Title: United Community Bank (Georgia) v. Wolfe

State: north-carolina

Issuer: North Carolina Supreme Court

Document:

IN THE SUPREME COURT OF NORTH CAROLINA 
No. 289PA15   
Filed 5 May 2017 
UNITED COMMUNITY BANK (GEORGIA) 
 
 
v. 
THOMAS L. WOLFE and BARBARA J. WOLFE, Trustees of THE THOMAS L. 
WOLFE AND BARBARA J. WOLFE IRREVOCABLE TRUST, THOMAS L. 
WOLFE, Individually, and BARBARA J. WOLFE, Individually 
 
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision 
of the Court of Appeals, ___ N.C. App. ___, 775 S.E.2d 677 (2015), reversing an order 
on summary judgment entered on 30 June 2014 by Judge Marvin P. Pope, Jr. in 
Superior Court, Transylvania County, and remanding for further proceedings.  Heard 
in the Supreme Court on 20 March 2017. 
Van Winkle, Buck, Wall, Starnes & Davis, P.A., by Robert A. Mays, Mark A. 
Pinkston, and Esther E. Manheimer, for plaintiff-appellant.  
 
Donald H. Barton, P.C., by Donald H. Barton; and Matthew J. Barton for 
defendant-appellees. 
 
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Clint S. Morse and 
Robert A. Singer, for North Carolina Bankers Association, amicus curiae. 
 
NEWBY, Justice. 
 
North Carolina’s anti-deficiency statute, N.C.G.S. § 45-21.36, affords 
protection to a borrower following a nonjudicial power-of-sale foreclosure by 
accounting for the “true value” of the foreclosed property, thereby potentially 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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reducing the borrower’s remaining indebtedness.  To assert this statutory protection, 
however, the borrower must allege and show that the creditor’s successful foreclosure 
bid was substantially less than the property’s “true value” by presenting substantial 
competent evidence of such value.  The borrower’s own unsupported opinion, standing 
alone, is insufficient.  Because defendants here failed to forecast substantial 
competent evidence sufficient to create a genuine issue of material fact as to the 
foreclosed property’s “true value,” we reverse the decision of the Court of Appeals and 
reinstate the trial court’s order granting summary judgment in favor of plaintiff. 
In August 2008, shortly before the collapse of the real estate market, plaintiff 
United Community Bank (Georgia) loaned defendants $350,000 to purchase certain 
real property situated in Transylvania County, North Carolina.  The loan was secured 
by a deed of trust.1  Sometime later defendants defaulted.  Ultimately, in August 
2013, the Bank foreclosed by nonjudicial power of sale under the deed of trust.  At the 
sale the Bank bought the property for $275,000 as the highest and only bidder.  The 
Bank had based its bid on an independent appraisal of the property dated March 
2013, which valued the property at $275,000.  The net proceeds realized from the 
foreclosure sale ($275,000 minus expenses) failed to satisfy the outstanding debt, 
resulting in a deficiency of over $50,000.  The Bank then listed the property for sale 
                                            
1 The “credit agreement” indicates that defendants Thomas L. Wolfe and Barbara J. 
Wolfe borrowed the money acting both individually and as trustees of the “Thomas L. Wolfe 
and Barbara J. Wolfe Irrevocable Trust under the provisions of a Trust Agreement dated 
June 29, 2004.” 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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at $279,000.  After receiving no suitable market response, the Bank lowered the 
asking price to $244,500 in October 2013, before eventually selling the property in 
December 2013 for $205,000.   
The Bank filed the instant action in Superior Court, Transylvania County, to 
collect the deficiency plus interest, attorneys’ fees, and costs.  In their answer 
defendants denied plaintiff’s allegations and asserted the protection of the anti-
deficiency statute.  The Bank moved for summary judgment and, relying primarily 
on the appraisal and resale price of the property, maintained that the price it paid for 
the property at foreclosure was reasonable.  Defendants’ affidavit in opposition 
stated: 
[A]ffiants verily believes [sic] that the residence and real 
property sold that is the subject of this Complaint was at 
the time of its sale fairly worth the amount of the debt it 
secured and affiants believe the amount bid for the 
property was substantially less than its fair market value 
at the time of the sale. 
While the affidavit tracks the statutory language and asserts defendants’ opinion 
that the property was “fairly worth the amount of the debt,” the affidavit does not 
assign a specific dollar value to the property or specify any supporting evidence.  
Following a hearing, the trial court granted summary judgment in favor of the Bank 
and awarded $57,737.74 for the deficiency and accrued interest, plus attorneys’ fees 
and costs.  Defendants appealed.  
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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The Court of Appeals reversed, concluding that defendants’ affidavit created 
a genuine issue of material fact as to the “true value” of the foreclosed property under 
section 45-21.36.  United Cmty. Bank (Ga.) v. Wolfe, ___ N.C. App. ___, ___, 775 S.E.2d 
677, 680 (2015).  Because defendants personally knew the loan balance at the time of 
the foreclosure sale, and their affidavit, as the property owners, stated that the 
foreclosed property was “fairly worth the amount of the debt,” the Court of Appeals 
reasoned that defendants were not only competent to testify but that their 
unsupported opinion created a genuine issue of material fact.  Id. at ___, 775 S.E.2d 
at 680 (citing Dep’t of Transp. v. M.M. Fowler, Inc., 361 N.C. 1, 6, 637 S.E.2d 885, 890 
(2006); N.C. State Highway Comm’n v. Helderman, 285 N.C. 645, 652, 207 S.E.2d 
720, 725 (1974)).  The Court of Appeals reversed the trial court’s grant of summary 
judgment for the Bank and remanded for trial.  Id. at ___, 775 S.E.2d at 681.  This 
Court allowed discretionary review.   
Summary judgment is appropriate when “the pleadings, depositions, answers 
to interrogatories, and admissions on file, together with the affidavits, if any, show 
that there is no genuine issue as to any material fact and that any party is entitled 
to a judgment as a matter of law.”  N.C.G.S. § 1A-1, Rule 56(c) (2015).  Supporting 
affidavits and affidavits in opposition to summary judgment  
shall be made on personal knowledge, shall set forth such 
facts as would be admissible in evidence, and shall show 
affirmatively that the affiant is competent to testify to the 
matters stated therein. . . .  [A]n adverse party may not rest 
upon the mere allegations or denials of his pleading, but 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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his response, by affidavits or as otherwise provided in this 
rule, must set forth specific facts showing that there is a 
genuine issue for trial.  If he does not so respond, summary 
judgment, if appropriate, shall be entered against him.   
 
Id., Rule 56(e) (2015).  The nonmoving party survives a motion for summary judgment 
by presenting substantial evidence that creates a genuine issue of material fact.  
Dobson v. Harris, 352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000).  “ ‘Substantial evidence 
is such relevant evidence as a reasonable mind might accept as adequate to support 
a conclusion’ and means ‘more than a scintilla or a permissible inference.’ ”  Ussery v. 
Branch Banking & Tr., 368 N.C. 325, 335, 777 S.E.2d 272, 278-79 (2015) (quoting 
Thompson v. Wake Cty. Bd. of Educ., 292 N.C. 406, 414, 233 S.E.2d 538, 544 (1977)).  
This Court reviews appeals from summary judgment de novo.  Id. at 334-35, 777 
S.E.2d at 278. 
Foreclosure by power of sale arises under the contract between the borrower 
and the creditor, allowing the creditor to sell the mortgaged property upon the 
borrower’s default.  In re Foreclosure of Lucks, ___ N.C. ___, ___, 794 S.E.2d 501, 504 
(2016).  Following a foreclosure sale, the amount of the borrower’s debt is reduced by 
the net proceeds from the sale.  N.C.G.S. § 45-21.31(a)(4) (2015).  Generally, a 
borrower is liable for the deficiency.  When the creditor is also the high bidder at the 
nonjudicial power-of-sale foreclosure, however, the borrower may assert the 
protection of section 45-21.36:   
When any sale of real estate has been made by a 
mortgagee, trustee, or other person authorized to make the 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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same, at which the mortgagee, payee or other holder of the 
obligation thereby secured becomes the purchaser and 
takes title either directly or indirectly, and thereafter such 
mortgagee, payee or other holder of the secured obligation, 
as aforesaid, shall sue for and undertake to recover a 
deficiency judgment against the mortgagor, trustor or 
other maker of any such obligation whose property has 
been so purchased, it shall be competent and lawful for the 
defendant against whom such deficiency judgment is 
sought to allege and show as matter of defense and offset, 
but not by way of counterclaim, that the property sold was 
fairly worth the amount of the debt secured by it at the 
time and place of sale or that the amount bid was 
substantially less than its true value, and, upon such 
showing, to defeat or offset any deficiency judgment 
against him, either in whole or in part . . . .  [T]his section 
shall not apply to foreclosure sales made pursuant to an 
order or decree of court . . . .  
 
Id. § 45-21.36 (2015).   
In a creditor’s action to collect the deficiency, this “anti-deficiency statute” 
provides the method of calculating a borrower’s remaining indebtedness by deducting 
from the total debt owed the “true value” of the foreclosed property, rather than the 
amount paid by the creditor at the foreclosure sale.  See High Point Bank & Tr. v. 
Highmark Props., LLC, 368 N.C. 301, 307, 776 S.E.2d 838, 843 (2015); see also 
Richmond Mortg. & Loan Corp. v. Wachovia Bank & Tr., 210 N.C. 29, 34, 185 S.E. 
482, 485 (1936) (“[The creditor] shall not recover judgment against his debtor for any 
deficiency . . . without first accounting to his debtor for the fair value of the property 
at the time and place of the sale . . . .  In such case, the amount bid by the creditor at 
the sale, and applied by him as a payment on the debt, is not conclusive as to the 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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value of the property.”), aff’d, 300 U.S. 124, 57 S. Ct. 338, 81 L. Ed. 338 (1937).  When 
the statutory protection is asserted, the “true value” of the property becomes a 
material fact.  Wachovia Realty Invs. v. Hous., Inc., 292 N.C. 93, 112, 232 S.E.2d 667, 
679 (1977).  The borrower’s remaining liability may be eliminated altogether or 
reduced by way of “offset” if the borrower shows that the foreclosed property “was 
fairly worth the amount of the debt” or that the foreclosure bid “was substantially 
less than [the foreclosed property’s] true value.”  N.C.G.S. § 45-21.36.   
A borrower opposing summary judgment must forecast substantial competent 
evidence by way of specific facts to show the property’s “true value” is genuinely at 
issue.  See id. (requiring the borrower to “allege and show as matter of defense and 
offset” (emphasis added)); see also N.C.G.S. § 1A-1, Rule 56(e).  Only “[u]pon such [a] 
showing” can a borrower defeat or offset a deficiency judgment against him or her.  
Id. § 45-21.36; see Wachovia Realty Invs., 292 N.C. at 112-13, 232 S.E.2d at 679 
(considering resale price after foreclosure as an indication of the true value of the 
property at foreclosure); Blue Ridge Savs. Bank v. Mitchell, 218 N.C. App. 410, 412-
13, 721 S.E.2d 322, 324-25 (considering appraisal value, foreclosure price, and resale 
price as competent evidence of true value), aff’d per curiam, 366 N.C. 331, 734 S.E.2d 
572 (2012). 
In opposing summary judgment here, defendants relied on their status as the 
property owners and their joint affidavit “made on [defendants’] personal knowledge,” 
stating that they “verily believe[ ] that the . . . property sold . . . was at the time of 
UNITED CMTY. BANK (GA.) V. WOLFE 
 
Opinion of the Court 
 
 
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[the foreclosure] sale fairly worth the amount of the debt it secured.”  Defendants’ 
conclusory statement without any supporting facts is insufficient to create a genuine 
issue of material fact.  See N.C.G.S. § 1A-1, Rule 56(e) (“[A]n adverse party may not 
rest upon the mere allegations or denials of his pleading, but his response, by 
affidavits or as otherwise provided in this rule, must set forth specific facts showing 
that there is a genuine issue for trial.”); Lowe v. Bradford, 305 N.C. 366, 370, 289 
S.E.2d 363, 366 (1982) (“[W]hen the moving party by affidavit or otherwise presents 
materials in support of his motion, it becomes incumbent upon the opposing party to 
take affirmative steps to defend his position by proof of his own.  If he rests upon the 
mere allegations or denial of his pleading, he does so at the risk of having judgment 
entered against him.”).  
Once the Bank produced substantial competent evidence of value, Rule 56 
required even the property owners to provide more than a conclusory statement.  See 
Lexington State Bank v. Miller, 137 N.C. App. 748, 753-54, 529 S.E.2d 454, 457 
(characterizing the defendant property owner’s affidavit, which stated that the 
property “was worth substantially more than the amount which was bid and paid by 
[the bank],” as “unsupported allegations” rather than the “specific facts” needed to 
survive summary judgment), disc. rev. denied, 352 N.C. 589, 544 S.E.2d 781 (2000); 
see also N.C. Dep’t of Transp. v. Haywood County, 360 N.C. 349, 352, 626 S.E.2d 645, 
647 (2006) (land condemnation case excluding “experts’ testimony about [their] 
feelings and personal opinions” on valuation because the trial court found the 
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Opinion of the Court 
 
 
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testimony “unsupported by objective criteria,” “based on hunches and speculation,” 
and therefore “lack[ing] sufficient reliability”).  Simply restating the statutory 
language in affidavit form is inadequate.  The Court of Appeals’ reliance on the land 
condemnation cases Department of Transportation v. M.M. Fowler, Inc. and North 
Carolina State Highway Commission v. Helderman is misplaced.  Here the issue is 
not a landowner’s competency to testify but whether the landowners’ affidavit 
presented substantial competent evidence under Rule 56(c) regarding the “true 
value” of the foreclosed property.     
In sum, defendants failed to present substantial competent evidence to create 
a genuine issue of material fact regarding the “true value” of the foreclosed property.  
Under Rule 56, merely reciting the statutory language or asserting an 
unsubstantiated opinion regarding the foreclosed property’s value is insufficient.  
Accordingly, we reverse the decision of the Court of Appeals and reinstate the trial 
court’s grant of summary judgment in favor of the Bank. 
REVERSED.