Mercer's Enterprises, Inc. v. Seascape at Wrightsville Beach, LLC et al

OCR transcription for search; preserved printed pages are authoritative

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SO ORDERED.

SIGNED this 10 day of J une, 2010.

J. Rich Leonard
United States Bankruptcy J udge

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILMINGTON DIVISION
IN RE:
MERCER’S ENTERPRISES, INC., CASE NO. 08-00651-8-J RL
Chapter 11

DEBTOR.
MERCER’S ENTERPRISES, INC.,

PLAINTIFF,

VS.

SEASCAPE AT WRIGHTSVILLE ADVERSARY PROCEEDING
BEACH, LLC and FIRST BANK, NO. 08-00012-8-AP

DEFENDANIS,
H. KENNETH STEPHENS, IT,
SUBSITTUTE TRUSTEE.
ORDER
This matter is before the court on the plaintiff’s motion for summary judgment on its

second and sixth claims for relief seeking a declaratory judgment involving ownership of

property at Wrightsville Beach, North Carolina. In making this determination, the court has

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considered the record in the case, the affidavits of Matthew Johnson and Patrick C. Bristow, and
the admissions of parties and other material on file. In view of the court’s familiarity with the
case and the need for expedition, the court in its discretion enters this ruling without further
hearing at the conclusion of the shortened response time. For the reasons set out herein, the
court concludes that the undisputed facts support conclusions of law allowing the plaintiff’s
motion.
UNDISPUTED FACTS
1. 	Plaintiff Mercer’s Enterprises, Inc. (“Mercer’s”) is a North Carolina corporation with its
principal office and place of business in New Hanover County, North Carolina.
2. 	Defendant Seascape at Wrightsville Beach, LLC (“Seascape”) is a North Carolina limited
liability company with its principal office and place of business in New Hanover County,
North Carolina.
3. 	Defendant First Bank (“First Bank”) is a banking corporation lawfully conducting the
business of a commercial bank in North Carolina with a place of business in Wilmington,
New Hanover County, North Carolina. On or about 19 June 2009, Cooperative Bank
ceased doing business and First Bank, pursuant to an agreement with the appropriate
agencies and Cooperative Bank, assumed certain benefits and burdens of Cooperative
Bank, including without limitation, Cooperative Bank’s rights pursuant to those certain
“Deeds of Trust,” as defined below. Accordingly, First Bank now stands in the shoes of
Cooperative Bank with respect to the Deeds of Trust.
4. 	Defendant H. Kenneth Stephens, II (the “Trustee”) is the Substitute Trustee under certain
deeds of trust from Seascape to Cooperative Bank, and is a citizen and resident of New
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Hanover County, North Carolina.
5. 	For approximately forty (40) years, Mercer’s has owned and operated that certain fishing
pier commonly known and referred to as “Johnnie Mercer’s Fishing Pier” (the “Pier”)
located in Wrightsville Beach, North Carolina. A portion of the Concrete Ramp of the
Pier is located on the following portion of Lot 14, Block 13, Wrightsville Beach, North
Carolina:
Beginning at the Southeastern corner of Lot 14 as depicted upon a map entitled
“Addition to Blocks No. 13 & 14 at North End”, said map being recorded in Map
Book 4, Page 66 of the New Hanover County Register of Deeds, running thence
with the Southern line of Lot 14 and the Northern line of Salisbury Street (130’
public right of way) North 52º 30’ 00” West 16.20 feet; thence parallel with the
Eastern line of Lot 14 North 37º 30’ 00” East 20.06 feet; thence with a curve to
the right, said curve having a radius of 21.50 feet to a point in the Eastern line of
Lot 14 located North 75º 21’ 52” East a chord distance of 26.39 feet from the
preceding point; and thence with the Eastern line of Lot 14 South 37º 30’ 00”
West 40.90 feet to the point of beginning, containing 575 square feet more or
less. (the “Easement Area”)
The rest of the Pier is located east of the eastern line of Lot 14, Block 13, Wrightsville
Beach, North Carolina.
Lot 14, Block 13, Wrightsville Beach, North Carolina appears on the map of Addition to
Blocks 13 and 14, Wrightsville Beach, N.C., dated 26 August 1941, as prepared by Lewis
L. Merritt and recorded in Map Book 4 at Page 66 of the New Hanover County, N.C.,
Registry (“Lot 14”). From the east line of Lot 14, the Pier extends eastwardly across the
beach and into the Atlantic Ocean. The Pier is shown on the Map of Survey for Mercer’s
Enterprises, Inc., prepared by Stocks Land Surveying, P.C. dated 21 March 2001 with the
notation “AS BUILT DWG DATE 11/27/02,” a copy of which is attached hereto as
Exhibit A. Without limitation, the Pier specifically includes: the Concrete Ramp
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(partially located on the Easement Area and partially located east of the eastern line of
Lot 14), the Concrete Decks, the Pier House, the Pier Deck, the Pier T-Head, the Ramp,
and the Piling Caps, all as labeled on Exhibit A. All references in this Order to the Pier
shall mean and refer to the location as shown on the Stocks Map of Survey attached as
Exhibit A.
6. 	An Act Relative to the Title to Land Built Up and Constructed in the Town of
Wrightsville Beach in the County of New Hanover as a Result of Certain Erosion Control
Work in Said Town, Pub. L. Chapter 246, 1939 Session, was ratified by the North
Carolina General Assembly on 30 March 1939 (the “1939 Act”). The 1939 Act provides,
among other things, that by virtue of certain beach renourishment work constructing new
land on the ocean front of Wrightsville Beach, fee simple ownership of the land lying
east of a line defined in the 1939 Act as the “building line” was granted and conveyed to
the Town of Wrightsville Beach, and fee simple ownership of the new land lying west of
the “building line” was granted and conveyed in fee simple to the land owner whose
property abutted the new land. The “building line” (which is now denoted the “property
line” pursuant to North Carolina Pub. L. Chapter 618, 1981 Session) in the area of the
Pier and Lot 14 is the eastern boundary line of Lot 14.
7. 	The 1939 Act further provides that: “The owners of the property abutting on said newly
made or constructed land shall in front of their said property, possess and keep their
rights, as if littoral owners, in the waters of the Atlantic Ocean, bordering on said newly
acquired and constructed land.” (Emphasis added). Mercer’s predecessor(s) in title to
Lot 14 owned the property that abutted on the newly made and constructed land.
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8. 	Mercer’s reconstructed the Pier in 2001-2002 pursuant to CAMA Major Development
Permit No. 59-99.
9. 	A Consent Judgment was entered on 5 August 2002 in Civil Action No. 02 CVS 3109
regarding CAMA Major Development Permit No. 56-99 and the scope of Mercer’s rights
to construct and operate the Pier, which Consent Judgment with the State of North
Carolina and the Town of Wrightsville Beach is recorded in Book 3383 at Page 186 of
the New Hanover County, N.C., Registry.
10. 	Following reconstruction of the Pier, the Town of Wrightsville Beach issued a Certificate
of Occupancy for the Pier on 27 September 2002.
11. 	Following negotiations in 2005, Mercer’s agreed to sell, and Wrightsville Beach Pier
House, LLC (“Wrightsville Beach Pier House”) agreed to buy, certain real property in
Block 13, Wrightsville Beach, N.C., including Lot 14, with Mercer’s retaining an
easement in the Easement Area, incident to which Mercer’s would retain the rights, as if
a littoral owner, to own, operate, maintain, repair, rebuild and replace the Pier. The
rights and obligations of Wrightsville Beach Pier House in connection with the purchase
of the real property from Mercer’s were duly assigned to and accepted by Seascape on 29
August 2005.
12. 	On 29 August 2005 Mercer’s executed and delivered a General Warranty Deed to
Seascape (the “Deed”), and the Deed was recorded the same day in Book 4896 at Page
1378 of the New Hanover County, N.C., Registry.
13. 	The real property conveyed from Mercer’s to Seascape in the Deed was described in
Exhibit A to the Deed. The description of Tract No. 2 in Exhibit A to the Deed includes
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all of Lot 14 and reads, in part, as follows:
. . . and except as hereinafter limited, together with all right, title and interest of
the party of the first part in and to all that land lying east of Lot No. 14 in Block
13 hereinabove described between the extended side property lines of said Lot
No. 14 in Block 13 and the low water mark of the Atlantic Ocean, if the said side
property lines of said lot were extended eastwardly to the low water mark,
excepted therefrom any right, title and interest of the party of the first part in and
to that certain fishing pier or wharf now constructed in the Atlantic Ocean
extending eastwardly on the eastern line of Lot 14 in Block 13, and formerly
known as the Atlantic View Pier and more recently as Johnnie Mercer’s Fishing
Pier, and further excepting any rights, privileges, easements, licenses and
appurtenances thereunto belonging or in anywise thereunto appertaining to said
fishing pier. (emphasis in original)..
14. 	The last paragraph in Exhibit A to the Deed reads, in part:
“EXCEPTING THEREFROM all equipment and fixtures used in connection
with the operation of Johnnie Mercer’s Fishing Pier . . . .” (emphasis in original).
15. 	Exhibit B to the Deed further reserved certain rights, easements and privileges in
Mercer’s (the “Easement”) as follows:
The Grantor reserves a non-exclusive easement for ingress, egress and regress
and necessary utilities (for operation of the Pier Facility) from Salisbury Street
to the Johnnie Mercer’s Fishing Pier (which includes the ramp to the Pier House
and the Pier) (hereinafter referred to as the “Pier Facility”) over a portion of Lot
14 in Block 13 as appears on the map of addition to Blocks 13 and 14,
Wrightsville Beach, N.C. as prepared by Lewis L. Merritt and recorded in the
Registry of New Hanover County in Map Book 4, at Page 66, which pier
easement is more specifically described as follows:
Beginning at the Southeastern corner of Lot 14 as depicted upon a map
entitled “Addition to Blocks No. 13 & 14 at North End”, said map being
recorded in Map Book 4, Page 66 of the New Hanover County Register
of Deeds, running thence with the Southern line of Lot 14 and the
Northern line of Salisbury Street (130’ public right of way) North 52º 30’
00” West 16.20 feet; thence parallel with the Eastern line of Lot 14 North
37º 30’ 00” East 20.06 feet; thence with a curve to the right, said curve
having a radius of 21.50 feet to a point in the Eastern line of Lot 14
located North 75º 21’ 52” East a chord distance of 26.39 feet from the
preceding point; and thence with the Eastern line of Lot 14 South 37º 30’
00” West 40.90 feet to the point of beginning, containing 575 square feet
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more or less.
This reservation shall run with and be appurtenant to land upon which the Pier
Facility is constructed, which land is described as follows: land lying east of Lot
No. 14 in Block 13 herein described between the extended side property lines of
said Lot No. 14 in Block 13 and the low water mark of the Atlantic Ocean, if the
said side property lines of said lot were extended eastwardly to the low water
mark—said land being entirely east of Lot 14 in Block 13 to the Atlantic Ocean.
Additionally, as noted in Exhibit “A,” the Grantor has excepted from the
operation of this Deed the structure known as the of [sic] Johnnie Mercer’s
Fishing Pier lying east of the Building Line and the Eastern Boundary Line of
Lot 14 of Block 13 as appears on the map of addition to Blocks 13 and 14,
Wrightsville Beach, N.C., as prepared by Lewis L. Merritt and recorded in the
Registry of New Hanover County in Map Book 4, at Page 66. The Grantee has
agreed to cooperate with the Grantor with respect to (1) the continued operation
of the Johnnie Mercer’s Fishing Pier, (2) Grantor’s right to rebuild the Johnnie
Mercer’s Fishing Pier in the event of damage to it, and (3) that Grantor’s use(s)
of the Lot 14 of Block 13 shall not unreasonably interfere with the continued
operation of the Pier and associated businesses, provided that such operation of
the Johnnie Mercer’s Fishing Pier does not unreasonably interfere with the use
and any future development of the Grantee’s Property as described in Exhibit
“A” above.
16. 	Cooperative Bank loaned Seascape funds for the purchase of the real property from
Mercer’s, and such loan was secured by a Real Estate Deed of Trust covering, inter alia,
Lot 14 (the “August 2005 Deed of Trust”), which deed of trust was recorded on 29
August 2005 in Book 4896 at Page 1385 of the New Hanover County, N.C., Registry.
17. 	Subsequently, Cooperative Bank also obtained from Seascape: (i) a Real Estate Deed of
Trust recorded on 1 September 2005 in Book 4898 at Page 3085 of the New Hanover
County, N.C., Registry; (ii) a Real Estate Deed of Trust recorded on 27 February 2007 in
Book 5147 at Page 1803 of the New Hanover County, N.C., Registry; (iii) a Real Estate
Deed of Trust recorded on 20 December 2007 in Book 5262 at Page 1483 of the New
Hanover County, N.C., Registry; and (iv) a Real Estate Deed of Trust recorded on 18
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June 2008 in Book 5324 at Page 410 of the New Hanover County, N.C., Registry
(collectively—including the August 2005 Deed of Trust—the “Deeds of Trust”).
18. 	First Bank assumed the rights and obligations of Cooperative under the Deeds of Trust,
and has appointed H. Kenneth Stephens II as Substitute Trustee under the Deeds of Trust.
19. 	The Deeds of Trust all contain the description of Tract 2—which encompasses Lot
14—including the “excepting language” quoted in Paragraph 13 above.
20. 	The property descriptions in three (3) of the Deeds of Trust reference the Easement
and/or the Deed by stating either “Subject to the restriction of easement rights from
Seascape at Wrightsville Beach, LLC in favor of Mercer Enterprises, Inc., as appearing
in Exhibit ‘B’ of that General Warranty Deed recorded on August 29, 2005 in Book 4896
at Page 1378 in the office of the New Hanover County Registry”; or, “BEING THE
SAME AS ALL OF THAT PROPERTY acquired by Seascape at Wrightsville Beach,
LLC via [the Deed].” (Emphasis in original).
21. 	Disputes arose as to the operation of the Deed and the Deeds of Trust, as they relate to
ownership of the Pier, the Easement and littoral rights, among other things.
22. 	These disputes resulted in litigation filed by both Mercer’s and Seascape in the New
Hanover County, North Carolina, Superior Court (Civil Action No. 06 CVS 2957 and
No. 06 CVS 2968—New Hanover County Superior Court), which actions were removed
to this Court on 1 February 2008.
23. 	However, Seascape has stipulated that it did not intend to purchase and did not purchase
the Pier, and First Bank has advised the Court that it is not claiming any interest in or title
to the Pier under the Deeds of Trust, except the underlying fee simple interest to the
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Easement Area of Lot 14.
24. 	At various places, the Deed reflects the reservation of the Pier to Mercer’s. For example:
(i) Mercer’s retained the right to rebuild the Pier; (ii) all the equipment and fixtures used
in connection with the operation of the Pier were excepted from the Deed; (iii) the Pier
east of Lot 14 is expressly reserved; (iv) Mercer’s retained an easement in the Easement
Area on which a portion of the Concrete Ramp lies; (v) Seascape agreed to cooperate
with Mercer’s with respect to the continued operation of the Pier; and (vi) Seascape
agreed that its use of Lot 14 would not unreasonably interfere with the continued
operation of the Pier. Accordingly, the language within the four corners of the Deed is
clear in that Mercer’s did not convey the Pier to Seascape, and Seascape did not purchase
the Pier from Mercer’s; instead, Mercer’s retained both an easement in the Easement
Area and ownership of the Pier.
25. 	The Deeds of Trust are clear in that the Trustee for Cooperative Bank received title to Lot
14, subject to the Easement, and that Mercer’s retained ownership of the Pier.
26. 	First Bank has instituted foreclosure proceedings seeking to foreclose on the property
described in four (4) of the Deeds of Trust that cover Lot 14: (i) Real Estate Deed of
Trust recorded in Book 5262, at page 1483, New Hanover County Registry; (ii) Real
Estate Deed of Trust recorded in Book 5147, at page 1803, New Hanover County
Registry; (iii) Real Estate Deed of Trust recorded in Book 4898, at page 3085, New
Hanover County Registry; and (iv) Real Estate Deed of Trust recorded in Book 4896, at
page 1385, New Hanover County Registry. A foreclosure sale pursuant to these
foreclosure proceedings is presently scheduled for 23 June 2010.
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CONCLUSIONS OF LAW
1. 	The Court has jurisdiction over the Chapter 11 case pursuant to 28 U.S.C. §§ 1334(b),
1334(e)(1), and 157(a) and the General Order of reference entered in the Eastern District
of North Carolina on 3 August 1984, referring all bankruptcy cases to the bankruptcy
court. The Court has exclusive jurisdiction over the property of the estate that is the
subject matter of this adversary proceeding pursuant to 28 U.S.C. § 1334(e), and has
jurisdiction over all other subject matter of this adversary proceeding as set forth in its
Order dated 8 May 2008.
2. 	All necessary parties have been joined and have made general appearances in this
Adversary Proceeding.
3. 	The Court has jurisdiction over the parties to this Adversary Proceeding.
4. 	A substantial controversy exists between and among the parties, who have adverse legal
interests, of sufficient immediacy and reality to warrant issuance of a declaratory
judgment.
5. 	No genuine issue as to any material fact exists and Mercer’s is entitled to judgment as set
forth in this Court’s Judgment of even date herewith.
6. 	The Deed reserved the Easement and the Pier to Mercer’s.
7. 	Upon the material facts not genuinely at issue in this case, the Easement is a sufficient
ownership of property by Mercer’s to vest in Mercer’s, as if a littoral owner, the rights to
own, operate, maintain, repair, rebuild and replace the Pier.
8. 	Mercer’s owns free and clear of any right or claim of Seascape, the Trustee, Cooperative
Bank, and First Bank, and their successors and assigns, the following: (i) the Pier, (ii) the
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Easement, and (iii) sufficient rights as if a littoral owner, incident to the Easement, to
allow Mercer’s to own, operate, maintain, repair, rebuild and replace the Pier, together
with the right to bargain, sell, convey, transfer, assign and encumber the Pier and the
Easement.
9. 	Any subsequent transfer or conveyance of Lot 14 by Seascape, its successors and assigns,
or First Bank pursuant to any foreclosure sale or otherwise, shall not include or impair
Mercer’s rights to the Easement, Mercer’s ownership of the Pier, and Mercer’s rights as
if a littoral owner, incident to the Easement.
10. 	This is a final judgment, pursuant to Federal Rule of Civil Procedure 54(b) – as made
applicable to this Adversary Proceeding by Federal Rule of Bankruptcy Procedure 7054.
The court expressly determines that there is no just reason for delay in directing entry of
final judgment on Plaintiff’s Motion for Partial Summary Judgment, as resolution of
these two claims largely resolves the entire controversy.
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"END OF DOCUMENT"
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1
552-3000? 1 99.00
NOW OR PORUCHY
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MERCERS ENTERPRISES, INC. 00. 911 PG. 291
LOT 11
LOT 12
LOT 15
-7.0
=
552.30007 1
-
-
PUNG CAPS MACAU
100.0
-
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25.0
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NOTES
1. THIS PROPERTY IS LOCATED IN A FLOOD HAZARDOUS APTA
2. ENCROACHMENT BASEMENTS POR, UTILITIES INSTALLATION & MAINTENANCE ONLY
3 NO NCGS MONUMENT FOUND WITHIN 2000 FEET
4. ROOF RAFTERS AND RIDGE DEAM IN PLACE AS OF THIS DATE
LEGEND
0 - CASTING IKON PPE
- CENTER,THE CY ROAD
X
- COMSELED ** IN CONCRETE
· - SET IROTIVE
SURVEY REFERENCE DEED BOOK 911 PAGE 291 MAP BOOK, 4 PAGE GG
AS BUILT DWI DATE 11-27-03
1.0- to Mine CHISVLE SCACOLOR IN VERCER MED VENNER & SOURI ong
STOCKS LAND SURVEYING, P.C. LAND SURVEYING AND PLANNING
-
40
120
S
1 INCH = 40 FEET
WRIGHTVILLE BEACH TOWNSHIP
NEW MAHOVER COUNTY
NORTH CAROLINA
Page 12 of
Case 08-00012-8-JRL Doc 138 Filed 06/10/10 Entered 06/10/10 16:28:44
23 EAST SALISBURY STREET - WRIGHTSVILLE BEACH, NORTH CAROLINA JOHNNIE MERCER'S PIER * REPLACEMENT
tabbles
EXHIBIT
LUMINA AVE.
00. 1244 PG. 1605 LOT 1G
₦37-30007
102.00
CONCRETE RAMP
-
₦523000₩ 99.00
401.0
952-30007
10.00 .
5. FOOF TOP HEIGHT = 38 95 ABOVE PAVEMONIT AT EASTERN TERMINUS OF SALEBURY STREET
6. ROOF TOP ÉLEVATION - 49 5
7. DATUM SOURCE - FIRE HYDRANT · S ELEVATION - 5.DI INE CORNER OF LUMINA AVE F SAUSOURY STREET
INTRACOASTAL WATPKW/AY
3
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LOCATION MAP NOT TO SCALE
RGE ARCHITECT 7036 WRIGHTSVILLE AVE. SUITE 102 WILMINGTON, N.C.28403
P. 910-256-5144 F. 910-256-5143
ATLANTIC OCEAN
194.00
45.30
72.00
80.2'
721.35*
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MAP OF SURVEY FOR MERCER'S ENTERPRISES, INC. LOTS 12, 13, 14 4 15 BLOCK 13
ADDITION TO BLOCKS NUMBER 13 AND 14 WRIGHTSVILLE BEACH
MARCH 21, 2001 REVISED: JUNE 28, 2001 0 20 40 80
LUMINA AVENUE
ATLANTIC OCEAN
174.00
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