Opinion
No. COA14–734.
02-17-2015
HOME TRUST BANK,Plaintiff, v. J. Brian MURPHY and Gail R. Murphy, Defendants.
Cannon Law, P.C., by William E. Cannon, Jr., for Plaintiff. Scott Taylor, PLLC, by J. Scott Taylor, and Frank G. Queen, PLLC, by Frank G. Queen, for Defendants.
Cannon Law, P.C., by William E. Cannon, Jr., for Plaintiff.
Scott Taylor, PLLC, by J. Scott Taylor, and Frank G. Queen, PLLC, by Frank G. Queen, for Defendants.
STEPHENS, Judge.
Factual and Procedural Background
In 2006, Defendants J. Brian Murphy and Gail R. Murphy obtained two loans from Plaintiff HomeTrust Bank in order to purchase a pair of lots in the Scarlet Oaks development in Maggie Valley: $224,000.00 for lot 10 and $260,000.00 for lot 16. After Defendants defaulted on both loans, Plaintiff foreclosed on each lot. At the foreclosure sale, Plaintiff bid $70,125.00 for lot 10 and $78,625.00 for lot 16, becoming the final bidder at those prices.
After the costs of the foreclosure sales were deducted, the net value paid by Plaintiff for the lots was $68,371.94 and $76,901.21, respectively.
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The foreclosure sale was completed on 26 April 2011, and the substitute trustee's deeds for lots 10 and 16 were signed on 16 May 2011. However, Plaintiff's attorney retained the signed deeds until 19 May 2011, when they were recorded. The amounts paid for the lots at the foreclosure sale were insufficient to extinguish the loans taken out by Defendants, and Defendants refused Plaintiff's demands to pay the deficiencies. Plaintiff initiated this action by the filing of a complaint for a deficiency judgment on 18 May 2012, 364 days after the deeds were recorded and 368 days after they were signed. On 30 July 2012, Defendants answered, asserting various defenses, including, inter alia,that Plaintiff's claim is time barred by section 1–54(6) which provides that the statute of limitations for deficiency judgment claims is one year from the date of delivery of a deed of trust. SeeN.C. Gen.Stat. § 1–54(6) (2013). Defendants asserted that the deeds were delivered on the date when they were signed, 16 May 2011, more than one year before Plaintiff's complaint was filed.
The matter came on for trial at the 22 September 2013 civil session of superior court in Haywood County, and, on 25 September 2013, the parties filed stipulations regarding all of the pertinent dates discussed supra.The only issue remaining for the jury to determine, other than the fair market value of each lot, was the date of delivery of the deeds: either 16 May 2011, when they were signed, or 19 May 2011, when they were recorded.
At the close of Plaintiff's case, Defendants moved for a directed verdict, which the trial court denied. Defendants renewed their motion at the close of all evidence, which the trial court again denied. On 25 September 2013, the jury returned a verdict finding that the fair market value of the two lots at the time of the foreclosure sale totaled $175,000.00 and that the date of delivery of the deeds was 19 May 2011. The parties stipulated that the trial court would determine whether the fair market values were substantially less than the purchase prices paid by Plaintiff. On 7 October 2013, Defendants moved for judgment notwithstanding the jury's verdict (“JNOV”) or, in the alternative, a new trial. Following a hearing, the trial court entered an order denying Defendants' motions on 9 December 2013. On the same day, the trial court, having determined that the values paid by Plaintiff were not substantially less than the fair market values of the lots, entered a final judgment for Plaintiff and against Defendants in the sum of $259,310.07 in principal, $41,154.24 in interest, and $38,896.51 in attorney's fees, as well as costs. Defendants appeal from the final judgment and from the denial of their motions for directed verdict, JNOV, and a new trial. We affirm.
Discussion
Defendants argue that the trial court erred in denying their motions for a directed verdict, JNOV, and a new trial. Specifically, Defendants contend that the applicable one-year statute of limitation had run prior to the filing of Plaintiff's complaint because the deeds were delivered on 16 May 2011, when they were signed, rather than on 19 May 2011, when they were recorded. We disagree.
I. Standards of review
“The standard of review of directed verdict is whether the evidence, taken in the light most favorable to the non-moving party, is sufficient as a matter of law to be submitted to the jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322, 411 S.E.2d 133, 138 (1991) (citation omitted).
In determining the sufficiency of the evidence to withstand a motion for a directed verdict, all of the evidence which supports the non-movant's claim must be taken as true and considered in the light most favorable to the non-movant, giving the non-movant the benefit of every reasonable inference which may legitimately be drawn therefrom and resolving contradictions, conflicts, and inconsistencies in the non-movant's favor.
Turner v. Duke Univ., 325 N.C. 152, 158, 381 S.E.2d 706, 710 (1989) (citation omitted). “A motion for directed verdict should be denied if more than a scintilla of evidence supports each element of the non-moving party's claim.” Weeks v. Select Homes, Inc.,193 N.C.App. 725, 730, 668 S.E.2d 638, 641 (2008) (citation and internal quotation marks omitted). “On appeal the standard of review for a JNOV is the same as that for a directed verdict, that is whether the evidence was sufficient to go to the jury.” Tomika Invs., Inc. v. Macedonia True Vine Pentecostal Holiness Church of God, Inc., 136 N.C.App. 493, 498–99, 524 S.E.2d 591, 595 (2000) (citation omitted).
“[A]n appellate court's review of a trial judge's discretionary ruling either granting or denying a motion to set aside a verdict and order a new trial is strictly limited to the determination of whether the record affirmatively demonstrates a manifest abuse of discretion by the judge.” Worthington v. Bynum, 305 N.C. 478, 482, 290 S.E.2d 599, 602 (1982) (citations omitted). “[A]n appellate court should not disturb a discretionary Rule 59 order unless it is reasonably convinced by the cold record that the trial judge's ruling probably amounted to a substantial miscarriage of justice.” Id.at 487, 290 S.E.2d at 605.
II. Evidence of delivery of the deeds
The dispositive issue underpinning all of Defendants' arguments is whether there was sufficient evidence that delivery of the deeds did not occur until they were recorded. If so, Plaintiff's claim was not time-barred by section 1–54(6), which provides:
For a deficiency judgment on any debt, promissory note, bond or other evidence of indebtedness after the foreclosure of a mortgage or deed of trust on real estate securing such debt, promissory note, bond or other evidence of indebtedness, which period of limitation above prescribed [one year] commences with the date of the delivery of the deed pursuant to the foreclosure sale....
N.C. Gen.Stat. § 1–54(6). In turn,
[w]ith respect to whether there is a valid delivery of a deed there are three requirements: (1) an intention by the grantor to give the instrument legal effect according to its purport and tenor; (2) evidence of that intention by some word or act which discloses that the grantor put the instrument beyond his legal control;and (3) acquiescence by the grantees in such intention.
Penninger v. Barrier, 29 N.C.App. 312, 315, 224 S.E.2d 245, 247 (citation omitted; emphasis in original), cert. denied, 290 N.C. 552, 226 S.E.2d 511 (1976).
Here, the evidence is undisputed that the Trustee as grantor intended to give the deeds legal effect and that Plaintiff, here the grantee, acquiesced in that intention. However, regarding the second requirement,
[t]here must be an intention of the grantor to pass the deed from his possession and beyond his control,and he must actually do so with the intent that it shall be taken by the grantee or by someone for him.Both the intent and act are necessary for a valid delivery. Whether such existed is a question of fact to be found by the jury.
Lerner Shops of N.C., Inc. v. Rosenthal, 225 N.C. 316, 320, 34 S.E.2d 206, 208–09 (1945) (citation and internal quotation marks omitted; certain emphasis added). “Accordingly, where evidence is introduced that calls into question the intention of the grantor, an issue of fact exists for resolution by the jury and the entry of a directed verdict on that issue is improper.” Fortner v. Hornbuckle,––– N.C.App. ––––, ––––, 761 S.E.2d 683, 687 (2014) (citation omitted).
In Fortner,this Court summarized the reasoning and holding in Penninger,a case we find instructive regarding the second requirement for delivery:
In Penninger,the decedent, approximately three years prior to his death, executed three deeds conveying property to the defendants. The decedent, without informing the defendants of the existence of these deeds, instructed his attorney to keep possession of them and to deliver the deeds to the defendants after his death.
The plaintiff, the decedent's next of kin and heir at law, filed an action to have the deeds declared and void on the ground that the decedent never at any time prior to his death released control over either of said deeds and said deeds were never, in contemplation of law, delivered to the grantees or to anyone else for the use and benefit of the grantees with the intention at said time that title should pass as the instruments become effective as a conveyance.
The decedent's attorney—who had drafted the deeds and then kept them in his possession at the decedent's direction—testified that had the decedent ever requested that he modify the deeds, “I imagine I would have but I don't know. I did whatever he instructed me to do” and that “I would have done what he wanted with these deeds to comply with his wishes.”
This Court emphasized in Penningerthat the dispositive factor for whether a completed transfer of a deed has occurred is the intention of the grantor at the time of the execution of the deeds. Applying this principle, we held that the testimony by the decedent's attorney would certainly justify a reasonable inference that the grantor retained ultimate control over the deeds until his death. So long as a deed is within the control and subject to the authority of the grantor there is no delivery, without which there can be no deed.
Id.at –––, 761 S.E.2d at 688 (citations, some internal quotation marks, and ellipses omitted; emphasis added). Likewise, in Fortner,this Court affirmed the denial of a motion for directed verdict and submission to the jury of the issue of whether delivery occurred where testimony created an inference that the grantor lacked the intent to fully relinquish control of the deeded properties at issue. Id.at –––, 761 S.E.2d at 689.
Here, at trial, Rebecca York, the Trustee's representative, testified on direct examination that she intended and believed that the signed deeds were still subject to her legal control until they were recorded:
Q In the past when acting as a substitute trustee, have you had the need to correct a trustee's deed after it was signed and in the possession of the lender's attorney but before it was recorded with the Register of Deeds?
A Yes.
Q At the time that you signed [the deeds in this case] ... and left them there [with Plaintiff's counsel], what was your understanding in your mind as to your authority and ability to have the deeds returned to you before they were recorded if you needed them back?
A That I could request that.
Q What was your understanding of when delivery was completed of the deeds to [Plaintiff, the grantee]?
A When [they were] recorded.
This testimony, that the grantor intended to retain control over the deeds until they were recorded, was evidence that the second requirement for delivery was notsatisfied. In addition, Larry Harris, the attorney acting for Plaintiff as grantee, testified that he shared York's understanding, to wit, that she, on behalf of the grantor, retained legal control of the deeds up until the time they were recorded. Harris testified, “It's my understanding that ... the trustee retains control over the deed until the point it's recorded.” Just as in Penninger,then, the party with physical possession of the signed deeds testified that the grantor retained legal control over the deeds until they were recorded.
Because evidence was “introduced that call[ed] into question the intention of the grantor, an issue of fact exist[ed] for resolution by the jury and the entry of a directed verdict on that issue [would have been] improper.” See id.at –––, 761 S.E.2d at 687 (citation omitted). Thus, the trial court did not err in denying Defendants' motions for directed verdict and JNOV. Further, we see no manifest abuse of discretion by the trial court in its denial of Defendants' alternative motion for a new trial. SeeWorthington, 305 N.C. at 482, 290 S.E.2d at 602. Accordingly, the trial court's final judgment and orders are
AFFIRMED.
Judges STEELMAN and GEER concur.
Report per Rule 30(e).
Opinion
Appeal by Defendants from judgment entered 9 December 2013 by Judge Marvin P. Pope in Haywood County Superior Court. Heard in the Court of Appeals 20 November 2014.