852 S.E.2d 413
N.C. Ct. App.2020Background
- Plaintiff (Home Realty Co.) owns ~231.20 acres known as Red Fox Country Club golf course; Defendants are the homeowners/Red Fox Country Club Owners Association.
- Chain: Hooper deed of trust recorded 27 June 1984 (senior mortgage); 1986 Amended & Restated Restrictions recorded 23 December 1986; Hooper foreclosure initiated Feb. 1990; trustee’s deed to RF Acquisition recorded June 19, 1990. Later NCFS&L foreclosure (1992) led to Plaintiff acquiring title in 1992.
- Plaintiff sued (Feb. 2018) for declaratory judgment / quiet title, arguing the 1986 Restrictions were extinguished by the earlier Hooper foreclosure; Defendants counterclaimed and asserted defenses including lack of notice, estoppel, and easement theories.
- The trial court granted Plaintiff’s motion for judgment on the pleadings and dismissed Defendants’ counterclaims with prejudice (Dec. 2019). Defendants appealed.
- The Court of Appeals affirmed, holding the motion need not be converted to summary judgment; the 1986 Restrictions were extinguished by the Hooper foreclosure; Defendants waived their notice defense; and their easement/estoppel claims failed as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court had to convert the Rule 12(c) motion to summary judgment because parties submitted affidavits/exhibits | The court may consider only the pleadings and arguments; materials outside the pleadings were excluded, so no conversion required | Court considered memoranda and exhibits so conversion required | Not converted; order shows court relied on pleadings and counsel arguments only, so Rule 12(c) procedure proper |
| Whether the Hooper foreclosure properly extinguished the 1986 Restrictions | Foreclosure of the senior deed recorded in 1984 relates back to its recording date and extinguished intervening encumbrances recorded later (1986 Restrictions) | Foreclosure was defective: Defendants (as association members) had a future interest and were not given statutory notice under §45-21.16 | Judgment for Plaintiff: foreclosure extinguished the 1986 Restrictions; Defendants waived the notice defense by failing to plead it and did not preserve it for trial |
| Whether the 1986 Restrictions survived as to the 40 homeowners who ratified them (i.e., run with the land) | Extinguished by the senior foreclosure as a matter of law; ratification does not revive encumbrances extinguished by foreclosure | Ratifying owners hold enforceable servitudes/easements that survive foreclosure and bind the Property | Held for Plaintiff: extinguishment cut off subsequent encumbrances; ratifications do not revive the restrictions after valid senior foreclosure; Dixieland exception inapplicable (mortgagor did not repurchase at senior sale) |
| Whether Defendants’ counterclaims (easement-by-estoppel, easement-by-plat, declaratory relief that property must remain a golf course) survive | Marketing materials/waivers and plats did not create enforceable easements or restrictive covenants on the Property; recorded plats here fail to identify/describe the golf-course boundaries with requisite certainty | Plaintiffs’ marketing, unrecorded/recorded plats, and Plaintiff’s conduct created enforceable easements or estoppel-based restrictions benefiting homeowners | Dismissed with prejudice: North Carolina law does not recognize easements created merely by marketing/unrecorded plats; recorded plats here lack metes-and-bounds for the golf-course area and cannot create an easement-by-plat; estoppel/quasi-estoppel theories fail on these facts |
Key Cases Cited
- St. Louis Union Tr. Co. v. Foster, 211 N.C. 331 (1937) (foreclosure title relates back to mortgage date and cuts off intervening rights)
- Dixieland Realty Co. v. Wysor, 272 N.C. 172 (1967) (rare equitable exception where trustor purchases at senior sale may preserve junior lien)
- Ragsdale v. Kennedy, 286 N.C. 130 (1974) (standard for judgment on the pleadings)
- McBurney v. Cuccinelli, 616 F.3d 393 (4th Cir. 2010) (trial court discretion not to convert Rule 12 motion when excluding matters outside the pleadings)
- Friends of Crooked Creek, L.L.C. v. C.C. Partners, Inc., 254 N.C. App. 384 (2017) (marketing materials and unreferenced plats do not create implied easements for golf-course use)
- Gaither v. Albemarle Hosp., Inc., 235 N.C. 431 (1952) (easement-by-plat/dedication principles)
- Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1 (2004) (doctrine and standards for equitable estoppel)