Opinion
No. COA15-426
04-05-2016
IN THE MATTER OF THE FORECLOSURE OF A DEED OF TRUST EXECUTED BY ROBERT GLENN CULLIFER, JR. AND WIFE, MARGARET P. CULLIFER DATED OCTOBER 4, 2007 AND RECORDED IN BOOK 2957, PAGE 95, ONSLOW COUNTY REGISTRY, TO JOHN CAMERON COBURN TRUSTEE.
Nexsen Pruet, PLLC, by David S. Pokela and J. Ronald Jones, Jr., for petitioner-appellee South State Bank f/k/a SCBT d/b/a First Federal, a Division of SCBT, successor in interest to Cape Fear Bank. Katherine S. Parker-Lowe, for respondent-appellants.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. Onslow County, No. 12-SP-237 Appeal by respondents from an order entered 14 July 2014 by Judge Jack W. Jenkins in Onslow County Superior Court. Heard in the Court of Appeals 3 November 2015. Nexsen Pruet, PLLC, by David S. Pokela and J. Ronald Jones, Jr., for petitioner-appellee South State Bank f/k/a SCBT d/b/a First Federal, a Division of SCBT, successor in interest to Cape Fear Bank. Katherine S. Parker-Lowe, for respondent-appellants. BRYANT, Judge.
Where the trial court allowed respondents' continuing objection on certain grounds to several exhibits, we will allow review of issues deemed to be properly preserved for review on appeal. Where the trial court did not err in its review and admission of evidence, we affirm the ruling of the trial court. And, where the trial court's findings of fact and conclusions of law were supported by proper evidence in the record, we affirm the judgment of the trial court determining that petitioner was the holder of a valid debt and instrument granting a right to foreclose.
Respondents, Robert Glenn Cullifer, Jr., and Margaret P. Cullifer, own a commercial building and lot located at 8689 U.S. Highway 17, in Holly Ridge, North Carolina (the "Holly Ridge lot"). On 4 October 2007, respondents executed documents for a commercial loan secured by the Holly Ridge lot. The loan included a Promissory Note (the "Note") made payable to Cape Fear Bank in the original amount of $60,000.00. The Note was secured by a Deed of Trust on the Holly Ridge lot.
Pursuant to a 10 April 2009 Order (Exhibit A), the Commissioner of Banks took over Cape Fear Bank and appointed the FDIC as Receiver and, thus, the FDIC took over Cape Fear Bank's assets. The FDIC, in turn, transferred Cape Fear Bank's assets to First Federal Savings and Loan Association of Charleston ("FFS & LAC") through a Purchase and Assumption Agreement (Exhibit B), effective as of 10 April 2009. Respondents' Note and Deed of Trust was transferred to FFS & LAC by way of the FDIC. Thereafter, on 4 November 2010, respondents entered into an amendment to their Note with FFS & LAC (Exhibit H).
Less than two years later, respondents defaulted on the Note, and on 21 March 2012, Jeff D. Rogers, Substitute Trustee for FFS & LAC, initiated this action for foreclosure by power of sale. On 4 April 2012, while the foreclosure action was pending, respondents entered into another amendment to the Note (Exhibit C) with FFS & LAC, whereby the principal amount was altered and a new payment schedule was arranged. The interest rate was also reduced from 8.75 to 5.75. On the same day, pursuant to a Certificate of Assumed Name for Corporation, petitioner, SCBT, a South Carolina state chartered banking corporation ("petitioner SCBT"), gave notice that it would be conducting business under the name of First Federal. The next day, on 5 April 2012, FFS & LAC recorded Articles of Amendment reflecting that FFS & LAC was converted to First Federal Bank.
Petitioner's name changes several times. See infra note 2 and accompanying text.
On 27 June 2012, the Assistant Clerk of Superior Court for Onslow County conducted a foreclosure hearing and entered an order allowing Rogers, the substitute trustee, to proceed with a foreclosure sale. On 9 July 2012, respondents filed notice of appeal to superior court.
While appeal was pending, on 7 August 2013, First Federal merged with petitioner SCBT. Thereafter, petitioner SCBT gave notice it would be conducting business as First Federal, a division of SCBT ("petitioner First Federal").
Petitioner First Federal's name changed to South State Bank after a 23 June 2014 hearing. However, for purposes of clarity, petitioner will hereinafter be referred to as "petitioner First Federal."
On 23 October 2013, respondents filed a motion in Superior Court asserting that as this was a special proceeding involving foreclosure by Power of Sale, it was not subject to procedures such as discovery and summary judgment, etc., under the Rules of Civil Procedure. The Honorable Judge Jack Jenkins, presiding in Onslow County Superior Court, granted the motion enjoining all parties from pursuing further discovery without order of the court.
On 23 June 2014, respondents' appeal of the foreclosure was heard in superior court before Judge Jenkins. At the hearing, respondents argued that the only evidence that should be considered was the evidence previously presented at the special proceeding before the clerk of court. When petitioner First Federal called its witness, Donna Lehmer, a vice president in the special assets area of First Federal, respondents requested a "continuing objection," arguing that certain documents had not been produced by petitioner First Federal. The trial court did not rule on the "continuing objection," as it had previously indicated that it would take all motions "under advisement."
Lehmer had worked for petitioner First Federal for sixteen years and was personally familiar (1) with the takeover of Cape Fear Bank and subsequent name changes and mergers; and (2) with the books and records of petitioner First Federal.
We note—just as the trial court did—the inherent contradiction in respondents' objection here, in that respondents moved for and obtained an order preventing discovery:
THE COURT: . . . There had been a motion heard by the Court in this previously dealing with discovery and I actually signed the order on December 2, 2013 that was filed basically the next day, December 3. And it says, "The Court, in its discretion, hereby orders that no party in this matter shall be allowed to pursue further discovery without permission from the Court," essentially cutting off all discovery at that time. . . . And then now, . . . Respondents are complaining because discovery wasn't as complete or as comprehensive as Respondents wanted. Which seems sort of contradictory to me . . . .
THE COURT: . . . [Y]ou [respondents] made the request to start with, and - - you know, "No party in this matter shall be allowed to pursue further discovery," and that's what the Court ordered. That's what you wanted, but now you're complaining about it. That just seems disingenuous to me.
Lehmer gave extensive testimony during the hearing. Specifically, Lehmer testified that Cape Fear Bank was a failed bank, she worked for petitioner First Federal when Cape Fear Bank failed, she was familiar with the books and records of SCBT (d/b/a First Federal), the purpose of the hearing was to foreclose on a deed of trust currently held by petitioner First Federal (f/k/a SCBT, which recently merged with First Federal Bank (f/k/a FFS & LAC)), and First Federal had the right to collect on accounts previously held by Cape Fear Bank. Additionally, Lehmer testified that: (1) respondents were obligated to pay a valid debt; (2) through an FDIC takeover, name changes, and a merger, petitioner First Federal was the holder of said debt; (3) respondents were in default; and (4) petitioner First Federal had a right to foreclose. Lehmer testified to the content of petitioner First Federal's Exhibits A-M, over respondents' continuing objection. Lehmer testified that the Note and Deed of Trust exhibits were true copies and that she had the original Note and Deed of Trust with her at the hearing. Respondents never asked to inspect the Note and Deed of Trust.
Some of petitioner First Federal's exhibits were not admitted into evidence. Rather, the trial judge conducted an in camera review of confidential documents during a bench conference. Exhibits N and O contain private financial information about respondents and other third parties. Respondents' counsel was present during the bench conference, and did not object to the court's in camera review of Exhibits N and O, nor did she request to see the documents being reviewed. Moreover, respondents never sought to preserve any purported error by requesting that Exhibits N and O be placed under seal. Lehmer testified to the contents of Exhibits N and O.
On 14 July 2014, the superior court entered an order allowing foreclosure and authorizing the substitute trustee to proceed with the sale of the property at issue. Respondents appeal.
On appeal, respondents argue that the trial court erred: (I) by denying their right to due process and a fair hearing; (II) in ordering a foreclosure sale where the court failed to specifically find facts and separately state conclusions of law which support the order as required by Rule 52(a)(1) of the Rules of Civil Procedure; and (III) in ordering a foreclosure sale where petitioner First Federal did not prove that it was the holder of a valid debt.
I
Respondents argue that they were denied due process and the right to a fair hearing. Specifically, respondents argue that the trial court erred by (1) allowing a witness to testify over respondents' objection to the contents of exhibits that were not properly authenticated; (2) conducting a bench review of documents that were never produced for or shown to respondents; (3) failing to make findings of fact regarding its bench review of said documents; and (4) failing to order the documents sealed for appellate review.
On all points, we disagree with respondents' contention that they were denied their right to due process and a fair hearing during a foreclosure by power of sale proceeding, in which respondents are entitled to only minimum due process requirements, as, to the extent respondents' constitutional arguments were properly before the trial court, they never received a proper ruling on the issue. See State v. Hunter, 305 N.C. 106, 112, 286 S.E.2d 535, 539 (1982) ("[A] constitutional question which is not raised and passed upon in the trial court will not ordinarily be considered on appeal." (emphasis added)). Respondents have suffered no deprivation of due process.
The Due Process Clause of the Fifth Amendment to the United States Constitution guarantees that "[n]o person shall be . . . deprived of life, liberty, or property without due process of law." U.S. Const. amend. V. The Fourteenth Amendment to the federal constitution similarly requires that no "State [shall] deprive any person of life, liberty, or property without due process of law . . . ." U.S. Const. amend. XIV. "Procedural due process restricts governmental actions and decisions which 'deprive individuals of "liberty" or "property" interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment.' " Peace v. Emp't Sec. Comm'n, 349 N.C. 315, 321, 507 S.E.2d 272, 277 (1998) (quoting Mathews v. Eldgridge, 424 U.S. 319, 332, 47 L. Ed. 2d 18, 31 (1976)).
was intended by the legislature to meet minimum due process requirements, not to engraft upon the procedure for foreclosure under a power of sale all of the requirements of a formal civil action. To have done so would have been to render the private remedy as expensive and time-consuming as foreclosure by action.In re Foreclosure of Sutton Invs., Inc., 46 N.C. App. 654, 663, 266 S.E.2d 286, 691 (1980) (emphasis added).
[Counsel for respondents]: . . . But as far as I know we don't have trial by ambush in this country anymore. We are entitled to confront accusers and see the evidence that is going to be used against us before it is presented, and we have seen nothing.
THE COURT: Okay. What I'm gonna do is take the motions under advisement for now. I'm gonna allow both sides to present whatever you think is appropriate under the circumstances and then after that, I'm gonna determine whether any extraneous materials were presented unfairly or somehow in a way that was not fair to both sides, and then I'll determine whether I [sic] should [sic] considered in the final decision or not.
(1)
Respondents first argue that the trial court erred in allowing witness Lehmer to testify regarding Exhibits A, B, C, D, and F as they were not properly authenticated. We disagree. However, as a threshold matter, we address the argument that respondents' continuing objection to the admissibility of Exhibits A, B, C, D, E, F, G, I, J, K, L, M, N, and O was properly preserved for purposes of appeal.
We note that respondents include Exhibit C in its argument regarding improperly authenticated documents—Exhibit C—Certificate of Merger. However, respondents concede in their brief that Exhibit C is a certified true copy of a public record. Accordingly, "[e]xtrinsic evidence of authenticity as a condition precedent to admissibility is not required with respect to" certified copies of public records. N.C.G.S. § 8C-1, Rule 902(4) (2015).
"The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." N.C. Gen. Stat. § 8C-1, Rule 901(a) (2015). However, in order to preserve any error for appellate review, a party is required to make timely and specific objections that clearly present the alleged error to the trial court. N.C. R. App. P. 10(a)(1) (2015).
The North Carolina Supreme Court has stated:
[i]t is not the responsibility of the trial court to predict the grounds of every objection made to testimony. It is the duty of counsel claiming error to demonstrate not only that the ruling was in fact incorrect, but also that he provided the judge with a timely and specifically defined opportunity to rule correctly.State v. Adcock, 310 N.C. 1, 18, 310 S.E.2d 587, 597 (1983) (internal quotation marks and citation omitted).
Respondents argue that, with regard to petitioner First Federal's Exhibits A (Order Taking Possession), B (Short Form Memorandum of Purchase and Assumption Agreement), C (Articles of Amendment), D (Certificate of Merger), E (Construction Loan Agreement and Promissory Note), and F (Deed of Trust Securing Future Advances), while they appear to be public records, the witness who testified about them failed to provide sufficient foundation as to the office where items of this nature are kept; in other words, respondents argue petitioner First Federal failed to lay a sufficient public records foundation for Exhibits A, B, C, D, and F.
Respondents' argument before the trial court was similar: "The records do not accurately go back to Cape Fear Bank. There are missing payments and missing records and reconstructed records. Reconstructed records that were reconstructed by Counsel, not in time, not - which in no way meet the rules of evidence for being admissible."
We are not unmindful of petitioner's concerns as stated in its brief regarding the lack of specificity of respondents' objections at trial, and the more specific arguments respondents now raise on appeal. However, we note that the court allowed great leeway as to the basis for respondents' continuing objection:
THE COURT: Okay. Well, the objection is noted, and I'm going to continue under the same protocol. I established originally, that I understand that you're objecting to all of the testimony, to everything she has to say, and even her presence as a witness. And I'm gonna give that due consideration at the appropriate time when any decisions are made in this case.Having acknowledged the leeway the trial court granted respondents at trial, we do likewise on appeal, and deem respondents' objections to the exhibits referenced above and related testimony to be preserved for review. We now address whether the trial court erred by allowing the witness to testify to the contents of the aforementioned exhibits, which respondents claim were not properly authenticated.
"On appeal, the standard of review of a trial court's decision to exclude or admit evidence is that of an abuse of discretion. An abuse of discretion will be found only when the trial court's decision was so arbitrary that it could not have been the result of a reasoned decision." Manning v. Anagnost, 225 N.C. App. 576, 580, 739 S.E.2d 859, 861 (2013) (citation omitted). However, "[a] trial court's determination as to whether a document has been sufficiently authenticated is reviewed de novo on appeal as a question of law." State v. Crawley, 217 N.C. App. 509, 515, 719 S.E.2d 632, 637 (2011) (citation omitted).
"Rule 901 of our Rules of Evidence requires authentication or identification 'by evidence sufficient to support a finding that the matter in question is what its proponent claims.' " State v. Murray, 229 N.C. App. 285, 288, 746 S.E.2d 452, 455 (2013) (quoting N.C. Gen. Stat. § 8C-1, Rule 901).
[T]he following are examples of authentication or identification conforming with the requirements of this rule:N.C.G.S. § 8C-1, Rule 901(b)(1), (7) (2015). "The authenticity of an original public record or document may be proved by the testimony of its official custodian that it is a part of the records or files of the custodian's office." State v. Oxendine, 112 N.C. App. 731, 738, 436 S.E.2d 906, 911 (1993) (citations omitted).
(1) Testimony of Witness with Knowledge. -Testimony that a matter is what it is claimed to be.
. . .
(7) Public Records or Reports. -Evidence that a writing authorized by law to be recorded or filed and in fact recorded or filed in a public office, or a purported public record, report, statement, or data compilation, in any form, is from the public office where items of this nature are kept.
With regards to Exhibits A, B, D, and F, respondents argue that the various documents appear to be public records, but the witness, Lehmer, failed to provide sufficient foundation as to the office where items of this nature are kept. This challenge is without merit.
(2)
Respondents next argue that the trial court erred by conducting a bench review of documents that were never produced for or shown to respondents, which thereby denied respondents' their right to due process and a fair hearing. Specifically, respondents contend that the trial court erred in conducting an in camera review of petitioner First Federal's Exhibits N and O. We disagree.
The North Carolina Supreme Court has stated the following with regard to the propriety of in camera review:
[E]ven though court records may generally be public records under N.C.G.S. § 132-1, a trial court may, in the proper circumstances, shield portions of court proceedings and records from the public; the power to do so is a necessary power rightfully pertaining to the judiciary as a separate branch of the government, and the General Assembly has "no power" to diminish it in any manner. This necessary and inherent power of the judiciary should only be exercised, however, when its use is required in the interest of the proper and fair administration of justice or where, for reasons of public policy, the openness ordinarily required of our government will be more harmful than beneficial.Virmani v. Presbyterian Health Servs. Corp., 350 N.C. 449, 463, 515 S.E.2d 675, 685 (1999) (emphasis added) (internal citations omitted).
Here, Exhibit N contained private financial and account information of third parties, and Exhibit O contained private billing statements sent to respondents. Exhibits N and O were of a confidential and sensitive nature and should not have been included in the court's public records. Consistent with Virmani, the exchange set forth below demonstrates that, in the interest of the proper and fair administration of justice, an in camera review was more beneficial than the harm that would have been caused by publicizing private financial information:
[Counsel for Petitioner First Federal]: . . . We actually have some documents that I would like to present. However I do have privacy concerns related to these documents. Perhaps it would be appropriate for Counsel and I to approach the bench at this time for the Court to review?
THE COURT: Sure.
(BENCH CONFERENCE.)
. . .
[Counsel for Petitioner First Federal]: . . . I wanted to ask the Court if it does take exhibits in - and that it be done in camera and not made a part of the public record. I do that on behalf of [First Federal].
THE COURT: . . . Those were not admitted into evidence, and I specifically didn't want them to be admitted into evidence for that very reason.
[Counsel for Petitioner First Federal]: I just wanted to be sure that we weren't violating some privacy -
THE COURT: I understand.
[Counsel for Petitioner First Federal]: -- of the people on the list.
Respondents argue that in camera reviews are only appropriate in connection with the review of privileged documents. However, the law does not support their position. See In re S. Bell Tel. & Tel. Co., 30 N.C. App. 585, 586-88, 277 S.E.2d 645, 646-47 (1976) (affirming the trial court's review and determination that, in the context of an in camera review of corporate reports in which there was no contention of privilege, such documents should not be disclosed based on concerns of personal privacy). Based on the foregoing, a proper basis existed for conducting an in camera review of Exhibits N and O. Accordingly, defendant's argument is overruled.
Even if respondents preserved their constitutional arguments for appeal—namely that they were denied due process because their counsel did not get to inspect Exhibits N and O—respondents ignore the fact that their counsel was invited to the bench for the in camera review, was present at the in camera review, and never requested the opportunity to review Exhibits N and O. Under the doctrines of fairness, estoppel, and/or acquiescence, respondents cannot now complain that they were prejudiced by failing to review Exhibits N and O while participating in a bench conference where there existed an opportunity to review said exhibits. For almost as long as there have been reported decisions, it has been recognized that "[i]t is neither just to the appellee, nor to the trying judge, to remain silent until the final result of the trial is reached, and then seek for error, which if brought to notice might have been corrected at once." Bost v. Bost, 87 N.C. 477, 481 (1882).
Respondents also argue that Exhibits N and O were never produced to respondents. This is because respondents moved for and obtained an order preventing discovery. See supra note 2.
Because respondents were invited to the bench for the in camera review, were present during the in camera review, had the opportunity to inspect Exhibits N and O, and invited the issue of which they now complain, see supra note 4, respondents were not deprived of any due process rights.
(3)
With regard to Exhibits N and O, respondents also argue that the trial court erred by not placing Exhibits N and O under seal after reviewing them in order to preserve them for appellate review. We disagree. We note that the burden is on the appellant, not the trial court, to have a document in question placed under seal in the record. See State v. Hardy, 293 N.C. 105, 128, 235 S.E.2d 828, 842 (1977). While respondents never requested Exhibits N and O be placed under seal, nevertheless, the record before this Court contains Exhibits N and O that were reviewed during the in camera inspection under seal. We dismiss this contention by respondent.
(4)
Respondents' final argument regarding Exhibits N and O is that the trial court's failure to make findings of fact or conclusions of law in support of the in camera proceeding was error. We disagree.
If a party does not request findings of fact and conclusions of law to be made in connection with an in camera proceeding, as respondents failed to do here, a trial court is not required to make any. See Hammond v. Saini, 229 N.C. App. 359, 365, 365 n.3, 748 S.E.2d 585, 589, 589 n.3 (2013) (reviewing the trial court's order regarding an in camera review of documents which "[did] not contain findings of fact and conclusions of law" and holding that in such an order "it is presumed that the court on proper evidence found facts to support its [decision]" and further noting that "[a] trial court is not required to make findings of fact or conclusions of law where no request is made by the parties" (internal quotation marks and citations omitted)). As respondents failed to request that the trial court make findings of fact or conclusions of law regarding the in camera review of Exhibits N and O, the trial court was not required to do so. See id. Respondent's argument is overruled.
Accordingly, as the trial court did not err in admitting testimony or exhibits, respondents' arguments are overruled.
II
In their next assignment of error, respondents argue that the trial court erred in ordering a foreclosure sale where the trial court failed to find facts and separately state conclusions of law which support the order as required by Rule 52(a)(1) of the North Carolina Rules of Civil Procedure. We disagree.
"The applicable standard of review on appeal where, as here, the trial court sits without a jury, is whether competent evidence exists to support the trial court's findings of fact and whether the conclusions reached were proper in light of the findings." In re Foreclosure Under that Deed of Trust Executed by Azalea Garden Bd. & Care, Inc., 140 N.C. App. 45, 50, 535 S.E.2d 388, 392 (2000) (citation omitted).
In a foreclosure proceeding under a power of sale, the trial court is limited to making six specified findings of fact:
At a foreclosure hearing pursuant to N.C. Gen. Stat. § 45-21.16, the clerk of superior court is limited to making the six findings of fact specified under subsection (d) of that statute: (1) the existence of a valid debt of which the party seeking to foreclose is the holder; (2) the existence of default; (3) the trustee's right to foreclose under the instrument; (4) the sufficiency of notice of hearing to the record owners of the property; (5) the sufficiency of pre-foreclosure notice under section 45-102 and the lapse of the periods of time established by Article 11, if the debt is a home loan as defined under section 45-101(1b); and (6) the sale is not barred by section 45-21.12A. . . . [I]n a section 45-21.16 foreclosure proceeding, the superior court's authority is similarly limited to determining whether the six criteria of N.C. Gen. Stat. § 45-21.16(d) have been satisfied.In re Foreclosure of Real Property Under Deed of Trust from Young, 227 N.C. App. 502, 505, 744 S.E.2d 476, 479 (2013) (emphasis added) (internal citations omitted). Any argument regarding the trial court's findings of facts should be considered in the context of power of sale foreclosures:
G.S. 45-21.16 was intended by the legislature to meet
minimum due process requirements, not to engraft upon the procedure for foreclosure under a power of sale all of the requirements of a formal civil action. To have done so would have been to render the private remedy as expensive and time-consuming as foreclosure by action.In re Foreclosure of Sutton Invs., Inc., 46 N.C. App. 654, 663, 266 S.E.2d 686, 691 (1980).
With regard to respondents' argument that the trial court's order does not comply with Rule 52(a)(1) of the Rules of Civil Procedure, respondents rely on In re Garvey, ___ N.C. App. ___, 772 S.E.2d 747 (2015), for the proposition that the trial court must "find the facts specially and state separately its conclusions of law . . . ." Id. at ___, 772 S.E.2d at 751 (quoting N.C.G.S. § 8C-1, Rule 52(a)(1)). Garvey is distinguishable from the instant case.
In Garvey, this Court agreed with the respondent that Rule 52(a)(1) of the Rules of Civil Procedure applies to orders entered for foreclosure by power of sale and subsequently remanded the case, ordering the superior court to make the appropriate findings of fact and conclusions of law. Id. at ___, 772 S.E.2d at 750-52. In doing so, this Court noted as follows with regard to the trial court's order at issue:
[T]he only specific findings in the superior court's order were that "the Appeal is properly before this Court, [and] that all parties have been given adequate and timely notice of the hearing on the matter. . . ." After that single recitation of fact—which was not even labeled as a finding of fact—the superior court made no express conclusions of law, but rather moved directly to the decretal portion of the order. As part of the decree, the superior court concluded
that "Bank of America, N.A. has satisfied the requirements set forth in N.C. Gen. Stat. § 45-21.16 and the Substitute Trustee is entitled to proceed with the foreclosure sale[.]" . . . In sum, the superior court only found one of the six criteria: that proper notice was given.Id. at ___, 772 S.E.2d at 751 (emphasis added).
Here, in its 14 July 2014 Order Allowing Foreclosure, the trial court made the following "Findings of Fact and Conclusions of Law":
3. The Respondents, Robert Glenn Cullifer, Jr. and wife, Margaret P. Cullifer are the record owners of the real property described in the Deed of Trust.(emphasis added). As the above illustrates, not only did the trial court make all six required findings of fact, its findings are specific. Again, we note that Garvey is not at all analogous because in Garvey, the trial court wholly failed to make all six required findings of fact—it made only one—that proper notice was given. Id. at ___, 772 S.E.2d at 751.
4. SCBT, d/b/a First Federal Bank, formerly First Federal Savings and Loan Association of Charleston is the holder of the Note and Deed of Trust.
5. The debt evidenced by the Note, and secured by the Deed of Trust, is a valid and enforceable debt due to the Petitioner by the Respondents.
6. The debt evidenced by the Note is in default.
7. The Deed of Trust contains a power of sale clause authorizing the Substitute Trustee, upon default, to foreclose the real property described in the Deed of Trust.
8. All parties entitled to notice of the hearing before the Court were given notice as required by law.
9. Neither of the Respondents are in the active military service of the United States and therefore, this foreclosure action is not barred by the provisions of N.C.G.S. 45-21.12A.
10. The debt evidenced by the Note is not a "Home Loan", as that term is defined by N.C.G.S. § 45-101(1b).
Because the trial court's findings of facts are sufficiently specific to satisfy Rule 52(a)(1) of the Rules of Civil Procedure, see id., its conclusions of law are also proper such that the trial court did not err in ordering the foreclosure sale. Respondents' argument is overruled.
III
Lastly, respondents argue that the trial court erred in ordering a foreclosure sale where petitioner First Federal did not prove that it was the holder of a valid debt or an instrument granting a right to foreclosure under power of sale as required by N.C. Gen. Stat. § 45-21.16(d). Specifically, respondents argue that competent evidence showed that petitioner First Federal was not the holder of a note drawn, issued, or indorsed to it as required by N.C. Gen. Stat. § 25-3-204. We disagree.
"[W]hen a court fails to make appropriate findings or conclusions, this Court is not required to remand the matter if the facts are not in dispute and only one inference can be drawn from them." In re Yopp, 217 N.C. App. 489, 499, 720 S.E.2d 769, 775 (2011) (alteration in original) (citation omitted). In Yopp, this Court held that remand for additional findings of fact on the "holder" issue was not necessary because "the only inference that [could] be drawn from the evidence [was] that petitioner . . . merged with Chevy Chase Bank and was in physical possession of the note at the time of the hearing." Id. at 499, 720 S.E.2d at 775 (citation omitted). As a result, this Court affirmed the trial court's order authorizing foreclosure by power of sale. Id. at 499, 720 S.E.2d at 775.
First, there is no actual dispute that petitioner First Federal had possession of the original Note and Deed of Trust at the hearing, just as the petitioner in Yopp was in physical possession of the note at the time of the hearing. Id. at 499, 720 S.E.2d at 776. As Lehmer testified on direct:
Q. . . . we have reviewed several documents that are copies of documents, agreements between the parties; is that right?
A. That's correct.
Q. Are they, in your experience, true and accurate copies thereof?
A. Yes, they are.
[Respondents' counsel]: Objection.
Q. Have you reviewed the originals?
A. Yes.
Q. And in fact, have you held the originals in your hand?
A. I have.
Q. And are they -
[Respondents' counsel]: Objection.
THE COURT: Overruled.
During cross-examination, respondents never asked to see the originals. Rather, the cross-examination confirmed that Lehmer had possession of the originals at the hearing: "Q. You don't have any paperwork to that effect, do you? A. I have - I do have the original note and mortgage so I have that documents [sic] - Q. You have that here today? A. Yes, ma'am."
Q. And are they in your possession currently?
A. They are.
Moreover, possession of the originals at the foreclosure hearing is not necessary if copies of the Note and Deed of Trust are introduced and there is no dispute that they are correct copies. Dobson v. Substitute Tr. Servs., Inc., 212 N.C. App. 45, 48-49, 711 S.E.2d 728, 730-31 (2011). Dobson demonstrates that, where there is no actual dispute either that petitioner First Federal had possession of the originals at the hearing or that the copies were correct, any "bare statement" by a mortgagor regarding an inability to "confirm the authenticity of the copy of the [n]ote . . . is insufficient to cast doubt on [purported holder's] evidence that [purported holder] is the holder of the note . . . ." Id. at 49, 711 S.E.2d at 731.
Here, when given the chance to dispute that petitioner First Federal had possession of the originals at the hearing or that the copies were not correct, respondents declined to do so: "THE COURT: And did you wish to offer evidence? At one point you indicated that you might wish to. You wish to offer evidence at this time? [Respondents' counsel]: No, sir."
Second, with regard to respondents' argument that there was no evidence that the Note was indorsed to petitioner First Federal, federal law provides that the FDIC may transfer a promissory note without indorsement or assignment. See 12 U.S.C. § 1821(d)(2)(G)(i)(II) (2013) (stating that a receiver may "transfer any asset or liability of the institution in default (including assets and liabilities associated with any trust business) without any approval, assignment, or consent with respect to such transfer"). When addressing arguments that state laws require formal indorsements or assignments in order for promissory notes to be transferred from the FDIC, courts have cited 12 U.S.C. § 1821(d)(2)(G)(i)(II) in rejecting such arguments and recognizing that no such indorsements or assignments are required. See, e.g., Demelo v. U.S. Bank Nat'l Ass'n, 727 F.3d 117, 125 (1st Cir. 2013) ("We hold that a transfer of a mortgage [from the FDIC], authorized by federal law, obviates the need for the specific written assignment that state law would otherwise require."); Newman v. JP Morgan Chase Bank, N.A., 81 F. Supp. 3d 735, 742 (D. Minn. 2015) ("[I]t is abundantly clear that the FDIC's transfer [of] WAMU's assets to Chase was based on FIRREA [Financial Institutions Reform, Recovery, and Enforcement Act of 1989], which explicitly states that the FDIC can transfer the assets of a failed bank 'without assignment' and by operation of law."); Drobny v. JP Morgan Chase Bank, NA, 929 F. Supp. 2d 839, 845-46 (D.C. Ill. 2013) (rejecting the argument that Chase had no right to foreclose because Chase, which had acquired WAMU's banking assets from the FDIC following WAMU's failure, had not obtained a mortgage assignment).
Finally, a mortgagor's past conduct can result in the waiver of specific arguments lodged against a power of sale foreclosure. In re Foreclosure of a N.C. Deed of Trust Executed by L.L. Murphrey Co., ___ N.C. App. ___, ___, 764 S.E.2d 221, 227-28 (2014). In Murphrey, the mortgagors challenged the mortgagee's right to foreclose, contending that the mortgagee "does not and cannot meet the Holder requirement" by arguing that "failure to execute new loan documents meant that the payment obligations under [a bankruptcy confirmed reorganization plan] were insufficient to constitute negotiable instruments," and that the mortgagee was "not the holder of a valid debt because [the bankruptcy confirmed reorganization plan] fails to qualify as a negotiable instrument." Id. at ___, 764 S.E.2d at 226-27. However, this Court held that the mortgagors had "waived their right to advance the above argument because the record shows that they made timely payments pursuant to the terms of the [bankruptcy confirmed reorganization plan] for approximately ten years." Id. at ___, 764 S.E.2d at 227.
Here, respondents similarly argue that there is no proof that Cape Fear Bank was still the holder of the Note when Cape Fear Bank was taken over by the FDIC and its assets transferred to FFS & LAC. However, after Cape Fear Bank's assets were transferred to FFS & LAC via the FDIC, respondents executed the Note Amendment with FFS & LAC on 4 November 2010. By entering into the Note Amendment with FFS & LAC after Cape Fear Bank's assets were transferred to FFS & LAC via the FDIC, pursuant to Murphrey, respondents waived any argument that Cape Fear Bank did not transfer the Note to FFS & LAC.
Alternatively, respondents ratified the transfer of the Note from Cape Fear Bank to FFS & LAC via the FDIC in executing the Note Amendment of 4 November 2010. See Daniel Boone Complex, Inc. v. Furst, 43 N.C. App. 95, 102, 258 S.E.2d 379, 385 (1979) (employing estoppel by the "doctrine of ratification"). Accordingly, competent evidence showed, and the trial court correctly determined that petitioner First Federal was the holder of a valid debt and an instrument granting a right to foreclose. Respondents' argument is overruled.
AFFIRMED.
Judges CALABRIA and ZACHARY concur.
Report per Rule 30(e).