
291, 293, 221 S.E.2d 347, 349 (1976). Moreover, “[a] deed of
trust containing a defective description of the subject property
is a defective deed of trust and provides no notice, actual or
constructive, under our recordation statutes.” Fifth Third
Mortg. Co. v. Miller, 202 N.C. App. 757, 761, 690 S.E.2d 7, 9–
10, disc. review denied, 364 N.C. 601, 703 S.E.2d 445 (2010).
Nevertheless, it has long been recognized that “[a] purchaser
. . . has constructive notice of all duly recorded documents
that a proper examination of the title should reveal.” Stegall
v. Robinson, 81 N.C. App. 617, 619, 344 S.E.2d 803, 804, disc.
review denied, 317 N.C. 714, 347 S.E.2d 456 (1986). Such an
examination has been said to “charge[] purchasers with
constructive notice of all that could be discovered by a search
of the deeds and records, whether within the direct chain of
conveyances or outside the direct chain of conveyances,” id. at
621, 344 S.E.2d at 805 (internal quotation marks omitted), so
that “the title examiner must look at each deed of any tract of
land of both immediate and prior grantors that was executed
during each one’s ownership of the land in question.” Id. at
621, 344 S.E.2d at 805–06 (internal quotation marks omitted).
In the present case, defendant CPI urges that Fifth Third
Mortgage Co. requires us to conclude that the trial court erred
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by determining that the property at issue is encumbered by the
Deed of Trust. See Fifth Third Mortg. Co., 202 N.C. App. at
758, 760–61, 690 S.E.2d at 9–10 (affirming the trial court’s
order which determined that a subsequent purchaser of property
did not have constructive notice of a deed of trust because the
deed contained an erroneous description of the property securing
the debt that described the property as being located in a
different county from both the county in which the property was
actually located and the county in which the deed was
registered). Although a deed of trust containing an inaccurate
description of the subject property is “defective” and “provides
no notice, actual or constructive, under our recordation
statutes,” see id. at 761, 690 S.E.2d at 9–10, here, the record
indicates that the Deed of Trust contained the correct physical
address and parcel ID number, thereby referring to extrinsic
sources from which the land could be identified with certainty.
See Overton, 289 N.C. at 293, 221 S.E.2d at 349. Moreover,
defendant CPI conducted an inadequate title examination, relying
solely on the brief description in the real estate index, rather
than examining all duly recorded documents “executed during
[Gathings’] ownership of the” subject property. See Stegall,
81 N.C. App. at 621, 344 S.E.2d at 805–06 (internal quotation
marks omitted); see also Waters v. N.C. Phosphate Corp.,
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310 N.C. 438, 441–42, 312 S.E.2d 428, 432 (1984) (“The law
contemplates that a purchaser of land will examine each recorded
deed and other instrument in his chain of title and charges him
with notice of every fact affecting his title which an accurate
examination of the title would disclose.”). For this reason, we
conclude the Deed of Trust, by referring to the correct physical
address and parcel ID number, was sufficient to identify the
parcel with certainty and to provide constructive notice of the
lien.
Defendant CPI next contends plaintiff Bank has failed to
establish that it holds the Deed of Trust and, therefore, is not
entitled to prevail at summary judgment on its quiet title
action.
An action to quiet title is controlled by N.C.G.S. § 41-10,
which provides, in part, that “[a]n action may be brought by any
person against another who claims an estate or interest in real
property adverse to him for the purpose of determining such
adverse claims . . . .” N.C. Gen. Stat. § 41-10 (2013). “The
beneficial purpose of this section is to free the land of the
cloud resting upon it and make its title clear and indisputable,
so that it may enter the channels of commerce and trade
unfettered and without the handicap of suspicion.” Heath v.
Turner, 309 N.C. 483, 488, 308 S.E.2d 244, 247 (1983). “In an
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action to quiet title, the burden of proof is on the plaintiff
to establish his title,” id., which may be done “by traditional
methods or by reliance on the Real Property Marketable Title
Act.” Id.; see also Mobley v. Griffin, 104 N.C. 112, 115–16,
10 S.E. 142, 142–43 (1889) (setting out the traditional methods
of proving title). To make a prima facie showing of title
through traditional methods, plaintiffs “may offer a connected
chain of title.” Heath, 309 N.C. at 489, 308 S.E.2d at 247.
In the present case, the record includes the Deed of Trust,
which identifies Countrywide as the Lender and defendant
Gathings as the Borrower. Plaintiff Bank supplemented the
record on appeal pursuant to Appellate Rule 9(b)(5)(a) with an
Assignment of Deed of Trust, which provides that the same Deed
of Trust for property with the address of 2816 Oasis Lane in
Charlotte, North Carolina, recorded with the Mecklenburg County
Register of Deeds on 13 June 2003 has since been assigned and
transferred from Countrywide to “BAC Home Loans Servicing, LP
FKA Countrywide Home Loans Servicing, LP,” of which plaintiff
Bank is a “successor by merger.” There is no transcript of the
summary judgment hearing before the trial judge included in the
record on appeal. Rule 9(a)(1)(j) of the North Carolina Rules
of Appellate Procedure provides that copies of “papers filed”
“in the trial court which are necessary to an understanding of
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all issues presented on appeal” “shall” be contained in the
record on appeal. N.C.R. App. P. 9(a)(1)(j). Appellate
Rule 9(b)(5)(a) provides that a party “may supplement the record
on appeal with any items that could otherwise have been included
pursuant to this Rule 9” “[i]f the record on appeal as settled
is insufficient to respond to the issues presented in an
appellant’s brief.” N.C.R. App. P. 9(b)(5)(a). Thus, the
record is only to contain documents that were before the trial
court and, in the absence of any objection from defendant CPI to
plaintiff Bank’s supplement to the record, we must assume that
the Assignment of Deed of Trust was before the trial court.
Therefore, plaintiff Bank had standing, pursuant to the
assignment, to file the claims brought in this action, and this
argument is without merit.
Affirmed.
Judges STEELMAN and DILLON concur.
Report per Rule 30(e).