Real Property – Anti-Deficiency Statute – Civil Practice – Appeals – Summary Judgment & Motion to Amend

 Rutherford Plantation, LLC v. Challenge Golf Group of the Carolinas, LLC (Lawyers Weekly No. 13-07-0041, 19 pp.) (Rick Elmore, J.) (Donna S. Stroud, J., dissenting) Appealed from Rutherford County Superior Court (Marvin P. Pope Jr, J.) N.C. App.

Holding: Even though defendant failed to raise the anti-deficiency statute at the summary judgment stage and cited the wrong subsection of N.C. R. Civ. P. 59 in its motion to amend judgment, the trial court should have taken notice of the anti-deficiency statute, which cannot be waived, and denied plaintiff a deficiency judgment.

We reverse the deficiency judgment and remand for further proceedings.

The trial court granted plaintiff only partial summary judgment, so this is an interlocutory appeal. Where the issue is whether the trial court violated the anti-deficiency statute by granting a monetary judgment on a purchase-money note, such an issue necessarily affects the judgment. Therefore, a substantial right is affected, and we will consider the substance of this appeal.

Under G.S. § 45-21.38, the foreclosing party is not entitled to a deficiency judgment if the underlying transaction is a purchase-money transaction.

Defendant’s failure to argue G.S. § 45-21.38 at the summary judgment hearing does not preclude it from arguing the statute on appeal. The trial court is expected to take judicial notice of public statutes.

Further, we recognize that defendant made a scriveners error in its motion to amend, stating that the motion was brought pursuant to Rule 59(a)(8) instead of Rule 59(a)(7). Nevertheless, in its motion to amend, defendant argued that the trial court made an “error of law” in entering the monetary judgment in favor of plaintiff as § 45-21.38 states that a mortgagee is not entitled to a monetary judgment when the executed deed of trust is to secure payment of the balance of the purchase price of real property. We conclude that the substantive grounds for relief were apparent and that defendant brought its motion pursuant to Rule 59(a)(7).

The entry of a deficiency judgment in favor of plaintiff was improper as § 45-21.38 prohibits a monetary judgment in this instance.

Reversed and remanded.

Dissent

(Stroud, J.) I would dismiss defendant’s appeal. Defendant failed to timely appeal the trial court’s summary judgment order.

Furthermore, where there was no trial – only a hearing on a motion for summary judgment – and where defendant did not raise the anti-deficiency statute at that hearing, Rule 59(a)(8) is not applicable here. Rule 59(a)(8) addresses “error of law” but still requires that the party who challenges the trial court’s ruling must have “objected,” or raised the issue before the trial court. The fact that a court can take judicial notice of a statute does not provide an alternate method for raising new legal arguments after a hearing is over.

As defendant presents solely an error of law, the trial court’s ruling was subject to challenge only by appeal.

A motion under any of the subsections of Rule 59 argued by defendant is proper only after a trial and not after a summary judgment hearing.