NO. COA14-166

NORTH CAROLINA COURT OF APPEALS

Filed: 7 October 2014

IN THE MATTER OF THE FORECLOSURE 

of a North Carolina Deed of Trust 

executed by L.L. Murphrey Co., 

f/k/a/ L.L. Murphrey Hog Co., Lois 

M. Barrow, Larry Barrow, Connie M. 

Stocks, Donald Stocks and Doris 

Murphrey dated April 23, 1996 and 

recorded April 24, 1996 in Book 

489 at Page 620, as modified by 

those certain Modification and 

Extension Agreements dated August 

30, 1996, Recorded October 7, 1996 

in Book 493 at Page 20, dated 

April 4, 1997, recorded April 25, 

1997 in Book 497, Page 94, dated 

May 26, 1998, recorded June 29, 

1998 in Book 507, Page 24 and 

dated August 21, 1998, recorded 

October 2, 1998, all in the Office 

of the Greene County Register of 

Deeds,

By Kluttz, Reamer, Hayes, 

Randolph, Adkins & Carter, L.L.P.

Substitute Trustee.

 

 Greene County

 No.: 13 SP 61

Appeal by respondents from order entered 31 October 2013 by 

Judge Paul L. Jones in Greene County Superior Court. Heard in 

the Court of Appeals 27 August 2014.
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Driscoll Sheedy, P.A., by Susan E. Driscoll, for appellee.

WHITE & ALLEN, P.A., by John P. Marshall and Ashley C. 

Fillippeli, for appellants.

ELMORE, Judge.

Lois M. Barrow, Larry Barrow, and Doris Murphrey 

(respondents) appeal from the Order Denying Motion to Dismiss 

and Authorizing Foreclosure entered by Judge Paul L. Jones on 31 

October 2013. After careful consideration, we affirm. 

I. Background

In the instant case, the particular real estate security 

interest being foreclosed was a North Carolina Deed of Trust 

entered into on 23 April 1996 by Doris Murphrey, Lois M. Barrow, 

Larry Barrow, Connie M. Stocks, Donald Stocks, and L.L. Murphrey 

Hog Co. (LLM), a North Carolina corporation, in favor of 

Wachovia Bank, N.A., predecessor in interest to D.A.N. Joint 

Venture Properties of North Carolina, LLM (DAN). The deed of 

trust was recorded in the Greene County Register of Deeds and 

the Lenoir County Register of Deeds and amended over time by 

certain modification and extension agreements. To secure the 

deed of trust, respondents pledged certain items of real 

property as collateral. Wachovia also received a security 

interest in LLM’s fixtures and items of personal property. The 
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deed of trust secures an indebtedness evidenced by five 

promissory notes (the Wachovia notes) executed by LLM, the 

borrower, in favor of Wachovia between July 1993 and March 1999. 

LLM previously filed a voluntary petition for relief under 

Chapter 11 of the Bankruptcy Code on 8 June 2000. At that time, 

LLM was in default to Wachovia for $12,790,522.36 pursuant to 

the Wachovia notes. In LLM’s Chapter 11 case, the Bankruptcy 

Court entered an order confirming LLM’s fourth amended plan of 

reorganization (“Confirmed Plan” or “the Plan”). Pursuant to 

class III of the Confirmed Plan, Wachovia’s claims were divided 

into Note A and Note B. Note A is an amortizing note in the 

amount of $8,000,000; Note B is a cash flow note in the amount 

of $3,500,000. Both Notes remained secured by the collateral 

pledged to secure the Wachovia notes. Respondents, LLM’s 

principals, guaranteed Note A and Note B, which both listed a 

maturity date of 30 September 2011. Upon maturation, the Plan 

provided that Note A and Note B would be recapitalized and that 

the obligations of the guarantors would be limited to the amount 

of recapitalized debt.

The Confirmed Plan also specified:

R. Execution and Delivery of Revised Loan 

Documents

The Debtor and Wachovia will enter into 
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amended and restated Loan Documents (the 

“Wachovia Restated Loan Documents”) 

consistent with the provisions of this Plan 

of Reorganization. The Debtor shall execute 

and

deliver such agreements, instruments and

documents as may be reasonably requested by 

Wachovia. The Wachovia Restated Loan 

Documents shall contain reasonably and 

customary warranties, covenants and other 

terms as the Debtor and Wachovia may agree 

upon. The following shall constitute events 

of default:

(i) Nonpayment as required under [the] terms 

of Note A or Note B,

(ii) Material misrepresentation,

(iii) Material breach of warranties of 

covenants,

(iv) Subsequent voluntary or involuntary 

bankruptcy proceedings, or

(v) Reopening of current bankruptcy 

proceedings.

S. Implementation Date

The Implementation Date for Note A and Note 

B shall be October 1, 2001, provided that 

the following Conditions Precedent have been

met:

(i) Cash shall be available to the Debtor in 

an amount sufficient to permit payment in 

full of all Administrative Claims,

(ii) Eleven days shall have expired since 

the Confirmation Date and no stay of the 

Confirmation Order shall be in effect, and

(iii) The Wachovia and MLLC Restated Loan 
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Documents [referred to above as the 

“Wachovia Restated Loan Documents”] required 

by the

Plan of Reorganization shall have been 

executed and delivered.

Wachovia did not execute the Restated Loan Documents 

referenced in the Confirmed Plan. Nonetheless, LLM made 

payments pursuant to the terms of the Confirmed Plan from 1 

October 2001 through 2011. Post-confirmation, Wachovia sold the 

Wachovia notes to CadleRock Joint Venture, L.P., who later sold 

or assigned the Wachovia notes to DAN in 2008. DAN filed the 

necessary notices of assignment, amendments, and continuation 

statements with the Greene County Register of Deeds, the Lenoir 

County Register of Deeds, and the North Carolina Secretary of 

State. 

Upon maturity of Note A and Note B, LLM and DAN could not 

agree to the amount of the recapitalized debt. Seeking a 

determination, LLM reopened the Chapter 11 case and filed an 

adversary proceeding in Bankruptcy Court. Judge J. Rich 

Leonard, United States Bankruptcy Judge for the Eastern District 

of North Carolina, ruled that LLM’s total indebtedness due and 

owing to DAN was $6,186,362.00. Neither party appealed this 

judgment. 
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Thereafter, LLM filed a voluntary petition for relief under 

Chapter 7 of the Bankruptcy Code on 21 May 2012. After LLM’s 

Chapter 7 filing, DAN filed a proof of claim in the amount of 

$6,056,645.26. DAN attached a copy of LLM’s fourth amended plan 

of reorganization, copies of the requisite security agreements, 

and copies of the assignments it filed with the Greene and 

Lenoir County Register of Deeds. In January and February 2013, 

LLC’s bankruptcy trustee filed motions requesting approval to 

conduct a proposed public sale of LLM’s real and personal 

property free and clear of liens. The trustee submitted a draft 

of a proposed complaint that he anticipated filing in an 

adversary proceeding against DAN. The complaint alleged that 

the Wachovia notes and the deed of trust were avoidable pursuant 

to 11 U.S.C. § 5444(a)(3) (2013).

The real property that was the subject of the proposed 

public sale included five tracts of land in Greene County and 

one tract of land in Lenoir County. As DAN asserted liens on 

all but one of the tracts of real property, it filed an 

objection to the trustee’s motion to sell free and clear of 

liens. DAN asserted that pursuant to 11 U.S.C. § 363(f)(4), its 

interest was not subject to a factual or legal dispute because 

LLM: (1) did not file any objection to DAN’s proof of claim, and 
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(2) because LLM’s indebtedness was reaffirmed in the bankruptcy 

court adversary proceeding. See L.L. Murphrey Co. v. D.A.N. 

Joint Venture III, L.P., Adv. No. 11-00139, 2011 WL 6301214 

(Bankr. E.D.N.C. Dec. 16, 2011) (calculating the recapitalized 

debt under the Confirmed Plan to be $6,168,362.00).

On 6 June 2013, Judge Leonard entered an order (“the 

Leonard order”) in the Chapter 7 case. The Leonard order 

reviewed the terms of the Confirmed Plan, particularly the 

portions that purported to require Wachovia to execute Restated 

Loan Documents to reaffirm the loan. Judge Leonard determined 

the terms of the Confirmed Plan were “unambiguous and impose[d] 

an obligation on the parties, the debtor and Wachovia, to 

execute amended and restated agreements, instruments and other 

loan documents consistent with the treatment provided therein.”

Judge Leonard further concluded, “[i]n addition to being 

explicitly required, the execution and delivery of the amended 

and restated loan documents was a condition precedent for 

setting the implementation date for Note A and Note B as October 

1, 2001.”

Further, Judge Leonard held that in the absence of the Restated 

Loan Documents, the description of Note A and Note B and the 

recitation of the terms were insufficient to constitute 
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negotiable instruments. Accordingly, Judge Leonard found that 

the trustee established the existence of a “bona fide dispute” 

regarding the validity of DAN’s liens. Judge Leonard authorized 

the trustee to sell the real property free and clear of the 

liens asserted by DAN. Notably, the Leonard order did not 

terminate DAN’s rights to foreclose on the deed of trust—it 

merely recognized the existence of a bona fide dispute between 

the parties and authorized the trustee to proceed with the sale 

of the requisite property.

DAN filed a Notice of Hearing for Foreclosure of Deed of 

Trust on 4 September 2013. Based on the Leonard order, LLM

filed a motion to dismiss DAN’s foreclosure action on 2 October 

2013. On 31 October 2013, the matter came on for hearing before 

Judge Paul L. Jones in Greene County Superior Court. Judge 

Jones entered an order denying LLM’s motion to dismiss. He also 

authorized the Substitute Trustee for DAN to proceed with the 

foreclosure of the subject property pursuant to the power of 

sale granted to him under the deed of trust. Judge Jones 

entered the following findings of fact:

2. The Deed of Trust secures an indebtedness 

evidenced by certain promissory notes 

executed by [LLM] in favor of Wachovia 

Bank, which were modified over time and 

through the Fourth Amended Plan (Confirmed 

Plan) filed in [LLM’s] Chapter 11 
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Bankruptcy Case[.]

3. The Deed of Trust states that it operates 

as security for “any renewals, 

modifications or extensions” of the Notes 

identified in the Confirmed Plan, as well 

as “all present and future obligations of 

Grantor[s] to [DAN].” (Deed of Trust,

p.3.)

5. Under the terms of the Confirmed Plan, the 

Notes were divided into two tranches: Note 

A and Note B were to “remain secured by 

that collateral pledged to Wachovia by 

[Borrower] prior to the Petition Date”. 

[sic] Although the Confirmed Plan 

required entry by Borrower and Wachovia 

into “amended and restated Loan 

Documents”, [sic] it did not specify what 

documents were required. Instead, the 

Confirmed Plan required that Borrower 

“execute and deliver such agreements, 

instruments and documents as may be

reasonably requested by Wachovia.” There 

was no requirement that the Barrow Family, 

Donald Stocks or Connie Murphrey execute 

any new documents.

. . . 

8. Through the Adversary Proceeding, it was 

determined that the amount of the 

Recapitalized Debt was $6,186,362.00. (May 

10, 2012 Order, Adv. Proc. No.: 11-00139-

8-JRL, p.6.) Instead of paying the 

Recapitalized Debt in full or entering 

into new loan documents for the amount of 

the Recapitalized Debt, Borrower filed for 

bankruptcy under Chapter 7 of the United 

States Bankruptcy Code, Case No.: 12-

03837-8-JRL. (Chapter 7 Case).

9. D.A.N. Joint Venture Properties of N.C., 

LLC is the current holder of the Notes and 
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the Deed of Trust.

Respondents now appeal.

II. Analysis

A. Judge Leonard’s order

Initially, we note that defendant challenges finding of 

fact #2, #5, and #9 above as being unsupported by competent 

evidence. The forgoing analysis addresses each of these 

challenged findings in substance and illustrates how each is, in 

fact, supported by competent evidence. 

Much of respondents’ argument is premised on the belief 

that the Leonard order constituted a final judgment purportedly 

affecting the merits of the foreclosure action. We find it 

necessary to dispel this argument at the outset of this appeal. 

In their brief, respondents advance the following argument:

The issue of whether the language of the 

Confirmed Plan, in the absence of Restated 

Loan Documents, is sufficient to constitute 

negotiable instrument has already been 

litigated and determined by the Leonard 

Order. The Leonard Order specifically 

provides that the Confirmed Plan is 

“unambiguous and imposes an obligation on 

the parties, the debtor and Wachovia, to 

execute [Restated Loan Documents] consistent 

with the treatment provided therein.” In 

addition, the Leonard Order holds 

specifically that “in addition to being 

explicitly required, the execution and 

delivery of the [Restated Loan Documents] 

was a condition precedent for setting the 
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implementation date of Note A and Note B as 

October 1, 2001.” Finally the Leonard Order

provides that “these provisions appear 

mandatory and are not self-executing” and

that “in the absence of [Restated Loan 

Documents], the description of Note A and 

Note B as well as the recitation of its 

terms, obligations and the treatment 

provided to Wachovia are insufficient to 

constitute negotiable instruments.” DAN does 

not and cannot meet the Holder requirement 

of N.C.

Gen. Stat. §45-21.16(d).

North Carolina must give full faith and 

credit to final judgments of Federal Courts. 

. . . An Order of a Bankruptcy Court 

avoiding a mortgage lien is a Final Order. . 

. . Issue preclusion prevents [DAN] from 

re-litigating the issue concerning holder 

status.

Respondents are misguided. “In order for collateral 

estoppel to apply in this case, the issues to be concluded must 

be the same as those in the prior Bankruptcy Court action[.]” 

In re Foreclosure Under That Deed of Trust Executed by Azalea 

Garden Bd. & Care, Inc., 140 N.C. App. 45, 56, 535 S.E.2d 388, 

396 (2000). The Bankruptcy Court did not rule on the merits of 

DAN’s foreclosure action, and the Leonard order was not an 

adjudication on the merits. For example, the issue of whether 

DAN was the holder of a valid debt was not litigated and 

determined in the bankruptcy proceeding. Therefore, collateral 

estoppel is inapplicable. Respondents’ counsel was aware that 
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Judge Leonard’s order did not constitute an adjudication on the 

merits of the foreclosure. During the foreclosure hearing 

counsel stated, “Judge Leonard’s decision is not an adjudication 

. . . but it’s really darn convincing and persuasive argument as 

to how it is he was going to rule.” In respondents’ reply 

brief, they clarify that their position is not that the Leonard 

order constitutes a final order avoiding a mortgage lien; 

instead, they aver that it is an order establishing: (1) that 

the reorganization plan mandated new loan documents, and (2) 

that the failure to execute new loan documents meant that the 

payment obligations under the Confirmed Plan were insufficient 

to constitute negotiable instruments.

Regardless, as applied to the foreclosure action before us 

on appeal, the Leonard order lacks controlling authority. It is 

merely a determination that a “bona fide dispute” exists between 

LLM and DAN regarding the validity of DAN’s liens. Under 11 

U.S.C. §363(f), a trustee has the right to sell property free 

and clear of liens if there is a bona fide dispute as to the 

validity of the lien. Despite respondents’ arguments to the 

contrary, Wachovia was not required to execute Restated Loan 

Documents for the Confirmed Plan to be valid and enforceable

against respondents in the foreclosure action. As the trial 
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court found in Finding #5, the Confirmed Plan simply provides: 

“The debtor shall execute and deliver such agreements, 

instruments and documents as may be reasonably requested by 

Wachovia.” Thus, the Confirmed Plan allowed Wachovia to 

determine what, if any, new loan documents Wachovia required.

Restated Loan Documents were neither required nor a condition 

precedent for the Confirmed Plan to bind the parties. 

Further, respondents have waived their right to advance the 

above argument because the record shows that they made timely 

payments pursuant to the terms of the Confirmed Plan for 

approximately ten years. Clement v. Clement, 230 N.C. 636, 639, 

55 S.E.2d 459, 461 (1949) (holding doctrine of waiver provides 

that “[a] person may waive almost any right he has, unless 

forbidden by law or public policy.)

B. Foreclosure by Power of Sale

Next, we must consider whether the trial court erred in 

authorizing DAN to foreclose on the subject properties. In a 

foreclosure by power of sale, the trial court shall enter an 

order permitting foreclosure upon finding: (i) a valid debt of 

which the party seeking to foreclose is the holder, (ii) 

default, (iii) right to foreclose under the instrument, and (iv) 

notice to those entitled. N.C. Gen. Stat. § 45-21.16(d) 
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(2013). Here, respondents essentially challenge the first and 

third elements of N.C. Gen. Stat. § 45-21.16(d) on the basis 

that DAN failed to produce competent evidence of a valid debt, 

failed to show that it was the current note holder, and was 

unable to show that it had a right to foreclose under the deed 

of trust. These issues are “question[s] of law controlled by 

the UCC [Uniform Commercial Code], as adopted in Chapter 25 of 

the North Carolina General Statutes.” In re Bass, 366 N.C. 464, 

467, 738 S.E.2d 173, 175-76 (2013). We conclude that the trial 

court did not err. 

The following documents set out the rights of the parties 

in this case: (1) the five Wachovia promissory notes executed 

between 1993-1999 by LLM in favor of Wachovia; (2) the deed of 

trust securing the notes executed by respondents and amended 

over time; (3) LLM’s fourth amended plan of reorganization filed

4 May 2001; (4) the Confirmed Plan effective 13 July 2001; and 

(5) the order determining LLM’s indebtedness entered in the 

adversary proceeding. L.L. Murphrey Co. v. D.A.N. Joint Venture 

III, L.P., Adv. No. 11-00139, 2011 WL 6301214 (Bankr. E.D.N.C. 

Dec. 16, 2011) (calculating the recapitalized debt under the 

Confirmed Plan to be $6,168,362.00).
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For the reasons set forth above, we decline to address 

respondents’ arguments that are premised entirely on the 

contention that the Confirmed Plan is not enforceable against

them. However, we will address the following three specific 

arguments advanced by respondents: First, respondents aver that 

DAN is not the holder of a valid debt because the Confirmed Plan 

fails to qualify as a negotiable instrument. Second,

respondents argue that the Confirmed Plan does not contain a 

sufficient description of the debt it proposes to secure.

Third, respondents argue that the Confirmed Plan was not 

intended to operate as an extension or modification of the deed 

of trust. 

First, we note that DAN need not prove that it is the 

holder of a negotiable instrument in order to satisfy element 

one of N.C. Gen. Stat. § 45-21.16(d). When determining whether 

a party is the holder of a valid debt, we must find (i) 

sufficient competent evidence of a valid debt, and (ii) 

sufficient competent evidence that the party seeking to 

foreclose is the current holder of the notes that evidence that 

debt. In re Adams, 204 N.C. App. 318, 322, 693 S.E.2d 705, 709 

(2010). Prong two, whether DAN is the holder of a valid debt, 

need not be addressed. Respondents’ argument that DAN is not 
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the “holder” of a valid debt is based on the premise that the 

Confirmed Plan is a nullity. Accordingly, we must only find 

competent evidence of a valid debt. In Azalea, this Court held 

that a “valid debt” can be evidenced by several documents 

(including a confirmed bankruptcy plan), each modifying the 

terms of the other. Azalea, 140 N.C. App. at 53, 535 S.E.2d at 

394 (2000) (finding that “the compromise and settlement 

agreement and plan of reorganization that were negotiated, 

amended and ratified by the parties in this case modified the 

original documents[.]”) (emphasis added). Here, the Wachovia 

notes were modified by the plan of reorganization, which was 

negotiated, amended, and ratified by the parties through the 

Confirmed Plan. The Confirmed Plan set forth the maturity date

of the loans, interest rate, and events triggering default. LLM 

(at respondents’ direction) made payments under the terms of the 

Confirmed Plan for approximately ten years. Upon review, we 

hold that the Confirmed Plan evidences a valid debt of which DAN 

is the holder. 

In addition, the valid debt and DAN’s holder status is 

further evidenced in the order entered by Judge Leonard. See

L.L. Murphrey Co. v. D.A.N. Joint Venture III, L.P., Adv. No. 

11-00139, 2011 WL 6301214 (Bankr. E.D.N.C. Dec. 16, 2011). 
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Judge Leonard calculated LLM’s recapitalized debt under the 

Confirmed Plan at $6,168,362.00 and found that DAN became the 

holder of this indebtedness in 2008. LLM did not appeal this 

order and it is therefore binding on this Court.

Second, the deed of trust and the Confirmed Plan both 

adequately describe the indebtedness each secures. In North 

Carolina, a deed of trust must identify the obligation secured 

so that all subsequent purchasers or lenders are afforded 

sufficient notice as to the nature of the obligations secured by 

the deed of trust. In re Hall, 210 N.C. App. 409, 413, 708 

S.E.2d 174, 177 (2011) (holding “[t]o be a valid lien on real 

property, North Carolina law requires a deed of trust to 

specifically identify the obligation it secures.”) Here, the 

deed of trust provides a detailed description of the obligations 

secured, as follows:

(a) Note, dated July 9, 1993, in the 

original principal amount of $1,000,000, 

executed by Larry Barrow and Lois M. Barrow 

and payable to the Beneficiary (which, 

together with any and all renewals, 

modifications and extensions thereof, is 

hereinafter referred to as the “Barrow 

Note”).

(b) Note, dated July 9, 1993, in the 

original principal amount of $1,000,000, 

executed by Donald Stocks and Connie M. 

Stocks and payable to the Beneficiary 

(which, together with any and all renewals, 
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modifications and extensions thereof is 

hereinafter referred to as the “Stocks 

Note”).

(c) Note, dated July 9, 1993 in the original 

principal amount of $1,131,478.94, executed 

by the Maker and payable to the Beneficiary 

(which, together with any and all renewals, 

modifications and extensions thereof, is 

hereinafter referred to as the “1993 Company 

Note”).

The deed of trust also details the modification of the 

Wachovia notes over time, including the decrease in principal 

balance and extension of maturity dates. Further, the deed of 

trust contains a catchall phrase—stating it operates as security 

for “any renewals, modifications or extension” of the Wachovia 

notes and “all present and future obligations of [LLM and 

respondents] to [DAN].”

The Confirmed Plan specifically describes the obligations 

it secures as including:

A. Note #1: Note #1 is a promissory note 

dated July 9, 1993 in the original 

principal amount of $1,131,478.94. By its 

terms, this obligation accrued interest at 

the annual rate of 7.15%. It was to be 

repaid by monthly principal and interest 

payments in the amount of $17,160.40. 

This note matured July 10, 1999. 

B. Note #17: Note #17 is a promissory note 

dated April 23, 1996 in the original 

principal amount of $3,500,000.00. By its 

terms, this obligation accrued interest at 

the annual rate of prime plus .75%. It 
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was to be repaid by monthly principal 

payments in the amount of $58,334.00 plus 

accrued interest. This note matures on 

May 1, 2001. 

C. Note #18: Note #18 is a Declining 

Revolver Note dated April 23, 1996 in the 

original principal amount of 

$5,420,000.00. By its terms, this 

obligation accrued interest at the annual 

rate of 9%. It was to be repaid by 

quarterly principal payments in the amount 

of $250,000.00 plus accrued interest. 

This note matured March 15, 2000.

D. Note #19: Note #19 is a Grain Line of 

Credit Note dated April 23, 1996 in the 

original principal amount of 

$2,750,000.00. By its terms, this 

obligation accrued interest at the annual 

rate of prime plus 1%. It was to be 

repaid by monthly interest payments with 

principal due and payable at maturity.

This note matured February 25, 1999.

E. Note #22: Note #22 is a future advances 

note dated March 16, 1999 in the original 

principal amount of $175,000.00. By its 

terms, this obligation accrued interest at 

the annual rate of prime plus 1.5%. It was 

to be repaid by monthly interest payments 

with principal due and payable at 

maturity. This note matured April 15, 

1999.

We conclude that the description of the indebtedness evidenced 

in the deed of trust and the Confirmed Plan is sufficient under 

North Carolina law to notify creditors of the nature of the 

obligations secured by the deed of trust and likewise by the 
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Confirmed Plan. Hall, supra.

As to respondents’ third argument, we note that they 

advance no specific argument to support their position that the 

Confirmed Plan was not intended to act as an extension or 

modification of the deed of trust. Our Supreme Court has held 

that a deed of trust executed as security for a debt will secure 

all renewals of the debt unless a different intent appears. 

Wachovia Nat'l Bank v. Ireland, 122 N.C. 571, 29 S.E. 835 (1898) 

(“The deed contains a covenant that the charge shall be binding 

for all renewals of the debts specified. This would be so 

without any agreement, unless a different intent appeared.”). 

“Where a note is given merely in renewal of another note and not 

in payment thereof, the effect is to extend the time for the 

payment of the debt without extinguishing or changing the 

character of the obligation, and, in case of default, the holder 

may sue upon the original instrument.” Dyer v. Bray, 208 N.C. 

248, 180 S.E. 83 (1935). 

Where a [subsequent] contract involves the 

same subject matter as the first, but where 

no recession has occurred, the contracts 

must be construed together in identifying 

the intent of the parties and in 

ascertaining what provisions of the first 

contract remain enforceable, and in such 

construction the law pertaining to 

interpretation of a single contract applies.
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In re Fortescue, 75 N.C. App. 127, 130, 330 S.E.2d 219, 221 

(1985) (citation omitted) (applying terms of a loan modification 

agreement to find default of promissory note and foreclosure of 

deed of trust). “The court’s primary purpose in construing a 

contract is to ascertain the intention of the parties.” Id. at 

130, 330 S.E.2d at 222; see also In re Foreclosure of Sutton 

Investments, 46 N.C. App. 654, 659-60, 266 S.E.2d 686, 689 

(1980) (concluding “that proper interpretation of the provisions 

in the Note and the Deed of Trust prescribing the conditions of 

default requires that the instruments be read together as one 

contract rather than as two independent agreements.”)

The modification of the Wachovia notes through the 

Confirmed Plan did not eliminate the original debt, as 

respondents contend. The plan of reorganization specifies: 

“[Note A and Note B] shall remain secured by that collateral 

pledged to Wachovia by the Debtor prior to the Petition Date and 

guaranties will remain in full force and effect for the Notes 

except as adjusted to reflect the amount of Recapitalized Debt, 

defined herein” and “[t]he Recapitalized Debt shall remain 

secured by the same Pre-Petition Collateral.” The Confirmed 

Plan provides: “The guarantors of Wachovia’s Notes A and B as 

provided for under the Plan shall be the same as pre-petition, 
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with the exception [] [of] Connie S. Murphrey[.]” Notably, the 

Confirmed Plan does not provide for a payoff of the Wachovia 

notes—it merely reclassifies the preexisting debt. Thus, the 

Confirmed Plan “set new, specific requirements that the parties 

in this case intended to follow, in addition to any agreements 

in the original promissory note and deed of trust, that were not 

irreconcilable.” Azalea, 140 N.C. App. at 52, 535 S.E.2d at 

393. 

The deed of trust also states that it is to operate as 

security for “any renewals, modifications or extensions” of the 

Wachovia notes as well as “all present and future obligations of 

[LLM and the Barrow family] to [DAN].” Based on the language 

of the Confirmed Plan and deed of trust, we conclude that the 

parties intended for the deed of trust to operate as security 

for the Wachovia notes, as modified under the terms of the 

Confirmed Plan.

C. Statute of Limitations

Respondents argue that DAN’s foreclosure action is barred 

by the applicable statute of limitations set forth in N.C. Gen. 

Stat. § 1-47(2) and (3) (2013). We disagree and note that the 

crux of the statute of limitations argument hinges on our having 
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concluded that the Confirmed Plan is unenforceable against 

respondents. 

N.C. Gen. Stat. § 1-47(3) (2013) provides:

For the foreclosure of a mortgage, or deed 

in trust for creditors with a power of sale, 

of real property, where the mortgagor or 

grantor has been in possession of the 

property, within ten years after the 

forfeiture of the mortgage, or after the 

power of sale became absolute, or within ten 

years after the last payment on the same.

As the statute provides, the statute of limitations does 

not run until ten years after a final payment is made on an 

obligation. Respondents do not contest the fact that LLM made 

payments pursuant to the terms of the Confirmed Plan through 

2011. Clearly, DAN is squarely within the requisite time frame 

in which it can bring its foreclosure action. We overrule 

respondents’ argument.

II. Conclusion

In reviewing the record in its entirety, we hold that DAN 

presented competent evidence of: (i) a valid debt of which the 

party seeking to foreclose is the holder, (ii) default, (iii) 

right to foreclose under the instrument, and (iv) notice to 

those entitled as required under N.C. Gen. Stat. § 45-21.16(d). 

Accordingly, we affirm the trial court’s order.
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Affirmed.

Judges CALABRIA and STEPHENS concur.