An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-907
NORTH CAROLINA COURT OF APPEALS
Filed: 4 February 2014
NEAL C. PETRI
Plaintiff,
v. Macon County
No. 12 CVS 805
BANK OF AMERICA, N.A. and
BANK OF AMERICA, N.A. S/B/M
To Countrywide Bank, FSB
& BROCK AND SCOTT, PLLC
Defendants.
Appeal by plaintiff from order entered 10 April 2013 by
Judge James U. Downs in Macon County Superior Court. Heard in
the Court of Appeals 7 January 2014.
Attorney David R. Payne, for plaintiff.
McGuire Woods L.L.P., by Lauren B. Loftis, for defendant.
ELMORE, Judge.
Neil C. Petri (plaintiff) appeals from an order entered on
10 April 2013 granting Bank of America, N.A.’s (defendant)
motions to dismiss plaintiff’s complaint with prejudice. After
careful consideration, we affirm the trial court’s order.
I. Facts
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On 6 May 2004, plaintiff executed a deed of trust and
promissory note (note) to receive a mortgage from Luxury
Mortgage Corporation (Luxury) to assist in the purchase of a
home (the property) located at 651 Viewpoint Road in Highlands.
In 2009, Brock & Scott, P.L.L.C. (Brock), the substitute trustee
in the foreclosure action, notified plaintiff that it had begun
foreclosure proceedings on the property due to plaintiff’s
default on the mortgage loan. Plaintiff believed that his loan
was held with Luxury, but Brock’s letter indicated that “the
creditor to whom the debt [was] owed [was defendant].”
Thereafter Brock filed a Notice of Hearing on 23 June 2009 for a
special proceeding before the Macon County Clerk of Court.
Pursuant to N.C. Gen. Stat. § 45-21.16(d), the Clerk of Court
entered an order allowing the foreclosure, and plaintiff
appealed de novo to Macon County Superior Court with a “PETITION
TO CANCEL FORECLOSURE SALE” (the petition). Plaintiff argued
that defendant was not the true holder of the note authorizing a
right of foreclosure. Superior Court Judge Marvin P. Pope, Jr.
(Judge Pope) disagreed, finding that on or prior to 9 March
2006, Luxury transferred the note to Countrywide Bank, N.A.,
which eventually merged with defendant. Judge Pope also found
that the note was in the continuous possession of defendant
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since 9 March 2006. On 12 March 2012, he entered an order
concluding that “[e]ach element of N.C. Gen. Stat. § 45-21.16
[had] been satisfied” because (a) defendant was the holder of
valid debt (the note); (b) plaintiff defaulted on his mortgage
payments; (c) defendant had the right to foreclose under the
debt note; and (d) proper notice was given to all entitled
persons. Accordingly, Judge Pope allowed Brock to “complete the
foreclosure.” Nothing in the record indicates that plaintiff
appealed Judge Pope’s order.
On 29 November 2012, plaintiff filed a complaint (the
complaint) to enjoin the foreclosure, assert agency and
negligent non-disclosure, and allege unfair and deceptive trade
practices (UDTPA) by defendant. In response, defendant filed a
motion to dismiss plaintiff’s claims pursuant to Rule 12(b)(1)
for lack of subject matter jurisdiction to the extent that those
claims “attempted to invoke the trial court’s jurisdiction” to
enforce a federal consent judgment. Defendant also filed a
motion to dismiss under Rule 12(b)(6) for failure to state a
claim upon which relief can be granted. In its motion,
defendant argued that the complaint was barred by res judicata.
After a hearing on the motions, Judge Downs entered an order on
10 April 2013 granting defendant’s motions to dismiss
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plaintiff’s complaint with prejudice. Plaintiff filed timely
notice of appeal on 17 April 2013 to this Court from Judge
Down’s order.
II. Analysis
a.) Jurisdiction
Plaintiff argues that the trial court erred in granting
defendant’s motion to dismiss for lack of subject matter
jurisdiction. For the reasons that follow, we fail to reach the
merits of this issue on appeal.
The North Carolina Rules of Appellate Procedure “are
mandatory and . . . failure to follow these rules will subject
an appeal to dismissal.” Steingress v. Steingress, 350 N.C. 64,
65, 511 S.E.2d 298, 299 (1999) (citations omitted). Rule
28(b)(6) states that “[i]ssues not presented in a party’s brief,
or in support of which no reason or argument is stated, will be
taken as abandoned.” N.C.R. App. P. 28(b)(6).
Here, plaintiff argues that “[t]he trial court erred in its
grant of [defendant’s] motion to dismiss pursuant to Rule
12(b)(1), because the [trial court’s] subject matter
jurisdiction encompassed the state law claims complained of[,]”
and the trial court “had power to hear the UDTPA and negligent
non-disclosure claims” along with the action to enjoin the
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foreclosure sale. However, the trial court did not dismiss
plaintiff’s state law claims under the UDTPA, negligent non-
disclosure, or foreclosure enjoinment on jurisdictional grounds,
but rather dismissed only the claim that sought to “enforce a
federal [consent] judgment out of the Federal District of
Columbia[.]” On appeal, plaintiff does not mention the federal
consent judgment, nor does he set forth legal arguments as to
why the trial court had subject matter jurisdiction to enforce
the federal consent judgment. Thus, we do not address the
merits of this issue on appeal, and we treat it as abandoned.
See Viar v. N. Carolina Dep't of Transp., 359 N.C. 400, 402, 610
S.E.2d 360, 361 (2005) (dismissing appeal where the arguments in
appellant’s brief in the Court of Appeals did not “address the
issue upon which the [trial court’s] conclusion of law was
based.”).
b.) Res Judicata/Collateral Estoppel
Next, plaintiff argues that the trial court erred in
granting defendant’s motion to dismiss pursuant to Rule
12(b)(6). 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
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on that basis the court must determine as a matter of law
whether the allegations state a claim for which relief may be
granted.” Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d
611, 615 (1979) (citations omitted). “This Court must conduct a
de novo review of the pleadings to determine their legal
sufficiency and to determine whether the trial court’s ruling on
the motion to dismiss was correct.” Leary v. N.C. Forest
Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4, aff’d per
curiam, 357 N.C. 567, 597 S.E.2d 673 (2003).
Under the doctrine of res judicata, “a final judgment on
the merits in one action precludes a second suit based on the
same cause of action between the same parties or their privies.”
Williams v. Peabody, ___ N.C. App. ___, ___, 719 S.E.2d 88, 92
(2011) (citation and quotations omitted). Res judicata also
applies to “issues which could have been raised in the prior
action but were not.” Clancy v. Onslow Cnty., 151 N.C. App.
269, 271-72, 564 S.E.2d 920, 923 (2002) (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
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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 omitted).
In the issue at bar, the determinative question is whether
the petition and subsequent complaint have identical causes of
action. The petition requested that the trial court cancel the
foreclosure sale based on a failure of defendant to satisfy the
elements of N.C. Gen. Stat. § 45-21.16(d) (2011). However, the
complaint’s causes of action consist of: 1.) a “TRO AND
INJUNCTION” to preclude the foreclosure; 2.) “AGENCY AND
NEGLIGENT NON DISCLOSURE” based on defendant’s agents filing
untruthful documents[;]” and 3.) “CHAPTER 75” UDTPA. Clearly,
the causes of action in the complaint and the petition are not
the same, and therefore plaintiff’s complaint is not barred by
res judicata.
However, plaintiff also contends that the complaint is not
barred by the doctrine of collateral estoppel. We disagree.
Collateral estoppel bars re-litigation of issues determined
in a prior suit if “(1) the earlier action resulted in a final
judgment on the merits, (2) the issue in question is identical
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to an issue actually litigated in the earlier suit, (3) the
judgment on the earlier issue was necessary to that case and (4)
both parties are either identical to or in privity with a party
or the parties from the prior suit.” Bee Tree Missionary
Baptist Church v. McNeil, 153 N.C. App. 797, 799, 570 S.E.2d
781, 783 (2002) (citations omitted).
Here, the petition and complaint involved identical
parties, and the petition resulted in a final judgment on the
merits as Judge Pope concluded that plaintiff showed “no valid
legal reason why the foreclosure should not proceed” and “[t]he
[s]ubstitute [t]rustee was . . . entitled to foreclose or
complete the foreclosure under the terms of the Deed of Trust.”
Furthermore, Judge Pope’s ruling on the merits as to defendant
being the true debt note owner was necessary to the resolution
of the petition because plaintiff averred that defendant could
not “satisfy two of the four prongs of NCGS [sic] 45-21.16(d) in
order to maintain [the] foreclosure action.” Those prongs
require the party seeking to foreclose to be the holder of valid
debt and have “the right to foreclose under the instrument[.]”
Thus, our inquiry is limited to whether the issue argued by
plaintiff in the complaint was actually litigated in the earlier
petition. The underlying issue presented by plaintiff in the
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complaint is solely based on the assertion that defendant
effectuated the foreclosure without being the true owner and
holder of the debt note. In plaintiff’s complaint, his first
cause of action sought to enjoin the foreclosure because
plaintiff “assert(s) that [he] never entered into any agreements
with MERS with respect to the subject loan; nor did they bargain
for or agree to be passed through a myriad of unrecorded
assignments or the securitization of their note to the point
where the same has been so genuinely diluted that no one could
ever tell who actually owns the corpus of the original note.”
(emphasis added). Plaintiff further supported his first cause
of action by stating that fraudulent documents were filed by
defendant to foreclose property upon which they have no legal
right, and actions by defendant “lulled” plaintiff into false
sense of security with respect to who actually owns the loan.
His second and third causes of action alleged “AGENCY AND
NEGLIGENT NON DISCLOSURE” and 3.) “CHAPTER 75” UDTPA based on a
theory that defendant’s agents purposefully filed untruthful
filings with this state by manipulating data and false reporting
since defendant was not the owner of the debt note. The issue
of who owned the note was conclusively established by Judge Pope
in response to the petition as he concluded that “[defendant] is
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the holder of the [n]ote sought to be foreclosed. The
indorsment into the [defendant] from the prior [h]older was
valid in all respects and signed by an officer of the previous
[h]older. [Defendant] was in possession of the [o]riginal [n]ote
at the [h]earing.” Thus, plaintiff’s complaint is barred by
collateral estoppel because the issues raised therein simply
attempt to re-litigate the issues already determined by Judge
Pope in the prior petition.
III. Conclusion
In sum, we do not address the merits of plaintiff’s claim
with regard to the trial court’s grant of defendant’s motion to
dismiss pursuant to Rule 12(b)(1) because that argument is
abandoned on appeal. Additionally, the trial court did not err
in granting defendant’s motion to dismiss under Rule 12(b)(6)
because the doctrine of collateral estoppel bars plaintiff’s
complaint. Thus, we affirm the trial court’s order.
Affirmed.
Judge McGEE and Judge HUNTER, Robert C., concur.
Report per Rule 30(e).