NO. COA14-46

NORTH CAROLINA COURT OF APPEALS

Filed: 19 August 2014

LIFESTORE BANK, f/k/a AF BANK,

Plaintiff,

v. Wilkes County

No. 12 CVS 648

MINGO TRIBAL PRESERVATION TRUST 

DATED JANUARY 4, 1993; PITCHFORK 

BASIN, LLC, f/k/a EAC REV NO.6, 

LLC; TUSCARORA RANCH, LLC AND 

ALLEN C. MOSELEY, SUBSTITUTE 

TRUSTEE,

Defendants.

Appeal by plaintiff from order entered 28 September 2012 by 

Judge Stuart Albright and by defendants from order entered 29 

August 2013 by Judge George B. Collins, Jr., both in Wilkes

County Superior Court. Heard in the Court of Appeals 7 May 

2014.

Di Santi Watson Capua Wilson & Garrett, by Chelsea Bell

Garrett, for plaintiff-appellant.

Hamilton Stephens Steele & Martin, PLLC, by Keith J. 

Merritt, for defendant-appellants.

BRYANT, Judge.

A creditor can seek to enforce payment of a promissory note 

by pursuing foreclosure by power of sale, judicial foreclosure, 
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or by filing for a money judgment, or all three options, until 

the debt has been satisfied. The “two dismissal rule” of Rule 

41 does not bar a creditor from bringing an action for judicial 

foreclosure or for money judgment where the creditor has filed 

and then taken voluntary dismissals from two prior actions for 

foreclosure by power of sale. Collateral estoppel is not 

applicable where a final judgment in an action has not been 

reached. Where there exists genuine issues of material fact as 

to whether a creditor is the holder of an enforceable 

instrument, summary judgment is not appropriate.

A. The Tuscarora Note

On 12 February 2007, defendant Mingo Tribal Preservation 

Trust (“Mingo”) entered into a promissory note with plaintiff 

Lifestore Bank (“Lifestore”) for $2,450,000.00 (the “Tuscarora 

Note”). The Tuscarora Note was secured by a deed of trust on 

property in Wilkes County owned by defendant Tuscarora Ranch, 

LLC (“Tuscarora”). 

On 1 December 2010, Lifestore initiated a foreclosure by 

power of sale proceeding against Mingo and Tuscarora, alleging 

that Mingo was in default on the Tuscarora Note. The Wilkes 

County Clerk of Court entered an order finding that Mingo was in 

default and Lifestore could conduct a foreclosure by power of 
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sale of the Tuscarora property. Mingo appealed to the Superior 

Court, and on 8 March 2011, the Wilkes County Superior Court 

affirmed the Clerk’s order allowing Lifestore to foreclose on 

the Tuscarora property. On 6 April 2011, Mingo appealed the 

Superior Court’s order to this Court and filed a motion to stay 

enforcement of the Superior Court’s order. Mingo’s motion to 

stay was granted on 15 April. After filing its appeal with this 

Court on 26 August, Mingo and Lifestore agreed to file a joint 

motion to dismiss the appeal which was granted by this Court. 

On 10 October 2011, Lifestore entered a voluntary dismissal 

without prejudice as to the foreclosure by power of sale action. 

On 7 December 2011, Lifestore filed a second foreclosure by 

power of sale action against Mingo and Tuscarora alleging that 

Mingo had defaulted on the Tuscarora Note. On 8 March 2012, the 

Clerk of Court entered an order allowing the foreclosure. Mingo 

appealed the order to the Wilkes County Superior Court. 

Lifestore entered a voluntary dismissal as to the foreclosure by 

power of sale on 13 July 2012. 

B. The EAC Note

On 8 February 2008, Mingo entered into a new promissory 

note for $1,800,000.00 with Lifestore. To secure this loan, 

Lifestore took a security interest in a promissory note held 
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between Mingo and Pitchfork Basin, f/k/a EAC (“EAC”). The 

promissory note between Mingo and EAC (the “EAC Note”) was 

entered into on 21 November 2006 and was secured by a deed of 

trust between EAC and Mingo. 

On 1 December 2010, Lifestore filed a foreclosure by power 

of sale action against Mingo and EAC alleging that Mingo had 

defaulted on the EAC Note and Lifestore could, therefore, 

foreclose on the EAC deed of trust. The Wilkes County Clerk of 

Court entered an order that same day finding that Lifestore 

could foreclose; this order was appealed to the Wilkes County 

Superior Court. On 8 March 2011, the Superior Court affirmed 

the Clerk of Court’s order allowing the foreclosure. Mingo and 

EAC appealed to this Court on 6 April 2011; on 7 October 2011, 

Lifestore took a voluntary dismissal without prejudice. 

On 7 December 2011, Lifestore filed a second foreclosure by 

power of sale action against Mingo and EAC alleging that Mingo 

had defaulted on the EAC Note. The Clerk of Wilkes County 

Superior Court entered an order on 8 March 2012 allowing the 

foreclosure; Mingo and EAC appealed this order to the Superior 

Court. Lifestore entered an oral notice of voluntary dismissal 

as to the foreclosure by power of sale on 7 May during the 
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foreclosure hearing; a written notice of voluntary dismissal was 

entered 13 July 2012. 

C. The Current Complaint

On 6 June 2012, Lifestore filed a complaint against Mingo, 

Tuscarora, and EAC which asserted three claims for: judgment 

against Mingo and EAC as to the EAC Note; judgment against Mingo 

as to the Tuscarora Note; and judicial foreclosure of the 

Tuscarora and EAC deeds of trust. Mingo, Tuscarora, and EAC 

(“defendants”) filed a motion to dismiss Lifestore’s complaint 

pursuant to Rule 41 of the Rules of Civil Procedure on 17 August

2012. On 28 September 2012, the trial court entered an order 

denying defendants’ motion to dismiss Lifestore’s first and 

second claims for relief, and granting defendants’ motion to 

dismiss as to Lifestore’s third claim for judicial foreclosure. 

On 8 April 2013, Lifestore filed a motion for judgment on 

the pleadings pursuant to Rule 12(c) or, in the alternative, for 

summary judgment pursuant to Rule 56 as to its first and second 

claims for relief in its complaint. Defendants filed a motion 

for summary judgment on 23 April. On 29 August 2013, the trial 

court entered an order allowing Lifestore’s motion for summary 

judgment and denying defendants’ motion for summary judgment. 

Both Lifestore and defendants appeal.
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_________________________

Defendants raise two issues as to whether the trial court 

erred in (I) denying defendants’ motion to dismiss and for 

summary judgment and (II) in granting judgment in favor of 

Lifestore on the EAC Note. Plaintiff Lifestore raises the sole 

issue of whether the trial court erred in (III) dismissing 

Lifestore’s claim for judicial foreclosure.

I. & III.

As defendants’ first issue on appeal concerns the same 

matter as that of Lifestore’s sole issue on appeal, i.e., 

whether the trial court erred in its application of the “two 

dismissal rule” of Rule 41, we address both issues together.

Defendants first argue that the trial court erred in 

denying their motion to dismiss and for summary judgment. In 

contrast, Lifestore contends the trial court erred in dismissing 

its claim for judicial foreclosure. We disagree as to 

defendants, and agree as to Lifestore.

”This Court must conduct a de novo review of the pleadings 

to determine their legal sufficiency and to determine whether 

the trial court's ruling on the motion to dismiss was correct.” 

Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396, 400, 580 

S.E.2d 1, 4 (2003). When a motion for summary judgment is 
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brought, the trial court must determine whether “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. Gen. Stat. § 

1A-1, Rule 56(c) (2013). The movant “has the burden of 

establishing the lack of any triable issue of fact.” Pembee 

Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 491, 329 

S.E.2d 350, 353 (1985) (citation omitted). 

When considering a motion for summary 

judgment, the trial judge must view the 

presented evidence in a light most favorable 

to the nonmoving party. In addition, [i]f 

the granting of summary judgment can be 

sustained on any grounds, it should be 

affirmed on appeal. If the correct result 

has been reached, the judgment will not be 

disturbed even though the trial court may 

not have assigned the correct reason for the 

judgment entered.

Rankin v. Food Lion, 210 N.C. App. 213, 215, 706 S.E.2d 310, 

312—13 (2011) (citations and quotations omitted).

Defendants contend the trial court erred in denying their 

motion to dismiss and for summary judgment as to Lifestore’s 

first and second claims for relief. Specifically, defendants 

argue that pursuant to the “two dismissal rule” of Rule 41, 

Lifestore’s claims for judgment on the Tuscarora and EAC 
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promissory notes were barred. Lifestore, in contrast, argues 

that its claim for judicial foreclosure is not barred pursuant 

to the “two dismissal rule” of Rule 41.

Foreclosure and Rule 41

A foreclosure under power of sale is a type of special 

proceeding, to which our Rules of Civil Procedure apply. See 

Phil Mech. Constr. Co. v. Haywood, 72 N.C. App. 318, 320—21, 325 

S.E.2d 1, 2—3 (1985). North Carolina Rules of Civil Procedure, 

Rule 41, states that:

an action or any claim therein may be 

dismissed by the plaintiff without order of 

court (i) by filing a notice of dismissal at 

any time before the plaintiff rests his 

case, or; (ii) by filing a stipulation of 

dismissal signed by all parties who have 

appeared in the action. Unless otherwise 

stated in the notice of dismissal or 

stipulation, the dismissal is without 

prejudice, except that a notice of dismissal 

operates as an adjudication upon the merits 

when filed by a plaintiff who has once 

dismissed in any court of this or any other 

state or of the United States, an action 

based on or including the same claim.

N.C. Gen. Stat. § 1A-1, Rule 41(a)(1) (2013) (emphasis added). 

[I]n enacting the two dismissal provision of 

Rule 41(a)(1), the legislature intended that 

a second dismissal of an action asserting 

claims based upon the same transaction or 

occurrence as a previously dismissed action 

would operate as an adjudication on the 

merits and bar a third action based upon the 

same set of facts. 
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Richardson v. McCracken Enters., 126 N.C. App. 506, 509, 485 

S.E.2d 844, 846 (1997). “The ‘two dismissal’ rule has two 

elements: (1) the plaintiff must have filed two notices to 

dismiss under Rule 41(a)(1) and (2) the second action must have 

been based on or included the same claim as the first action.” 

Dunton v. Ayscue, 203 N.C. App. 356, 358, 690 S.E.2d 752, 753 

(2010) (citing City of Raleigh v. Coll. Campus Apartments, Inc.,

94 N.C. App. 280, 282, 380 S.E.2d 163, 165 (1989)).

Defendant contends the “two dismissal rule” of Rule 41 bars 

Lifestore from bringing claims for money judgment on the two 

promissory notes because the claims for money judgment are based 

on the same set of facts as Lifestore’s motions for foreclosure 

by power of sale and, therefore, because Lifestore took two 

voluntary dismissals as to the actions for foreclosure by power 

of sale, it is now barred under Rule 41 from pursuing its claims 

for money judgments. 

This Court has held that “a creditor-mortgagee such as 

[Lifestore] has an election of remedies. Upon default, it may 

sue to collect on the unpaid note or foreclose on the land used 

to secure the debt, or both, until it collects the amount of 

debt outstanding.” G.E. Capital Mort. Servs., Inc. v. Neely, 

135 N.C. App. 187, 192, 519 S.E.2d 553, 557 (1999) (citation 
-10-

omitted). If a creditor seeks to foreclose on property, they

may proceed under N.C. Gen. Stat. § 45-21.1 et seq. (foreclosure 

by power of sale), or under N.C. Gen. Stat. § 1-339.1 et seq.

(judicial foreclosure). See In re Young, ___ N.C. App. ___, ___, 

744 S.E.2d 476, 480 (2013).

At a foreclosure [by power of sale] 

hearing pursuant to N.C. Gen.[]Stat. § 45-

21.16, the clerk of superior court is 

limited to making the six findings of fact 

specified under subsection (d) of that 

statute: (1) the existence of a valid debt 

of which the party seeking to foreclose is 

the holder; (2) the existence of default; 

(3) the trustee's right to foreclose under 

the instrument; (4) the sufficiency of 

notice of hearing to the record owners of 

the property; (5) the sufficiency of preforeclosure notice . . .; and (6) the sale 

is not barred by section 45-21.12A [pursuant 

to] N.C. Gen. Stat. § 45-21.16(d)[.] The 

clerk's findings are appealable to the 

superior court for a hearing de novo; 

however, in a section 45-21.16 foreclosure 

proceeding, the superior court's authority 

is similarly limited to determining whether 

the six criteria of N.C. Gen.[]Stat. § 45-

21.16(d) have been satisfied. 

Id. at ___, 744 S.E.2d at 479 (citations omitted).

Lifestore first sought to foreclose on defendants’ property 

by filing, then taking voluntary dismissals from, two actions 

for foreclosure by power of sale stemming from defendants’ 

default upon the two promissory notes. In Lifestore’s instant 

(and third) complaint, Lifestore now seeks to obtain money 
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judgments against defendants as to the two promissory notes.

While a foreclosure by power of sale is a type of special 

proceeding, limited in scope and jurisdiction, in which the 

clerk of court determines whether a foreclosure pursuant to a 

power of sale should be granted, a claim for money judgment 

arising from a default upon a promissory note must be brought 

through the filing of a complaint in a civil action. See id. at 

___, 744 S.E.2d at 479 (noting that in an action for foreclosure 

by power of sale, “[t]he clerk's findings are appealable to the 

superior court for a hearing de novo; however, in a section 45-

21.16 foreclosure [by power of sale] proceeding, the superior 

court's authority is similarly limited to determining whether 

the six criteria of N.C. Gen.[]Stat. § 45-21.16(d) have been 

satisfied. The superior court has no equitable jurisdiction and 

cannot enjoin foreclosure upon any ground other than the ones 

stated in [N.C. Gen.[]Stat. § ] 45-21.16.” (citations and 

quotation omitted)); United Carolina Bank v. Tucker, 99 N.C. 

App. 95, 98, 392 S.E.2d 410, 411 (1990) (“A foreclosure by power 

of sale is a special proceeding commenced without formal summons 

and complaint and with no right to a jury trial.” (citation 

omitted)). As such, an action for foreclosure by power of sale

differs from a claim for money judgment, as while both actions 
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may concern the same parties, property, and promissory note(s), 

each action must be brought separately due to a foreclosure by 

power of sale being of limited jurisdiction and scope.

In its order granting Lifestore’s motion for summary 

judgment, the trial court noted the following:

Defendants contend that the “two 

dismissal rule” of Rule 41 of the North 

Carolina Rules of Civil Procedure gives them 

an absolute defense, not only to Claim Three 

of the complaint (upon which Defendants have 

previously prevailed on their Motion for 

Summary Judgment and which is therefore not 

before this Court)1 but also to Claims One 

and Two of the Complaint.

Claims One and Two of the complaint 

seek a money judgment against the Defendants 

for failure to pay debts. Claim Three seeks 

to have the Court order a judicial 

foreclosure of certain real property that 

allegedly served as security for said debts. 

[Lifestore] had previously filed two 

successive foreclosure actions pursuant to 

Chapter 45 of the North Carolina General 

Statutes under the Trustee’s power of sale 

provision. [Lifestore] had voluntarily 

dismissed both actions under Rule 41.

[Lifestore] argues that the “two 

dismissal rule” does not apply to 

foreclosures pursuant to Chapter 45, citing 

a case from the North Carolina Court of 

Appeals that predated the enactment of broad 

amendments to Chapter 45. Defendant argues 

 

1 The trial court is referring to Judge Albright’s 28 September 

2012 order granting defendants’ motion to dismiss Lifestore’s 

third claim for relief for judicial foreclosure, from which 

Lifestore now appeals (Issue III). 
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that the plain language of the Rules of 

Civil Procedure make them apply to Chapter 

45 unless provided otherwise by law. This 

Court need not address this issue because it 

finds that the “two dismissal rule” would 

not apply in this case, even if it does 

apply to Chapter 45 foreclosures.

In enacting the two dismissal provision 

of Rule 41(a)(1), the legislature intended 

that a second dismissal of an action 

asserting claims based upon the same 

transaction or occurrence as a previously 

dismissed action would operate as an 

adjudication on the merits and bar a third 

action based upon the same set of facts. 

Richardson v. McCracken Enters., 126 N.C. 

App. 506, 509; 485 S.E.[]2d 844, 846

(1997)[,] aff’d, 347 N.C. 660, 496 S.E.[]2d 

380 (1998). The test is whether the actions 

are claims based upon the same core of 

operative facts and whether all of the 

claims could have been asserted in the same 

cause of action. Id.

Here, while Claims One and Two of the 

Complaint are based on the same core of 

operative facts as the foreclosure actions, 

they are not claims that could have been 

asserted in the foreclosure actions and 

therefore are not barred by Rule 41. A 

foreclosure action only allows the sale of 

property. While it is true that the Clerk 

must find a valid debt, the action itself 

does not allow for the entry of a judgment 

on that debt. 

Defendants contend the trial court erred in its analysis of 

Richardson as Rule 41 only requires a determination of “whether 

the actions are claims based upon the same core of operative 
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facts.” Defendants’ argument lacks merit, as the trial court 

was accurate in its analysis of Richardson. 

In Richardson, the plaintiffs filed an action against the 

defendant oil company alleging trespass, strict liability, 

negligence, and punitive damages caused by the defendant 

allowing diesel fuel and oil to leak onto the plaintiffs’ 

property. Richardson, 126 N.C. App. at 507, 485 S.E.2d at 845. 

The plaintiffs voluntarily dismissed their claims without 

prejudice and then filed a new action against the defendant for 

nuisance based on the same facts as alleged in the first action. 

Id. The plaintiffs then voluntarily dismissed their second 

action without prejudice and filed a third action containing all 

of the claims asserted in their first and second actions. Id. 

The defendant moved for summary judgment, arguing that the 

plaintiffs’ third action was barred under the “two dismissal 

rule” of Rule 41. Id. The trial court granted the defendant’s 

motion and this Court affirmed, noting that where the two 

previously dismissed actions “asserted claims based upon the 

same core of operative facts relating to the contamination of 

plaintiffs' property, and all of the claims could have been 

asserted in the same cause of action[,]” Rule 41(a)(1) barred 

the plaintiffs’ third action. Id. at 509, 485 S.E.2d at 846—47. 
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Richardson is distinguishable from the instant matter, as

Lifestore’s claims for foreclosure by power of sale could not, 

as a form of special proceeding, be brought in the same action 

as a claim for money judgment on a promissory note. As such, we 

disagree with defendants’ contention the trial court erred in 

holding that Rule 41’s “two dismissal rule” is not applicable to 

Lifestore’s claims for money judgment.

Defendants further argue that Lifestore’s claims for money 

judgment are barred under the “two dismissal rule” of Rule 41 

because Lifestore’s voluntary dismissals of its actions for 

foreclosure by power of sale are, under Rule 41, an adjudication 

on the merits. We disagree. 

Lifestore pursued two foreclosures by power of sale under

N.C.G.S. § 45-21.16(a) each against Mingo and EAC, 10 SP 423 and 

11 SP 395, and against Mingo and Tuscarora, 10 SP 424 and 11 SP 

394. Lifestore subsequently took voluntary dismissals of each 

foreclosure by power of sale action. As such, the “two 

dismissal rule” of Rule 41 applies here for, by taking two sets 

of voluntary dismissals as to its claims for foreclosure by 

power of sale, the second set of voluntary dismissals is an 

adjudication on the merits which bars Lifestore from undertaking 
-16-

a third foreclosure by power of sale action pursuant to N.C.G.S. 

§ 45-21.16(a). 

However, in the instant matter Lifestore has now filed a 

complaint seeking, in addition to money judgments, judicial 

foreclosure against defendants. As already noted, a creditor 

may pursue foreclosure, money judgment, or both in order to 

collect on a debt. See G.E. Capital Mort. Servs., 135 N.C. App. 

at 192, 519 S.E.2d at 557. This Court has more recently held 

that a creditor seeking to foreclose on property can do so under 

both N.C.G.S. § 45-21 et seq., foreclosure by power of sale, and 

N.C.G.S. § 1-336 et seq., judicial foreclosure. In re Young,

___ N.C. App. at ___, 744 S.E.2d at 480. 

In In re Young, the respondents defaulted on their loan 

with the petitioner. Id. at ___, 744 S.E.2d at 477—48. The 

respondents then agreed to a loan modification agreement with 

the petitioner and began making payments in accordance with the 

agreement. Id. at ___, 744 S.E.2d at 478. The petitioner 

alleged that the loan modification was never finalized and 

demanded that the respondents return to making payments under

the terms of the original loan, but the respondents refused. 

Id. The petitioner subsequently filed for a foreclosure by 

power of sale, and during the special proceeding hearing the 
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clerk of court dismissed the petitioner’s action on grounds that 

the petitioner never finalized the loan modification agreement 

with the respondents. Id. On appeal to Superior Court, the 

petitioner’s action for foreclosure was again dismissed on 

grounds that because the petitioner had begun to undertake a 

loan modification agreement with the respondents, the 

petitioner’s action for foreclosure was now barred by equitable 

estoppel. Id. This Court vacated and remanded the petitioner’s 

appeal for a determination of subject matter jurisdiction, but 

noted that if the petitioner was now barred from pursuing a 

foreclosure by power of sale, the petitioner could still pursue 

a judicial foreclosure. Id. at ___, 744 S.E.2d at 478—80.

Lifestore argues that the trial court erred in dismissing 

its claim for judicial foreclosure. We agree, and find In re 

Young to be instructive. This Court noted in Young that a 

judicial foreclosure differs from a foreclosure by power of sale 

in that a judicial foreclosure is not a type of special 

proceeding and, as such, can be pursued by a creditor after a 

foreclosure by power of sale has failed. See id. at ___, 744 

S.E.2d at 480 (holding that if the petitioner’s action for 

foreclosure by power of sale was now barred, “[p]etitioner's 

remedy would then be limited to judicial foreclosure procedures 
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pursuant to N.C. Gen. Stat. § 1-339.1 et seq., rather than the 

summary proceedings provided under N.C. Gen. Stat. § 45-21.1 et 

seq.”); see also Phil Mech. Constr. Co., 72 N.C. App. at 321, 

325 S.E.2d at 3 (“Foreclosure by action requires formal judicial 

proceedings initiated by summons and complaint in the county 

where the property is located and culminating in a judicial sale 

of the foreclosed property if the mortgagee prevails.” (citation 

omitted)). As a judicial foreclosure is not a type of special 

proceeding limited in scope and jurisdiction, the “two dismissal 

rule” of Rule 41 is not applicable to Lifestore’s claim for 

judicial foreclosure as Lifestore could not have brought a claim 

for judicial foreclosure in the same action as its claims for 

foreclosure by power of sale. See Richardson, 126 N.C. App. at 

508—09, 485 S.E.2d at 846—47 (holding that the “two dismissal 

rule” of Rule 41 does not apply where all of a party’s claims 

could not be asserted in the same action). Accordingly, the 

trial court erred in finding that Lifestore’s claim for judicial 

foreclosure was barred under the “two dismissal rule” of Rule 

41. We therefore reverse as to Lifestore’s argument.

Collateral Estoppel

Defendants further contend the trial court erred in 

granting Lifestore’s motion for summary judgment because
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Lifestore’s two voluntary dismissals of its actions for 

foreclosure by power of sale now act as collateral estoppel upon 

Lifestore’s claims for money judgment. We disagree.

For collateral estoppel to bar 

plaintiff's action, defendants must show: 

(1) the earlier action resulted in a final 

judgment on the merits, (2) the issue in 

question is identical to an issue actually 

litigated in the earlier suit, (3) the 

judgment on the earlier issue was necessary 

to that case and (4) both parties are either 

identical to or in privity with a party or 

the parties from the prior suit.

Bee Tree Missionary Baptist Church v. McNeil, 153 N.C. App. 797, 

799, 570 S.E.2d 781, 783 (2002) (citations omitted). 

Defendants cite three cases in support of their contention

that collateral estoppel applies to Lifestore’s claims for money 

judgment: Petri v. Bank of Am., No. COA13-907, 2014 N.C. App. 

LEXIS 157 (Feb. 4, 2014); Haughton v. HSBC Banks USA, No. COA12-

420, 2013 N.C. App. LEXIS 92 (Feb. 5, 2013); and Peak Coastal 

Ventures, LLC v. Suntrust Bank, No. 10 CVS 6676, 2011 NCBC LEXIS 

13 (N.C. Sup. Ct., Forsyth Cnty., May 5, 2011).2

 

2 Pursuant to Rule 30(e) of our Rules of Appellate Procedure, 

“[a]n unpublished decision of the North Carolina Court of 

Appeals does not constitute controlling legal authority. 

Accordingly, citation of unpublished opinions in briefs, 

memoranda, and oral arguments in the trial and appellate 

divisions is disfavored[.]” N.C. R. App. Proc. 30(e)(3) (2014). 

As such, these cases cited by defendants are not controlling 

authority upon this Court. Moreover, we decline to consider 
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Petri and Haughton are not applicable to the instant case. 

In Petri and Haughton, final judgments were reached in 

foreclosure proceedings against the plaintiffs; none of the 

plaintiffs appealed. Petri at *1-3; Haughton at *1-3. When the 

plaintiffs later filed complaints relating back to the 

foreclosure proceedings, the trial court held, and this Court 

affirmed, that the plaintiffs’ complaints were barred by 

collateral estoppel because the issues raised in the complaints 

had already been decided in final judgments reached in the 

foreclosure proceedings. Petri at *5—10; Haughton at *3—11. 

Here, Lifestore took two sets of voluntary dismissals from 

its foreclosure by power of sale actions against defendants. The 

first voluntary dismissal was taken after defendants had 

appealed to this Court, and the second was taken during the 

Superior Court’s hearing on defendants’ appeal of the Clerk of 

Court’s order granting Lifestore foreclosure by power of sale. 

In each instance, no final judgment was reached. As such, 

although Lifestore is barred from bringing a third action for 

foreclosure by power of sale due to the application of Rule 41,

collateral estoppel is not applicable because a final judgment 

was not reached. See First Union Nat’l Bank v. Richards, 90 

 

defendants’ arguments as to Peak Coastal Ventures as this 

opinion is not from our appellate courts.
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N.C. App. 650, 653, 369 S.E.2d 620, 621 (1988) (holding that a 

final judgment has not been reached in a case where a plaintiff 

has not abandoned, dismissed, or withdrawn its appeal, “but 

rather took a voluntary dismissal of the action.”). Further, as 

already discussed the nature of these actions — foreclosure by 

power of sale, judicial foreclosure, and money judgment — are 

such that these actions, and the issues raised in each, differ. 

Accordingly, although Lifestore’s two claims for foreclosure by 

power of sale are now barred under Rule 41, Rule 41 does not bar 

Lifestore from bringing its current claims for money judgment

and judicial foreclosure against defendants, nor are Lifestore’s 

current claims barred by collateral estoppel. Therefore, we 

overrule defendants’ argument (Issue I) and reverse as to 

Lifestore’s argument (Issue III).

II.

Defendants next contend the trial court erred in granting 

judgment in favor of Lifestore on the EAC Note. We agree.

Summary judgment is appropriate if 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. A trial 

court's grant of summary judgment receives 

de novo review on appeal, and evidence is 

viewed in the light most favorable to the 
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non-moving party.

TD Bank, N.A. v. Mirabella, ___ N.C. App. ___, ___, 725 S.E.2d 

29, 30 (2012) (citation omitted).

Defendants argue that the trial court erred in finding 

Lifestore was entitled to a judgment against EAC on the EAC Note 

because Lifestore failed to prove that it is the holder of the 

note. In its order, the trial court noted the following:

Defendants also argue that [Lifestore] 

cannot obtain a judgment against 

EAC/Pitchfork Basin, LLC because it cannot 

prove and has not alleged that it is the 

holder of the Note made to [Mingo] by 

EAC/Pitchfork LLC and assigned to 

[Lifestore]. This argument fails because 

the record in the case shows that 

[Lifestore] has met the requirements of 

North Carolina General Statutes Section 25-

9-203(b)(3)(a). 

Pursuant to North Carolina General Statutes, Article 9 —

Secured Transactions, “[a] security interest attaches to 

collateral when it becomes enforceable against the debtor with 

respect to the collateral[.]” N.C. Gen. Stat. § 25-9-203(a) 

(2013). 

[A] security interest is enforceable against 

the debtor and third parties with respect to 

the collateral only if:

(1) Value has been given;

(2) The debtor has rights in the collateral 

or the power to transfer rights in the 
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collateral to a secured party; and 

(3) . . . The debtor has authenticated a 

security agreement that provides a 

description of the collateral[.]

Id. § 25-9-203(b)(1), (2), (3)(a) (2013). 

As part of the EAC Note between Mingo and Lifestore, Mingo 

executed an assignment of note which granted Lifestore a 

security interest in the deed of trust between EAC and Mingo. 

We agree with the trial court that Lifestore has met the 

requirements of N.C.G.S. § 25-9-203(b)(3)(a), as the record 

indicates that Lifestore gave value to Mingo (via a promissory 

note for $1,800,000.00) in exchange for a security interest in 

collateral (the deed of trust between Mingo and EAC), as 

provided in an authenticated security agreement (the assignment 

of note between Lifestore and Mingo).

Lifestore, as the holder of an enforceable instrument (the 

assignment of note) may seek to enforce payment of that 

instrument. See TD Bank, ___ N.C. App. at ___, 725 S.E.2d at 

31. However, Lifestore must prove that it is the holder of the 

instrument, and “[t]he requirement that [Lifestore] prove [its]

status as a holder of the note is distinguishable from a 

requirement that [Lifestore] allege that status in [its]

pleadings.” Liles v. Myers, 38 N.C. App. 525, 527, 248 S.E.2d 
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385, 387 (1978). “Mere possession of a note payable to order 

does not suffice to prove ownership or holder status.” EconoTravel Motor Hotel Corp. v. Taylor, 301 N.C. 200, 203, 271 

S.E.2d 54, 57 (1980) (citations omitted).

Here, Lifestore attached photocopies of the assignment of 

note executed between itself (as AF Bank) and Mingo and the EAC 

Note to its complaint. Lifestore did not provide the actual 

documents during the trial court’s hearing on the parties’

motions for summary judgment however, and defendants filed an 

affidavit containing an email from Lifestore in which Lifestore 

admitted it was not in possession of the original EAC Note. 

Further, Lifestore did not provide evidence establishing it as 

the holder of the EAC Note during the trial court’s hearing. 

Lifestore contends that although the EAC Note may be lost, it

remains the holder of the note and is, thus, entitled to enforce 

it.

We find that Liles v. Myers is applicable to the instant 

case. In Liles, the plaintiff brought an action for money

judgment against the defendant alleging the defendant had 

defaulted upon a promissory note. Liles, 38 N.C. App. at 525, 

248 S.E.2d at 386. The plaintiff then filed a motion for 
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summary judgment which the trial court granted. This Court 

reversed, noting that: 

Prior to being entitled to a judgment 

against the defendant, the plaintiff was 

required to establish that she was [the] 

holder of the note at the time of this suit. 

This element might have been established by 

a showing that the plaintiff was in 

possession of the instrument and that it was 

issued or endorsed to her, to her order, to 

bearer or in blank. It is essential that 

this element be established in order to 

protect the maker from any possibility of 

multiple judgments against him on the same 

note through no fault of his own. 

. . .

As evidence that a plaintiff is holder of a 

note is an essential element of a cause of 

action upon such note, the defendant was 

entitled to demand strict proof of this 

element. By his answer denying the 

allegations of the complaint, the defendant 

demanded such strict proof. The 

incorporation by reference into the 

complaint of a copy of the note was not in 

itself sufficient evidence to establish for 

purposes of summary judgment that the 

plaintiff was the holder of the note. As the 

record on appeal fails to reveal that the 

note itself or any other competent evidence 

was introduced to show that the plaintiff 

was the holder of the note, she has failed 

to prove each essential element of her claim 

sufficiently to establish her entitlement to 

summary judgment.

Id. at 526—28, 248 S.E.2d at 387—88 (citations omitted). 
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Here, defendants demanded strict proof that Lifestore is 

the holder of the EAC Note. Lifestore attached a copy of the 

assignment of note and the EAC Note to its complaint, but 

admitted at the trial court’s hearing that it could not find the 

original documents. See id. Accordingly, as there remain

genuine issues of material fact as to whether Lifestore is the 

holder of the EAC Note and can, therefore, enforce it, we must 

reverse and remand as to this issue.

Affirmed in part; reversed in part; and remanded.

Judges CALABRIA and GEER concur.