In re Foreclosure of Lopez

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. NO. COA13-1015 NORTH CAROLINA COURT OF APPEALS Filed: 18 March 2014 In the Matter of the Foreclosure of a Deed of Trust Executed by Fabio Lopez and Kathleen Englund Lopez, dated November 28, 2007 and recorded in Book 2878 at Page 1574 in the Catawba County Public Registry, North Carolina. Catawba County No. 11 SP 841 Appeal by respondents from order entered 29 April 2013 by Judge Timothy S. Kincaid in Catawba County Superior Court. Heard in the Court of Appeals 21 January 2014. SHAPIRO & INGLE, LLP, by Jason K. Purser, for petitionerappellee. FERIKES & BLEYANT, PLLC, respondents-appellants. by H. Gregory Johnson, for ELMORE, Judge. Fabio Lopez and his wife Kathleen Englund Lopez (respondents) appeal from the trial court s order authorizing U.S. Bank National Association (petitioner or U.S. Bank), as -2substitute trustee, to proceed with foreclosure under a power of sale on the deed of trust recorded in Book 2878 at Page 1574 in the Catawba County Register of Deeds. I. We affirm. Background On 29 November 2007, Fabio Lopez executed an adjustable rate promissory note (the Note) to purchase a second home located at 6977 Golden Bay Court, Sherrils Ford, North Carolina 28673. According to the terms of the Note, Mr. Lopez promised to pay a principal amount of $527,200.00 plus interest to Wells Fargo Bank, National Association (Wells Fargo). secured by a deed of trust, executed by The Note was respondents on 28 November 2007. On or about 1 May 2011, respondents ceased paying on the Note. Wells Fargo sent a forty-five day pre-foreclosure notice to respondents on 24 July 2011. In October 2011, Wells Fargo, through its substitute trustee, filed this foreclosure action after respondents failed to make timely payments. Prior to the initial foreclosure proceeding, Wells Fargo sold the loan and transferred possession of the Note to U.S. Bank. were notified by Rushmore Loan Management Respondents Services LLC (Rushmore) that the servicing of their loan had been assigned, -3sold, or transferred from Marix Servicing LLC to Rushmore and that the new creditor was U.S. Bank effective May 2012. On 13 November 2012, the matter came on for hearing before the Catawba County Clerk of Court. The Clerk entered an order authorizing U.S. Bank, as legal title trustee, to foreclose on the subject property pursuant to N.C. Gen. Stat. § 45-21.16. Respondents appealed. The appeal was originally calendared for a de novo hearing in Catawba County Superior Court on 25 March 2013. Judge Timothy S. Kincaid granted respondents However, motion for continuance and subsequently moved the matter to the 22 April 2013 court session. On 11 April 2013, Mr. Lopez wrote the Catawba County Clerk of Court to request a second continuance on the basis that he had a scheduling conflict. On 19 April 2013, the Friday before the hearing, Mr. Lopez wrote directly to Judge Richard Boner to request a continuance. There is no evidence that Judge Boner received the letter and ruled on Mr. Lopez s motion. Respondents failed to appear at the 22 April hearing. such, there is no transcript of this proceeding. As The record reflects that counsel for U.S. Bank presented the trial court with the subject Note, the deed of trust, the appointment of -4substitute trustee, and the affidavit of default executed by Rose Lara, officer of Rushmore and servicer for U.S. Bank (the Lara affidavit). Judge Kincaid Pursuant to N.C. Gen. Stat. § 45-21.16(d), found: (1) a valid debt, (2) default by respondents, (3) proper notice of the foreclosure proceeding, and (4) U.S. Bank was the holder of the Note. As such, he entered an order permitting foreclosure on 29 April 2013. II. Analysis A. Preservation of Appeal As a preliminary matter we must determine whether we may hear respondents appeal. Rules object of at Appellate trial Rule 10(a)(1) of the North Carolina Procedure in order to generally preserve requires an issue a party for to appeal. N.C.R. App. P. 10(a)(1) (2013). Respondents could not object to the hearing entry there. of evidence at the because they were not Petitioner argues that a dismissal is warranted because respondents failed to preserve any error for appeal. We agree that respondents failed to preserve their right to challenge the entry of specific evidence. exception for an issue However, Rule 10(a)(1) contains an which by rule or law was deemed preserved or taken without any such action, including, but not limited to, whether the judgment is supported by the verdict or -5by the findings of fact and conclusions of law[.] P. 10(a)(1). N.C.R. App. Thus, we are limited to determining whether error appears on the face of the record; we will not re-weigh evidence or address unpreserved issues. B. Note Holder In a foreclosure by power of sale, the trial court shall enter an order permitting foreclosure upon finding: (i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, [and] (iv) notice to those entitled[.] (2013). N.C. Gen. Stat. § 45-21.16(d) Here, respondents challenge the first element of N.C. Gen. Stat. § 45-21.16(d) on the basis that U.S. Bank failed to produce competent evidence that it was the current holder of a valid debt. This issue is a question of law controlled by the UCC [Uniform Commercial Code], as adopted in Chapter 25 of the North Carolina General Statutes. In re Bass, 366 N.C. 464, ___, 738 S.E.2d 173, 176 (2013). We conclude that the trial court did not err. When determining whether a party is the holder of a valid debt, we must find (1) competent evidence of a valid debt, and (2) that the party seeking to foreclose is the current holder of the Note. In re Adams, 204 N.C. App. 318, 321-22, 693 S.E.2d -6705, 709 (2010) respondents (citations concede that a and valid quotations debt omitted). exists, we need discern whether petitioner is the current note holder. holder is defined as [t]he person in As only The term possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. Stat. § 25-1-201(b)(21)(a) (2013). N.C. Gen. The term bearer is defined as a person in control of a negotiable electronic document of title or a person in possession of a negotiable instrument, negotiable tangible document of title, or certificated security that is payable to bearer or indorsed in blank. Stat. § 25-1-201(b)(5) (2013). N.C. Gen. There is a strong presumption in favor of the legitimacy of indorsements to protect the transfer of negotiable instruments by giving force to the information presented on the face of the instrument. Bass, 366 N.C. at ___, 738 S.E.2d at 176. On appeal, the crux of respondents argument is that U.S. Bank failed to supplement the Lara affidavit with documentation adequately proving that it was the legal owner and holder of the Note. Respondents aver that a party must prove that it is both the owner and holder of the promissory note before it has the right to foreclose on a negotiable instrument. Respondents -7ask: Was the note sold or transferred to US [sic] Bank? US Bank as legal title trustee? for what trust? And, if as legal title trustee, Does that trust have the legal capacity to hold this note and deed of trust? Does the legal title trustee have the legal authority to pursue the foreclosure? conclude: Or to Respondents Nothing in the Lara affidavit or attached exhibits address these essential legal questions. Further, respondents challenge the indorsement on the Note, namely because the face of the instrument crossed out or indorsement. shows voided, a blank leaving indorsement that a undated, second, has been blank Respondents contend, [t]hese [i]ndorsements fail to demonstrate when the alleged sale or transfer occurred and to whom the transfer was intended. Finally, respondents aver: There is no evidence in the record that the original note was in fact presented to the trial court at any appeal hearing. We briefly address each of these concerns in turn. First, there is no statutory requirement that the note holder must also demonstrate disregard that any he is argument the note owner. pertaining to Accordingly, whether U.S. we Bank purchased the Note or owns it as such argument is irrelevant to this issue. Second, this Court is not charged with answering rhetorical questions unnecessarily. We note that Rule 10(a)(1) -8prohibits respondents from challenging the sufficiency of the Lara affidavit because the issue was not preserved by objection at the hearing. See N.C. App. P. Rule 10(a)(1) (2013). Third, respondents cite no authority to support their position that the indorsement in blank that is not marked through is a nullity because a voided indorsement in blank also appears on the face of the instrument. Although respondents could have raised this issue at the hearing, they did not. order permitting foreclosure Finally, the 29 April 2013 explicitly states that various documents were provided including the subject Promissory Note[] [and] the Deed of Trust[.] Thus, respondents argument that the trial court was never presented with the Note is without merit. C. Review of the Record Generally, whenever this Court has held that possession of the original promissory note is insufficient to show that the person in possession is the holder, the note was either (1) not drawn, issued, or indorsed to the party, to bearer, or in blank, or (2) the trial court neglected to make a finding in its order as hearing. to which party had possession of the note at the See e.g. In re David A. Simpson, P.C., 211 N.C. App. -9483, 485, 711 S.E.2d 165, 168 (2011). Neither situation applies in the present case. Here, respondents concede that the Note was endorsed in blank. Further, given that U.S. Bank was the only party who made an appearance at the hearing, and because the trial judge received the Note into evidence, an inference can be made that U.S. Bank was in possession of the Note, making it the bearer. Thus, U.S. Bank satisfied the definition of holder. See N.C. Gen. Stat. § 25-1-201(b)(21)(a). Additionally, U.S. Bank offered evidence that it was the Note holder through the Lara affidavit. exercise its sound discretion in The trial court may receiving documents into evidence, and appellate review is limited to a determination of whether there was a clear abuse of discretion. S.E.2d at 170. knowledge: Id. at 488, 711 Ms. Lara testified that based on her personal The Note bears an [i]ndorsement from Wells Fargo to blank[;] Wells Fargo sold the Loan and transferred possession of the Note to U.S. Bank[;] and U.S. Bank has remained in possession of the Note. Upon review, we see no reason to find that the trial court abused its discretion in admitting the Lara affidavit. II. Conclusion -10We are satisfied that the record contains competent evidence to support the trial court s conclusion that U.S. Bank was the current holder of a valid debt. court did not err in ordering U.S. Accordingly, the trial Bank to proceed with foreclosure pursuant to N.C. Gen. Stat. § 45-21.16(d) (2013). We affirm. Affirmed. Judges McGEE and HUNTER, Robert C., concur. Report per Rule 30(e).

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