BRANCH BANKING AND TRUST COMPANY, Plaintiff, v. BRIAN KEITH KEESEE and BRIAN KEITH KEESEE CONSTRUCTION, INC., Defendants.
NO. COA14-328
NORTH CAROLINA COURT OF APPEALS
Filed: 21 October 2014
New Hanover County No. 13 CVS 996
Appeal by defendants from order entered 10 October 2013 by Judge W. Allen Cobb, Jr. in New Hanover County Superior Court. Heard in the Court of Appeals 10 September 2014.
McGuire Woods LLP., by John H. Anderson, Jr. and Pamela J. Butler, for plaintiff.
Shanklin & Nichols, LLP., by Kenneth A. Shanklin and Matthew A. Nichols, for defendant.
ELMORE, Judge.
Brian Keith Keesee and Brian Keith Keesee Construction, Inc. (collectively defendants), appeal from an order entered on 10 October 2013 granting Branch Banking and Trust Company‘s (plaintiff) motions to dismiss defendants’ counterclaims and
I. Facts
In 2004, defendants obtained numerous commercial construction loans with plaintiff totaling in excess of nine million dollars through the execution of twenty commercial promissory notes currently owned and held by plaintiff. Defendants secured their obligation to repay the notes with one deed of trust from defendant Brian Keesee and another from defendant Keesee Construction, Inc. (collectively “deeds of trust“). Both deeds of trust conveyed real property located in Brunswick County to plaintiff. Defendants defaulted on certain promissory notes (the notes) by failing to make required payments of interest and principal when due. Plaintiff thereafter filed special proceedings in Brunswick County seeking orders to allow foreclosure of the collateral securing the notes. In orders entered 17 May 2012, the Brunswick County Assistant Clerk of Superior Court (the clerk) concluded that H. Kenneth Stephens, II (the substitute trustee), was “authorized to exercise the power of sale contained in the Deed of Trust executed by Brian Keith Keesee Construction, Inc. [and Brian Keith Keesee] . . . and to proceed with foreclosure[s] under the
After the clerk approved the final reports and accounts, plaintiff applied the proceeds of the foreclosure sales to the outstanding balance on the notes. On 6 March 2013, plaintiff filed a complaint to recover the remaining balance of approximately $6,500,000 still due on the notes.
In response, defendants filed six counterclaims: 1.) A declaratory judgment action pursuant to
Defendants also asserted several affirmative defenses. In their third affirmative defense, defendants stated that they were not provided adequate notice of the foreclosure proceedings as required by
II. Analysis
a.) Interlocutory Appeal
We first address whether we should dismiss defendant‘s appeal as interlocutory.
“Generally, there is no right of immediate appeal from interlocutory orders and judgments.” Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). “An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.” Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) (citation omitted). An order that grants “a motion to dismiss certain claims in an action, while leaving other claims in the action to go forward, is plainly an interlocutory order.” Pratt v. Staton, 147 N.C. App. 771, 773, 556 S.E.2d 621, 623 (2001). Similarly, our rules ordinarily preclude “an appeal from an order striking or denying
However, immediate appeal of an interlocutory order is available when it “affects a substantial right[.]” Sharpe v. Worland, 351 N.C. 159, 162, 522 S.E.2d 577, 579 (1999). Our Supreme Court has noted that “the right to avoid the possibility of two trials on the same issues can be such a substantial right.” Bockweg v. Anderson, 333 N.C. 486, 490-91, 428 S.E.2d 157, 160 (1993) (citation and internal quotation marks omitted). The possibility of a second trial “affects a substantial right only when the same issues are present in both trials, creating the possibility that a party will be prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue.” Green v. Duke Power Co., 305 N.C. 603, 608, 290 S.E.2d 593, 596 (1982).
This appeal is clearly interlocutory because the trial court will be required to address plaintiff‘s claims to resolve the entire controversy notwithstanding the dismissal and striking of defendants’ counterclaims and some of their affirmative defenses. However, a substantial right is affected
b.) Counterclaims #1-5
Defendants argue that the trial court erred in granting plaintiff‘s motion to dismiss their counterclaims. We disagree.
The motion to dismiss under
N.C. R. Civ. P. 12(b)(6) tests the legal sufficiency of the complaint. In ruling on the motion the allegations of the complaint must be viewed as admitted, and on that basis the court must determine as a matter of law whether the allegations state a claim for which relief may be granted.
On 17 May 2012 the clerk entered two orders concluding that plaintiff was the owner and holder of the notes, the notes held by plaintiff were valid debts, defendants defaulted on the notes and deeds of trust, the substitute trustee had the right to foreclose, and proper notice of the hearing was provided to all required parties.
Defendant‘s first four counterclaims (declaratory judgment, voiding the foreclosures, wrongful foreclosures, and lender liability), each seek relief based on impropriety of the foreclosure proceedings. However, defendants did not argue these issues during the foreclosure proceedings or timely appeal the clerk‘s order. Thus, defendants are precluded from now challenging issues arising from the foreclosure proceedings.
Moreover, defendants’ first four counterclaims are barred by res judicata because of an order entered 14 February 2013 by Judge Reuben F. Young in Brunswick County Superior Court. Res judicata, also known as claim preclusion, bars “the relitigation of all matters . . . that were or should have been adjudicated in the prior action.” Whitacre P‘ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004) (citation and internal quotation marks omitted). The party seeking to assert res judicata has the burden of establishing its elements. Bluebird Corp. v. Aubin, 188 N.C. App. 671, 679, 657 S.E.2d 55, 62 (2008). A party must show “(1) a final judgment on the merits in an earlier suit, (2) an identity of the causes of action in both the earlier and the later suit, and (3) an identity of the parties or their privies in the two suits” in order to prevail on a theory of res judicata. Herring v. Winston-Salem/Forsyth Cnty. Bd. of Educ., 188 N.C. App. 441, 444, 656 S.E.2d 307, 310 (2008) (citation and quotation marks omitted).
Judge Young entered an order in response to plaintiff‘s Motion to Cancel Defendants’ Notice of Lis Pendens. The parties in that action were plaintiff and defendants. Judge Young
Thus, plaintiff‘s Motion to Cancel Defendants’ Notice of Lis Pendens resulted in a final order on the merits, the subject matter in that motion and the complaint in the present case both arise from defendants’ attempt to prevent plaintiff from obtaining title to the collateral due to alleged improprieties in the foreclosure proceedings, and both actions involve identical parties. Thus, in addition to the clerk‘s order, Judge Young‘s order also bars defendants from asserting their first four counterclaims.
c.) Clogging the Equity of Redemption
Defendants also argue that the trial court erred in dismissing the equitable portion of their fourth counterclaim. We disagree.
An equitable claim contesting a foreclosure sale must “be asserted in an action to enjoin the foreclosure sale under
Any owner of real estate, or other person, firm or corporation having a legal or equitable interest therein, may apply to a judge of the superior court, prior to the time that the rights of the parties to the sale or resale becoming fixed pursuant to
G.S. 45-21.29A to enjoin such sale, upon the ground that the amount bid or price offered therefor [sic] is inadequate and inequitable and will result in irreparable damage to the owner or other interested person, or upon any other legal or equitable ground whichthe court may deem sufficient[.]
(emphasis added). Generally, a party‘s rights to a foreclosure sale become fixed at the “expiration of the period for filing an upset bid[.]” Goad v. Chase Home Fin., LLC, 208 N.C. App. 259, 263, 704 S.E.2d 1, 4 (2010). The time period for filing an upset bid lapses if it “is not filed [within ten days] following a sale, resale, or prior upset bid[.]”
The fourth counterclaim, in part, alleges that the plaintiff‘s conduct during the foreclosure proceedings clogged “the equity of redemption in each parcel of real estate[.]”
Defendants rely on Swindell v. Overton to support their argument that
Defendants in the instant case, however, never objected to the foreclosure sales before the clerk entered her order confirming the foreclosure sales. Moreover, the record is devoid of any evidence that defendants exercised their rights to enjoin the foreclosures on equitable grounds within the prescribed time period required by
e.) Counterclaim #6:
Defendants argue that the trial court erred in dismissing their sixth counterclaim. This counterclaim alleges that plaintiff failed to account for the fair value of the property at the time of the foreclosure sales in violation of
When any sale of real estate has been made by a mortgagee, trustee, or other person authorized to make the same, at which the mortgagee, payee or other holder of the obligation thereby secured becomes the purchaser and takes title either directly or indirectly, and thereafter such mortgagee, payee or other holder of the secured
obligation, as aforesaid, shall sue for and undertake to recover a deficiency judgment against the mortgagor, trustor or other maker of any such obligation whose property has been so purchased, it shall be competent and lawful for the defendant against whom such deficiency judgment is sought to allege and show as matter of defense and offset, but not by way of counterclaim, that the property sold was fairly worth the amount of the debt secured by it at the time and place of sale or that the amount bid was substantially less than its true value, and, upon such showing, to defeat or offset any deficiency judgment against him, either in whole or in part[.]
(emphasis added). Here, plaintiff filed a deficiency action against defendants to recover the remaining balance of approximately $6,500,000 due on the notes after completion of the foreclosure sales. Pursuant to the plain language of the statute above, defendants were required to allege the accounting issue as an affirmative defense. Instead, defendants asserted a counterclaim alleging that the amounts bid for the properties at the foreclosure sales were less than their fair value. Thus, defendant‘s counterclaim #6 is improper as a matter of law, and the trial court properly dismissed this claim.
f.) Affirmative Defenses #3, 4, 16
Defendants also argue that the trial court erred in striking their third, fourth, and sixteenth affirmative defenses. We disagree.
Each of defendants’ affirmative defenses (inadequate notice and violation of the North Carolina foreclosure statute) are premised in the alleged irregularities of the foreclosure proceedings. However, in her orders allowing the foreclosure sales, the clerk concluded that “[p]roper notice of hearing was given to all of those parties entitled to such notice under
Their affirmative defenses are also barred by res judicata in light of Judge Young‘s order since plaintiff‘s Motion to Cancel Defendants’ Notice of Lis Pendens resulted in a final order on the merits, the subject matter asserted in the affirmative defenses and that motion arise from defendants’ attempt to attack the legality of the foreclosure proceedings, and both actions involve identical parties. Accordingly, the trial court did not err by dismissing defendants’ third, fourth, and sixteenth affirmative defenses.
III. Conclusion
In sum, the trial court neither erred by granting plaintiff‘s motion to dismiss all of defendants’ counterclaims nor by granting plaintiff‘s motion to strike defendants’ third, fourth, and sixteenth affirmative defenses. Accordingly, we affirm the trial court‘s order.
Affirmed.
Judges CALABRIA and STEPHENS concur.
Report per Rule 30(e).