766 S.E.2d 699
N.C. Ct. App.2014Background
- In 2004 Keesee and Keesee Construction borrowed > $9M from BB&T, secured by two deeds of trust on Brunswick County real property.
- Defendants defaulted; BB&T initiated statutory (clerk) foreclosure proceedings. The clerk authorized the substitute trustee and entered final reports after sales in Sept/Oct 2012.
- Defendants did not object to the clerk’s orders or appeal within the statutory 10-day period or seek to enjoin the sales under N.C. Gen. Stat. § 45-21.34 prior to confirmation.
- BB&T applied foreclosure proceeds and then sued in March 2013 for a remaining deficiency of about $6.5M.
- Defendants filed six counterclaims (declaratory relief, voiding foreclosures, wrongful foreclosure/lender liability, clogging the equity of redemption, accounting, and alleged § 45-21.36 fair-value claim) and asserted affirmative defenses alleging inadequate notice and statutory violation; BB&T moved to dismiss and to strike certain defenses.
- The trial court granted BB&T’s motions; defendants appealed. The Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether interlocutory appeal may proceed | BB&T argued appeal is interlocutory but defendants face substantial right (possible inconsistent second trial) | Defendants sought immediate review of dismissal/striking | Appeal affects substantial right (risk of inconsistent verdicts on valuation) — Court addressed merits |
| Dismissal of counterclaims challenging foreclosure irregularities (counterclaims 1–4) | Clerk’s orders are binding; issues had to be raised in clerk proceedings or timely appealed | Keesee argued foreclosures were unlawful and sought relief in this suit | Dismissed: defendants failed to object or appeal clerk’s orders; issues precluded and res judicata applied |
| Equitable claim clogging equity of redemption | BB&T: equitable claims must be raised before sale/resale under § 45-21.34 | Keesee: Swindell permits post-sale equitable challenges to confirmation | Dismissed: Swindell distinguishable (there party acted before confirmation); Keesee failed to seek injunction within statutory period |
| § 45-21.36 fair-value claim (counterclaim 6) | BB&T: statute allows fair-value showing only as a defense/offset to a deficiency action, not as an independent counterclaim | Keesee sued that property was worth more than bids and sought relief as counterclaim | Dismissed: statute requires raising fair-value as an affirmative defense, not a counterclaim |
| Striking affirmative defenses (inadequate notice, statutory violations) | BB&T: clerk found notice proper; defenses immaterial and barred by res judicata | Keesee: defenses preserved issues for trial | Stricken: defenses immaterial (not raised/appealed in clerk proceedings) and barred by prior final order |
Key Cases Cited
- Goldston v. Am. Motors Corp., 326 N.C. 723 (discussing interlocutory appeals)
- Veazey v. City of Durham, 231 N.C. 357 (definition of interlocutory order)
- Pratt v. Staton, 147 N.C. App. 771 (motions dismissing some claims are interlocutory)
- Faulconer v. Wysong & Miles Co., 155 N.C. App. 598 (appeal from order striking allegations ordinarily precluded)
- Sharpe v. Worland, 351 N.C. 159 (immediate appeal allowed when substantial right affected)
- Bockweg v. Anderson, 333 N.C. 486 (possibility of two trials can be a substantial right)
- Green v. Duke Power Co., 305 N.C. 603 (inconsistent jury verdicts as substantial right)
- Stanback v. Stanback, 297 N.C. 181 (standard for Rule 12(b)(6) motion)
- Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396 (de novo review of pleadings)
- Wood v. Guilford Cnty., 355 N.C. 161 (grounds for dismissal under Rule 12)
- Douglas v. Pennamco, Inc., 75 N.C. App. 644 (must raise foreclosure irregularity in clerk proceeding)
- Phil Mech. Const. Co., Inc. v. Haywood, 72 N.C. App. 318 (clerk’s order binding if not timely appealed)
- Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1 (res judicata bars relitigation of matters adjudicated or that should have been)
- Bluebird Corp. v. Aubin, 188 N.C. App. 671 (burden to establish res judicata elements)
- Herring v. Winston-Salem/Forsyth Cnty. Bd. of Educ., 188 N.C. App. 441 (elements of res judicata)
- Goad v. Chase Home Fin., LLC, 208 N.C. App. 259 (when rights to sale become fixed; upset-bid process)
- Swindell v. Overton, 310 N.C. 707 (allowing equitable challenge when party acted before clerk confirmation)
- Reese v. Charlotte-Mecklenburg Bd. of Educ., 196 N.C. App. 539 (standard for striking affirmative defenses)