Currie v. Poteat ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in a ccordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-814
NORTH CAROLINA COURT OF APPEALS
Filed: 1 April 2014
CLEON CURRIE, as Executor of the
Estate of Della Brown,
Plaintiff,
v. Caswell County
No. 04 CVS 336
ISAAC POTEAT and wife, ROSETTA
POOLE POTEAT,
Defendants,
and
GEORGE B. DANIEL, P.A.,
Intervenor Defendant.
Appeal by Plaintiff from order entered 28 May 2013 by Judge
Michael Gentry in Caswell County Superior Court.1 Heard in the
Court of Appeals 8 January 2014.
1
The underlying action from which this appeal is taken was in
the superior court in Caswell County. The clerk of superior
court referred the matter to Judge Michael Gentry, an elected
judge of the district court in Caswell County, for a hearing
pursuant to N.C. Gen. Stat. § 1C-1603(e)(7) (2013) (“If the
judgment creditor objects to the schedule filed or claimed by
the judgment debtor, the clerk [of superior court] must place
the motion for hearing by the district court judge, without a
jury, at the next civil session.”). We also note that Plaintiff
erroneously captioned his notice of lis pendens in a preceding
and related case involving the same parties, 03 CVS 43, as being
in the district court although that matter was also in the
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Carruthers & Roth, P.A., by Kenneth R. Keller, for
Plaintiff.
No brief for Defendants.
George B. Daniel, P.A., by Amy Scott Galey, for Intervenor
Defendant.
STEPHENS, Judge.
Procedural History and Factual Background
Plaintiff Cleon Currie, in his capacity as Executor of the
Estate of Della Brown, appeals from a 28 May 2013 order
determining the relative priority as between a deed of trust
obtained by Intervenor George B. Daniel, P.A., (“the law firm”)
from its clients, Defendants Isaac Poteat, Jr., and his wife,
Rosetta Poole Poteat, and a judgment subsequently obtained
against the Poteats by Currie on behalf of Brown’s estate. The
law firm obtained the deed of trust to secure its legal fees
associated with the representation of the Poteats on a claim
brought by Currie for, inter alia, conversion of funds to
purchase the home on which the law firm took the deed of trust.
Della Brown died testate in March 2002. Her will named
Currie, her great-nephew, as executor of her estate, file number
superior court. This apparent clerical error has no bearing on
our resolution of this appeal.
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02 E 213 (“the estate matter”). In July 2002, having found no
property in Brown’s name, Currie filed final account documents
as to Brown’s estate and was discharged as executor.
Thereafter, Currie learned that, at a time when Currie believed
Brown lacked mental capacity, Isaac Poteat had caused Brown to
transfer $92,000 to the Poteats. Currie also learned that the
Poteats had used $75,000 of that money to purchase a home in
Yanceyville, North Carolina (“the home”). Currie hired attorney
Powell W. Glidewell IV to pursue possible claims on behalf of
Brown’s estate, unaware that his signing of the final account as
to her estate and his discharge as executor of the estate might
affect his right to undertake such action.
In February 2003, Glidewell filed a complaint in the
superior court in Caswell County on Currie’s behalf asserting
various claims against the Poteats, file number 03 CVS 43 (“the
first case”). On 13 March 2003, Glidewell filed notice of lis
pendens. The law firm represented the Poteats in that action.
The case was set for trial in September 2004, and, at the pre-
trial conference on 7 September 2004, the law firm advised the
court and Glidewell of its contention that Currie’s discharge as
executor of Brown’s estate constituted a fatal defect to his
claims on Brown’s behalf against the Poteats. Upon hearing the
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law firm’s contentions, Glidewell stated in open court his
intention to dismiss the action without prejudice the following
day so that Currie could be re-qualified as executor of Brown’s
estate, after which he would refile a complaint against the
Poteats. The trial court announced in open court that the first
case was voluntarily dismissed.2
On 8 September 2004, the Poteats, through the law firm,
filed a deed of trust on the home to secure a promissory note to
the law firm in the amount of $40,000. On the same day, a
general warranty deed (“the Poteat deed”) was filed,
transferring a remainder interest in the home to the Poteats’
daughters and retaining a life estate to the Poteats. On 22
September 2004, a series of filings occurred: (1) Currie signed
an amended petition to reopen the estate matter, which he took
to the clerk of superior court in Rockingham County; (2) the
clerk filed the petition and order to re-open the estate matter,
re-qualified Currie as executor, and issued letters
testamentary; (3) Glidewell filed a written dismissal without
prejudice of the first case; and (4) Glidewell filed a second
2
A voluntary dismissal announced in open court becomes effective
immediately and terminates all adversary proceedings in the
case. Walker Frames v. Shively, 123 N.C. App. 643, 646, 473
S.E.2d 776, 778 (1996). Accordingly, as Currie and the law firm
agree, the first case was dismissed on 7 September 2004.
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civil action against the Poteats, file number 04 CVS 336 (“the
second case”), and a second notice of lis pendens. The
complaint in the second case was virtually identical to the
first, except for updated references to the reissued letters
testamentary.
The second case was tried in September 2005 and the jury
returned a verdict that Currie, on behalf of the Brown estate,
was entitled to recover $75,000 from the Poteats for
constructive fraud and conversion. The Poteats appealed, and
this Court affirmed that judgment in an unpublished opinion,
Currie v. Poteat, 185 N.C. App. 158 (2007), available at 2007
N.C. App. LEXIS 1757. However, execution of the judgment was
returned unsatisfied.
Thereafter, Currie learned of the Poteat deed and filed an
action seeking to set aside that conveyance as fraudulent, file
number 08 CVS 320 (“the third case”). On 7 July 2009, the
superior court entered a default judgment in favor of Currie,
setting aside the Poteat deed and declaring it void ab initio.
In August 2009, Isaac Poteat filed a motion to claim exempt
property which listed, inter alia, the lien owed to the law
firm. Currie objected, and, on 21 August 2009, the trial court
set aside the order designating exempt property and set the
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matter for hearing. The law firm intervened in the third case
and, on 15 October 2009, filed an answer that asserted various
defenses, each based upon its assertion that Currie had lacked
standing to file the notice of lis pendens in the first case
because he had been discharged as executor of Brown’s estate at
the time. The answer did not claim any defect in service of the
notice of lis pendens in the first case.
On 11 December 2009, Currie filed a petition in the estate
matter to date his requalification as executor nunc pro tunc to
2 April 2002. The clerk of superior court allowed the petition
on 14 January 2010. The law firm appealed to superior court,
and after hearing arguments, on 22 April 2010, the superior
court filed an order affirming the clerk’s order allowing the
petition to date Currie’s requalification as executor nunc pro
tunc to 2 April 2002 (“the nunc pro tunc order”). The law firm
did not appeal from that order, and the time in which it could
do so has passed.
In November 2012, the clerk of superior court referred the
matter to the district court in Caswell County for determination
of the relative priorities of the judgment Currie had obtained
in the second case and the deed of trust held by the law firm.
See N.C. Gen. Stat. § 1C-1603(e)(7).
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On 26 May 2013 nunc pro tunc to 27 November 2012, the court
entered an “Order Determining Priority of Liens” which declared
that the law firm’s deed of trust had priority over Currie’s
judgment against the Poteats. In the order, the court concluded
that: (1) because the first case was voluntarily dismissed on 7
September 2004 and the deed of trust was recorded the following
day, the law firm was not a purchaser pendente lite3; (2)
although a complaint can serve as a notice of lis pendens,
because the first case had been dismissed at the time the deed
of trust was recorded, the complaint in that case became a
nullity which could no longer serve as notice of lis pendens;
and (3) because “Currie did not follow his [n]otice of [l]is
[p]endens with either the first publication of notice of the
summons, or by an affidavit therefor[e] pursuant to Rule
4(j)(1)c of the Rules of Civil Procedure, or by personal service
on the defendant within 60 days after the cross-indexing, as
required by [N.C. Gen Stat. §] 1-110(a),” the notice of lis
pendens in the first case “was void.” (Italics added). From
that order, Currie appeals.
Discussion
3
“One who buys an interest in something that is the subject of a
pending lawsuit.” Black’s Law Dictionary 1271 (8th ed. 2004).
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On appeal, Currie argues that (1) the lis pendens filed in
the first case was sufficient to constitute legal notice of
Currie’s claims on the home at the time the law firm obtained
its deed of trust and, (2) even if the notice of lis pendens in
the first case was not effective, the law firm had actual notice
of pending litigation affecting the home such that the law firm
took the deed of trust subject to the judgment subsequently
rendered. We are constrained to disagree.
I. Standard of Review
“The standard of review on appeal from a judgment entered
after a non-jury trial is whether there is competent evidence to
support the trial court’s findings of fact and whether the
findings support the conclusions of law and ensuing judgment.”
Cartin v. Harrison, 151 N.C. App. 697, 699, 567 S.E.2d 174, 176
(citation and internal quotation marks omitted), disc. review
denied, 356 N.C. 434, 572 S.E.2d 428 (2002). “[F]indings of
fact made by the trial judge are conclusive on appeal if
supported by competent evidence, even if there is evidence to
the contrary.” Sisk v. Transylvania Cmty. Hosp., Inc., 364 N.C.
172, 179, 695 S.E.2d 429, 434 (citation, internal quotation
marks, and ellipsis omitted), reh’ing denied, 364 N.C. 442, 702
S.E.2d 65 (2010). “Conclusions of law drawn by the trial court
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from its findings of fact are reviewable de novo on appeal.”
Carolina Power & Light Co. v. City of Asheville, 358 N.C. 512,
517, 597 S.E.2d 717, 721 (2004).
II. Notice of lis pendens in the first case
In arguing that the notice of lis pendens in the first case
was effective on 8 September 2004 when the deed of trust was
recorded, Currie asserts that (1) his discharge as executor of
Brown’s estate before the filing of the first case was cured
when the clerk of superior court re-qualified him nunc pro tunc
to the date of his initial qualification, (2) the method of
service of the notice of lis pendens was statutorily sufficient,
and (3) because the first case was dismissed without prejudice,
the second case was a continuation of the first case.
A. The nunc pro tunc order in the estate matter
We agree with Currie’s contention that the nunc pro tunc
order was effective to cure Currie’s discharge as executor of
Brown’s estate and reject the law firm’s arguments to the
contrary as impermissible collateral attacks on the nunc pro
tunc order in the estate matter.
A collateral attack is one in which a
plaintiff is not entitled to the relief
demanded in the complaint unless the
judgment in another action is adjudicated
invalid. A collateral attack on a judicial
proceeding is an attempt to avoid, defeat,
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or evade it, or deny its force and effect,
in some incidental proceeding not provided
by law for the express purpose of attacking
it. North Carolina does not allow
collateral attacks on judgments.
Pinewood Homes, Inc. v. Harris, 184 N.C. App. 597, 601, 646
S.E.2d 826, 830 (2007).
“Nunc pro tunc is defined as now for then. It signifies a
thing is now done which should have been done on the specified
date.” Whitworth v. Whitworth, __ N.C. App. __, __, 731 S.E.2d
707, 712 (2012) (citations and internal quotation marks omitted)
(unpublished opinion), available at 2012 N.C. App. LEXIS 1077.
The law firm cites Whitworth in support of its argument that
entry of the nunc pro tunc order was erroneous:
Nunc pro tunc orders are allowed only when
[1] a judgment has been actually rendered,
or decree signed, but not entered on the
record, [2] in consequence of accident or
mistake or the neglect of the clerk provided
that the fact of its rendition is
satisfactorily established and [3] no
intervening rights are prejudiced.
Id. at 712-13 (citations, internal quotation marks, and ellipsis
omitted). The law firm argues that the second two requirements
for entry of the requalification order nunc pro tunc were not
present in the estate matter.
We note that, although the law firm intervened in the
estate matter and appealed the clerk’s order to the superior
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court, the law firm chose not to appeal from the nunc pro tunc
order and, therefore, the validity of that order is not before
this Court. Accordingly, in resolving this appeal, we will not
consider arguments regarding the invalidity of an order in the
estate matter. Pinewood Homes, Inc., 184 N.C. App. at 601, 646
S.E.2d at 830.
We agree that the nunc pro tunc order cured Currie’s
discharge such that he had standing to file the complaint and
notice of lis pendens in the first case. However, we do not
consider the sufficiency of service of the notice of lis pendens
because, at the time the law firm recorded its deed of trust,
there was no pending action affecting the title to real
property. Our General Statutes providing for constructive
notice of pending litigation via notice of lis pendens are
inapplicable in such circumstances.
The firmly-established doctrine of lis
pendens is that: When a person buys
property pending an action of which he has
notice, actual or presumed, in which the
title to it is in issue, from one of the
parties to the action, he is bound by the
judgment in the action, just as the party
from whom he bought would have been.
Hill v. Pinelawn Mem. Park, 304 N.C. 159, 163-64, 282 S.E.2d
779, 782 (1981) (citation and internal quotation marks omitted;
italics added). Our General Statutes provide a scheme for
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giving notice of lis pendens. See N.C. Gen. Stat. § 1-116 et
seq. (2013). However,
lis pendens notice under our statute is not
exclusive. It serves only to provide
constructive notice of pending litigation. .
. . The lis pendens statutes enable a
purchaser for a valuable consideration who
has no actual notice of the pendency of
litigation affecting the title to the land
to proceed with assurance when the lis
pendens docket does not disclose a cross-
indexed notice disclosing the pendency of
such an action.
Our registration statute does not protect
all purchasers, but only innocent purchasers
for value. While actual notice of another
unrecorded conveyance does not preclude the
status of innocent purchaser for value,
actual notice of pending litigation
affecting title to the property does
preclude such status. Where a purchaser
claims protection under our registration
laws, he has the burden of proving by a
preponderance of the evidence that he is an
innocent purchaser for value, i.e., that he
paid valuable consideration and that he had
no actual notice, or constructive notice by
reason of lis pendens, of pending litigation
affecting title to the property.
Hill, 304 N.C. at 164-65, 282 S.E.2d at 783 (citations and
internal quotation marks omitted; italics and some emphasis
added).
Voluntary dismissals are covered by Rule 41(a) of our Rules
of Civil Procedure. N.C. Gen. Stat. § 1A-1, Rule 41(a) (2013).
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The effect of a judgment of voluntary
dismissal is to leave the plaintiff exactly
where he or she was before the action was
commenced. After a plaintiff takes a Rule
41(a) dismissal, there is nothing the
defendant can do to fan the ashes of that
action into life, and the court has no role
to play. . . . [O]nce a party voluntarily
dismisses its action pursuant to . . . Rule
41(a)(1)[], it is as if the suit had never
been filed[.]
Hous. Auth. v. Sparks Eng’g, PLLC, 212 N.C. App. 184, 187, 711
S.E.2d 180, 182 (2011) (citations, internal quotation marks, and
some brackets omitted). In sum, “a voluntary dismissal . . .
terminate[s] the action, and no suit is pending thereafter on
which the court can enter a valid order.” Renner v. Hawk, 125
N.C. App. 483, 489, 481 S.E.2d 370, 373, disc. review denied,
346 N.C. 283, 487 S.E.2d 553 (1997).
Here, it is undisputed that the law firm, which represented
the Poteats in the first case (in addition to later litigation),
had actual notice of the claims Currie asserted in that case
which affected title to the home. Further, the law firm was
present at the pretrial conference on 7 September 2004 where the
matter of Currie’s standing to bring the first case was
questioned and Currie, through counsel, stated his intent to
take a voluntary dismissal to reopen Brown’s estate and be re-
qualified as executor so that he could refile the case.
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Unquestionably, then, the law firm had actual notice of Currie’s
claims, his need to voluntarily dismiss the first case, his plan
to cure the matter of his discharge as executor, and his intent
to refile the case asserting the same claims. However, as noted
supra, the voluntary dismissal was effective when announced in
open court on 7 September 2004, and Currie did not initiate the
second case until the complaint was filed on 22 September 2004.
Thus, on 8 September 2004, as the law firm well knew, there
was no litigation pending that affected title to the home. For
this reason, the doctrine of lis pendens, whether by actual
notice or by constructive notice via a notice of lis pendens,
was inapplicable. Currie’s citations to numerous cases
involving actual notice of pending litigation are unavailing
because the law firm’s “actual notice” here was only of Currie’s
intent to file a new complaint. In simple terms, there was no
pending litigation for any party to have notice of on 8
September 2004, and actual or constructive notice of an
intention to bring litigation is of no legal effect in real
estate transactions.
Currie cites Goodson v. Lehmon, 225 N.C. 514, 35 S.E.2d 623(1945), for the proposition that a notice of lis pendens filed
in the original case remains effective if the initial proceeding
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is voluntarily dismissed without prejudice and a second
proceeding is then filed on substantially the same claims. In
that case, the appellees first brought an action in 1943 against
certain of the appellants to set aside a deed to real property
on the ground of mental incompetency of the grantor and duress
and undue influence on the part of the grantees. Id. at 515, 35
S.E.2d at 623. In addition to their complaint, the appellees
filed a separate notice of lis pendens. Id. The appellees
prevailed at trial, but on appeal, our Supreme Court reversed.
Id. at 515, 35 S.E.2d at 623-24 (citing Goodson v. Lehmon, 224
N.C. 616, 31 S.E.2d 756 (1944)).
The opinion was certified to the Superior
Court of Catawba County, and appears to have
been received there on or about 5 December[]
1944. . . . [J]udgment in accordance with
the opinion was rendered and entered in the
Superior Court 15 January[] 1945. Meantime,
on 5 December[] 1944, the [appellants],
holding under the [original] deed, conveyed
the lands to [various other parties
(“defendants”)] in separate lots.”
On 15 January[] 1945, the [appellees] began
a new proceeding . . . upon the same cause
of action, seeking the same relief. . . .
[but also alleging] that the defendants
purchased pendente lite, setting up the
notice of lis pendens as part of the
complaint, and that each of them had not
only constructive notice given by the lis
pendens on file, but actual notice of the
rights and equities of the plaintiffs
respecting the lands.
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The defendants demurred to the complaint as
not stating a cause of action for that, it
is contended, it appears upon the face of
the pleading that at the time defendants
took title, lis pendens was not in force, as
the judgment of reversal in this Court was
final, ending the case, and with it the
effectiveness of notice of lis pendens, and
giving them the status of innocent
purchasers without notice; or, if the suit
did not end then, it necessarily terminated
on 15 January, with a like effect, making
valid the deeds they had already taken,
notwithstanding the original notice of lis
pendens.
Id. at 516, 35 S.E.2d at 624. Our Supreme Court noted that
“[t]he judgment of reversal was not final until its entry in the
Superior Court on 15 January [1944]. [The defendants] were
therefore, at the time they acquired title, purchasers pendente
lite.” Id. at 518, 35 S.E.2d at 625. The Court then held that,
“where there is identity between the causes of action, and a
procedural continuity arising out of the legal right to renew
the litigation on the merits, the original lis pendens will be
effective in the ‘new action,’ where the defendants were
pendente lite purchasers in the original proceeding.” Id.(emphasis in original).
Here, in contrast, as discussed supra, the deed of trust
was filed in the window between the voluntary dismissal of the
first case and initiation of the second case, a time when there
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was no pending action. Accordingly, unlike the defendants in
Goodson, the law firm was not a purchaser pendente lite, and we
must affirm the order of the trial court.
AFFIRMED.
Judges STEELMAN and DAVIS concur.
Report per Rule 30(e).