First Commerce Bank v. Dockery

*298HUNTER, Judge.

Defendant, Annetta B. Dockery, appeals the trial court’s order granting summary judgment in favor of plaintiff, First Commerce Bank. After careful review, we affirm the summary judgment order.

The undisputed facts tend to indicate that on or about 21 November 2002, First Commerce Bank agreed to loan, and defendants, Michael and Annetta Dockery, agreed to borrow, the original principal sum of $38,000.00 pursuant to a Promissory Note. The loan was secured by a 1997 Ford Expedition automobile and a 2000 Sea Doo Boat, which were titled only in Michael Dockery’s name. Michael and Annetta Dockery failed to make payments when due and were default on their obligations under the promissory note. First Commerce Bank accelerated the principal balance by filing a complaint against Michael and Annetta Dockery on 22 May 2003. Annetta Dockery filed her answer on 23 July 2003.

After the complaint was filed, Michael Dockery sought bankruptcy protection on 11 July 2003, which resulted in an automatic stay of the action-brought by First Commerce Bank against Michael Dockery. In response, First Commerce Bank sought relief from the automatic stay in order to repossess the collateral. Then, on 4 August 2003, Michael Dockery’s attorney sent a letter to First Commerce Bank regarding the possibility of reaffirming the debt owed to First Commerce Bank, which would allow Michael Dockery to, retain the ownership of the collateral — the Ford Expedition and the Sea Doo Boat. In an exchange of letters, Michael Dockery and First Commerce Bank agreed to reaffirm the debt for $20,000.00 payable over a sixty month time period with an interest rate of eight percent (8%). Michael Dockery and First Commerce Bank then executed a reaffirmation agreement, which contained their agreement that Michael Dockery would reaffirm $20,000.00 of his indebtedness owed to First Commerce Bank, payable in sixty monthly installments with eight percent (8%) interest per year. The agreement also referenced 11 U.S.C. § 524, which governs reaffirmation agreements.

On 30 March 2004, First Commerce Bank moved for summary judgment against Annetta Dockery. In response, Annetta Dockery filed an affidavit from Michael Dockery, which stated that First Commerce Bank agreed to release Annetta Dockery if Michael Dockery reaffirmed the debt. Boyd Coggins, Vice President of Bank of Granite, the successor to First Commerce Bank, filed an affidavit in response to the Micheál Dockery affidavit. Mr. Coggins stated that *299Michael Dockery and the Bank agreed that in exchange for Michael Dockery reaffirming his obligations under the Note for $20,000.00, the bank would not seek relief from the automatic stay to repossess the collateral. According to Mr. Coggins, there was no agreement reached concerning the balance of the debt as it relates to any other obligor or guarantor. The trial court determined there were no genuine issues of material fact and entered summary judgment in favor of First Commerce Bank. Annetta Dockery appeals.

Annetta Dockery contends the trial court erroneously granted summary judgment to First Commerce Bank because a genuine issue of material fact exists regarding whether First Commerce Bank agreed to release Annetta Dockery from any liability on the $38,000.00 debt as part of the reaffirmation agreement between Michael Dockery and First Commerce Bank. Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2003).

When the party bringing the cause of action moves for summary judgment, he must establish that all of the facts on all of the essential elements of his claim are in his favor and that there is no genuine issue of material fact with respect to any one of the essential elements of his claim. In other words, the party must establish his claim beyond any genuine dispute with respect to any of the material facts. An issue is genuine if it may be maintained by substantial evidence. An issue is material if the facts as alleged would constitute a legal defense, would affect the result of the action or would prevent the party against whom it is resolved from prevailing in the action. If the movant carries his burden of establishing prima facie that he is entitled to summary judgment then his motion should be granted unless the opposing party responds and shows either that a genuine issue of material fact exists or that he has an excuse for not so showing. If the movant fails to carry his burden, the opposing party does not have to respond and summary judgment is not proper regardless of whether he responds or not.

Development Corp. v. James, 300 N.C. 631, 637, 268 S.E.2d 205, 209-10 (1980) (citations omitted). “In ruling on the motion, the court must consider the evidence in the light most favorable to the non-movant, who is entitled to the benefit of all favorable inferences *300which may reasonably be drawn from the facts proffered.” Averitt v. Rozier, 119 N.C. App. 216, 218, 458 S.E.2d 26, 28 (1995).

“A reaffirmation agreement is a contract between a debtor and a creditor. In substance a reaffirmation agreement is a new contract that renegotiates or reaffirms the original debt. Conventional contract principles apply to reaffirmation agreements.” Schott v. Wyhy Fed. Credit Union, 282 B.R. 1, 7 (B.A.P. 10th Cir. 2002) (citations omitted). Thus, state law governs the construction and interpretation of a reaffirmation agreement. Id.

The promissory note entered into by Annetta Dockery is a negotiable instrument governed by Article 3 of the Uniform Commercial Code (“UCC”), N.C. Gen. Stat. § 25-3-101 el seq. According to N.C. Gen. Stat. § 25-3-104 (2003), the following elements are required for' an instrument to be classified as a negotiable instrument:

(a) Except as provided in subsections (c) and (d) of this section, “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
(1) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) Is payable on demand or at a definite time; and
(3) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
(d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.

Id. The promissory note in this case complies with all of the provisions in N.C. Gen. Stat. § 25-3-104(a)(l)-(3) and it does not contain a *301conspicuous statement indicating it is not negotiable. Therefore, the promissory note is a negotiable instrument governed by the UCC.

Under the UCC: “A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument . . . (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.” N.C. Gen. Stat. § 25-3-604(a) (2003) (emphasis added). Although Annetta Dockery contends First Commerce Bank verbally agreed to release her from the debt obligation, the release was not in a signed writing as required by N.C. Gen. Stat. § 25-3-604. See id. As Annetta Dockery admitted in her answer that she was in default of her obligations under the promissory note she signed because she failed to make payments when due, summary judgment was properly granted by the trial court.

Affirmed.

Judge McCULLOUGH concurs. Judge LEVINSON concurs in a separate opinion.