In a decision handed down December 16, 2014, the North Carolina Court of Appeals unanimously upheld the decision of the Buncombe County Superior Court awarding more than $1,400,000 to the Town of Black Mountain against two bond companies. Cannon Law, P.C.’s Bill Cannon, along with Black Mountain Town Attorney Ron Sneed, represented Black Mountain when the bond companies refused to pay for completion of subdivision improvements after the developer defaulted.
Lexon and Bond Safeguard Insurance Companies had argued that annexation by the Town had terminated the bonds that were issued while the property was in the County. They also argued that the Town had failed to file suit within three years of the developer defaulting on its obligations.
The Court of Appeals agreed with the Town of Black Mountain that annexation of the property did not terminate the bonds. The Court also held suit was timely filed under the applicable statute of limitations and that enforcement of the bonds was a governmental function, negating application of the statute of limitations.