Wells Fargo Bank, N.A. v. AMH Roman Two NC, LLC

Case Type:
Case Status:
No. 16-1681 (4th Circuit, Jun 12,2017) Published
As to the threshold requirements of Rule 60(b), the court found that Wells failed to timely file its motion and that granting relief to Wells would prejudice the bona fide purchaser at the foreclosure sale. Finally, even if Wells could satisfy the threshold requirements, the court found that it was not entitled to relief under Rule 60(b)(4) and 60(b)(6). The court disagreed that the bankruptcy court lacked jurisdiction to cancel the Wells Fargo lien due to the failure of PNC to bring the lift stay by adversary proceeding and that the order was entered in violation of Wells due process rights
Procedural context:
Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Bankruptcy Court denied Wells Fargo Bank N.A.'s motion to set aside the court's order canceling its deed of trust. Wells Fargo appealed and the district court affirmed.
Wells Fargo extended an equity line of credit to the Debtors, which was secured by a deed of trust on one of two of the Debtors' properties. Two years later, the Debtors refinanced the Property subject to the Wells' Deed of Trust with PNC Bank. During the refinance, Wells Fargo notified PNC that it had frozen the line of credit and told PNC the amount needed to pay off the obligation. PNC transmitted the money to Wells Fargo. Wells Fargo did not, however, close the line of credit and permitted the Debtors to continue to take advances totaling over $300,000. Approximately 8 years later, the Debtors filed for Chapter 13 bankruptcy. Wells Fargo filed a secured proof of claim for the debt arising out of its line of credit and secured by the property. Counsel filed a notice of appearance on behalf of Wells Fargo in the bankruptcy case. PNC filed a motion for relief from stay with respect to the Property and served counsel of record for Wells Fargo. Wells Fargo did not respond to the motion. The court entered an order granting PNC relief from the stay, accorded PNC's deeds of trust priority over Wells Fargo's deed of trust and canceled Wells Fargo's deed of trust. A copy of the order was recorded. PNC foreclosed two years after the stay order was entered and sold the property. Wells Fargo sought and the court allowed the bankruptcy case to be reopened and Wells moved to set aside the order pursuant to Fed. R. Civ. P. 60(b)(4). The bankruptcy court held that Wells could not meet the threshold requirements of Rule 60(b)-that the motion was untimely and allowing the motion would prejudice the purchaser at the foreclosure sale. The district court affirmed finding that even if the threshold requirements were met the bankruptcy court had subject matter jurisdiction and Wells' due process rights were not violated. The courts also concluded that counsel's appearance on behalf of Wells was general and not restricted to one of the two properties.
Before Judges Niemeyer, King, and Duncan, Circuit Judges.

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