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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
IN THE MATTER OF THE FORECLOSURE OF A LIEN BY RIDGELOCH
HOMEOWNERS ASSOCIATION, INC. AGAINST W. MICHAEL MCNEILL AND
SPOUSE, IF ANY
Filed: 3 April 2007
1. Mortgages and Deeds of Trust_--enforcement of foreclosure bid_underlying lien
extinguished--order to set aside judgment
The superior court properly set aside a judgment enforcing a foreclosure bid where the
court concluded that foreclosure of a superior lien extinguished the junior lien which produced
the foreclosure and judgment at issue here.
2. Mortgages and Deeds of Trust_junior lienholder_standing
The trustee for a junior lienholder lacked standing to challenge a foreclosure sale on the
senior deed of trust in the absence of a filed request for notice of sale.
3. Costs_Rule 60 motion_no abuse of discretion
The superior court did not abuse its discretion in assessing the costs of a Rule 60 motion
to vacate a judgment to enforce a foreclosure bid. The adjudication of costs in an action in the
nature of an equitable proceeding is in the discretion of the court. The trial court's decision here
was not shown to be manifestly unsupported by reason.
Appeal by Nelson G. Harris as Trustee for Ridgeloch Homeowners
Association, Inc. from order entered 9 May 2006 by Judge Robert H.
Hobgood in Wake County Superior Court. Heard in the Court of
Appeals 7 March 2007.
Harris & Hilton, P.A., by Nelson G. Harris as Trustee for
Ridgeloch Homeowners Association, Inc.
Poyner & Spruill LLP, by Keith H. Johnson and Chad W. Essick,
for appellee Jeremy Walker.
Nelson G. Harris (Harris) as trustee for Ridgeloch
Homeowners Association, Inc. (Ridgeloch) appeals from ordervacating the 22 February 2006 order entered by an Assistant Clerk
of Court. We affirm.
On 17 January 1997, W. Michael McNeill (McNeill) executed
and delivered a deed of trust on real property located in Wake
County (the McNeill property) to Anchor Financial Group, Inc. to
secure payment of a promissory note. The note and deed of trust
were eventually assigned to American General Finance, Inc.
A. Ridgeloch's Liens and Harris's Sales
On 21 January 2004, Harris filed a Claim of Lien on the
McNeill property. The Claim of Lien asserted for overdue and
outstanding homeowner's association dues in the amount of $2,088.18
owed to Ridgeloch.
Harris filed a Notice of Foreclosure Hearing with the Clerk of
Superior Court on 6 February 2004. Ridgeloch sought to foreclose
on the McNeill property based upon its Claim of Lien filed 21
January 2004. On 8 April 2004, after hearing, an Assistant Clerk
of Court entered a Foreclosure Order that authorized Harris to sell
the McNeill property as described in the Claim of Lien. On 26
April 2004, Harris filed a Notice of Sale of Real Estate that
stated the McNeill property would be exposed for sale on 27 May
On 24 May 2004, Harris filed a Notice of Postponement of Sale
of Real Estate. Harris had received notice that McNeill had filedbankruptcy. The foreclosure sale was postponed until 24 June 2004
for Harris to determine whether or not his sale could proceed.
McNeill's bankruptcy case was later dismissed. Harris filed a
Re-Notice of Sale of Real Estate on 25 June 2004 that stated the
McNeill property would be exposed for sale on 12 August 2004.
On 12 August 2004, Harris conducted a foreclosure sale of the
McNeill property. Rodney Daw was the last and highest bidder with
a bid of $3,794.12. Successive upset bids were submitted that
culminated with a high bid of $16,537.50 on 9 September 2004. Also
that day, McNeill filed a second petition for bankruptcy.
On 14 September 2004, Harris filed a Notice of Stay. The
Notice of Stay stated McNeill had again filed for bankruptcy.
McNeill's second bankruptcy petition was dismissed on 5 January
On 12 January 2005, Harris filed a Re-Notice of Sale of Real
Estate that stated the McNeill property would be exposed for sale
on 24 February 2005. On 24 February 2005, Harris conducted a
foreclosure sale (the Harris foreclosure sale) of the McNeill
property. Overhaul, LLC was the last and highest bidder for
$6,300.00. The Harris foreclosure sale was followed by ten upset
On 21 April 2005, Jeremy Walker (Walker) filed a Notice of
Upset Bid - Notice to Trustee or Mortgagee on the Harris
foreclosure sale. Walker bid $27,575.00 for the McNeill property
and deposited $1,378.75 with the Clerk of Superior Court. Nofurther upset bids were filed. Walker became the last and highest
bidder for the Harris foreclosure sale on 3 May 2005.
On 9 May 2005, Harris submitted to Walker a proposed Trustee's
Deed to convey the property pursuant to Walker's winning upset bid
during the Harris foreclosure sale. Walker developed concerns
about finalizing the foreclosure sale and contacted Harris. David
Shearin (Shearin), counsel for Walker, also contacted Harris.
Shearin indicated Walker was unaware his interest would be subject
to the first mortgage and other liens of record filed prior to
Harris's Claim of Lien when he purchased the McNeill property at
the Harris foreclosure sale. Shearin indicated to Harris that
Walker was unlikely to close.
On 6 June 2005, Harris filed a Motion for Order seeking an
order to permit resale of the McNeill property. On 23 June 2005,
an Assistant Clerk of Court entered an Order for Resale of the
B. The Glass Foreclosure Sale
On 28 March 2005, Philip A. Glass (Glass), as substitute
trustee on the deed of trust held by American General, held a
separate foreclosure sale (the Glass foreclosure sale). The high
bid at the Glass foreclosure sale and conveyance was also followed
by successive upset bids.
On 24 June 2005, the Glass foreclosure sale and conveyance was
completed upon the recordation of a Substitute Trustee's Deed for
the McNeill property. Glass's Substitute Trustee's Deed conveyed
the McNeill property to the highest bidder, Kendall Moragne. On 28 June 2005, Harris filed a Notice of Resale of Real Estate
that stated the McNeill property would be exposed for sale on 28
July 2005. On 29 July 2005, Ridgeloch was the last and highest
bidder at the resale with a bid of $1.00.
C. Harris's Motion for Judgment
On 9 August 2005, Harris filed a Motion For Judgment Against
Walker and moved the Clerk of Court for entry of judgment against
Walker pursuant to N.C. Gen. Stat. § 45-21.30. On 1 September
2005, an Assistant Clerk of Court entered judgment against Walker
and found: (1) Walker was the last and highest bidder during the
Harris foreclosure sale of the McNeill property; (2) Walker did not
honor his bid; (3) the McNeill property had been resold for $1.00;
and (4) Walker was obligated to Harris for the difference between
his bid of $27,575.00 and the ultimate sales price of $1.00, plus
resale costs of $550.00. An Assistant Clerk of Court ordered
Walker's bid deposit of $1,378.00 to be delivered to Harris and
applied to the judgment. Harris collected Walker's bid deposit and
proceeded to attempt to enforce the judgment.
D. Walker's Motion to Vacate Judgment
On 6 February 2006, Walker filed a Motion to Vacate Judgment
pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b). On 22 February
2006, an Assistant Clerk of Court denied Walker's motion. Walker
filed a Notice of Appeal to the Superior Court.
On 9 May 2006, the Superior Court ordered the judgment against
Walker vacated pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b) and
concluded: 11. Since Ridgeloch's lien was junior in
priority to the [American General] Deed of
Trust, Ridgeloch's lien was extinguished by
[American General's] foreclosure on the
property, which was consummated by the tender
of a deed on June 28, 2005. As a result,
[Harris], as the appointed trustee in this
foreclosure proceeding on Ridgeloch's lien,
should have ceased all efforts to foreclose on
the property as of June 28, 2005, when
Ridgeloch's lien was extinguished. Thus, the
resale of the property that [Harris]
subsequently held on July 28, 2005, at which
Ridgeloch was the only bidder at $1.00, was
not a valid resale. Therefore, it was not
proper for Harris to seek a judgment against
Walker based upon the results of the invalid
July 28, 2005 resale pursuant to G.S. 45-
. . . .
13. Walker's costs associated with bringing
his Motion to Vacate the Judgment are taxed
Harris contends the superior court erred by concluding: (1)
Ridgeloch should have ceased all efforts to foreclose on the
McNeill property as of 28 June 2005; (2) the foreclosure sale was
invalid; (3) that the judgment against Walker should be set aside;
and (4) imposing costs upon Ridgeloch.
III. Standard of Review
When a proceeding before the clerk is brought before the
superior court, the court's jurisdiction is not appellate or
derivative; it is original. Hassell v. Wilson, 301 N.C. 307, 311,
272 S.E.2d 77, 80 (1980). The superior court had original
jurisdiction to adjudicate de novo Walker's Motion to VacateJudgment pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b). N.C. Gen.
Stat. § 1-301.1(b) (2005).
Priority of interests in land is a question of law. Hood,
Comr. of Banks, v. Landreth, 207 N.C. 621, 623, 178 S.E. 222, 223
(1935). We review the superior court's conclusions of law de novo.
Starco, Inc. v. AMG Bonding and Ins. Services, 124 N.C. App. 332,
336, 477 S.E.2d 211, 215 (1996).
IV. The Harris Foreclosure Sale
A. No Statutory Authority
 Harris asserts the superior court's conclusion of law that
Ridgeloch improperly sought judgment against Walker was error and
argues there is no statutory or other authority for the
proposition that Harris should not complete the foreclosure sale in
this case. We disagree.
The superior court found that: (1) American General held a
senior mortgage or deed of trust on the McNeill property that was
executed, delivered, and recorded on 17 January 1997; (2) on 21
January 2004, Ridgeloch obtained a junior lien on the McNeill
property when Harris filed a Claim of Lien; and (3) the Glass
foreclosure sale on American General's senior deed of trust was
completed and Glass's trustee's deed was tendered and recorded on
28 June 2005.
The superior court's findings of fact were not excepted to by
Harris and are binding on appeal. See Schloss v. Jamison, 258 N.C.
271, 275, 128 S.E.2d 590, 593 (1962) (Where no exceptions havebeen taken to the findings of fact, such findings are presumed to
be supported by competent evidence and are binding on appeal.).
Long settled case law holds, The sale [under a mortgage or
deed of trust] . . . cuts out and extinguishes all liens,
encumbrances and junior mortgages executed subsequent to the
mortgage containing the power. Dunn v. Oettinger Bros., 148 N.C.
276, 282, 61 S.E. 679, 681 (1908) (citing Paschal v. Harris, 74
N.C. 335 (1876)). Ordinarily, all encumbrances and liens which
the mortgagor or trustor imposed on the property subsequent to the
execution and recording of the senior mortgage or deed of trust
will be extinguished by sale under foreclosure of the senior
instrument. Realty Co. v. Wysor, 272 N.C. 172, 175, 158 S.E.2d 7,
10 (1967) (citing Trust Co. v. Foster, 211 N.C. 331, 190 S.E. 522
The superior court concluded: (1) American General's
foreclosure on the property was consummated with delivery and
recordation of the trustee's deed on 28 June 2005 and extinguished
Ridgeloch's junior lien; (2) Harris should have ceased all efforts
to foreclose on the McNeill property as of 28 June 2005; (3)
Harris's final foreclosure sale was invalid; and (4) that the
resulting judgment against Walker is to be set aside.
American General's foreclosure pursuant to a prior recorded
and senior deed of trust on the McNeill property consummated 28
June 2005 extinguished Ridgeloch's junior lien on the property.
Dunn, 148 N.C. at 282, 61 S.E. at 681. Harris's petition was
functus officio by a sale under the power in [American General'ssenior deed of trust]. Paschal, 74 N.C. at 338. The superior
court properly ordered the judgment against Walker to be set aside.
This assignment of error is overruled.
B. The Glass Foreclosure Sale
 Harris also argues the superior court erred because
insufficient evidence showed whether the Glass foreclosure sale on
American General's senior deed of trust was conducted in a proper
fashion. We disagree.
This Court addressed a similar argument in Benefit Mortg. Co.
v. Hamidpour, where a junior mortgagee, challenged a senior
mortgagee's foreclosure sale. 155 N.C. App. 641, 643, 574 S.E.2d
163, 165 (2002), disc. rev. denied, 357 N.C. 163, 580 S.E.2d 359
(2003). This Court concluded the junior mortgagee did not file a
request for notice of sale and dismissed the appeal. Id. The
junior mortgagee failed to file a request for notice of sale and
lacked standing to challenge either the adequacy of notice provided
by the senior mortgagee or whether the senior mortgagee's sale
violated other statutes. 155 N.C. App. at 644, 574 S.E.2d at 166.
Here, either Harris, as Trustee, or Ridgeloch, holder of the
junior lien on the McNeill property, could have filed a request for
notice of foreclosure sale on American General's senior deed of
trust. N.C. Gen. Stat. § 45-21.17A(a) (2005) states, in relevant
Any person desiring a copy of any notice of
sale may, at any time subsequent to the
recordation of the security instrument and
prior to the filing of notice of hearing
provided for in G.S. 45-21.16, cause to be
filed for record in the office of the registerof deeds of each county where all or any part
of the real property is situated, a duly
acknowledged request for a copy of such notice
Absent from the record on appeal is any evidence Harris or
Ridgeloch recorded a request for notice of sale of the McNeill
property. In the absence of a filed request for notice of sale,
Harris lacks standing to challenge the Glass foreclosure sale on
the senior deed of trust held by American General. Benefit Mortg.
Co., 155 N.C. App. at 644, 574 S.E.2d at 166. This assignment of
error is dismissed.
V. Imposing Costs
 Harris argues the superior court erred when it concluded
Walker's costs associated with bringing his Motion to Vacate the
Judgement are taxed against Ridgeloch. We disagree.
Walker moved to vacate the judgment against him pursuant to
N.C. Gen. Stat. § 1A-1, Rule 60(b). Our Supreme Court has stated
the language of Rule 60(b) gives the court ample power to vacate
judgments whenever such action is appropriate to accomplish
justice. Brady v. Town of Chapel Hill, 277 N.C. 720, 723, 178
S.E.2d 446, 448 (1971) (internal quotation and citation omitted).
This Court has described Rule 60(b) as a grand reservoir of
equitable power to do justice in a particular case. Jim Walter
Homes, Inc. v. Peartree, 28 N.C. App. 709, 712, 222 S.E.2d 706, 708
(1976) (internal quotation and citation omitted).
Long ago, our Supreme Court stated when the action has been
in the nature of an equitable proceeding, . . . the adjudication of
the costs is in the discretion of the court. Hare v. Hare, 183N.C. 419, 421, 111 S.E. 620, 621 (1922) (citing Parton v. Boyd, 104
N.C. 422, 10 S.E. 490 (1889); Yates v. Yates, 170 N.C. 533, 87 S.E.
317 (1915)). This Court may reverse for abuse of discretion only
upon a showing that the trial court's order is 'manifestly
unsupported by reason.' Clark v. Penland, 146 N.C. App. 288, 291,
552 S.E.2d 243, 245 (2001) (quoting Cheek v. Poole, 121 N.C. App.
370, 374, 465 S.E.2d 561, 564 (1996), cert. denied, 343 N.C. 305,
471 S.E.2d 68 (1996)). Here, Harris has failed to show the trial
court's decision to award costs to Walker was manifestly
unsupported by reason. Id. This assignment of error is
The superior court properly concluded: (1) Harris should have
ceased all efforts to foreclose on the McNeill property as of 28
June 2005; (2) the Harris foreclosure sale was not valid; and (3)
the judgment against Walker should be set aside.
Harris failed to file a request for notice of sale. Harris
lacks standing to challenge whether the Glass foreclosure sale on
the senior deed of trust held by American General was conducted in
a proper fashion. This assignment of error is dismissed. Benefit
, 155 N.C. App. at 644, 574 S.E.2d at 166.
Harris has failed to show that the superior court abused its
discretion by concluding Walker's costs associated with bringing
his Motion to Vacate the Judgement are taxed against Ridgeloch.
The superior court's order is affirmed.
Affirmed. Judges ELMORE and GEER concur.
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