TD BANK, N.A. v. JAY JALA BAPA,.L.C. et al

Filing 29

MEMORANDUM OPINION AND ORDER signed by MAGISTRATE JUDGE L. PATRICK AULD on 1/17/2018. The Motion to Strike 22 is DENIED. FURTHER that the Summary Judgment Motion 16 is DENIED as to the deficiency claim, but GRANTED as tothe request for attorney's fees. FURTHER that Defendants are jointly and severally liable to Plaintiff on the Note and Guarantees for $73,493.57 in attorneys fees. (Coyne, Michelle)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

TD BANK, N.A.,

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
JAY JALA BAPA, L.L.C., et al.,
Defendants.

1:16cv823

MEMORANDUM OPINION AND ORDER
This case comes before the Court on the “Motion for Summary
Judgment” (Docket Entry 16) (the “Summary Judgment Motion”) and
“Plaintiff’s Motion to Strike Affidavit of Bankim Rana” (Docket
Entry 22) (the “Motion to Strike”) filed by TD Bank, N.A. (the
“Plaintiff”). For the reasons that follow, the Court will grant in
part and deny in part the Summary Judgment Motion and will deny the
Motion to Strike.1
FACTUAL AND PROCEDURAL HISTORY
On

December

12,

2008,

Jay

Jala

Bapa

L.L.C.

(the

“LLC

Defendant”) entered into a “Loan and Security Agreement” with
Plaintiff regarding a $950,000 loan.

(Docket Entry 1-2 at 1.)

In

connection with the loan, LLC Defendant executed a “U.S. Small
Business Administration Note” (Docket Entry 1-3) (the “Note”) and

1
Pursuant to the parties’ consent, Chief United States
District Judge Thomas D. Schroeder referred this matter to the
undersigned United States Magistrate Judge for all proceedings.
(See Docket Entry 13 at 3; Docket Entry 14 at 1.) [Docket Entry
page citations utilize the CM/ECF footer’s pagination.]

a “Deed of Trust, Security Agreement and Assignment of Leases and
Rents” (Docket Entry 17-1) in favor of Plaintiff for 220 South
Eastern Boulevard, Fayetteville, North Carolina 28301 (the “Motel
Property”).

In addition, Bankim Rana, Shila Bankim Rana, and Doli

Rana (each, a “Guarantor”) each executed a “U.S. Small Business
Administration Unconditional Guarantee” (each, a “Guarantee”),
“unconditionally

guarantee[ing]

amounts owing under the Note.”

payment

to

[Plaintiff]

of

all

(Docket Entry 1-4 at 1, 7, 13.)2

LLC Defendant ceased making payments on the Note after September
2015.

(Docket Entry 1, ¶ 22; Docket Entry 10, ¶ 22; Docket Entry

17, ¶ 18.)
On February 12, 2016, Plaintiff sent letters to LLC Defendant
and Guarantors (collectively, the “Defendants”) notifying them that
the Note “is seriously delinquent,” and “has been accelerated, and
payment in full is hereby demanded” (Docket Entry 17-2 (the “Demand
Letters”) at 1, 3). The Demand Letters further informed Defendants
that, “unless the outstanding balance on [the] Note is paid within
five (5) days,” Plaintiff would enforce the “provisions relative to
payment of attorneys’ fees” in the Note and Guarantees.

(Id. at 1,

3.) More specifically, the Demand Letters stated that, pursuant to
North Carolina General Statute Section 6-21.2, Plaintiff would seek
attorney’s fees equal to “15%[] of the outstanding balance on the

2 In May 2009, Defendants executed an “Amendment to Note,”
which modified the interest rate on the loan. (See Docket Entry 15.)
2

Note when the action for collection is started” if the Note
remained unpaid.

(Id. at 1, 3.)

Defendants made no payments on

the Note in response to the Demand Letters.
¶

26.)

On

March

8,

2016,

Plaintiff

(See Docket Entry 10,
commenced

proceedings regarding the Motel Property.

foreclosure

(See Docket Entry 17,

¶¶ 21-23; see also Docket Entry 17-3.)

At a foreclosure sale on

April

the

28,

$215,000.

2016,

Plaintiff

purchased

Motel

for

(See Docket Entry 1, ¶¶ 33-34; Docket Entry 1-6 at 1;

Docket Entry 17, ¶¶ 24-25.)

Following expiration of the upset bid

period, this sale became final on May 9, 2016.
¶ 25; see also Docket Entry 1, ¶ 39.)
business

Property

assets

contained

in

the

(Docket Entry 17,

Plaintiff also purchased the
Motel

Property

for

$3,824.

(Docket Entry 1, ¶ 37; Docket Entry 17-9 at 1.)
On June 29, 2016, Plaintiff initiated this action by filing a
“Verified Complaint.” (Docket Entry 1 (the “Complaint”) at 1.) The
Complaint asserts that Defendants owed a deficiency balance of
$595,447.97 as of June 13, 2016, with interest accruing at 4.5% per
year or “$74.43 per day.”

(Id., ¶ 41.)

The Complaint seeks such

deficiency balance “plus reasonable attorneys’ fees for 15% of the
outstanding
(Id. at 6.)3

indebtedness

owing

when

suit

is

instituted.”

In response to the Complaint, Defendants raised a

3 To avoid confusion, citations to the Complaint’s relief
prayer refer to a page number rather than paragraph, as the
Complaint’s relief prayer suspends the sequential numbering used in
prior sections and begins a new numbering sequence.
3

defense under North Carolina’s anti-deficiency statute, N.C. Gen.
Stat. § 45-21.36, contending “that the fair market value of the
[Motel P]roperty was equal to the amount of the indebtedness at the
time and place of sale, or in the alternative, that the amount of
[Plaintiff’s] credit bid was substantially less than the fair
market value of the [Motel P]roperty.”

(Docket Entry 10 (the

“Answer”), ¶ 44.)
Thereafter, Plaintiff moved for summary judgment. (See Docket
Entry 16.)

In its Summary Judgment Motion, Plaintiff requests

“$510,345.24 plus interest at the annual rate of 4.50% after May
30, 2017, which equates to $60.86 per day,” as well as “reasonable
attorneys’ fees of $73,493.57, which is 15% of the outstanding
indebtedness when [Plaintiff] instituted this action on June 29,
2016 ($489,957.14).”
Judgment Motion.
seeks

to

strike

Affidavit”)
judgment.

upon

(Id. at 1.)4

Defendants oppose the Summary

(See Docket Entries 20, 21.)
the

affidavit

which

(Docket

Defendants

Entry

rely

(See Docket Entries 22, 23, 25.)

oppose the Strike Motion.

In turn, Plaintiff

in

21)

(the

opposing

“Rana

summary

Defendants similarly

(See Docket Entry 24.)

4
Plaintiff filed the Summary Judgment Motion on June 2,
2017. (See id. at 2-3.)
4

DISCUSSION
I.

Preliminary Matters

Federal courts bear an “independent obligation” to assess
whether

subject-matter

jurisdiction

exists

in

every

action.

Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d
474, 480 (4th Cir. 2005); see also Fed. R. Civ. P. 12(h)(3) (“If
the court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the action.”). No presumption
of jurisdiction applies, Pinkley, Inc. v. City of Frederick, Md.,
191 F.3d 394, 399 (4th Cir. 1999); instead, federal courts must
determine if a valid jurisdictional basis exists and “dismiss the
action if no such ground appears,” In re Bulldog Trucking, Inc.,
147 F.3d 347, 352 (4th Cir. 1998).

Generally, federal courts

possess jurisdiction over “actions arising under the Constitution,
laws, or treaties of the United States,” 28 U.S.C. § 1331 (i.e.,
federal

question

jurisdiction),

as

well

as

actions

involving

disputes of a value of $75,000 or more between “citizens of
different

States,”

28

U.S.C.

§

1332(a)(1)

(i.e.,

diversity

jurisdiction). Facts supporting jurisdiction typically must appear
in the complaint, see Pinkley, 191 F.3d at 399, and the party
asserting federal jurisdiction bears the burden of “show[ing] that
jurisdiction does, in fact, exist,” Davis v. Pak, 856 F.2d 648, 650
(4th Cir. 1988) (internal quotation marks omitted).

5

In

this

case,

the

Complaint

fails

jurisdictional basis upon which it rests.

to

specify

the

(See Docket Entry 1, ¶ 6

(stating only that “[t]his Court has jurisdiction over the parties
to this action and the subject matter of the claims set forth”).)
However, the parties treat this action as arising under the Court’s
diversity

jurisdiction,

and

no

discernable

basis

for

federal

question jurisdiction appears in the record. (See generally Docket
Entries 1, 10, 19, 20, 23-25 (relying on state substantive law).)
The

Court

therefore

examines

the

availability

of

diversity

jurisdiction, remaining mindful that “diversity jurisdiction does
not exist unless each defendant is a citizen of a different State
from each plaintiff,” Owen Equip. & Erection Co. v. Kroger, 437
U.S. 365, 373 (1978) (emphasis in original).
According to the Complaint, Plaintiff “is a national banking
association organized and existing under the laws of the United
States” and “is co-headquartered in Maine and New Jersey and
conducts business in North Carolina.”
Complaint

further

describes

LLC

(Docket Entry 1, ¶ 1.)

Defendant

as

“organized

The
and

existing under the laws of the State of North Carolina with a
principal place of business in Cumberland County, North Carolina.”
(Id., ¶ 2.)

Finally, the Complaint maintains that each Guarantor

“is a resident of Lodi, New Jersey.”

(Id., ¶¶ 3-5.)5

Because the

5
The Answer concedes the accuracy of the jurisdictional
allegations regarding Defendants. (See Docket Entry 10, ¶¶ 2-5.)
6

Complaint provided insufficient information for “assessing the
citizenship of Plaintiff and [LLC] Defendant” (Docket Entry 26 at
1), the Court ordered the parties to file notices supplying certain
citizenship information (see id. at 1-2).

According to these

notices, Plaintiff’s “main office, as designated in its articles of
association, is located in the State of Delaware” (Docket Entry 27
at 1) and LLC Defendant “is a North Carolina limited liability
company,” whose members — the Guarantors — all qualify as residents
and citizens of New Jersey (Docket Entry 28 at 1-2).
For diversity jurisdiction purposes, the Court attributes to
a

limited

liability

company

“the

citizenship

of

all

of

its

members.” Central W. Va. Energy Co. v. Mountain State Carbon, LLC,
636 F.3d 101, 103 (4th Cir. 2011).

Thus, notwithstanding its

establishment under North Carolina law, LLC Defendant remains a
citizen

of

New

Jersey.

As

to

Plaintiff,

“national

banking

associations shall,” for cases of this sort, “be deemed citizens of
the States in which they are respectively located.”
§

1348.

“‘locates’”

According
a

bank

to
for

the

United

Section

States

1348

Supreme

purposes

“in

28 U.S.C.
Court,
the

one

State

designated in its articles of association as its main office.”
Wachovia Bank v. Schmidt, 546 U.S. 303, 318 (2006).6

That view

6 In so holding, the Supreme Court distinguished the statute
governing corporate citizenship, 28 U.S.C. § 1332(c)(1), explaining
that “Congress has prescribed that a corporation ‘shall be deemed
to be a citizen of any State by which it has been incorporated and
of the State where it has its principal place of business.’” Id.
7

establishes Plaintiff as a citizen of Delaware.
27 at 1.)

(See Docket Entry

The parties therefore qualify as diverse, bringing this

case within the Court’s diversity jurisdiction.7
II.

Relevant Motion Standards

“The [C]ourt shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the

at 317 n.9 (quoting 28 U.S.C. § 1332(c)(1)) (emphasis in original).
Unlike that statute, the Supreme Court noted, Section 1348 “does
not refer to ‘principal place of business’” of the entity. Id.
The Supreme Court posited that such omission “may be of scant
practical significance for, in almost every case, as in th[e] one
[before the Supreme Court], the location of a national bank’s main
office and of its principal place of business coincide.” Id. In
this case, though, Plaintiff’s principal place of business and
designated main office diverge.
(See Docket Entry 27 at 1
(indicating that Plaintiff’s “principal place of business is
located in the State of New Jersey” rather than Delaware).)
Moreover, if relevant to the citizenship determination, Plaintiff’s
principal place of business would render the parties non-diverse.
However, in light of the Supreme Court’s Wachovia Bank decision and
in accordance with subsequent appellate decisions addressing this
issue, the Court concludes that a national banking association
qualifies as a citizen only of the state designated in its articles
of incorporation as its main office. See, e.g., OneWest Bank, N.A.
v. Melina, 827 F.3d 214, 218-19 (2d Cir. 2016) (“Several federal
courts of appeals to have considered this issue in the wake of
Wachovia Bank have held that a national bank is a citizen only of
the state listed in its articles of association as its main office.
. . . We agree with our sister circuits . . . .” (collecting
cases)); see also Halifax Corp. v. Wachovia Bank, 192 F. App’x 196,
196-97 (4th Cir. 2006) (“In Schmidt, we held that national banks
are ‘located’ under 28 U.S.C. § 1348 (2000), in every state in
which they operate a branch office. . . . While this case was
pending on direct review, the Supreme Court reversed this court’s
judgment in Schmidt, resolving a circuit split and holding that for
the purposes of diversity jurisdiction, a bank is ‘located’ in the
state designated in its articles of association as its main office
under § 1348.”).
7 This case satisfies the amount-in-controversy requirements
for diversity jurisdiction. (See Docket Entry 1 at 6.)
8

movant is entitled to judgment as a matter of law.”
P. 56(a).

Fed. R. Civ.

A genuine dispute of material fact exists “if the

evidence is such that a reasonable jury could return a verdict for
the nonmoving party.”
242, 248 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S.

The movant bears the burden of establishing the

absence of such dispute.
323 (1986).

Celotex Corp. v. Catrett, 477 U.S. 317,

In analyzing a summary judgment motion, the Court

“tak[es] the evidence and all reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party.”

Henry v.

Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (en banc).

In other

words, the nonmoving “party is entitled ‘to have the credibility of
his evidence as forecast assumed, his version of all that is in
dispute accepted, [and] all internal conflicts in it resolved
favorably to him.’”

Miller v. Leathers, 913 F.2d 1085, 1087 (4th

Cir. 1990) (en banc) (brackets in original) (quoting Charbonnages
de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979)).

If,

applying this standard, the Court “find[s] that a reasonable jury
could return a verdict for [the nonmoving party], then a genuine
factual dispute exists and summary judgment is improper.” Evans v.
Technologies Applications & Serv. Co., 80 F.3d 954, 959 (4th Cir.
1996).
In

evaluating

a

summary

judgment

motion,

the

Court

can

consider any “material[] in the record,” Fed. R. Civ. P. 56(c)(3),
including any affidavits, Fed. R. Civ. P. 56(c)(1)(A).

9

Affidavits

used to support or oppose summary judgment “must be made on
personal knowledge, set out facts that would be admissible in
evidence, and show that the affiant . . . is competent to testify
on the matters stated.”

Fed. R. Civ. P. 56(c)(4).

“A party may

object that the material cited to support or dispute a fact cannot
be presented in a form that would be admissible in evidence.”

Fed.

R. Civ. P. 56(c)(2).8
“In resolving a motion to strike [an allegedly noncompliant
affidavit], the Court should use ‘a scalpel, not a butcher knife’
to

strike

portions

of

an

affidavit

requirements of Rule 56([c]).”
5:09-cv-152,

2011

WL

1321403,

that

do

not

satisfy

the

Gardner v. Group Health Plan, No.
at

*3 (E.D.N.C.

Apr.

4, 2011)

(quoting Upshaw v. Ford Motor Co., 576 F.3d 576, 593 (6th Cir.
2009)).

Furthermore, “the papers of a party opposing summary

judgment are usually held to a less exacting standard than those of
the moving party and doubts regarding admissibility are resolved in
favor of the party opposing summary judgment.”

Owle v. Solomon,

No. 5:16cv25, 2017 WL 2262419, at *3 (W.D.N.C. May 23, 2017)
(internal quotation marks omitted); see also Salami v. North
Carolina Agric. & Tech. State Univ., 394 F. Supp. 2d 696, 706
(M.D.N.C. 2005) (“[T]he Court will evaluate [the] motions to strike
while considering that the papers of a party opposing summary

8 As such, “[t]here is no need to make a separate motion to
strike.”
Fed. R. Civ. P. 56 advisory committee’s notes, 2010
Amendment Subdivision (c).
10

judgment are usually held to a less exacting standard than those of
the moving party.” (internal quotation marks omitted)), aff’d, 191
F. App’x 193 (4th Cir. 2006).

Finally, the Court may disregard

noncompliant portions of an affidavit “without formally entering an
order striking them.”

Kirkman v. Tison, No. 1:09cv886, 2012 WL

4891624, at *7 (M.D.N.C. Oct. 15, 2012); see also Salami, 394 F.
Supp. 2d at 706 (“Therefore, although the Court will not address
each specific statement [the d]efendant objects to, to the extent
that this Court conclusively finds that any statement is not based
on an affiant’s first-hand knowledge, the Court will disregard that
statement in making the summary judgment determination.”).
III.

Deficiency Analysis

As an initial matter, no dispute exists regarding either the
validity or the breach of the Note and Guarantees, as
Defendants concede that the Plaintiff has established the
existence of binding contracts in the form of the
promissory [N]ote and personal [G]uarantees, that such
contracts were breached as a result of the Defendants’
failure to pay the indebtedness when due, and that the
Plaintiff received less than the full amount of its
indebtedness at the foreclosure sale in which Plaintiff
obtained ownership of the [Motel] Property.
(Docket

Entry

20

at

7-8.)

Nevertheless,

relying

on

North

Carolina’s anti-deficiency statute, N.C. Gen. Stat. § 45-21.36,
Defendants maintain that summary judgment remains improper because

11

“there is a genuine factual dispute with respect to the value of
the collateral at the time of the foreclosure sale.”
A.

(Id. at 8.)9

Anti-deficiency Statute

A “depression era law[] designed to protect debtors,” High
Point Bank & Tr. Co. v. Highmark Properties, LLC, 368 N.C. 301,
305, 776 S.E.2d 838, 842 (2015), the anti-deficiency statute
provides a defense to a defendant in a deficiency action brought by
a mortgagor who obtains the defendant’s property in a foreclosure
sale, see N.C. Gen. Stat. § 45-21.36.10

More specifically, this

9 As a federal court sitting in diversity, the Court applies
North Carolina’s substantive law to the parties’ dispute, including
its choice-of-law provisions. See TD Bank, N.A. v. Shree Dutt Sai,
LLC, No. 1:14cv852, 2015 WL 7302259, at *2 (M.D.N.C. Nov. 18,
2015).
Because Defendants executed the Note and Guarantees in
North Carolina (see Docket Entry 1-3 at 1, 6 (bearing Guarantors’
signatures and date of December 12, 2008); Docket Entry 1-4 at 5-6,
11-12, 17-18 (indicating Guarantors signed the Guarantees in North
Carolina on December 12, 2008)) and Plaintiff holds the Note (see
Docket Entry 1, ¶ 21; see also Docket Entry 1-3 at 4; Docket Entry
1-4 at 2, 8, 14), North Carolina law governs the parties’ dispute.
See TD Bank, 2015 WL 7302259, at *2-3 & n.2.
10

In relevant part, the anti-deficiency statute provides:

When any sale of real estate has been made by a
mortgagee, trustee, or other person authorized to make
the same, at which the mortgagee, payee or other holder
of the obligation thereby secured becomes the purchaser
and takes title . . . and thereafter such mortgagee,
payee or other holder of the secured obligation, as
aforesaid, shall sue for and undertake to recover a
deficiency judgment against the mortgagor, trustor or
other maker of any such obligation whose property has
been so purchased, it shall be competent and lawful for
the defendant against whom such deficiency judgment is
sought to allege and show as matter of defense and offset
. . . that the property sold was fairly worth the amount
of the debt secured by it at the time and place of sale
12

statute “provides the method of calculating th[e] amount [of the
‘indebtedness’]” owed the plaintiff.
305, 776 S.E.2d at 841.

High Point Bank, 368 N.C. at

As the North Carolina Supreme Court

explained, under this statute,
when the creditor has elected to become the purchaser of
the property conveyed by the mortgage or deed of trust at
a sale made under a power of sale contained in the
mortgage or deed of trust, and thereafter, pursuant to
such sale and purchase, acquires title to the property,
he shall not recover judgment against his debtor for any
deficiency, after the application of the amount of his
bid as a payment on the debt, without first accounting to
his debtor for the fair value of the property at the time
and place of the sale, and that such value shall be
determined by the court. In such case, the amount bid by
the creditor at the sale, and applied by him as a payment
on the debt, is not conclusive as to the value of the
property.
Richmond Mortg. & Loan Corp. v. Wachovia Bank & Tr. Co., 210 N.C.
29, 185 S.E. 482, 485 (1936), aff’d, 300 U.S. 124 (U.S. 1937).11
In actions implicating this statute, the fair market value of the
relevant property at the time of the foreclosure sale constitutes
a “material fact.”

Wachovia Realty Invs. v. Housing, Inc., 292

N.C. 93, 112, 232 S.E.2d 667, 679 (1977).

or that the amount bid was substantially less than its
true value, and, upon such showing, to defeat or offset
any deficiency judgment against him[.]
N.C. Gen. Stat. § 45-21.36.
11 The anti-deficiency statute protects guarantors as well as
principal debtors.
See High Point Bank, 368 N.C. at 307, 776
S.E.2d at 843 (“[The] guarantors had the right to have the court
determine the outstanding indebtedness by application of the fair
market value of the collateral at the time of sale.”).
13

B.

The Parties’ Contentions

For

purposes

maintains

that

constituted

of

the

the

fair

$320,000

or

Summary
market

less

foreclosure sale became final.
40; Docket Entry 19 at 4.)

Judgment

value

on

May

of
9,

Motion,
the

Motel

2016,

the

Plaintiff
Property
date

the

(See Docket Entry 17, ¶¶ 28, 39,

Plaintiff bases the $320,000 amount on

an appraisal it obtained of the Motel Property in October 2015,
which “determined that the [Motel P]roperty had an ‘as-is’ fee
simple market value of $320,000” (Docket Entry 17, ¶ 28).

(See

id., ¶ 40; see also Docket Entry 17-4 (the “Appraisal”) at 3.)
According to the Appraisal, the “highest and best use of the [Motel
P]roperty

is to continue hotel operations on an interim basis,”

and “the ‘as is’ market value of the going concern hotel as of
October 15, 2015[,] is . . . $320,000.”

(Docket Entry 17-4 at 2-

3.)
Defendants dispute this assessment.
Entry 21.)
for

the

(See generally Docket

Bankim Rana (“Rana”), “the primary person responsible

day-to-day

management

and

operations

of

the

[Motel]

Property” (id., ¶ 1), submitted the Rana Affidavit contesting
certain “factual inaccuracies” in the Appraisal (id., ¶ 5; see id.,
¶¶ 6, 9-11) and opining on the Motel Property’s value (see, e.g.,
id., ¶¶ 8, 16).

In particular, Rana averred that, solely as an

operating motel, the Motel Property held a value of at least
$700,000.

(Id., ¶ 8.)

Further, according to Rana, “the value of

14

[the] underlying land was greater than the value . . . based upon
an operating motel.”
that

the

value

of

(Id.)
the

Specifically, “[i]t is [his] opinion

[Motel]

Property

on

foreclosure sale was approximately $900,000.”

the

date

of

the

(Id., ¶ 16.)

The

Rana Affidavit identifies four factors underlying this opinion:
(i) the Motel Property’s $995,600 tax value “at the time of the
foreclosure[;]” (ii) its listing “in the months prior to the
foreclosure” for sale at $999,000 based on a determination by “an
experienced commercial real estate brokerage firm[;]” (iii) its
purchase for $1,050,000 in 2008 and the absence of “substantial
changes to the condition of the [Motel P]roperty during the time
that [LLC Defendant] owned it[;]” and (iv) “comparable sales,”
which “support a conclusion that the value of the underlying 4.2
acres of land was worth in excess of $900,000.”

(Id.)

Plaintiff moves to strike the Rana Affidavit on the grounds
that it “contain[s] inadmissible lay witness opinions and hearsay.”
(Docket Entry 22 at 1.)

More particularly, Plaintiff asserts that

Rana cannot critique the Appraisal or testify regarding the value
of the Motel Property as an operating motel because he does not
qualify as an expert witness.

(See Docket Entry 23 at 7-10.)

Plaintiff further asserts that Rana’s testimony regarding the Motel
Property’s

underlying

value

does

not

constitute

“substantial

competent evidence sufficient to defeat summary judgment” (id. at
2), because it relies on allegedly inadmissible facts. (See id. at

15

7.)

Defendants, in turn, defend Rana’s testimony as admissible

“lay opinion testimony of value” regarding the Motel Property.
(Docket Entry 24 at 6.)
C.

Expert Witness Challenges

As an initial matter, Plaintiff contends that “Rana is not
competent to critique [the A]ppraisal because he is not qualified
as a real estate expert,” as “[t]he sole qualification in the
[Rana] Affidavit is [Rana’s] alleged ‘experience in the motel
industry.’”

(Docket Entry 23 at 9.)

Plaintiff further challenges

Rana’s assertion that the Motel Property “should have been valued
‘based upon a multiple of 3.5 times gross revenue,’” on the grounds
that “Rana has not been qualified as an expert and he offers no
corroboration for this formula.”

(Id. (citing Docket Entry 21,

¶¶ 3-8).) For their part, Defendants contend that Rana’s testimony
qualifies as admissible lay witness opinion testimony rather than
impermissible expert witness testimony.

(See generally Docket

Entry 24.)
Federal Rule of Evidence 702 (“Rule 702”) governs testimony by
“expert” witnesses, permitting opinion testimony based on such
witnesses’ “scientific, technical, or other specialized knowledge”
in certain specified circumstances.
Evidence

701

(“Rule

701”)

governs

Conversely, Federal Rule of
opinion

testimony

by

lay

witnesses, permitting such testimony if it “is ‘rationally based on
the witness’s perception’ and helpful to determining a fact in

16

issue, so long as it is not based on the same ‘scientific,
technical, or other specialized knowledge’ covered by Rule 702.”
Lord & Taylor, LLC v. White Flint, L.P., 849 F.3d 567, 575 (4th
Cir. 2017), as amended (Mar. 7, 2017) (quoting Fed. R. Evid. 701).
“Because Rule 701 does not distinguish between expert and lay
witnesses, but rather between expert and lay testimony, the line
between lay opinion testimony under Rule 701 and expert testimony
under Rule 702 is a fine one.”

United States v. Perkins, 470 F.3d

150, 155 (4th Cir. 2006) (citation and internal quotation marks
omitted; emphasis in original). Nevertheless, “the key to Rule 701
lay opinion testimony is that it must arise from the personal
knowledge or firsthand perception of the witness.”

Lord & Taylor,

849 F.3d at 575.
Here, Plaintiff challenges “Defendants’ cherry-picked critique
of [the A]ppraisal” (Docket Entry 23 at 7) on the grounds that Rana
“is not qualified as a real estate expert” (id. at 9).

However,

Rana’s critique of “factual inaccuracies” (Docket Entry 21, ¶ 5) in
the

Appraisal

involves

information

within

Rana’s

“personal

knowledge or firsthand perception,” Lord & Taylor, 849 F.3d at 575,
rather

than

the

“scientific,

technical,

knowledge” Rule 702 contemplates.

or

other

specialized

To begin with, Rana disputes

aspects of the Appraisal’s contention “that the motel was in poor
condition, indicating that the [Motel P]roperty had deteriorated
since it was acquired, many rooms were not habitable or unusable

17

[sic], and the pool was filed with debris.”
¶ 9.)

(Docket Entry 21,

First, according to Rana, “the condition of the [Motel

P]roperty was similar to its condition when it was acquired, and
had not deteriorated significantly from its condition at the time
of its acquisition.”
pool’s

condition

ownership,

with

(Id.)

In particular, Rana asserts that the

remained

unchanged

“construction

debris

Defendant] acquired it.”

rooms

LLC

in

pool

(Id., ¶ 11.)

motel

during

limited

available

to

50

the

Defendant’s
when

[LLC

Rana also avers that the
“to

limit

local

taxes

associated with the operation of a motel,” not, “as suggested by
the [A]ppraisal, [because] only 50 rooms were habitable or usable.”
(Id.,

¶

10.)

These

assertions

arise

from

Rana’s

firsthand

observation of the Motel Property, rendering them admissible under
Rule 701.
In addition, Rana reports that the Appraisal understates LLC
Defendant’s 2014 gross income (see id., ¶ 6), as evidenced by LLC
Defendant’s

2014

tax

return

(see

Docket

Entry

20-1

at

20).

Finally, Rana asserts (i) that the Appraisal’s projection regarding
the Motel Property’s future gross income “is far too low” and
(ii)

that

a

figure

of

at

least

$200,000

(rather

than

the

Appraisal’s projected $166,988) represents a reasonable expected
annual gross income.

(Docket Entry 21, ¶ 7.)

Given his role as

“the primary person responsible for the day-to-day management and
operations of the [Motel] Property” (id., ¶ 1), Rana’s opinion

18

testimony regarding the Motel Property’s 2014 income and future
earnings qualifies as lay rather than expert.

See Fed. R. Evid.

701 advisory committee’s notes, 2000 Amendments (“[M]ost courts
have permitted the owner or officer of a business to testify to the
value or projected profits of the business, without the necessity
of qualifying the witness as an accountant, appraiser, or similar
expert.

Such opinion testimony is admitted . . . because of the

particularized knowledge that the witness has by virtue of his or
her position in the business.” (citation omitted)); see also Lord
& Taylor, 849 F.3d at 575-76 (explaining that the United States
Court of Appeals for the Fourth Circuit has “permit[ted] business
employees . . . to opine on accounting projections under Rule 701,
so long as their opinions are based on their first-hand experience
on the job,” and upholding admission of employee’s testimony
regarding projected construction costs as consistent “with our
precedent [and] also with the Advisory Committee’s Note to Rule
701”).
Plaintiff also challenges Rana’s income-based valuation of the
Motel Property.
“[t]he

purchase

In relevant part, the Rana Affidavit states that
price

[of

the

Motel

Property

in

2008]

was

determined based upon a multiplier of 3.5 times gross revenue.”
(Docket Entry 21, ¶ 3.)

Rana further states that, “[a]t the time

the [Motel] Property was purchased, projected gross revenue was
$300,000, and [LLC Defendant] valued the [Motel P]roperty at

19

$1,050,000 based upon a multiple of 3.5 times gross revenue.”
(Id.)

Finally, Rana asserts that, “[u]sing a multiplier of 3.5,

which is the same multiplier used at the time [LLC Defendant]
acquired

the

[Motel

P]roperty,

yields

an

estimated

value

of

$794,592.75 if the historical average is used for the gross revenue
figure” or “a value of $700,000” if using his $200,000 minimum
gross revenue projection.

(Id., ¶ 8.)

In response to these averments, Plaintiff contends that Rana
(i) “offers no corroboration for th[e 3.5 times gross revenue]
formula,” (ii) “provides no analysis of factors . . . which might
impact his formula,” and (iii) “provides no gross revenue figures
for 2015 and 2016 from which the Court could apply this formula.”
(Docket Entry 23 at 9.)

In Plaintiff’s view, “Rana is attempting

to provide an expert opinion based on the uncorroborated formula[,
b]ut this vague formula should not be considered by the Court.”
(Id.)

These objections do not affect the admissibility of this

testimony.
Based on his firsthand experience with the Motel Property and
its

acquisition,

Rana

can

testify

valuation of the Motel Property.

regarding

an

income-based

See, e.g., Sharma v. USA Int’l,

LLC, 851 F.3d 308, 315 (4th Cir. 2017) (reversing summary judgment
award, concluding that “the plaintiffs have introduced sufficient
evidence of their damages to create a material dispute of fact”
where

their

interrogatory

answers

20

and

deposition

testimony

calculated

the

restaurants’

value

“using

the

widely

accepted

income-based approach with a capitalization multiplier that [a
defendant] purportedly stated was the industry standard and that
the parties allegedly used to agree on the [original] purchase
price”).

Moreover, rather than constituting a “vague” formula,

Rana’s valuation approach reflects the “capitalization rate method”
of valuing income-producing property, under which one multiples the
property’s
determine
omitted).

stabilized
its

value.

income
Id.

“by

at

314

a

capitalization
(internal

rate”

quotation

to

marks

As such, although Plaintiff remains free to challenge

the correctness of Rana’s 3.5 capitalization ratio (and/or income
figures), its objections do not render such testimony inadmissible.
Id. at 313-14.
In sum, the disputed Appraisal critiques and income-valuation
testimony qualify as admissible under Rule 701.

The Court will

therefore deny Plaintiff’s request to strike this testimony.12

12 In its “Reply in Support of Motion to Strike,” Plaintiff
asserts for the first time that “the Court must strike all
references in the Rana Affidavit to the ‘gross revenue multiplier
commonly used in the industry’ that Rana relies on to compute his
value opinion” (Docket Entry 25 at 3) on the grounds that Rana
cannot testify regarding “the real estate industry’s practice for
valuing real property” (id. at 5).
Parties cannot advance new
arguments for the first time in a reply brief. See, e.g., United
States v. Williams, 445 F.3d 724, 736 n.6 (4th Cir. 2006)
(declining to consider argument raised for the first time in reply
brief and observing that “this argument comes far too late in the
day”); Thompkins v. Key Health Med. Sols., Inc., No. 1:12cv613,
2015 WL 1292228, at *7 (M.D.N.C. Mar. 23, 2015) (“The ordinary rule
in federal courts is that an argument raised for the first time in
a reply brief or memorandum will not be considered.” (internal
21

D.

“Substantial Competent Evidence” Objections

Relying on United Community Bank (Georgia) v. Wolfe, 369 N.C.
555, 799 S.E.2d 269 (2017), Plaintiff next asserts that “[t]he Rana
Affidavit

does

not

contain

substantial

sufficient to defeat summary judgment.”

competent

evidence

(Docket Entry 23 at 2.)

More specifically, Plaintiff contests the admissibility of three
matters Rana relied upon in support of his opinion that the Motel
Property’s

value

“on

the

date

of

the

foreclosure

sale

was

approximately $900,000” (Docket Entry 21, ¶ 16). (See Docket Entry
23 at 2-7 (challenging as inadmissible purchase price, tax value,
and listing at realtor’s recommended price).)

Stripped of such

support, Plaintiff maintains, Rana’s opinion evidence fails to
raise a genuine issue regarding the Motel Property’s value, such
that the Court should grant summary judgment. (See Docket Entry 25
at 3.)
matters

In turn, Defendants maintain that, at a minimum, the three
at

issue

provide

a

proper

basis

for

Rana’s

opinion

quotation marks omitted)), report and recommendation adopted, No.
1:12cv613, 2015 WL 3902340 (M.D.N.C. June 24, 2015).
Even if
considered, however, this argument would not compel an award of
summary judgment to Plaintiff. At a minimum, Rana can permissibly
testify to his own experience in valuing motels, including the
valuation of the Motel Property using a 3.5 gross income multiplier
in 2008. See Sharma, 851 F.3d at 313-15; see also Trademark Props.
Inc. v. A & E Television Networks, 422 F. App’x 199, 218 (4th Cir.
2011) (explaining that the “[d]efendant was certainly entitled to
present testimony regarding its own standard practices and each
[non-expert] witness was allowed to testify that based upon their
experience and knowledge of historical facts no one had ever made
a fifty-fifty revenue sharing deal with [the d]efendant”).
22

regarding the Motel Property’s value.

(See generally Docket Entry

24.)
Under well-established North Carolina law,
[u]nless it affirmatively appears that the owner
does not know the market value of his property, it is
generally held that he is competent to testify as to its
value even though his knowledge on the subject would not
qualify him as a witness were he not the owner. He is
deemed to have sufficient knowledge of the price paid,
the rents or other income received, and the possibilities
of the land for use, to have a reasonably good idea of
what it is worth.
North Carolina State Highway Comm’n v. Helderman, 285 N.C. 645,
652,

207

omitted).13

S.E.2d

720,

725

(1974)

(internal

quotation

marks

To defeat summary judgment in a deficiency action,

however, a property owner must do more than “[s]imply restat[e] the
statutory language [of the anti-deficiency statute] in affidavit
form.”

Wolfe, 369 N.C. at 560, 799 S.E.2d at 273; see also id. at

559-60, 799 S.E.2d at 272 (“In opposing summary judgment here,
[the] defendants relied on their status as the property owners and

13
Indeed, even non-owners may testify to the value of
property with which they possess sufficient familiarity.
See,
e.g., Craven Cty. v. Hall, 87 N.C. App. 256, 261, 360 S.E.2d 479,
481 (1987) (holding that landowner’s “son should have been
permitted to give his opinion as to the value of the property”);
see also Harrelson v. Gooden, 229 N.C. 654, 656-57, 50 S.E.2d 901,
903 (1948) (“Appellant excepted to the ruling of the court
permitting a witness to give in evidence his opinion of the value
respectively of the 14½ acres of land and of the 85 acres.
However, the witness had testified [that] he was living on the
Gooden land in 1944, and had lived there four years[, as well as]
that he knew both tracts of land and had an opinion satisfactory to
himself as to their value at the time the deed to Alden Gooden was
made. This evidence was not incompetent. Its probative value,
subject to being tested on cross-examination, was for the jury.”).
23

their joint affidavit ‘made on [their] personal knowledge,’ stating
that they ‘verily believe[ ] that the . . . property sold . . . was
at the time of [the foreclosure] sale fairly worth the amount of
the debt it secured.’

[The d]efendants’ conclusory statement

without any supporting facts is insufficient to create a genuine
issue

of

material

fact.”

alterations in original)).14

(all

but

first,

second,

and

final

In other words, as with any witness,

a property owner must offer “more than a conclusory statement”
regarding the property’s value to create the necessary genuine
issue of material fact to stave off summary judgment.

Id. at 560,

799 S.E.2d at 272; see also id., 799 S.E.2d at 273 (“In sum, [the]
defendants failed to present substantial competent evidence to
create a genuine issue of material fact regarding the ‘true value’
of the foreclosed property.

Under [North Carolina Rule of Civil

Procedure] 56, merely reciting the statutory language or asserting
an unsubstantiated opinion regarding the foreclosed property’s
value is insufficient.”).
Unlike the affidavit at issue in Wolfe, the Rana Affidavit
articulates “specific facts” and “objective criteria,” id., 799
S.E.2d at 272 (internal quotation marks omitted), upon which Rana

14 In Wolfe, the property owners merely recited the statutory
language without specifying a monetary value for the property or
any facts upon which they based their opinion of the property’s
value. See id. at 559-60, 799 S.E.2d at 272-73; see also United
Cmty. Bank (Ga.) v. Wolfe, 242 N.C. App. 245, 248-50, 775 S.E.2d
677, 680-81 (2015), review allowed, 369 N.C. 45, 794 S.E.2d 315
(2016), and rev’d, 369 N.C. 555, 799 S.E.2d 269 (2017).
24

bases his opinion of the Motel Property’s value.
Docket Entry

21.)

As

relevant

here,

admissibility

of

three

such

bases,

Significantly,

however,

Plaintiff

(See generally

Plaintiff
as

does

contests

discussed
not

the

below.

challenge

the

admissibility of Rana’s testimony regarding “comparable sales”
(id., ¶¶ 15, 16; see also Docket Entry 20 at 5-6 (analyzing
“comparable sales” identified in Appraisal)).

(See Docket Entries

23, 25.)
It is the rule in [North Carolina] that the price
paid at voluntary sales of land, similar in nature,
location, and condition to the condemnee’s land, is
admissible as independent evidence of the value of the
land taken if the prior sale was not too remote in time.
Whether two properties are sufficiently similar to admit
evidence of the purchase price of one as a guide to the
value of the other is a question to be determined by the
trial judge in the exercise of a sound discretion guided
by law.
State v. Johnson, 282 N.C. 1, 21, 191 S.E.2d 641, 655 (1972).
Given the fact-dependent nature of this analysis and Plaintiff’s
failure to challenge Rana’s testimony regarding comparable sales,
the Court concludes that, for summary judgment purposes, Rana’s
testimony regarding “comparable sales” (see Docket Entry 21, ¶¶ 15,
16) constitutes admissible independent evidence regarding the Motel
Property’s value.

It also qualifies as a permissible basis for

Rana’s opinion testimony regarding the Motel Property’s value.
Given that consideration and for the reasons that follow,
Plaintiff’s challenges to the three additional matters identified
in support of Rana’s valuation testimony do not warrant summary
25

judgment

against

Defendants.

Plaintiff

first

contests

the

admissibility of Rana’s testimony regarding the Motel Property’s
purchase price on the grounds that the Rana Affidavit (i) “provides
no evidence to determine if the sale was voluntary or not,”
(ii) “[s]ince Rana attaches no documents to establish the terms of
the original purchase, allegations about the purchase are not
corroborated and inadmissible” (relying on “Orsi v. Kirkwood, 999
F.2d 86, 92 (4th Cir. 1993)”), and (iii) “the purported sale in
2008 is not ‘within a reasonable time’ of the foreclosure sale.”
(Docket Entry 23 at 3.)
As an initial matter, Plaintiff has identified no evidence in
the record suggesting that LLC Defendant purchased the Motel
Property under anything but voluntary terms.

In the absence of

such evidence, the Court declines, at least at the summary judgment
stage, to infer any such circumstance. Likewise, Plaintiff has not
shown that Rana bore any obligation to support his sworn statement
that Defendants purchased the Motel Property for $1,050,000 in 2008
with documentary evidence.15
(documentary

evidence

of

Furthermore, Plaintiff’s Appraisal

record)

explicitly

states

that

LLC

15
The case cited by Plaintiff on this front involved a
party’s failure to authenticate documentary evidence with a
qualifying affidavit, not a party’s failure to provide documentary
evidence in support of an affidavit.
See Orsi, 999 F.2d at 92
(“None of the four documents were attached to affidavits, and the
district court had no immediate way of ascertaining whether the
documents were even what they purported to be.”).
26

Defendant purchased the Motel Property for $1,050,000 in 2008.
(Docket Entry 17-4 at 11, 48.)
Finally (as to the purchase price testimony), “[w]hat is a
reasonable time [regarding a prior sale] . . . depend[s] upon the
circumstances of each particular case and the character of the
property in question.”

Newsom v. Cothran, 185 N.C. 161, 116 S.E

415, 416 (1923); see also State Highway & Pub. Works Comm’n v.
Hartley, 218 N.C. 438, 11 S.E.2d 314, 315 (1940) (“The rule is
necessarily one of variableness in the time limits, depending upon
the

nature

of

the

property,

its

location

and

surrounding

circumstances, and whether the evidence offered fairly points to
its value at the time in question.”).

For instance, the North

Carolina Supreme Court has deemed admissible information regarding
a purchase “about 18 years ago” where the landowner “testified that
they had owned the property for 18 years, and that the building [in
question] was then upon the property.”

Palmer v. North Carolina

State Highway Comm’n, 1925 N.C. 1, 141 S.E. 338, 339 (1928). Here,
Rana asserts that the Motel Property remained largely unchanged
during its ownership by LLC Defendant. (See Docket Entry 21, ¶¶ 911.)

Plaintiff disputes that assessment.

(See Docket Entry 23 at

4 (emphasizing “that the City of Fayetteville condemned the [Motel
P]roperty in 2016,” resulting in a “resale price of $75,000.00”).)
In adjudicating the Summary Judgment Motion, the Court must resolve
all factual conflicts in Defendants’ favor.

27

See Miller, 913 F.2d

at

1087.

Accordingly,

for

present

purposes,

the

Court

will

overrule Plaintiff’s objection to Rana’s reliance on the purchase
price as support for his opinion testimony about value.
Plaintiff next contends that the Motel Property’s 2016 tax
valuation of $995,600 does not qualify as “competent to establish
the market value of real property.”

(Docket Entry 23 at 4-5.)

Defendants respond that “the tax value is not being offered as
independent evidence of value.

Instead, the tax value is one fact

among many that forms the basis for Mr. Rana’s opinion of value.
The purpose of this fact is to create the necessary underlying
support for his ability to offer lay opinion testimony” of the
Motel Property’s value, “not to serve as evidence of value in and
of itself.”

(Docket Entry 24 at 5.)

In North Carolina,

[a]ll property, real and personal, shall as far as
practicable be appraised or valued at its true value in
money. When used in this Subchapter, the words “true
value” shall be interpreted as meaning market value, that
is, the price estimated in terms of money at which the
property would change hands between a willing and
financially able buyer and a willing seller, neither
being under any compulsion to buy or to sell and both
having reasonable knowledge of all the uses to which the
property is adapted and for which it is capable of being
used.
N.C. Gen. Stat. § 105-283.

Accordingly, courts in North Carolina

frequently admit tax valuations as evidence of the fair market
value of property.

See, e.g., Queen v. Queen, No. COA07-1207, 189

N.C. App. 531 (table), 659 S.E.2d 490 (table), 2008 WL 850633 (Apr.

28

1, 2008); First Citizens Bank & Tr. Co. v. Cannon, 138 N.C. App.
153, 155-56, 530 S.E.2d 581, 583 (2000).
Nevertheless, the North Carolina Supreme Court has held that
tax valuations do not constitute competent evidence of the fair
market value of property.

See, e.g., Star Mfg. Co. v. Atlantic

Coast Line R. Co., 222 N.C. 330, 332-33, 23 S.E.2d 32, 36 (1942).16
However, the North Carolina Supreme Court has also held that,
although tax records cannot independently establish the value of
property, such records remain admissible for proving the “fact that
the [relevant] land had been assessed at [a certain amount].”
Cardwell v. Mebane, 68 N.C. 485, 487 (1873) (emphasis in original).
The North Carolina Supreme Court has thus permitted introduction of
tax records in a fraud case where the defendants sought to prove
“probable cause on their part to believe, that the land was of that
value as represented . . ., and is explanatory of the circumstance
that they paid that price.”

Id. at 487; see also id. at 488 (“The

mere fact that this land was entered on the tax lists as of the
value of $5,000 is evidence against everybody of that fact, and we
are of opinion that in repelling a charge of fraud resting among

16 The North Carolina Supreme Court has given two primary
rationales for this approach. First, because officials establish
the tax value of real property without an owner’s input regarding
valuation, evidence of the tax value cannot impeach an owner’s
testimony regarding the property’s worth. See id., 23 S.E.2d at
36. Second, in the ordinary case, litigants could not subject the
tax-assessor’s valuation to cross-examination. See, e.g., Cardwell
v. Mebane, 68 N.C. 485, 487 (1873).
29

other circumstances on the allegation that the pretended price paid
exceeded very much the value of the land, the defendants ought to
have been allowed to prove this fact, to pass for what it was worth
in the estimation of the jury.”).
At

this

juncture,

the

Court

need

not

decide

whether

consideration of tax value to the extent permitted by Cardwell
would provide a basis for Rana’s valuation opinion, as the Rana
Affidavit

relies

on

sufficient

other

indicia

of

the

Motel

Property’s value to avoid summary judgment, even excluding Rana’s
reference to tax value.
As a final matter, Plaintiff seeks to strike Rana’s testimony
regarding the listing of the Motel Property at a price determined
by a realtor.

In particular, Plaintiff challenges as inadmissible

hearsay Rana’s assertion that LLC Defendant listed the Motel
Property for $999,000 based upon a realtor’s recommendation.17

In

response, Defendants contend that “[t]he broker’s recommended list

17
Plaintiff also maintains that “Defendants provide no
evidence they actually listed the property for sale in 2015.”
(Docket Entry 23 at 5.) However, the Appraisal describes the Motel
Property as “[c]urrently listed with Grant Murray RE LLC for
$999,000.” (Docket Entry 17-4 at 11.) Plaintiff further argues
that North Carolina law precludes a realtor from offering “[a]
broker price opinion or comparative market analysis that estimates
the value of or worth . . . [of] real estate . . . in lieu of an
appraisal when an appraisal is required by federal or State law.”
(Docket Entry 23 at 6-7 (emphasis omitted) (quoting N.C. Gen. Stat.
§ 93A-83(f)).) By its terms, the cited statute does not apply to
a recommendation regarding the Motel Property’s appropriate listing
price. Also, North Carolina courts frequently accept evidence from
realtors regarding appropriate property valuations.
See, e.g.,
Cannon, 138 N.C. App. at 156, 530 S.E.2d at 583.
30

price of $999,000 is not offered as evidence of value itself, but
is instead offered as evidence of what facts Mr. Rana considered in
forming his lay opinion that the property was worth more than
$900,000,” and, as such, “the broker’s recommended listing price is
not hearsay since it is not offered for the truth of the matter
asserted.”

(Docket Entry 24 at 6.)

As with the tax valuation, the

Court need not resolve this issue for summary judgment purposes, as
sufficient other grounds exist to permit consideration of Rana’s
valuation opinion.
E.

Deficiency Amount

In sum, given the standards at the summary judgment stage, the
Rana Affidavit contains an adequate foundation for its lay opinion
valuation of the Motel Property at $700,000 or higher.

Because

Plaintiff’s evidence values the Motel Property at a maximum of
$320,000, a genuine dispute of material fact exists.

See Wachovia

Realty, 292 N.C. at 112, 232 S.E.2d at 679 (“The fair value, as of
the date of the foreclosure sale, of the properties . . . is,
therefore, a material fact with reference to the amount, if any,
which the plaintiff is entitled to recover from the defendant upon
the note in suit.”); see also Evans, 80 F.3d at 959 (explaining
that a genuine issue of material fact exists if a reasonable jury
could find for the nonmoving party).

This dispute regarding the

Motel Property’s value precludes awarding summary judgment to
Plaintiff on its deficiency claim.

31

IV.

Attorney’s Fees

Pursuant to North Carolina General Statute Section 6-21.2,
Plaintiff independently seeks an award of attorney’s fees equal to
15 percent of the outstanding balance when it instituted this
action.

(See Docket Entry 19 at 9-12; Docket Entry 23 at 10.)

relevant part, the cited statute provides:
Obligations to pay attorneys’ fees upon any note
. . . or other evidence of indebtedness . . . shall be
valid and enforceable, and collectible as part of such
debt, if such note, contract or other evidence of
indebtedness be collected by or through an attorney at
law after maturity, subject to the following provisions:
. . . .
(2) If such note . . . or other evidence of
indebtedness provides for the payment of reasonable
attorneys’ fees by the debtor, without specifying any
specific percentage, such provision shall be construed to
mean fifteen percent (15%) of the “outstanding balance”
owing on said note . . . or other evidence of
indebtedness.
(3) As to notes and other writing(s) evidencing an
indebtedness arising out of a loan of money to the
debtor, the “outstanding balance” shall mean the
principal and interest owing at the time suit is
instituted to enforce any security agreement securing
payment of the debt and/or to collect said debt.
. . . .
(5) The holder of . . . a note and chattel mortgage
or other security agreement . . ., or his attorney at
law, shall, after maturity of the obligation by default
or otherwise, notify the maker, debtor, account debtor,
endorser or party sought to be held on said obligation
that the provisions relative to payment of attorneys’
fees in addition to the “outstanding balance” shall be
enforced and that such maker, debtor, account debtor,
endorser or party sought to be held on said obligation
has five days from the mailing of such notice to pay the
32

In

“outstanding balance” without the attorneys’ fees. If
such party shall pay the “outstanding balance” in full
before the expiration of such time, then the obligation
to pay the attorneys’ fees shall be void, and no court
shall enforce such provisions.
N.C. Gen. Stat. § 6-21.2; see also Lee Cycle Ctr., Inc. v. Wilson
Cycle Ctr., Inc., 143 N.C. App. 1, 12, 545 S.E.2d 745, 752 (2001)
(“[S]ection 6-21.2 allows (1) the party owed the debt (2) to
recover attorney’s fees (3) after the debt has matured (4) provided
it

is

written

indebtedness.”).

in

the

note

.

.

.

or

other

evidence

of

A creditor can recover attorney’s fees pursuant

to this statute even if the anti-deficiency statute precludes
recovery of the note’s outstanding balance.

See Trull v. Central

Carolina Bank & Tr., 124 N.C. App. 486, 491-92, 478 S.E.2d 39,
42-43 (1996) (rejecting challenge to attorney’s fee award where the
creditor “was unsuccessful in its deficiency action against” a
debtor who used the anti-deficiency statute’s “reasonable value
defense”), aff’d in part, review dismissed in part, 347 N.C. 262,
490 S.E.2d 238 (1997).
Here, the Note obliges LLC Defendant to pay “reasonable
attorney’s fees and costs” that Plaintiff incurs “to collect
amounts due under this Note.”

(Docket Entry 1-3 at 3.)18

Each

Guarantee similarly obliges the Guarantor “to pay all expenses

18 The Note also authorizes Plaintiff to incur expenses to
“preserve or dispose of the [Motel Property],” including “property
taxes,” and to either “demand immediate repayment from [LLC
Defendant] or add the expenses to the principal balance” on the
Note. (Id.)
33

[Plaintiff] incurs to enforce this Guarantee, including, but not
limited to, attorney’s fees and costs.”
15.)

(Docket Entry 1-4 at 3, 9,

In accordance with Section 6-21.2(5), Plaintiff’s Demand

Letters notified Defendants of (i) LLC Defendant’s default under
the Note; (ii) the balance due on the Note; (iii) Plaintiff’s
intention to recover attorney’s fees equal to 15 percent of the
balance

due

at

commencement

of

any

deficiency

suit;

and

(iv) Defendants’ ability to avoid such attorney’s fees by paying
the outstanding balance within five days. (Docket Entry 17-2 at 1,
3.)

Plaintiff

has

therefore

established

its

entitlement

to

attorney’s fees under this statute.
Because the Note and Guarantees do not specify the amount of
attorney’s fees Plaintiff can collect, Section 6-21.2(2) authorizes
attorney’s fees of 15 percent of the outstanding balance when
Plaintiff

instituted

Plaintiff

provided

this

from

suit.

an

According

employee

to

an

knowledgeable

affidavit
about

the

situation, the outstanding indebtedness on the Note — crediting the
Appraisal’s $320,000 valuation, and including foreclosure costs,
interest, late fees, and property taxes — totaled $489,957.14 when
Plaintiff instituted this action.

(See Docket Entry 17, ¶¶ 38-43;

see also Docket Entry 17-9 at 1-2; Docket Entry 1-6 at 1.)19

19 The North Carolina courts have held that a foreclosure
“bid that was twenty percent less than the appraised value of the
property was ‘substantially less’ than the property’s true value”
under the anti-deficiency statute. Blue Ridge Sav. Bank, Inc. v.
Mitchell, 218 N.C. App. 410, 413, 721 S.E.2d 322, 325, aff’d, 366
34

Fifteen percent of $489,957.14 equals $73,493.57.

Defendants bear

joint and several liability for this $73,493.57 attorney’s fee
award.

See TD Bank, N.A. v. Shree Dutt Sai, LLC, No. 1:14cv852,

2015 WL 7302259, at *6 (M.D.N.C. Nov. 18, 2015) (citing RC Assocs.
v. Regency Ventures, Inc., 111 N.C. App. 367, 374, 432 S.E.2d 394,
398 (1993)).
CONCLUSION
Plaintiff’s challenges to the Rana Affidavit lack merit and/or
do not affect the admissibility, at least for summary judgment
purposes, of the lay opinion testimony as to the value of the Motel
Property.

In light of that testimony, a material factual dispute

exists, precluding
claim.

summary

judgment

on

Plaintiff’s

deficiency

Nevertheless, Plaintiff has established, as a matter of

law, Defendants’ liability for attorney’s fees under Section 621.2.
IT IS THEREFORE ORDERED that the Motion to Strike (Docket
Entry 22) is DENIED.

N.C. 331, 734 S.E.2d 572 (2012); see also In re Greco, Civ. Action
No. 12-51497, 2014 WL 1168507, at *4 & n.2 (Bankr. M.D.N.C. Mar.
21, 2014) (explaining that, as a matter of North Carolina law, a
bid of 20 percent less than the property’s appraised value “may be
deemed to have been substantially less than the true value of the
subject property”). Plaintiff’s $215,000 foreclosure bid equals
only 67 percent of the Appraisal’s $320,000 valuation, a difference
of 33 percent.
Under the circumstances, the Court agrees with
Plaintiff that a credit of $320,000, rather than $215,000, applies
to the Note’s outstanding balance. (See Docket Entry 17, ¶ 40; see
also Docket Entry 19 at 12 (“When [Plaintiff] sued, the debt was
$489,957.14.”).)
35

IT IS FURTHER ORDERED that the Summary Judgment Motion (Docket
Entry 16) is DENIED as to the deficiency claim, but GRANTED as to
the request for attorney’s fees.
IT

IS

FURTHER

ORDERED

that

Defendants

are

jointly

and

severally liable to Plaintiff on the Note and Guarantees for
$73,493.57 in attorney’s fees.
This 17th day of January, 2018.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge

36