North Carolina Business Court Addresses Three Motions By and Against the Receiver in In re Southeastern Eye Center

On August 10, 2022, the North Carolina Business Court released three Orders of Significance in In re Southeastern Eye Center-Pending Matters and In re Southeastern Eye Center-Judgments. This litigation was initiated in 2012, resulting in a number of opinions and orders from the Court. The Orders released on August 10 all relate to the receiverships into which various entities involved have been placed.

In Order No. 45, the movants sought to compel the Receiver, pursuant to Article 38, § 1-501, et seq. of the North Carolina General Statutes, to testify under oath at a hearing in response to questions from the movants concerning information they contended the Receiver was required to provide to interested parties. Setting aside issues of standing, the Court determined that the relief requested was not authorized by Article 38 and denied the motions. However, the Court further noted that it had directed the Receiver to file an interim report by September 1, 2022, which would provide at least some of the information that the movants were seeking.

In Order No. 46, the Receiver sought an accounting from Doug Harris (“Harris”), who served as trustee for JDPW Trust (“JDPW”) prior to the Receiver’s appointment. In previous orders and opinions, the Court had concluded that Harris had committed a breach of trust against JDPW through various transactions which benefited himself and others and which were not in the best interests of JDPW and its beneficiaries. Reviewing caselaw and statutory authority, the Court determined that an accounting was an appropriate remedy and that the Receiver had satisfied his burden entitling him to an accounting. Thus, the Court granted the motion and ordered Harris to file an accounting setting forth the assets, income, and expenses of JDPW during his time as trustee and making available all original source documents so that the accounting could be verified.

In Order No. 47, the Receiver sought authority to exercise the power of sale in a deed of trust owned by JDPW. As an initial matter, the Court addressed whether the statutes in effect when JDPW was placed in receivership in 2016 governed, or whether the North Carolina Commercial Receivership Act, which became effective January 1, 2021, controlled. In agreement with the Receiver, the Court concluded that the versions of sections 1-501.1 through 1-507.11 that were in effect at the commencement of the receivership continued to govern the receivership and thus the Receiver was entitled to seek its requested relief under those provisions. The Court then granted the motion, concluding that, based on the Receiver’s forecast of evidence, it was in JDPW’s best interest to seek to enforce the deed of trust through power of sale procedures. The Court also delegated its authority to the Clerk of Superior Court of Guilford County to conduct the foreclosure proceedings and directed that any appeal therefrom be filed in the Business Court.

By: Ashley B. Oldfield

The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.


Posted 08/19/22 in Legal Updates