Lawyers Title Ins. Corp. v. Zogreo, LLC

Decision Date16 November 2010
Docket NumberNo. COA09-1304.,COA09-1304.
Citation702 S.E.2d 222
PartiesLAWYERS TITLE INSURANCE CORPORATION, Commonwealth Land Title Insurance Company, Clark's Creek Associates, L.L.C., and Branch Bank and Trust Company, Plaintiffs, v. ZOGREO, LLC, Forest at Swift Creek, LLC, C.C. Mangum Company, L.L.C., and Donnie Harrison, in his official capacity as Sheriff of Wake County, Defendants.
CourtNorth Carolina Court of Appeals
702 S.E.2d 222

LAWYERS TITLE INSURANCE CORPORATION, Commonwealth Land Title Insurance Company, Clark's Creek Associates, L.L.C., and Branch Bank and Trust Company, Plaintiffs,
v.
ZOGREO, LLC, Forest at Swift Creek, LLC, C.C. Mangum Company, L.L.C., and Donnie Harrison, in his official capacity as Sheriff of Wake County, Defendants.1


No. COA09-1304.

Court of Appeals of North Carolina.

Nov. 16, 2010.

702 S.E.2d 224

Appeal by Defendants 2 from judgment entered 8 June 2009 by Judge Robert H. Hobgood in Wake County Superior Court. Heard in the Court of Appeals 12 May 2010.

Moore & Van Allen PLLC, Morrisville, by David E. Fox and Michael J. Byrne, for Plaintiffs Lawyers Title Insurance Corporation, Commonwealth Land Title Insurance Company, and Branch Bank and Trust Company.

No brief for Plaintiff Clark's Creek Associates, L.L.C.

Lewis & Roberts, PLLC, Raleigh, by James A. Roberts, III, Matthew C. Bouchard, and Brooke N. Albert, for Defendants Zogreo, LLC and Forest at Swift Creek, LLC.

Brent E. Wood, Cary, and Nicholls & Crampton, P.A., by W. Sidney Aldridge, Raleigh, for Defendant C.C. Mangum Company, L.L.C.
702 S.E.2d 225
Erwin and Eleazer, P.A., Charlotte, by L. Holmes Eleazer, Jr. and Fenton T. Erwin, Jr., for American Subcontractors Association of America, Amicus Curiae.

STEPHENS, Judge.

I. Pertinent Procedural History of Current Lawsuit

On 8 December 2008, in Wake County Superior Court, Lawyers Title Insurance Corporation ("Lawyers Title"), Commonwealth Land Title Insurance Company ("Commonwealth"), Clark's Creek Associates, L.L.C. ("Clark's Creek"), and Branch Bank and Trust Company ("BB & T") (collectively, "Plaintiffs"), filed a complaint for declaratory judgment and motions for a temporary restraining order, preliminary injunction, and permanent injunction against Zogreo, LLC ("Zogreo"), Forest at Swift Creek ("Forest"), and C.C. Mangum Company, L.L.C. ("Mangum") (collectively, "Defendants"), as well as Donnie Harrison in his official capacity as Sheriff of Wake County. Plaintiffs sought judgment declaring their security interests in property located in Garner, North Carolina ("Property") to have priority over materialmen's liens perfected by Bunn Construction Company, Inc. ("Bunn") 3 and Mangum, and sought to prevent the sale of the Property by execution sale.

On 19 December 2008, the trial court entered a temporary restraining order preventing Defendants and Sheriff Harrison from pursuing an execution sale of the Property. Plaintiffs filed an amended complaint on 6 January 2009. The parties served cross-motions for summary disposition on 18 March 2009. Specifically, Plaintiffs filed a motion for partial summary judgment; Zogreo and Forest filed a Rule 12(b)(6) motion to dismiss, and in the alternative, a Rule 56 motion for summary judgment; and Mangum filed motions for judgment on the pleadings and for summary judgment. While the parties' cross-motions were pending, Plaintiffs filed a motion to supplement their motion for partial summary judgment to add an argument based on the doctrine of instantaneous seisin.

The parties' motions came on for hearing on 17 April 2009. On 8 June 2009, the trial court entered an Order and Partial Summary Judgment granting Plaintiffs' motion for partial summary judgment and denying Defendants' motions. The trial court concluded, inter alia, that "Defendants' liens and judgments are invalid as to these Plaintiffs[.]" The trial court did not consider the doctrine of instantaneous seisin in its ruling. The trial court's order further provides that "there is no just reason for delay" and that "this matter is Certified for Immediate Appeal pursuant to N.C. Gen.Stat. § 1A-1, Rule 54(b)[.]" 4

From the trial court's order, Defendants appeal. Plaintiffs cross-assign error to the trial court's implicit denial of their motion to add an argument based on the doctrine of instantaneous seisin.

II. Factual Background and Prior Litigation

The Property, the site of a residential development project referred to as Parkland Grove ("Project"), is divided into three tracts ("Tract 1," "Tract 2," and "Tract 3") and is encumbered by various security interests held by the parties. Specifically, the entire Property is subject to two claims of lien: one filed by Mangum on or about 5 October 2006, and one filed by Bunn on or about 18 December 2006. Additionally, portions of the Property are subject to deeds of trust: one held by BB & T recorded 22 February 2005 ("BB & T DOT"), and the other originally held by Cardinal State Bank ("Cardinal") recorded 29 April 2005 ("Cardinal DOT"). The Cardinal DOT was transferred to Clark's Creek. When BB & T and Cardinal obtained the deeds of trust, each obtained a lender's title

702 S.E.2d 226
insurance policy. Lawyer's Title issued a policy insuring BB & T and Commonwealth issued a policy insuring Cardinal. As Cardinal's assignee, Clark's Creek is insured under the Cardinal policy.

On 8 April 2004, Old Stage Partners, LLC ("Old Stage"), which owned Tract 1 at the time, entered into a contract with Bunn for clearing, grading, and erosion control services for $268,540. On 19 April 2004, Old Stage entered into another contract with Bunn for sewer main, water main, storm drain, and roadway construction services. After performing some clearing and rough grading, Bunn ceased work on or around 16 June 2004 for non-payment. On 14 October 2004, Bunn filed a claim of lien on Tract 1 in the principal amount of $180,495.24 for "clearing and grading of property[.]" In this claim of lien, Bunn asserted that the date upon which labor or materials were first furnished to the Property ("date of first furnishing") was 5 April 2004 and the date upon which labor or materials were last furnished ("date of final furnishing") to the Property was 16 June 2004.

On 8 December 2004, Bunn filed suit against Old Stage to enforce the claim of lien. In its complaint, Bunn alleged that it had entered into " 'the Grading Contract' " with Old Stage under which Bunn was to perform "grading construction services" for a total price of $268,540. The complaint additionally alleged that Bunn had performed approximately $199,235 worth of grading and erosion services, that Bunn had ceased working on 16 June 2004, and that Old Stage owed Bunn the principal amount of $180,495.84 for labor and materials supplied to the Property.

On 12 January 2005, Old Stage entered into a third contract with Bunn for silt basin/erosion control services for $27,555. This contract was paid in full in cash when the contract was signed.

On 22 February 2005, Trinity Builders, LLC ("Trinity") purchased a controlling interest in Old Stage, and Old Stage conveyed Tract 1 to Trinity. Also on that date, BB & T loaned $975,000 to Trinity and Trinity executed a promissory note in favor of BB & T. BB & T recorded its deed of trust in Tract 1 as security for Trinity's promissory note, and Lawyer's Title issued a lender's policy insuring BB & T. A portion of the proceeds from the BB & T loan were used to pay the debt on which Bunn's claim of lien was based. As a result, Bunn cancelled its claim of lien on 28 February 2005 and dismissed with prejudice its action to enforce the lien on 10 March 2005.

On 25 April 2005, Bunn submitted a contract proposal to Trinity through Avery Bordeaux, who managed the Project for the various owners of the Property. The proposal was for sewer main, water main, storm drain, roadway, construction road, pump station, and force main construction services for $1,813,631. On 29 April 2005, Trinity borrowed $700,000 from Cardinal to purchase Tracts 2 and 3 from Nantex Corporation, thereby completing the aggregation of the tracts referred to in this case as the Property. As part of the transaction, Trinity gave Cardinal a deed of trust on Tracts 2 and 3. Both the deed from Nantex to Trinity and the Cardinal DOT were recorded simultaneously on 29 April 2005.

On 25 May 2005, Avery Bordeaux, acting as Trinity's agent, signed Bunn's 25 April 2005 proposal. The contract, drafted by Bunn, states: "This proposal—contract replaces any others discussed or written in the past[.]"

On 16 September 2005, Mangum and Bunn entered into a written contract whereby Mangum would "furnish all materials and labor and perform all the work required for ... Parkland Grove[.]" The total contract price was $1,086,545.80.

Bunn and Mangum ceased work on the Property on 29 September 2006 due to non-payment for their services. On 15 October 2006, Mangum filed a claim of lien on all three tracts. The claim of lien asserted a principal amount of $389,438.41, and listed a date of first furnishing of 15 May 2006 and a date of final furnishing of 22 September 2006. On 18 December 2006, Bunn filed a claim of lien on all three tracts. This claim of lien asserted a principal amount of $895,483.86, listed a date of first furnishing of 5 May 2004, and listed a date of final furnishing of 29 September 2006.

702 S.E.2d 227

On 12 February 2007, Bunn filed suit against Trinity and Old Stage to enforce Bunn's claim of lien. In its complaint, Bunn alleged that "[i]n or about 2005," Bunn entered into a contract "to perform grading construction services." Bunn further alleged that it had "performed approximately $1,123,869.70 worth of grading and erosion services" and was "owed the principal amount of $895,483.86 for labor and materials supplied to the Property." On 2 January 2007, Mangum filed suit against Bunn and Trinity to enforce its claim of lien.

Bunn and Mangum filed motions for summary judgment, which were unopposed by Trinity. On 24 March 2008, the trial court, the Honorable Henry W. Hight, Jr. presiding, granted summary judgment in favor of Mangum ("Mangum Judgment"). The Mangum Judgment declares a lien on the Property, relates the lien back to 5 May 2004 by right of subrogation to Bunn's lien, and orders the sale of the Property to satisfy the judgment. On 29 April 2008, the trial court, the Honorable Orlando F. Hudson, Jr. presiding, granted summary...

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