NO. COA14-192

NORTH CAROLINA COURT OF APPEALS

Filed: 5 August 2014

IRIS ENTERPRISES, INC.,

Plaintiff,

v. Wake County

No. 13 CVS 4167

FIVE WINS, LLC,

Defendant.

Appeal by defendant from Order entered 18 September 2013 by 

Judge Carl R. Fox in Superior Court, Wake County. Heard in the 

Court of Appeals 4 June 2014.

Hatch, Little & Bunn, LLP, by John N. McClain, Jr., A.

Bartlett White, and Justin R. Apple, for plaintiffappellee.

Morris, Russell, Eagle & Worley, PLLC, by Benjamin L. 

Worley, for defendant-appellant.

STROUD, Judge.

Five Wins, LLC (“defendant”), appeals from an order entered 

18 September 2013, requiring the trustee of property encumbered 

by a deed of trust to pay Iris Enterprises (“plaintiff”)

$24,291.24 as surplus from the foreclosure sale of that 

property. We affirm.

I. Background
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On 8 March 2007, Greenfield Durham, LLC executed a 

promissory note for $3,959,000.00 in favor of Capital Bank. As 

collateral for that loan, plaintiff executed a deed of trust in 

favor of Capital on three pieces of real property. Iris is owned 

by Massoumeh Valanejad, who is one of two owners of Greenfield.

Greenfield defaulted on the note in 2010. On 31 March 2010, 

Capital sent Greenfield a letter declaring a default and 

accelerating the terms of the loan. Greenfield did not pay the 

balance of $870,902.84. As a result, Capital initiated 

foreclosure proceedings against the encumbered properties. 

Before the foreclosure sale could proceed, Iris filed for 

Chapter 11 bankruptcy, which stayed the foreclosure proceedings. 

The United States Bankruptcy Court for the Eastern District of 

North Carolina entered a Chapter 11 Plan that required Iris to 

make full payment on or before 5 January 2013. Iris failed to do 

so. 

On 8 March 2013, Capital sold Greenfield’s debt to 

defendant. Defendant re-opened foreclosure proceedings and 

demanded payment of $971,670.03 in order for Iris to redeem the 

property and cancel the deed of trust. On 26 March 2013, 

plaintiff filed a complaint in Wake County Superior Court 

seeking an injunction to prohibit the foreclosure sale and a 
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declaratory judgment on the “payoff on the Note secured by the 

Deed of Trust.” The trial court issued a temporary restraining 

order halting foreclosure proceedings until it could hold a 

hearing.

On 28 June 2013, the trial court entered its declaratory 

judgment. It made a number of findings of fact and concluded 

that the “pay-off amount that Iris must pay to Five Wins to 

redeem the Property and cancel the Deed of Trust is $894,711.25 

as of 6 May 2013 . . . .” It further concluded that interest 

would accrue at $314.08 per day while Iris would “receive credit 

for payments in the amount of $356.45 every day until pay-off by 

Iris, or Foreclosure by Five Wins.” It therefore decreed:

The pay-off amount that Iris must pay to 

Five Wins to redeem the Property and cancel 

the Deed of Trust is $894,711.25 as of 6 May 

2013, which includes, in the discretion of 

the Court, “attorneys’ fees” of $43,640.92, 

with that amount decreasing by $42.37 each 

day until pay-off by Iris, or foreclosure by 

Five Wins[.]

The trial court also permitted Five Wins to move forward 

with its foreclosure sale, which it did. At the foreclosure 

sale, Five Wins bid $875,000.00, but WA Venture, LLC made an 

upset bid of $918,750.00. WA Venture then assigned its upset bid 

to Five Wins. On 27 August 2013, the trustee of the encumbered 

property filed a “Final Report and Account of Foreclosure Sale” 
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(original in all caps), which reported various disbursements, 

including $856,286.33 as the “Right of Redemption pursuant to 

Declaratory Judgment” and $24,105.61 as going toward the 

“Secured Obligation(s) (partial)”. Under the disbursement made 

by the trustee, the entire $917,750.00 was used, leaving no 

surplus.

Plaintiff believed that these disbursements contravened the 

declaratory judgment. So, it noticed a hearing, without filing 

an accompanying motion, and requested that the trial court 

“clarify” its previous declaratory judgment. The trial court 

rejected defendant’s argument that the prior judgment did not 

control because “there is a distinction between ‘the payoff on 

the Promissory Note’ and the ‘amount to redeem real 

property[.]’” It entered an order on 18 September 2013, wherein 

it concluded that its prior judgment determined the

amount of the payoff on the Promissory Note 

applicable to Plaintiff, and after payment 

by the Substitute Trustee of the amounts set 

out therein, along with the three (3) 

expenses set out in paragraph 16 above 

[relating to expenses incurred after the 

judgment was entered], there should have 

been surplus funds totaling $24,291.24 to be 

paid to Plaintiff as owner of the 

Collateral.
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The trial court therefore ordered the trustee to pay $24,291.24 

to plaintiff as surplus from the foreclosure sale. Defendant 

filed written notice of appeal on 25 September 2013.

II. Distribution of Foreclosure Sale Assets

Defendant argues that the trial court invaded the sole 

province of the trustee by determining that the trustee had 

misapplied the funds from the foreclosure sale. We conclude that 

defendant lost the opportunity to challenge the trial court’s 

decision when it failed to appeal the declaratory judgment, 

which determined the “pay-off” amount and the amount of 

attorney’s fees.

Any error in the trial court’s 18 September 2013 order

necessarily follows from the declaratory judgment. In that 

order, the trial court determined the attorney’s fees and “payoff amount” necessary to exercise the equitable remedy of 

redemption. Contrary to defendant’s argument, the law of this 

state has long been that the right of redemption allows a 

mortgagor “to regain complete title by paying the mortgage debt, 

plus any interests and any costs accrued.” James A. Webster, 

Jr., Webster’s North Carolina Real Estate Law, § 13.05[1] (6th

ed. 2013). The redemption amount thus is the amount of 

indebtedness. So, when the trial court concluded that the “pay-
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off” amount was $894,711.25, it was ruling on the amount of the 

indebtedness, including accrued interest and fees. Indeed, in 

the September order, the trial court specifically concluded that 

the June judgment “was intended to set out the amount of the 

payoff on the Promissory Note applicable to Plaintiff . . .” 

Further, in the prior judgment, the trial court calculated the 

amount of interest that would accrue each day and the credit for 

payments that Iris would receive until “pay-off by Iris, or 

foreclosure by Five Wins.”

Once these amounts were set, any sale price in excess of 

that amount, deducting other reasonable expenses incurred after 

entry of the order and contemplated by that order, must be 

considered surplus. See N.C. Gen. Stat. § 45-21.31(b) (2013)

(“Any surplus remaining after the application of the proceeds of 

the sale as set out in subsection (a) shall be paid to the 

person or persons entitled thereto, if the person who made the 

sale knows who is entitled thereto.” (emphasis added)). Once the 

trial court determined the amount of the payoff and the per diem 

sums of interest which would accrue until paid in full, and that 

determination was not appealed, it was the law of the case and 

the trustee was required to follow the court’s order.
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Although we have said that disbursements of proceeds from a 

foreclosure sale “are within the sole province of the 

trustee[,]” in none of the cases cited by defendant has there 

been a prior order from a declaratory judgment action 

determining the relevant amounts. In re Foreclosure of Deed of 

Trust Executed by Ferrell Bros. Farm, Inc., 118 N.C. App. 458, 

461, 455 S.E.2d 676, 678 (1995). “When an order is not appealed, 

it becomes[] the law of the case, and other . . . judges [are]

without authority to enter orders to the contrary.” Kelly v. 

Kelly, 167 N.C. App. 437, 443, 606 S.E.2d 364, 369 (2004).

Certainly if one superior court judge cannot overrule another, 

the trustee of a property in foreclosure lacks authority to 

overrule a superior court judge. See Cato v. Crown Financial, 

Ltd., 131 N.C. App. 683, 686, 508 S.E.2d 822, 824 (1998) 

(holding that a prior final judgment was the law of the case, 

which the debtor corporation’s receiver could not reduce or 

modify), disc. rev. denied, 350 N.C. 593, 536 S.E.2d 836 (1999).

Even assuming that the declaratory judgment exceeded the trial 

court’s authority, defendant cannot now challenge it.

1 Defendant 

does not argue that the trial court was without jurisdiction to 

 

1 Plaintiff also argues that the trial court erred in concluding 

that defendant was entitled to any attorney’s fees, but 

plaintiff similarly failed to appeal the declaratory judgment, 

so we have no jurisdiction to address that issue. 
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enter the declaratory judgment, so any argument to that effect 

has been abandoned. N.C.R. App. P. 28(a). Therefore, we affirm 

the trial court’s 18 September 2013 order enforcing its 

unappealed declaratory judgment.

III. Conclusion

For the foregoing reasons, we affirm the order of the trial 

court.

AFFIRMED.

Judges STEPHENS and MCCULLOUGH concur.