United Community Bank v. Angarita et al

Filing 57

ORDER REQUIRING RECEIVER TO PAY OVER FUNDS TO JUDGMENT CREDITOR OF MICHAEL AND SALLY PENA pursuant to N.C. Gen. Stat. § 1-360. Signed by District Judge Martin Reidinger on 7/1/2015. (Copy mailed to Receiver Joseph W. Grier, III)(khm)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
Civil Case No. 1:09-cv-00307-MR-DLH

UNITED COMMUNITY BANK,
Petitioner,
vs.
JORGE ANGARITA, ARMANDO
G. ARMAS, JOSE G. BELTRAN,
ALINA BOYD, PRECIOUS
BROOKS, MARTHA G.
ESPARRAGOZA, NESTOR
ESPARRAGOZA, FOLAYELE F.
FAPOHUNDA,THOMAS L.
FLYNN, HYVRON L. JEAN,
LAWRENCE B. OGEDEGBE,
WILSON O. OLUREMI, ADEYOLA
OWOLADE, MICHAEL PENA,
SALLY PENA, ADEKUNLE G.
ROGERS, RAFEL A. UBEDA,
GLEN B. WARRINGTON and
RENEE E. WARRINGTON,
Respondents.
ORDER REQUIRING RECEIVER TO PAY OVER FUNDS TO JUDGMENT
CREDITOR OF MICHAEL AND SALLY PENA PURSUANT TO
N.C. Gen. Stat. § 1-360
THIS MATTER is before the Court on the Verified Statement (the
“Statement”) of Joseph W. Grier, III, Receiver for Peerless Real Estate
Services, Inc. et al. regarding the judgment debtors Michael and Sally Pena

(collectively, the “Penas”) [Doc. 56], which was filed in response to the
verified motions (the “Motions”) of United Community Bank (“UCB”) for
orders pursuant to N.C. Gen. Stat. §1-360 compelling Joseph W. Grier, in
his capacity as receiver (the “Receiver”), to appear and give testimony
concerning the funds he has in his possession that may belong to the Penas.
Having considered the pleadings, the Motions and the Statement, the
Court hereby FINDS as follows:
1. On October 18, 2010, the Court entered an Amended Default
Judgment against Michael Pena in favor of UCB in the amount of $121,510.38
and against Sally Pena in favor of UCB in the amount of $110,827.80 [Doc.
38] (the “Judgment”).
2. As of the date of this Order, no amounts have been paid by the
Penas to UCB in full or partial satisfaction of the Judgment.
3. On or about June 6, 2007, the State of North Carolina, ex rel. through
Roy Cooper, Attorney General, filed a lawsuit in the Superior Court, Wake
County, North Carolina (the “Receivership Court”), against Peerless Real
Estate Services, Inc., Village of Penland, LLC, MFSL Landholdings, LLC,
Communities of Penland, LLC, COP Land Holdings, LLC, PG Capital
Holdings, LLC and West Side Development, LLC (the “Receivership
Entities”), Case No. 07-CVS-9006, pursuant to authority granted in Chapters
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75 and 114 of the General Statutes of North Carolina and for the purpose,
among others, of seeking restitution for consumers pursuant to G.S. § 75-1.1
(the “Receivership Case”). The allegations in the Receivership Case were
generally that the Receivership Entities were created to develop a real estate
project called “The Village of Penland” in Mitchell County, North Carolina,
individual investors would “invest” in the development by obtaining loans from
banks secured with particular real estate lots, the individuals were told that
after development, their lots would be sold, the bank loans paid off and a
profit would be made by the investors. In actuality, the funds received from
investors and their lenders were not all used for the real estate development,
the lots were worth a fraction of the amount the investors and banks believed,
and when the developers ran out of funds the investors were left with bank
loans secured by virtually worthless property. Many banks, including United
Community Bank (“UCB”), were not fully paid on loans secured by property
in the Village of Penland and sought judgments against their borrowers, who
were the “investors” in the Village of Penland scheme.
4. On June 6, 2007, the Receivership Court appointed Joseph W.
Grier, III as Receiver (the “Receiver”) pursuant to the provisions of N.C.G.S.
§ 1-502(5), which provides for the appointment of a receiver “[i]n cases
wherein restitution is sought for violations of G.S. 75-1.1,” by Order
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Appointing Receiver For Defendants Peerless Real Estate Services, Inc.,
Village of Penland, LLC, MFSL Landholdings, LLC, Communities of Penland,
LLC, COP Land Holdings, LLC, PG Capital Holdings, LLC and West Side
Development, LLC (the “Receivership Order”) to serve as receiver for the
Receivership Entities and to preserve assets to be used for restitution to
consumers who invested in the Village of Penland.
5. Assets of the Receivership Entities have been liquidated,
administrative expenses approved to date have been paid and at this time
the Receiver is holding approximately $225,847.68 in funds for the benefit of
the Receivership.
6. On August 28, 2013, the Receivership Court entered its Order
Allowing Reimbursement to Banks for Investigation Expenses, Denying
Certain Consumer Claims, Approving Consumer Claim Verification Form
and Approving Notice setting forth a process for making claims in the
Receivership among other terms. Thereafter, the Receiver conducted the
claims process for the purpose of establishing allowable claims as to the
Receivership Estate.
7. On October 6, 2014, the Receivership Court entered its Order
Approving Report of Claims, Allowed Claim Amounts and Distribution
Method which held that each claimant who made a timely claim would have
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a claim in the Receivership equal to that claimant’s original loan amounts.
The distribution method of funds in the Receivership Estate is such that the
Receiver shall pay Allowed Claimants a pro-rata calculation based upon the
Allowed Claim Amounts after payment of all administrative fees and
expenses.
6. The Receiver received a timely claim from Michael and Sally Pena.
The Penas’ Allowed Claim Amount is $721,000.00 (the “Penas’ Claim”). The
distribution on the Penas’ Claim will be the pro-rata share of net Receivership
Estate funds, after payment of administrative fees and expenses of the
Receivership. The total of all of the Allowed Claims is $14,035,000.00.
7. The Receiver is in the process of winding down the Receivership
and cannot at this time project the specific amount of funds in his possession
which will be available for distribution to Allowed Claimants including the
amount to be paid on the Penas’ Claim. Further, any distribution of the
Receivership Estate is subject to the approval of the Receivership Court.
However, the distribution to the Penas is anticipated to be over $10.00.
8.

The proposed distribution to the Penas is expected to be

approximately $9,000, which is significantly less than the outstanding
amount of the Judgment ($121,510.38 and $110,827.80, respectively), plus
any accrued interest.
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IT IS, THEREFORE, ORDERED as follows:
1. That when the distribution amounts are finalized, the Receiver shall
pay to UCB all amounts that would otherwise be distributed to the
Penas to the extent that amount is less than the outstanding amount
owed by the Judgment Debtors to UCB pursuant to the Judgment;
and
2. To the extent there is any excess amount owed, that amount be
paid to the Penas.
IT IS SO ORDERED.
Signed: July 1, 2015

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