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July 28, 2014

North Carolina Court of Appeals Rule 60(b) Motion Cannot Be Used to Attack An Order That a Party Failed to Appeal

In Hodgin v. United Community Bank, the COA emphasized the importance of the proper procedure for appealing a final order entered by the trial court.

The Hodgins took out two loans from Community Bank to finance construction of a home on a parcel of land they owned.  The Hodgins only intended for the 1.62 acres of that parcel to serve as collateral for the loans, but the Deed of Trust included an adjacent 2.09 acre tract of land as well.  The Hodgins failed to make their loan payments, and the bank agreed to refinance both loans with a new deed of trust.  Again the Hodgins intended for the deed of trust to only go to the 1.62 parcel of land, but it in fact encumbered the 2.09 acre tract as well.

The Hodgins discovered this alleged error, and the bank executed a release deed, but that deed actually only released the 2.09 acre tract of land from the first deed of trust, which was no longer in effect due to the second deed of trust.

The Hodgins again defaulted on the loan, and the bank foreclosed on both parcels of land.  The Hodgins brought suit against the bank, claiming that it led them to believe that the 2.09 acre tract had been released from the more recent deed of trust.

The bank filed a motion to compel arbitration, and the Hodgins agreed to arbitrate the matter.  The arbitrator found in favor of the Hodgins, holding that the parties did not intend to include the 2.09 acre parcel as collateral for any of the loans, and awarded them the fair market value of the 2.09 acres.  The court confirmed the arbitration award, and the Hodgins filed a motion for appropriate relief from that order pursuant to Rule 60(b).   The trial court granted that motion, vacating the arbitration award and granting the Hodgins a de novo trial on all of their claims.

The COA reversed the trial court’s order granting the motion for appropriate relief, finding that such a motion was an improper substitute for a notice of appeal from the order confirming the arbitration award, and that “a Rule 60(b) motion cannot in any circumstances be used to collaterally attack a final order from which a party chose not to appeal.”  A timely notice of appeal or a motion pursuant to Rule 59(a)(8) (not Rule 60(b)) was the proper method for seeking relief for errors of law.  The COA also noted that the trial court’s order granting the motion for appropriate relief was improper because Rule 60(b) only allows for such relief for newly discovered evidence.  Here, the evidence asserted to be “new” by the Hodgins was previously known to them and could have been introduced during arbitration, but wasn’t. 

Copyright © 2014 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

About the Author

Amanda G Ray, Womble Carlyle Law Firm, Litigation Attorney
Associate

Amanda is an associate in the Business Litigation practice group of Womble Carlyle's Raleigh office. Amanda's diverse practice includes representing clients in commercial contract disputes, unfair and deceptive trade practice claims, consumer finance and residential lending claims, and disputes arising out of trust and estate administration. She has participated in mediations, arbitrations, administrative hearings, and several significant appellate cases. Amanda is a primary editor/writer for Womble Carlyle's highly-regarded ...

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