{ "id": 4347994, "name": "IN THE MATTER OF THE FORECLOSURE OF THAT NORTH CAROLINA DEED OF TRUST BY CARVER POND I LIMITED PARTNERSHIP TO UNITED GENERAL TITLE INSURANCE COMPANY, TRUSTEE FOR RED CAPITAL COMMERCIAL FUNDING, LLC AS RECORDED IN THE DURHAM COUNTRY REGISTRY IN BOOK 5710 AT PAGE 308", "name_abbreviation": "In re the Foreclosure of that North Carolina Deed of Trust by Carver Pond I Ltd. Partnership", "decision_date": "2011-12-06", "docket_number": "No. COA11-367", "first_page": "352", "last_page": "357", "citations": [ { "type": "official", "cite": "217 N.C. App. 352" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "649 S.E.2d 10", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12639164 ], "weight": 4, "year": 2007, "pin_cites": [ { "page": "12", "parenthetical": "quotation omitted" }, { "page": "146-47" }, { "page": "13" } ], "opinion_index": 0, "case_paths": [ "/se2d/649/0010-01" ] }, { "cite": "319 S.E.2d 266", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1984, "opinion_index": 0 }, { "cite": "310 N.C. 749", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2399937, 2403675 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc/310/0749-01", "/nc/310/0749-02" ] }, { "cite": "309 S.E.2d 193", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "pin_cites": [ { "page": "198", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "309 N.C. 695", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4762459 ], "year": 1983, "pin_cites": [ { "page": "701", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/309/0695-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 55", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "271 S.E.2d 54", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1980, "pin_cites": [ { "page": "204" }, { "page": "58" }, { "page": "58", "parenthetical": "stating \"if the alleged merger had occurred, then plaintiff, as the surviving corporation, would have succeeded by operation of law to Econo-Travel Corporation's status as owner and holder of the promissory note\"" } ], "opinion_index": 0 }, { "cite": "301 N.C. 200", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564678 ], "weight": 2, "year": 1980, "pin_cites": [ { "page": "204" } ], "opinion_index": 0, "case_paths": [ "/nc/301/0200-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 25-1-201", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "year": 2009, "pin_cites": [ { "page": "(b)(21)" }, { "parenthetical": "quotation and quotation marks omitted" } ], "opinion_index": 0 }, { "cite": "711 S.E.2d 165", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 2011, "pin_cites": [ { "page": "170", "parenthetical": "quotation marks and citations omitted" }, { "page": "171" } ], "opinion_index": 0 }, { "cite": "693 S.E.2d 705", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2010, "pin_cites": [ { "page": "709", "parenthetical": "quotation and quotation marks omitted" } ], "opinion_index": 0 }, { "cite": "185 N.C. App. 142", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8208829 ], "weight": 2, "year": 2007, "pin_cites": [ { "page": "144", "parenthetical": "quotation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/185/0142-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 45-21.16", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 3, "year": 2009, "pin_cites": [ { "page": "(d)" }, { "page": "(d)" }, { "page": "(d)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 564, "char_count": 13696, "ocr_confidence": 0.725, "pagerank": { "raw": 1.0599897330993742e-07, "percentile": 0.556835359899361 }, "sha256": "1a75f85a7f7a95c67458b8a272e7486aa72126856a2b1e05a6707651a979fad8", "simhash": "1:03dd4c77f87ea516", "word_count": 2270 }, "last_updated": "2023-07-14T22:07:22.966851+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges GEER and STROUD concur." ], "parties": [ "IN THE MATTER OF THE FORECLOSURE OF THAT NORTH CAROLINA DEED OF TRUST BY CARVER POND I LIMITED PARTNERSHIP TO UNITED GENERAL TITLE INSURANCE COMPANY, TRUSTEE FOR RED CAPITAL COMMERCIAL FUNDING, LLC AS RECORDED IN THE DURHAM COUNTRY REGISTRY IN BOOK 5710 AT PAGE 308" ], "opinions": [ { "text": "THIGPEN, Judge.\nRespondent Carver Pond I Limited Partnership (\u201cCarver Pond\u201d) appeals from the trial court\u2019s order authorizing James Trachtman to act as substitute trustee and to proceed with foreclosure under a power of sale. We must determine whether the trial court erred by finding that Bank of America, National Association (\u201cBank of America\u201d) is the holder of the debt and that the promissory note was in default. Because we conclude the trial court\u2019s findings of fact are supported by competent evidence, we affirm.\nCarver Pond owns Carver Pond Apartments, located at 4001 Meriwether Drive in Durham, North Carolina. On 9 August 2007, Carver Pond executed a Promissory Note in which it promised to pay a principal amount of $8,100,000.00 plus interest to Red Capital Commercial Funding (\u201cRed Capital\u201d). To secure the loan evidenced by the Promissory Note, Carver Pond executed a Deed of Trust, Security Agreement and Assignment of Lease and Rents (the \u201cDeed of Trust\u201d) on Carver Pond Apartments (the Promissory Note and the Deed of Trust are collectively referred to as the \u201cLoan Documents\u201d). On the same date, Red Capital assigned the Loan Documents to Nomura Credit & Capital, Inc., which later assigned them to LaSalle Bank National Association (\u201cLaSalle\u201d) on 30 August 2007. On 17 October 2008, LaSalle merged with Bank of America.\nAfter Carver Pond failed to make three monthly payments of $51,624.41 in January through March of 2010, Bank of America sought the appointment of a receiver to administer Carver Pond Apartments. On 5 April 2010, Hawthorne Residential Partners LLC (\u201cHawthorne\u201d) was appointed as receiver to take possession of, manage, and operate Carver Pond Apartments. Although Hawthorne transferred $264,772.00 to Bank of America on 27 July 2010, Hawthorne failed to make payments to Bank of America in April and May 2010. On 4 June 2010, Bank of America sent a letter to Carver Pond stating that Carver Pond was in default for failing to make monthly payments for January through May of 2010. The 4 June 2010 letter also stated that Bank of America accelerated the loan and demanded payment of $8,646,619.64, the entire amount due under the Loan Documents.\nOn 21 June 2010, Bank of America filed a Notice of Foreclosure Hearing. After a hearing on 22 July 2010, the clerk of Durham County Superior Court entered an Order Authorizing Foreclosure of Deed of Trust on 14 September 2010. On appeal from the 14 September 2010 order, the trial court heard arguments and entered an Order Authorizing Foreclosure Sale on 4 November 2010. In its order, the trial court found that Bank of America \u201cis the successor by merger to LaSalle\u201d; the \u201cLoan Documents evidence a valid debt of which Bank of America is the holder\u201d; the Note is in default as Carver Pond made no payments since December 2009; and the actions of the receiver appointed by the court \u201care not those of the Holder; therefore, the Holder did not take advantage of any alleged nonperformance by the Receiver.\u201d Based on these findings of fact, the trial court authorized the substitute trustee to proceed with the foreclosure sale. Carver Pond appeals from this order.\nOn appeal, Carver Pond argues the trial court erred in finding that (I) Bank of America is the holder of the Loan Documents and (II) the Promissory Note was in default.\nIn reviewing a trial court\u2019s order allowing a foreclosure sale pursuant to N.C. Gen. Stat. \u00a7 45-21.16(d) (2009), our standard of review is \u201cwhether competent evidence exists to support its findings of fact and whether the conclusions reached were proper in light of the findings.\u201d In re Foreclosure of a Deed of Trust Executed by Bigelow, 185 N.C. App. 142, 144, 649 S.E.2d 10, 12 (2007) (quotation omitted). At the time this foreclosure proceeding was commenced, a clerk of court was required to find five elements to authorize a foreclosure sale:\n(i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, (iv) notice to those entitled to such under subsection (b), and (v) that the underlying mortgage debt is not a subprime loan as defined in G.S. 45-101(4)[.]\nN.C. Gen. Stat. \u00a7 45-21.16(d) (2009). \u201cOn appeal from a determination by the clerk that the trustee is authorized to proceed, the judge of the district or superior court having jurisdiction is limited to determining de novo the same . . . issues resolved by the clerk.\u201d In re Adams, _ N.C. App. _, _, 693 S.E.2d 705, 709 (2010) (quotation and quotation marks omitted).\nI. Bank of America as Holder of the Loan Documents\nIn its first argument on appeal, Carver Pond contends the trial court erred in finding that Bank of America is the holder of the Loan Documents. We disagree.\nFor the trial court to find sufficient evidence that a petitioner is the holder of a valid debt in accordance with section N.C. Gen. Stat. \u00a7 45-21.16(d), the following two questions must be answered in the affirmative: \u201c(1) is there sufficient competent evidence of a valid debt?; and (2) is there sufficient competent evidence that the party seeking to foreclose is the holder of the notes that evidence that debt?\u201d In re David A. Simpson, P.C., _ N.C. App. _, _, 711 S.E.2d 165, 170 (2011) (quotation marks and citations omitted). \u201cOur General Statutes define the \u2018holder\u2019 of an instrument as \u2018the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.\u2019 \u201d Id. at _, 711 S.E.2d at 171 (quoting N.C. Gen. Stat. \u00a7 25-1-201(b)(21) (2009)). \u201cFurthermore, a \u2018person\u2019 means an individual, corporation, business trust, estate, trust ... or any other legal or commercial entity.\u201d Id. (quotation and quotation marks omitted).\nCarver Pond cites In re Adams, _ N.C. App. _, 693 S.E.2d 705 (2010), in support of its argument that evidence of Bank of America\u2019s merger with LaSalle is not sufficient evidence that Bank of America is the current holder of the Loan Documents. Adams, however, does not address whether evidence of a merger is sufficient evidence that a petitioner is the holder of a note. We find Econo-Travel Motor Hotel Corp. v. Taylor, 301 N.C. 200, 271 S.E.2d 54 (1980), instructive.\nIn Econo-Travel, the plaintiff alleged in its complaint \u201cthat it became the owner and holder of the note sued upon by merger with [the] indorsee [of the note] Econo-Travel Corporation.\u201d Id. at 204, 271 S.E.2d at 58. Although our Supreme Court held that the plaintiff failed to establish a genuine issue as to whether it was the owner and holder of the note because it failed to introduce evidence of a merger, the court noted that \u201cif the alleged merger had occurred, then plaintiff, as the surviving corporation, would have succeeded by operation of law to Econo-Travel Corporation\u2019s status as owner and holder of the promissory note, and would have had standing to enforce the note in its own name.\u201d Id. Furthermore, pursuant to N.C. Gen. Stat. \u00a7 55-ll-06(a)(2) (2009), when a merger between two corporations occurs, \u201c[t]he title to all real estate and other property owned by each merging corporation is vested in the surviving corporation without reversion or impairment.\u201d\nHere, the record on appeal contains three documents which evidence the merger between LaSalle and Bank of America. The first document is an Affidavit of Noteholder executed by the Servicer which states Bank of America is successor by merger to LaSalle. The second document is a certified statement from the assistant secretary of Bank of America attesting that \u201c[effective October 17, 2008, LaSalle Bank National Association . . . merged into and under the charter and title of Bank of America, National Association[.]\u201d The third document is a letter from the Comptroller of the Currency Administrator of National Banks officially certifying that LaSalle merged with Bank of America and authorizing Bank of America \u201cto operate the former main and branch offices of LaSalle\u201d as \u201cbranches of Bank of America[.]\u201d\nWe conclude the three documents in the record are sufficient evidence of the merger between LaSalle and Bank of America. Furthermore, we note that Carver Pond does not dispute that a valid merger occurred between LaSalle and Bank of America; rather, Carver Pond contends that the documents evidencing the merger are not evidence that the Loan Documents were transferred from LaSalle to Bank of America. However, following Econo-Travel, we hold that Bank of America, as the surviving corporation after the merger, succeeded by operation of law to LaSalle\u2019s status as owner and holder of the Loan Documents. Econo-Travel, 301 N.C. at 204, 271 S.E.2d at 58 (stating \u201cif the alleged merger had occurred, then plaintiff, as the surviving corporation, would have succeeded by operation of law to Econo-Travel Corporation\u2019s status as owner and holder of the promissory note\u201d). Accordingly, the evidence of the merger between LaSalle and Bank of America is competent evidence that Bank of America is the holder of the Loan Documents.\nII. Promissory Note in Default\nCarver Pond next contends the trial court erred in finding that the Promissory Note was in default because Bank of America\u2019s actions prevented payment of the debt. We disagree.\nCarver Pond cites In re Foreclosure of a Deed of Trust Executed by Bigelow, 185 N.C. App. 142, 649 S.E.2d 10 (2007), for the proposition that \u201ca mortgage holder cannot demonstrate default if the mortgage holder\u2019s own actions prevented performance of the unsatisfied obligation.\u201d Although the court in Bigelow upheld the trial court\u2019s finding that there was no default because the mortgage holder wrongly refused to accept payment from the homeowners, id. at 146-47, 649 S.E.2d at 13, we find Bigelow distinguishable because it did not involve a receiver. Our Supreme Court has explained the role of a receiver as follows:\nWith respect to the court, the parties to the suit in which he is appointed, creditors and other interested persons, and the property in receivership, the position of the receiver is that of an officer of the court. He may be considered a \u201cquasi-trustee,\u201d holding legal title and possession as the agent of the court for the beneficial owners. He is not appointed for the benefit of either party and does not derive his authority from either one. The parties have no authority over him and have no right to determine what liability he may or may not incur. The receiver is a representative and protector of the interests of creditors and shareholders alike in the property of the receivership.\nLowder v. All Star Mills, Inc., 309 N.C. 695, 701, 309 S.E.2d 193, 198 (1983) (citation omitted) (emphasis added), rehearing denied, 310 N.C. 749, 319 S.E.2d 266 (1984).\nHere, the parties agree that Carver Pond failed to make monthly payments in January, February, and March 2010, and the trial court appointed Hawthorne as receiver by order dated 5 April 2010. Although Hawthorne transferred $264,772.00 to Bank of America on 27 July 2010, Hawthorne failed to make payments to Bank of America in April and May 2010. Thus, on 4 June 2010, Bank of America sent a letter to Carver Pond stating that Carver Pond was in default for failing to make monthly payments in January through May of 2010 and demanding payment for the entire loan amount.\nCarver Pond contends that after the appointment of the receiver, Bank of America had the authority to direct Hawthorne to apply excess funds to the mortgage debt, and Bank of America\u2019s failure to do so made further payment by Carver Pond impossible. However, as Lowder explains, a receiver is an \u201cofficer\u201d and \u201cagent\u201d of the court who \u201cis not appointed for the benefit of either party and does not derive his authority from either one.\u201d Id. Once Hawthorne was appointed as receiver, Bank of America had no authority to direct Hawthorne to make payments on Carver Pond\u2019s debt. Therefore, Hawthorne\u2019s failure to make a distribution to Bank of America in April and May 2010 is not attributable to Bank of America. Accordingly, we conclude there is competent evidence to support the trial court\u2019s finding of fact that the Promissory Note is in default.\nAFFIRMED.\nJudges GEER and STROUD concur.", "type": "majority", "author": "THIGPEN, Judge." } ], "attorneys": [ "Law Office of James C. White, P.C., by James C. White and Michelle M. Walker, for respondent-appellant.", "Kilpatrick Townsend & Stockton LLP, by Alan D. Mclnnes and James H. Pulliam, for petitioner-appellee." ], "corrections": "", "head_matter": "IN THE MATTER OF THE FORECLOSURE OF THAT NORTH CAROLINA DEED OF TRUST BY CARVER POND I LIMITED PARTNERSHIP TO UNITED GENERAL TITLE INSURANCE COMPANY, TRUSTEE FOR RED CAPITAL COMMERCIAL FUNDING, LLC AS RECORDED IN THE DURHAM COUNTRY REGISTRY IN BOOK 5710 AT PAGE 308\nNo. COA11-367\n(Filed 6 December 2011)\n1. Deeds \u2014 foreclosure\u2014holder of loan documents \u2014 surviving corporation after merger\nThe trial court did not err in a foreclosure case by finding that Bank of America was the holder of the pertinent loan documents. Bank of America, as the surviving corporation after a merger, succeeded by operation of law to LaSalle\u2019s status as owner and holder of the loan documents.\n2. Receivership \u2014 foreclosure\u2014promissory note in default\u2014 appointment of receiver \u2014 bank had no authority to direct receiver\nThe trial court did not err in a foreclosure case by finding that a promissory note was in default. Once a receiver was appointed, Bank of America had no authority to direct the receiver to make payments on the debt. The receiver\u2019s failure to make a distribution to Bank of America in April and May 2010 was not attributable to Bank of America.\nAppeal by respondent from order entered 4 November 2010 by Judge Michael R. Morgan in Durham County Superior Court. Heard in the Court of Appeals 29 September 2011.\nLaw Office of James C. White, P.C., by James C. White and Michelle M. Walker, for respondent-appellant.\nKilpatrick Townsend & Stockton LLP, by Alan D. Mclnnes and James H. Pulliam, for petitioner-appellee." }, "file_name": "0352-01", "first_page_order": 362, "last_page_order": 367 }