Court Opinion

ID: 9780756
Source: CourtListenerOpinion
Date Created: 2023-08-30 02:46:48.741156+00
Date Added: 2024-06-11T07:34:09.286015
License: Public Domain

ERVIN, Judge,
concurring in part and dissenting in part.
Although I concur in the Court’s determinations that the Teagues and the Glovers were bona fide purchasers for value; that Plaintiffs were not entitled to reformation of the deed of trust; and that the holding in Williams Masonry is not controlling in the present case, I am unable to agree with the Court’s conclusion that there is a genuine issue of material fact regarding whether Defendants would be preju*450diced by reformation of the deed of trust. As a result, I concur in the Court’s opinion in part and dissent in part.
“ ‘A genuine issue of material fact arises when ‘the facts alleged . . . are of such nature as to affect the result of the action.’ ” N.C. Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 179, 182, 711 S.E.2d 114, 116 (2011) (quoting Kessing v. Nat’l Mortg. Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971)) (citation and quotation marks omitted); see also City of Thomasville v. Lease-Afex, Inc., 300 N.C. 651, 654, 268 S.E.2d 190, 193 (1980) (stating that “[a]n issue is material if, as alleged, facts would constitute a legal defense, or would affect the result of the action or if its resolution would prevent the party against whom it is resolved from prevailing in the action”). The ultimate issue about which the Court and I disagree is the extent, if any, to which the existence of a factual dispute about the manner in which the size of the credit that the Gibbs’ received against the Teague & Glover judgment would constitute a genuine issue of material fact.
According to Black’s Law Dictionary, “prejudice” is defined as “[d]amage or detriment to one’s legal rights of claims.” Black’s Law Dictionary 1218 (8th ed. 2004). In light of that definition, I believe that any “prejudice” determination requires a “before and after” comparison involving the nature and extent of a party’s legal rights “with or without” the relevant event. As I understand the present record, there is no dispute that (1) Defendants were deeded a tract of property of which only Tract A, which contains less than half the total amount of property previously owned by the Gibbs and which does not include the residence that had been constructed on the property, was encumbered by Plaintiff’s deed of trust; (2) if the Gibbs fail to meet their obligation under the deed of trust, the bank is only entitled to foreclose upon Tract A, rather than the entire tract of property previously owned by the Gibbs; (3) if the deed of trust were reformed in accordance with Plaintiff’s request, the entire tract of property, including both Tract A and the remainder of the overall tract, would then be encumbered by Plaintiff’s deed of trust; and (4) if the Gibbs defaulted on their obligation to Plaintiff after reformation, Plaintiff would be able to foreclose on the entire tract of property rather than just on Tract A. As a result, reformation would result in a change from a situation in which the larger and more desirable portion of the property in question was unencumbered to one in which the entire property is encumbered. In my view, such an outcome clearly constitutes “damage or detriment” to the Teagues’ and Glovers’ “legal *451rights” sufficient to compel a finding of “prejudice” regardless of the other factors upon which the Court relies.
As the Court correctly observes, “Plaintiffs argue that, since the Teague Defendants ‘had to have expected’ that the loan would be repaid in connection with the foreclosure process and since the Teague Defendants did not rely on the terms of the deed of trust during their negotiations with the Gibbses, the Teague Defendants would receive ‘exactly what they bargained for’ in the event that ‘the 2009 Deed of Trust is reformed.’ ” This argument, which the Court obviously accepts, does not rest upon a comparison between the nature and extent of Defendants’ legal rights with or without reformation of the deed of trust. Instead, the Court appears to compare the economic effect of reformation with Defendants’ subjective expectations regarding the economic value of the bargain they made with the Gibbs. Put another way, the Court, consistently with Plaintiff’s argument, assumes that, if the amount of the debt owed by the Gibbs to BB&T was utilized in calculating the amount of credit which the Gibbs were entitled to receive against the Teague & Glover judgment in return for deeding the entire parcel to the Teagues and the Glovers, then the Teague Defendants would be unable to show the necessary prejudice.
The approach adopted by the Court is inconsistent with the manner in which I believe that the prejudice inquiry should be conducted. As I understand the appropriate prejudice inquiry, which should rest upon a “before and after” comparison of the type outlined above, the various factors, both objective and subjective, upon which Defendants relied in deciding how much to credit the Gibbs for the deed to the property are legally irrelevant to the issue of whether Defendants would be prejudiced by reformation of the deed of trust encumbering the property. As a result, the evidence upon which the Court relies in reversing the trial court’s decision with respect to the prejudice issue does not relate to a “material” issue of fact, because resolution of this issue would not affect the outcome of the case. Thus, since the Court reaches a contrary conclusion, I respectfully dissent from the Court’s decision to remand this case to the trial court for consideration of this issue,while concurring with the remainder of its opinion.