In re George
| Decision Date | 06 September 2022 |
| Docket Number | COA22-33 |
| Citation | 878 S.E.2d 836 |
| Parties | In the MATTER OF the Proposed Foreclosure of a Claim of Lien filed on Calmore GEORGE and Hygiena Jennifer George by The Crossings Community Association, Inc. dated August 22, 2016, recorded in Docket No. 16-M-6465 in the Office of the Clerk of Court of Superior Court for Mecklenburg County Registry by Sellers, Ayers, Dortch & Lyons, P.A. Trustee. |
| Court | North Carolina Court of Appeals |
Thurman, Wilson, Boutwell & Galvin, P.A., by James P. Galvin, for Petitioners-Appellants Calmore and Hygiena George.
Sellers, Ayers, Dortch, & Lyons, P.A., by Michelle Massingale Dressler, Charlotte, for Respondent-Appellee/Cross-Appellee The Crossings Community Association.
James, McElroy & Diehl, P.A., Charlotte, by Preston O. Odom, III, for Intervenor-Appellee/Cross-Appellant KPC Holdings.
DeVore, Acton & Stafford, P.A., Charlotte, by Derek P. Adler, for Intervenor-Appellee/Cross-Appellant National Indemnity Group.
¶ 1 Petitioners Calmore George and Hygiena Jennifer George appeal from an order denying their request for restitution and attorneys’ fees. The Georges assert that the trial court erred in finding that they did not qualify for recovery of attorneys’ fees under N.C. Gen. Stat. § 47F-3-116, and further argue that the trial court abused its discretion in failing to award restitution under N.C. Gen. Stat. § 1-108. Intervenor KPC Holdings has filed a cross-appeal asserting that the trial court abused its discretion in failing to award restitution for the cost of the invalidated foreclosure sale. We reverse the decision of the trial court which withheld attorneys’ fees and restitution from the Georges. As to the cross-appeal, we affirm the trial court's decision not to award restitution to KPC.
¶ 2 This case is an appeal following remand of In re George , 377 N.C. 129, 2021-NCSC-35, 856 S.E.2d 483. A full statement of the facts from this case can be found in the prior appeal; however, "we limit our discussion in this opinion to the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson , 255 N.C. App. 347, 348, 804 S.E.2d 599, 601 (2017).
¶ 3 The Georges owned a home in Charlotte located in the Crossings Community subdivision. On 22 August 2016, the Crossings Community Association, Inc. (the "Association"), filed a claim of lien in the amount of $204.75 against the Georges’ property—the amount of unpaid homeowner's association fees.
¶ 4 On 11 October 2016, a notice of hearing was filed which stated that the Association intended to foreclose on the property to collect the unpaid fees. On 12 October 2016, Deputy Sheriff Shakita Barnes of the Mecklenburg County Sheriff's Office mistakenly served personal notice of foreclosure upon the Georges’ daughter, Jeanine George.
¶ 5 The nonjudicial foreclosure sale was subsequently initiated, and on 12 January 2017, KPC purchased the property at auction for $2,650.22. On 21 March 2017, KPC conveyed the property to National Indemnity Group, with the sale secured by a promissory note and deed of trust in the amount of $150,000.
¶ 6 On 18 April 2017, the Georges filed a motion to set aside the foreclosure sale and the subsequent transactions pursuant to N.C. R. Civ. P. 60(c), claiming that notice had not been properly served. On 17 July 2017, National Indemnity was introduced as an intervening party by the trial court.
¶ 7 On 9 August 2017, the trial court entered an order concluding that the Georges had not been properly served with notice of foreclosure and invalidating the foreclosure sale and the subsequent conveyances for lack of personal jurisdiction.
¶ 8 On 3 November 2017, KPC and National Indemnity filed a motion for relief from judgment pursuant to N.C. R. Civ. P. 60(b)(6), requesting that the trial court vacate the previous order on the grounds that they were good faith purchasers for value and that the Georges had received constitutionally sufficient service. On 15 March 2018, the trial court entered an order concluding that neither KPC nor National Indemnity qualified as a good faith purchaser for value for purposes of N.C. Gen. Stat. § 1-108 and denying their motion for relief.
¶ 9 On appeal, the Supreme Court of North Carolina determined that "the trial court did not abuse its discretion in determining that KPC Holdings and National Indemnity were not entitled to good faith purchaser for value status." In re George , 2021-NCSC-35, ¶ 29, 856 S.E.2d 483. The trial court "had a rational basis for concluding that KPC Holdings paid a grossly inadequate price to purchase the property from the trustee and ... had ample reason to question the sufficiency of the notice of the pendency of the foreclosure proceeding." Id. ¶ 32. Further, the Court affirmed the trial court's determination that "proper service of process had not been effectuated." Id. "[G]iven [the trial court's] decision to invalidate the results of the foreclosure proceeding and the resulting property transfers[,]" this case was subsequently remanded "for consideration of the issue of whether an award of restitution as authorized by [ N.C. Gen. Stat. § 1-108 ] would be appropriate." Id.
¶ 10 The Georges seek to recover restitution after their home had been partially demolished while in the possession of Respondent and Intervenors. During the time that the Georges were excluded from the property, demolition work had begun on the home and "all the appliances" and "every bit of flooring" had been removed. The Georges also request restitution for other expenses, including an outstanding property tax liability of $11,931.55, alternative living expenses incurred while displaced from the home, and lost rental income. The Georges further seek to recover attorneys’ fees related to the Rule 60(c) motion which set aside the foreclosure. On cross-appeal, KPC seeks to recover the $2,650.22 payment made to the Association to purchase the home at auction.
¶ 11 On 20 August 2021, the trial court entered an order denying all motions for attorneys’ fees and restitution. The Georges and KPC each timely filed notice of appeal from the order.
¶ 12 We first consider whether the trial court erred in failing to award any attorneys’ fees to the Georges under N.C. Gen. Stat. § 47F-3-116. The Georges assert that they are entitled to an award of reasonable attorneys’ fees because they are the "prevailing party" in a "civil action relating to the collection of assessments." We agree.
¶ 13 The North Carolina Planned Community Act ("PCA") provides in part that "[a]ny judgment, decree, or order in any judicial foreclosure or civil action relating to the collection of assessments shall include an award of costs and reasonable attorneys’ fees for the prevailing party[.]" N.C. Gen. Stat. § 47F-3-116(g) (2021) (emphasis added). "We review a trial court's decision whether to award mandatory attorney's fees de novo. " Willow Bend Homeowners Ass'n, Inc. v. Robinson , 192 N.C. App. 405, 418, 665 S.E.2d 570, 573 (2008).
¶ 14 "[T]he action created by N.C.G.S. § 47F-3-116 is one in which a homeowners’ association forecloses on a lien created under N.C.G.S. § 47F-3-116(a) for unpaid assessments." Id. Prior to 2013, N.C. Gen. Stat. § 47F-3-116(e) required an award of attorneys’ fees for "[a] judgment, decree, or order in any action brought under this section." N.C. Gen. Stat. § 47F-3-116(e) (2011). In 2013, the statute was amended with broader and more inclusive language, now requiring an award of attorneys’ fees in "any judgment, decree or order in any judicial foreclosure or civil action relating to the collection of assessments. " N.C. Gen. Stat. § 47F-3-116(g) (2013) (emphasis added).
¶ 15 Here, in order for the Georges to recover under N.C. Gen. Stat. § 47F-3-116(g), they must establish: (1) that they were the prevailing party, and (2) that they prevailed in a civil action relating to the collection of assessments. Id.
¶ 16 The Georges have successfully challenged the order permitting foreclosure of the home. In granting the Georges’ Rule 60 motion, the trial court set aside the foreclosure sale and the subsequent transfers of the deed for lack of proper service, thereby granting the relief sought by the Georges. In re George , 2021-NCSC-35, ¶ 32, 856 S.E.2d 483 (). Accordingly, we hold that the Georges are a "prevailing party" under N.C. Gen. Stat. § 47F-3-116(g). We are confident that such a result fits within the broad reach of "prevailing" in "any judgement, decree, or order." N.C. Gen. Stat. § 47F-3-116(g) (emphasis added). Respondent's contention that the Georges must "prevail" in the underlying foreclosure action is an impermissibly narrow reading of the statute.
¶ 17 Further, it is clear to this Court that the Georges prevailed in a "civil action relating to the collection of assessments." Id. "The action created by [N.C. Gen. Stat. §] 47F-3-116 is one in which a homeowners’ association forecloses on a lien ... for unpaid assessments," and the Rule 60 motion was necessary for the Georges to recover where the Association had foreclosed upon the home to collect the unpaid dues. See Willow Bend , 192 N.C. App. at 418, 665 S.E.2d at 578.
¶ 18 The broad nature of the statute's language convinces this Court that the Rule 60 motion is included within the meaning of "any ... civil action relating to the collection of assessments." Denying recovery to the Georges here would run counter to the expansive protections afforded by this statute to homeowners, who in this case would be otherwise burdened with the cost of the Association's failure to notify. As such, the trial court erred in failing to award reasonable attorneys’ fees as mandated by N.C. Gen. Stat. § 47F-3-116.
¶ 19 We now consider whether the trial court...
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