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Today at the Court of Appeals

By Sean E. Andrussier

Today, Tuesday, February 22, 2011, the a three-judge panel of North Carolina Court of Appeals comprised of Judges Robert C. Hunter, Linda Stephens, and Sam J. Ervin, IV will hear oral argument in the following cases:

Wachovia Bank National v. Superior Construction Corp.

This case arises out of an action filed in Mecklenburg County Superior Court by Wachovia Bank, N.A., seeking a determination regarding whether a claim of lien filed by Wachovia had priority over a claim of lien filed by Superior Construction Corp.  The Court of Appeals will consider whether a lien waiver executed by a contractor can effect a change in the date when the contractor first furnished materials and labor to a project.

Wachovia loaned Intracostal Living, LLC approximately $22.8 million for the construction of a high end condominium project.  Wachovia secured this loan through a deed of trust filed on May 19, 2005.  In September 2007, Superior filed a claim of lien asserting that it was owed $1.6 million for services provided for the condominium project.  Superior further alleged that it first provided labor and materials to the condominium project on April 22, 2005. Superior executed partial lien wavers on May 11, 2005 and June 9, 2005 for labor and materials provided to those dates.

After being substituted as the plaintiff, Preserve Holdings, LLC, the owner of the land that was subject to the lien, filed a motion for judgment on the pleadings that asserted that Wachovia's deed of trust had priority over Superior's claim of lien.  North Carolina Business Court Judge John R. Jolly determined that although North Carolina's lien statutes provide that claims of lien relate to the time of first furnishing of labor, the parties may waive these protections if they wish to do so.  Judge Jolly went on to determine that the lien waivers executed by Superior constituted such a waiver and that any lien rights Superior had did not attach until after Wachovia filed it deed of trust.  Therefore, in Judge Jolly's opinion, Wachovia deed of trust took priority over Signatures' claim of lien.

Murdock v. Thomas

Plaintiff Peggy Murdock instituted a civil action in Iredell County Superior Court against various entities related to a payday lending operation.  Due to certain pretrial rulings, the case proceeded at the same time in both state court and in arbitration before the American Arbitration Association.  With respect to the portion of the case that remained in state court, Judge Ripley E. Rand dismissed claims against several defendants because the named plaintiffs lacked standing to pursue claims against those defendants.  However, the arbitrator's Class Determination Award approved a class that included class members who only had claims against these dismissed entities. The defendants unsuccessfully sought to have the Class Determination Award vacated by Judge Rand.  This appeal followed.

Appellants contend that the Class Determination Award should be vacated because the class definition included claims against defendants that had been dismissed from the state action due to the named-plaintiffs' lack of standing.  Additionally, the appellants assert that the class definition will allow class members to seek to pursue claims directly against them for alleged bad acts that were committed by the other parties.

Appellees contend that the case should be dismissed as interlocutory and that the appellants' arguments do not establish the manifest disregard of the law that is required to vacate the arbitrator's award.

Full post as published by North Carolina Appellate Blog on February 22, 2011 (boomark / email).