The release of opinions by the NC Court of Appeals on February 3 included several cases involving lender foreclosure or collection efforts. The holdings are not monumental, but there is a common thread of useful illustrations of relevant rules or principles. Here is a summary of the applications we found valuable:

Glass v. Zaftrin, LLC (No. COA14-907): At issue in this foreclosure was a defaulting bidder’s claim for refund of its bid deposit where there was a subsequent resale of the property at a price greater than the original bid. The facts are not complicated. Zaftrin was the high bidder at a foreclosure sale and paid its bid deposit to the Clerk. Zaftrin thereafter notified the trustee it was unable to complete the purchase, and the property was resold at a price greater than Zaftrin’s original bid. The trustee moved for an order to disburse the bid deposit back to Zaftrin, but sought to deduct the costs of resale. The trial court granted the trustee’s motion over Zaftrin’s objection. On appeal, the Court of Appeals reversed and awarded Zaftrin its full deposit. The court found that a “bidder in default is liable only to the extent that the final sale price is less than his bid plus the costs of sale.” In this case, the final sale price ($350,000.00) was indeed greater than the defaulting bid ($315,000.00) plus the costs of resale ($1,469.80).

Wells Fargo Bank, N.A. v. Coleman et al. (No. COA14-683): Among the issues in this lender reformation action was the borrower’s claim that the lender’s action was time-barred by the “non-claim statute”, a time limitation on claims against a decedent’s estate. The lender was attempting to reform the property description in a deed of trust before proceeding with foreclosure. The now-deceased borrower’s estate raised a number of defenses to reformation, all of which were based on the timing of the lender’s efforts. The trial court granted summary judgment for the borrower without specifying the grounds for its ruling. The Court of Appeals considered the borrower’s defenses and reversed. Concerning the non-claim statute, the Court concluded that the statute does not apply to an action to enforce a deed of trust (including reformation). Analogizing to a statute of limitation, the court found that the non-claim statute works to limit the time in which a creditor may bring suit against a decedent’s estate, but not to enforce a deed of trust. In other words, the non-claim statute prevents seeking a judgment on the underlying debt, but not foreclosure of the collateral pledged as security.

Macon Bank, Inc. v. Cornblum (No. COA14-631-unpublished): This appeal involved a married couple’s attempt to avoid enforcement of a consent judgment based on the lender’s use of the singular “Defendant” instead of “Defendants” in the body of the document. The borrowers entered the consent judgment as part of a settlement of liability under their defaulted home equity line. When the lender attempted enforcement, the borrowers argued the use of the singular “Defendant” (as opposed to “Defendants”) rendered the judgment unenforceable. This argument failed at every level, ultimately resulting in sanctions against the borrowers. The lesson, however, comes from the Court of Appeals analysis. The Court cited the established principles that “names are to designate persons, and where identity is certain a variance is immaterial” and “errors or defects in pleadings or proceedings not affecting substantial rights are to be disregarded.” The Court further confirmed the trial court’s authority to correct such clerical errors by motion under Rule 60(a).

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