PERRY et al v. CITIMORTGAGE, INC. et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ARTHUR PERRY and LISA
GILLESPIE PERRY,
Plaintiffs,
v.
CITIMORTGAGE, INC.,
CORINTHIAN MORTGAGE
CORPORATION d/b/a SOUTHBANC
MORTGAGE, and TRUST TITLE
COMPANY d/b/a TTC
SETTLEMENT AND ESCROW
COMPANY,
Defendants.
1:24-CV-1080-DAB-LPA
MEMORANDUM OPINION AND ORDER
Pending before the Court are Plaintiffs’ Consent Motion to Stay (D.E. 21) and
Plaintiffs’ Motion for Default Judgment (D.E. 22). For the reasons set forth below,
the Court grants the Motion to Stay and denies the Motion for Default Judgment
without prejudice.
FACTUAL BACKGROUND
This action arises from a dispute concerning an allegedly fraudulent deed of
trust encumbering Plaintiffs’ property. According to the Complaint, Plaintiff Arthur
Perry purchased the property in 2005 with a loan secured by a recorded deed of trust.
(Complaint (D.E. 2) ¶¶ 8-12.) In 2006, a separate deed of trust purporting to secure
a loan in favor of Corinthian Mortgage Corporation d/b/a SouthBanc Mortgage was
recorded against the property. (Id. ¶¶ 14-15.) Plaintiffs allege Mr. Perry never
applied for, authorized, or received this loan and that the Corinthian deed of trust is
fraudulent. (Id. ¶¶ 48, 66-68.)
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In 2019, Plaintiffs attempted to sell the property. (Id. ¶ 19.) At closing, they
learned for the first time that the Corinthian deed of trust encumbered the property,
preventing the transaction from closing. (Id. ¶¶ 24-25, 28.) Plaintiffs thereafter
contacted 	CitiMortgage, 	Inc., 	which 	had 	allegedly 	been 	assigned 	the 	rights
associated 	with 	the 	Corinthian 	deed 	of 	trust. 	(Id. 	¶¶ 	30, 	69.) 	In 	those
communications, 	CitiMortgage 	allegedly 	acknowledged 	that 	it 	maintained 	an
incorrect Social Security number for Mr. Perry. (Id. ¶ 33.) Plaintiffs allege that
although they repeatedly requested documentation establishing the validity of the
alleged loan, CitiMortgage was initially unable to produce responsive records and
later produced documents that Plaintiffs contend contained material inaccuracies.
(Id. ¶¶ 35, 38.)
In October 2022, Plaintiffs sued CitiMortgage in a state court action asserting
claims arising from the Corinthian deed of trust and related collection and reporting
activity (hereinafter “Perry I”). See Perry v. CitiMortgage, Inc., No. COA 25-938
(N.C. Ct. App.) (Record on Appeal at 4-17). Plaintiffs voluntarily dismissed Perry I
with prejudice in December 2023. (Id. at 50.) They then initiated the instant lawsuit
in December 2024 against CitiMortgage, Corinthian, and Trust Title Company d/b/a
TTC Settlement and Escrow Company based on substantially the same underlying
conduct (hereinafter “Perry II”). (See Compl. (D.E. 2).) Plaintiffs have since
obtained an entry of default against both Corinthian and Trust Title Company for
their failure to appear in this action. (See Entry of Default (D.E. 16).)
CitiMortgage did appear, however, and asserted an affirmative defense based
on Plaintiffs’ voluntary dismissal with prejudice in Perry I. (Answer (D.E. 8) at 18.)
Thereafter, Plaintiffs moved the Perry I court to convert the dismissal to one without
prejudice. (Perry I Record on Appeal at 52-57.) The superior court denied that
motion in March 2025, and Plaintiffs appealed. (Id. at 146-47.) That appeal remains
pending before the North Carolina Court of Appeals.
Plaintiffs and CitiMortgage now jointly move to stay proceedings between
them, representing that the Perry I appeal is likely determinative of whether
Plaintiffs’ claims against CitiMortgage here may proceed. (Motion to Stay (D.E.
21).) Plaintiffs also move for default judgment against Corinthian and Trust Title
Company. (Motion for Default Judgment (D.E. 22).) The Court addresses both
motions in turn.
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ANALYSIS
I. 	A temporary stay pending the disposition of the Perry I appeal is
warranted.
The Court initially addresses the Consent Motion to Stay. This Motion does
not cite any rule, statute, or other authority supporting the requested relief,
notwithstanding Local Rule 7.3(j), which requires that even unbriefed consent
motions cite “any applicable rule, statute, or other authority justifying the relief
sought.” Although the Court does not treat that omission as dispositive, it does mean
the Court must independently assess whether a stay is warranted under governing
law.
That review confirms that a federal court possesses the “inherent” authority
to stay proceedings “to control the disposition of the causes on its docket with
economy of time and effort for itself, for counsel, and for litigants.” Maryland v.
Univ. Elections, Inc., 729 F.3d 370, 379 (4th Cir. 2013) (quoting Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936)). Under the Colorado River doctrine, for example, a
federal court may stay a “duplicative federal action for purposes of ‘wise judicial
administration.’” vonRosenberg v. Lawrence, 849 F.3d 163, 167 (4th Cir. 2017)
(quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,
818 (1976)); see also United States v. Oliver, 878 F.3d 120, 124 (4th Cir. 2017)
(noting a court’s authority “to stay an action pending the outcome of parallel
proceedings in another court”). Application of 	Colorado River 	requires both:
(1) “parallel 	proceedings 	in 	state 	and 	federal 	court” 	and 	(2) 	“exceptional
circumstances” justifying the stay. Gannett Co. v. Clark Constr. Grp., 286 F.3d 737,
741 (4th Cir. 2002) (citing Colorado River, 424 U.S. at 813). Although Plaintiffs’
Motion does not invoke 	Colorado River 	expressly, the Court is satisfied its
requirements are met here.
First, the proceedings are parallel. Actions are parallel when “substantially the
same 	parties 	litigate 	substantially 	the 	same 	issues 	in 	different 	forums.”
vonRosenberg, 849 F.3d at 168 (quoting New Beckley Mining Corp. v. Int’l Union,
United Mine Workers of Am., 946 F.2d 1072, 1073 (4th Cir. 1991)). Here, Plaintiffs
and CitiMortgage are parties to both this action and Perry I. And the issues
substantially overlap: the pending state court appeal concerns whether Plaintiffs may
pursue renewed claims against CitiMortgage at all following a voluntary dismissal
with prejudice, while this action presumes the continued viability of those same
claims.
Second, exceptional circumstances warrant a stay. In assessing whether such
circumstances exist, courts consider: “(1) whether the subject matter of the litigation
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involves property where the first court may assume in rem jurisdiction to the
exclusion of others; (2) whether the federal forum is an inconvenient one; (3) the
desirability of avoiding piecemeal litigation; (4) the relevant order in which the
courts obtained jurisdiction and the progress achieved in each action; (5) whether
state law or federal law provides the rule of decision on the merits; and (6) the
adequacy of the state proceeding to protect the parties’ rights.” Id. (quoting Chase
Brexton Health Servs., Inc. v. Maryland, 411 F.3d 457, 463–64 (4th Cir. 2005)).
Courts “must look at these factors holistically, ‘with the balance heavily weighted in
favor of the exercise of jurisdiction.’” Id. (quoting Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 16 (1983)).
Several factors weigh strongly in favor of a stay here. Most importantly, the
parties jointly represent that the pending state court appeal is likely dispositive of
whether Plaintiffs’ claims against CitiMortgage in this action may proceed at all.
(See Motion to Stay (D.E. 21).) Allowing this case to move forward while that appeal
remains unresolved creates a substantial risk of inconsistent rulings, unnecessary use
of judicial resources, and piecemeal litigation. Further, the state court action predates
this case and has progressed to the appellate stage. There is also no dispute that the
state forum is adequate to protect the parties’ rights.
To be sure, some Colorado River factors may be neutral or weigh modestly
against a stay. But given the potentially dispositive nature of the state court appeal
and to avoid piecemeal and duplicative litigation here, the Court concludes that this
case presents the type of exceptional circumstances that justify a temporary stay. The
Court accordingly grants the Motion to Stay as outlined below.
II. 	Plaintiffs’ Motion for Default Judgment is premature and denied
without prejudice.
The Court next turns to Plaintiffs’ Motion for Default Judgment. Obtaining a
default judgment is a two-step process. A plaintiff must first secure an entry of
default under Rule 55(a), Fidrych v. Marriott Int’l, Inc., 952 F.3d 124, 130 (4th Cir.
2020), which Plaintiffs have already done (see Entry of Default (D.E. 16)). The
plaintiff must then obtain a default judgment under Rule 55(b), which—unless
entered by the Clerk—must be entered by the district court. Fidrych, 952 F.3d at
130. The district court must then ordinarily determine “whether the well-pleaded
allegations in the operative complaint support the relief sought.” Mey v. Phillips, 71
F.4th 203, 223 (4th Cir. 2023) (quoting Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780 (4th Cir. 2001)) (internal brackets omitted).
That said, this case presents a distinct procedural posture because Plaintiffs
seek default judgment against fewer than all defendants. The Supreme Court has
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long cautioned that, to avoid logically inconsistent judgments, a court should not
enter default judgment against a defaulting defendant in a case involving joint or
interdependent liability while other defendants continue to litigate the merits. Frow
v. De La Vega, 82 U.S. (15 Wall.) 552, 554 (1872). The Fourth Circuit has extended
this principle beyond strict joint liability to cases involving multiple defendants
whose potential liability is joint, several, or otherwise “closely interrelated.” United
States ex rel. Hudson v. Peerless Ins. Co., 374 F.2d 942, 944 (4th Cir. 1967) (citation
omitted). Courts accordingly hold that default judgment is inappropriate where it
would risk outcomes inconsistent with the resolution of claims against non-
defaulting defendants. See, e.g., Escalante v. Lidge, 34 F.4th 486, 495 (5th Cir.
2022); Vick v. Wong, 263 F.R.D. 325, 331-33 (E.D. Va. 2009).
These considerations counsel against entering default judgment at this stage.
The claims for which Plaintiffs seek default judgment arise from the same alleged
loan transaction and deed of trust that underlie Plaintiffs’ stayed claims against
CitiMortgage. 	Several 	claims 	against 	the 	defaulting 	defendants 	are 	pleaded
expressly in the alternative to claims asserted against CitiMortgage, such that
liability on those claims would necessarily turn on the resolution of CitiMortgage’s
liability. (See Compl. (D.E. 2) Counts 6-9, 12.) Other claims are asserted jointly
against CitiMortgage and one or more defaulting defendants, and CitiMortgage’s
potential liability on certain claims is derivative of the alleged conduct of the
defaulting defendants. (Id. Counts 6, 9, 10.) In addition, certain claims against
CitiMortgage hinge on the validity or fraudulence of the Corinthian deed of trust.
(See id. ¶ 26.) Indeed, Plaintiffs themselves acknowledge that “there is a great deal
of overlap between facts proving the several causes of action.” (Motion for Default
Judgment (D.E. 22) at 5.) Entering default judgment now would risk predetermining
factual and legal issues central to the remaining claims, thereby creating a substantial
risk of inconsistent liability and damages determinations.
To be sure, Counts 13 (constructive fraud) and 14 (negligence) appear to be
asserted solely against Trust Title Company and are not expressly pleaded in the
alternative. Even so, those claims arise from the same underlying facts and are
closely intertwined with the unresolved merits issues in this action. Under these
circumstances, 	entering 	default 	judgment 	at 	this 	stage 	risks 	inconsistent
adjudications and premature merits determination. Thus, the Court concludes that
denial of the Motion for Default Judgment without prejudice is warranted.
CONCLUSION
For the reasons stated above, Plaintiffs’ and CitiMortgage’s Consent Motion
to Stay (D.E. 21) is GRANTED, and this action is STAYED pending resolution of
the related appeal currently before the North Carolina Court of Appeals. The Court
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further ORDERS that Plaintiffs and CitiMortgage shall file a joint notice within 14
days of the issuance of a decision by the North Carolina Court of Appeals in the
related state court proceeding. If no decision has been issued within three months of
the entry of this Order, Plaintiffs and CitiMortgage shall instead file a joint status
report advising the Court of the status of the state court appeal and whether
continuation of the stay remains appropriate.
It is further ordered that Plaintiffs’ Motion for Default Judgment (D.E. 22) is
DENIED WITHOUT PREJUDICE. This motion may be renewed, if appropriate,
after the stay of the action is lifted and in a manner consistent with this Opinion and
Order.
This the 18th day of February, 2026.
/s/ David A. Bragdon
United States District Judge
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