Court Opinion

ID: 2726795
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:08:55.215723+00
Date Added: 2024-06-11T10:03:12.334213
License: Public Domain

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,
                                      -2-
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
                                       -3-
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
                                      -4-
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
                                      -5-
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.
                                           -6-
                                 _________________________

      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
                                   -7-
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
                                 -8-
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.
                                      -9-

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 pre-
            foreclosure 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
                                          -11-
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
                                  -12-
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).
                             -13-
         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
                                           -14-
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.
                                  -15-
       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
                                            -17-
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
                                    -18-
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
                                -19-
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
                                           -20-
       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.
                                   -21-
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
                                     -22-
            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
                                                -23-
               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
                                            -24-
385, 387 (1978).           “Mere possession of a note payable to order

does not suffice to prove ownership or holder status.”                               Econo-

Travel   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
                              -25-
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).
                                     -26-
    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.