Oakwood Acceptance Corp., LLC v. Massengill

• Decision Date: 20 January 2004
• Docket Number: No. COA02-706, No. COA02-1430.
• Citation: 162 NC App. 199,590 S.E.2d 412
• Parties: OAKWOOD ACCEPTANCE CORPORATION, LLC, Plaintiff, v. Dalton Ray MASSENGILL; Phyllis Tart Massengill; David Womack, Tax Collector for Johnston County, North Carolina; Johnston County, North Carolina, Rainbow Investments, L.L.C.; North Carolina Department of Transportation; North Carolina Division of Motor Vehicles, Defendants.
• Court: North Carolina Court of Appeals

590 S.E.2d 412

162 NC App. 199

OAKWOOD ACCEPTANCE CORPORATION, LLC, Plaintiff, v. Dalton Ray MASSENGILL; Phyllis Tart Massengill; David Womack, Tax Collector for Johnston County, North Carolina; Johnston County, North Carolina, Rainbow Investments, L.L.C.; North Carolina Department of Transportation; North Carolina Division of Motor Vehicles, Defendants.

Nos. COA02-706, COA02-1430.

Court of Appeals of North Carolina.

January 20, 2004.

Frederic E. Toms & Associates, P.L.L.C., by David A. Bridgman, Cary, for plaintiff.

Holland & O'Connor, P.L.L.C., by W.A. Holland, Jr., Smithfield, for defendant Rainbow Investments, L.L.C.

Attorney General Roy Cooper, by Assistant Attorney General Jeffrey R. Edwards, for defendants North Carolina Department of Transportation and North Carolina Division of Motor Vehicles.

J. Mark Payne, Raleigh, for defendants Johnston County and David Womack.

GEER, Judge.

This decision addresses two appeals arising from the same lawsuit challenging the tax sale of a mobile home in which plaintiff Oakwood Acceptance Corporation, LLC held a perfected security interest. Defendant Rainbow Investments, L.L.C., the purchaser of the mobile home at the tax sale, appeals from (1) the trial court's grant of partial summary judgment to Oakwood invalidating the sale and awarding Oakwood possession of the mobile home; and (2) the trial court's dismissal of Oakwood's claims against the North Carolina Department of Transportation and the Division of Motor Vehicles (collectively "the DMV"). Plaintiff Oakwood appeals from the trial court's dismissal of its claims against Johnston County and David Womack. Case No. COA02-706, plaintiff Oakwood's appeal, and Case No. COA02-1430, defendant Rainbow's appeal, were previously consolidated for hearing. They are now consolidated for decision.

We hold that the trial court properly found no genuine issues of material fact regarding the invalidity of the sale and, therefore, affirm the grant of partial summary judgment to Oakwood. As for the dismissal of the DMV, Rainbow does not have standing to appeal since it was not an aggrieved party with respect to that portion of the trial court's order. We also hold that the trial court properly dismissed the claims against Johnston County and Womack because Oakwood failed to allege a waiver of state law governmental immunity and failed to allege a basis for municipal liability under 42 U.S.C. § 1983.

Facts

On 12 November 1998, defendants Dalton Ray Massengill and Phyllis Tart Massengill purchased an Oakwood double-wide mobile home priced at $71,789.00. The Massengills financed the purchase with Oakwood for the principal sum of $76,766.22 plus interest and other charges. Oakwood perfected its security interest in the mobile home by filing with the DMV. When the Massengills defaulted on their payments, Oakwood accelerated their debt and repossessed the mobile home in September 2000 by changing the locks and posting notices.

Later in September, the Johnston County Tax Collector's Office levied upon and seized the Massengills' mobile home for non-payment of taxes due on the mobile home. Following the levy, the Johnston County Tax Collector's Office forwarded notice of the intended tax sale to the DMV, which in a letter dated 27 September 2000 acknowledged receipt of the notice and stated: "A reasonable attempt has been made to locate and notify the current owner and all recorded lienholders for all sales conducted under G.S. 44-A. Full disclosure of all liens is not guaranteed."

On 27 September 2000, the Johnston County Tax Collector's Office posted a notice of sale at the Johnston County Courthouse announcing that the sale of the Massengills' mobile home would take place on 18 October 2000 "at 11:00 at Storage Location." The notice provided no further information about the location of the sale.

Although Johnston County had valued and insured the mobile home at $50,000.00, Rainbow purchased it at the sale for only $5,000.00. Following payment to the County of the taxes and costs, less than $500.00 remained to satisfy the Massengills' debt to Oakwood.

In October 2001, Oakwood filed a complaint in Johnston County Superior Court asserting claims for (1) breach of contract against the Massengills; (2) declaratory judgment voiding the sale of the mobile home; (3) damages for negligence and under 42 U.S.C. § 1983 against "Tax Collector and Johnston County"; (4) possession against Rainbow; (5) unjust enrichment against Rainbow; (6) injunctive relief barring transfer by Rainbow of any interest in the mobile home; and (7) declaratory judgment that the "Tax Collector" and the DMV were required to provide actual notice to plaintiff that the mobile home had been seized for taxes owed. Defendants Johnston County and Womack filed a motion to dismiss under Rule 12(b)(6) and on 14 March 2002, Judge Knox V. Jenkins granted that motion. The order of dismissal specified that it was "final" as to the County and Womack and that "there is no just cause for delay of any appeal." On 4 April 2002, Oakwood appealed that order.

The remaining parties filed cross-motions for summary judgment with the DMV alternatively filing a motion to dismiss pursuant to Rules 12(b)(6), 12(c), and 12(h)(2). On 22 May 2002, Judge James R. Vosburgh granted Oakwood partial summary judgment as to defendant Rainbow, awarded plaintiff immediate possession of the mobile home, ordered the DMV to void the certificate of title issued to Rainbow and to reissue the title as it existed before the sale, dismissed all claims against the DMV, and awarded plaintiff $78,912.67 (less the net proceeds of any sale of the mobile home) as against the Massengills. The order stated: "This is a final and appealable order, and there is no just cause for delay." Rainbow appealed, contesting both the dismissal of the DMV and the partial summary judgment granted to Oakwood. Although Oakwood did not cross-appeal, it cross-assigned error as to the dismissal of the DMV.

Rainbow's Appeal

We address first Rainbow's appeal because it involves the primary question presented by this case: Whether the tax sale of the Massengills' mobile home was valid. As an initial matter, we note that Rainbow's appeal is interlocutory since the trial court only granted partial summary judgment to Oakwood. Because, however, the trial court appropriately certified the order under Rule 54 of the Rules of Civil Procedure, the appeal is properly before this Court. Liggett Group v. Sunas, 113 N.C.App. 19, 23, 437 S.E.2d 674, 677 (1993).

I. The Grant of Partial Summary Judgment to Oakwood

Rainbow contends that genuine issues of material fact exist precluding the grant of partial summary judgment to Oakwood. Specifically, Rainbow argues that there are issues of fact regarding whether an irregularity occurred in connection with the tax sale and whether Rainbow was a good faith purchaser for value.

On review of a grant of summary judgment, this Court must review the whole record to determine (1) whether the pleadings, the discovery on file, and any affidavits show that there is no genuine issue as to any material fact; and (2) whether the moving party is entitled to judgment as a matter of law. Von Viczay v. Thoms, 140 N.C.App. 737, 738, 538 S.E.2d 629, 630 (2000), aff'd per curiam, 353 N.C. 445, 545 S.E.2d 210 (2001)

. As stated by this Court:

A genuine issue of material fact is of such a nature as to affect the outcome of the action. The moving party bears the burden of establishing the lack of a triable issue of fact. The motion must be denied where the non-moving party shows an actual dispute as to one or more material issues.

Johnson v. Trustees of Durham Tech. Cmty. Coll., 139 N.C.App. 676, 681, 535 S.E.2d 357, 361, app. dismissed and disc. review denied, 353 N.C. 265, 546 S.E.2d 102 (2000) (citations omitted). The non-movant may not "rest upon the allegations of its pleading to create an issue of fact, even though the evidence must be interpreted in a light favorable to the nonmovant." Smiley's Plumbing Co., Inc. v. PFP One, Inc., 155 N.C.App. 754, 761, 575 S.E.2d 66, 70, disc. review denied, 357 N.C. 166, 580 S.E.2d 698 (2003).

Johnston County and its Tax Collector acted pursuant to N.C. Gen.Stat. §§ 105-366 and 105-367 (2003) in levying upon and seizing the Massengills' mobile home. N.C. Gen. Stat. § 105-366 permits a taxing authority collecting unpaid taxes to proceed first against personal property, while § 105-367(a) provides: "The levy upon the sale of tangible personal property for tax collection purposes (including levy and sale fees) shall be governed by the laws regulating levy and sale under execution except as otherwise provided in this section."

In execution sales, a sale of personal property may take place "at any place in [the] county designated ... in the notice of sale." N.C. Gen.Stat. § 1-339.44(c) (2003). Further, under N.C. Gen.Stat. § 1-339.51 (2003), "[t]he notice of sale shall ... (2)[d]esignate the date, hour and place of sale...." By virtue of N.C. Gen.Stat. § 105-367(a), these requirements apply equally to the sale of personal property for non-payment of taxes.

Oakwood first challenges the validity of the sale on the grounds that the failure to provide it with actual notice violated the due process requirements of the federal and state constitutions, citing Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798, 103 S.Ct. 2706, 2711, 77 L.Ed.2d 180, 187 (1983) (citations omitted) ("Since a mortgagee clearly has a legally protected property interest, he is entitled to notice reasonably calculated to apprise him of a pending tax sale. When the mortgagee is identified in a mortgage that is publicly recorded, constructive notice by publication must be supplemented by notice mailed to the mortgagee's last known available address, or by personal service. But unless the mortgagee is not reasonably identifiable, constructive notice alone does not satisfy the mandate of Mullane [v. Central...