The original owners, Cyril N. and Karina C. Gaydos, bought the property in March 2006 with a mortgage from EquiFirst Corporation, Deutsche Bank’s predecessor-in-interest. The initial deed of trust, recorded on June 19, 2006, had a clerical error in the legal description, listing Unit 7301 instead of Unit 7104, but the address and tax parcel number were correct. Within a year, on May 21, 2007, a second general warranty deed was recorded with the correct unit number, and the deed of trust was rerecorded with the corrected legal description.
After the Gaydoses filed for bankruptcy in July 2013, the condominium owners’ association foreclosed on the property due to unpaid assessments. Title was transferred by foreclosure deed on March 13, 2015, to Gaydos & Family 14716 Via Sorrento Condominium, Inc., a business entity associated with the Gaydoses. Around this time, fraudulent satisfactions of the Gaydos deed of trust were recorded as part of a scheme allegedly orchestrated by the Gaydos/Earquhart Defendants.
On July 7, 2015, Meha Bhupendra Shah and Fenil Hiren Kumar Shah purchased the property from Gaydos & Family and took title by general warranty deed, believing there were no outstanding liens. In connection with the purchase, the Shahs executed a note secured by a deed of trust for the property in favor of their mortgagee, U.S. Bank, National Association s/i/i Pinnacle Bank s/b/m Bank of North Carolina. The Shah vesting deed and the Shah deed of trust were recorded on July 8, 2015.
Deutsche Bank filed suit on April 5, 2018, seeking monetary damages from the Gaydos/Earquhart Defendants and a declaratory judgment against all named defendants, including the Shahs, to restore the fraudulently extinguished deed of trust and establish its priority. An amended complaint was filed on May 4, 2018, adding Mortgage Electronic Registration Systems, Inc. (MERS) as a party. The Shah Defendants filed their answer and a motion to dismiss on February 10, 2020. Deutsche Bank voluntarily dismissed its claims against the individual Gaydos defendants, MERS, and John Does #1-10. Both parties moved for summary judgment in 2020.
The trial court heard the motions on July 19, 2021, and entered an order on October 26, 2021, denying the Shah Defendants’ motions to dismiss and granting summary judgment in favor of Deutsche Bank on its claim for declaratory relief. The court ordered that Deutsche Bank’s deed of trust was superior in time and priority over the Shah Defendants’ interest in the property and any subsequent liens or interests granted by the Shahs. Deutsche Bank then obtained a final default judgment against the defaulted Gaydos/Earquhart Defendants on April 5, 2022.