In Peachtree Homes Inc. v. Bank of America NA, the Georgia Court of Appeals affirmed the confirmation of four foreclosure sales. Although Bank of America (“BOA”) bid at the sale, the Deed Under Power actually conveyed the property to BOA’s subsidiary Quality Properties Asset Management Company (“Quality”). The Court of Appeals held that this procedure was acceptable, as it did not prejudice the debtor, and had no chilling effect on the sale.
The full text of the decision follows: [Read more →]
Comments OffTags:
In Diplomat Constr. Inc. v. State Bank of Texas, the Georgia Court of Appeals affirmed the confirmation of a foreclosure sale on a hotel leasehold interest.
Confirmation of Available Funds Does Not “Chill” Bid. During the foreclosure sale, the lender’s representative who conducted the auction continued to check with a bidder to ensure that it had sufficient funds present to support the bid. However, the lender did not know the total amount of funds the bidder had available, and did not know the bidder’s ”final bid ceiling”. In this circumstance, the Court of Appeals affirmed the trial court’s finding that the bidding was not chilled.
Erroneous Legal Description in Advertisement Not Harmful. The notice of sale as advertised was found to have an error in the metes and bounds, so that the property line was not contiguous. However, the legal description was identical to that in the lender’s Security Deed, and there was no evidence that the error in the description affected the bidding. Accordingly, this challenge was rejected.
Expert May Not Testify As to “Ultimate Issue”. The debtor had an expert watch a video of the foreclosure, and afterwards asked the expert whether he had formed any opinions about the “regularity” of the sale from this viewing. The Court of Appeals affirmed the trial court’s determination that the expert could not give a legal conclusion on the “ultimate issue” of regularity.
The full text of the decision follows: [Read more →]
Comments OffTags:
In 2011, the Georgia Court of Appeals entered a decision which held that, although a lender (BB&T) gave a notice of foreclosure, and then bid upon the property at a foreclosure auction, there was no “foreclosure sale” which would trigger the requirement of confirmation until a written deed was executed which would satisfy the statute of frauds. Legacy Communities Group v. Branch Banking & Trust Co. , 310 Ga. App. 466, 469-470 (1), 713 SE2d 670 (2011).
On November 7, 2011, the Georgia Supreme Court granted two writs of certiorari in Case No. A11A0696 and in Case No. A11A0697.
→ No CommentsTags:
Generally, the entire scope of a Court’s jurisdiction in a confirmation proceeding is to determine true market value and regularity of sale, and other claims and counterclaims are not permitted. See, e.g. Dorsey v. Mancuso, 249 Ga. App. 259, 261, 547 S.E.2d 787 (2001) (“The duty of the trial court is to test the fairness of the technical procedure of the actual sale and to insure that it brought at least the true market value; the statute does not undertake to decide controversies between parties as to the amount of the debt, side agreements, or matters in defense of default or in denial of indebtedness, or which might have been the basis of an injunction preventing the foreclosure sale.”).
Therefore, it has been an open question whether the parties may settle other disputes (e.g. the amount of the deficiency) through the vehicle of the confirmation proceeding. Stated another way, can the parties through settlement voluntarily confer subject matter jurisdiction on the trial court to determine issues over which the trial court otherwise would not have jurisdiction? Out of caution, this author has generally assumed that the answer to this question is “no.” See, e.g. In the Interest of C. F., 199 Ga. App. 858, 406 S.E.2d 279 (1991) (“Subject matter jurisdiction cannot be waived, nor can one voluntarily submit herself to subject matter jurisdiction of an improper court.”).
However, the Court of Appeals in Brooks v. Ironstone Bank assumed that a trial court could enforce other relief by enforcing a settlement agreement which arose out of a confirmation proceeding, but remanded for the trial court to determine factual issues regarding the settlement.
The full text of the decision follows: [Read more →]
Comments OffTags:
In The Village at Lake Lanier LLC v. State Bank and Trust Co., Case No. A11A2128 (Ga. App. March 1, 2012), the Georgia Court of Appeals reiterated that a trial court has broad discretion in determining whether a lender has shown “good cause” for a resale of the property in the event that it does not sell for its true market value, holding that “the trial court did not abuse its discretion in ordering a resale where a bank acted in good faith and where the property failed to sell for its true market value.”
The Court of Appeals rejected the appellant’s other challenges because there was no transcript of the hearings, and therefore the Court of Appeals relied upon the general presumption of regularity: ”An appellate court generally presumes that a trial court has performed its duties in accordance with law.”
The full text of the decision follows: [Read more →]
Comments OffTags:
In White Oak Homes Inc. v. Community Bank & Trust, Case No. A11A2191 (March 1, 2012) the Court of Appeals held that a Publisher’s Affidavit to which was attached a “tear sheet” of the foreclosure advertisement which ran in the paper, was admissible to prove the fact of the advertisement, and did not constitute inadmissible hearsay.
The Court of Appeals also held that it was not relevant that the FDIC as receiver for CB&T had sold CB&T’s assets to another bank on the same date as the final foreclosure advertisement and prior to the foreclosure sale, because “[t]he issues of standing and assignment were irrelevant to the confirmation proceeding.”
The full text of the decision follows: [Read more →]
Comments OffTags:
The Georgia Court of Appeals affirmed a trial court’s order of resale when the lender’s $1.1M purchase price was based in good faith upon a faulty appraisal. The lender’s appraiser performed only an exterior examination of the building because the parties’ contentious relationship hindered an interior inspection. Accordingly, the lender’s appraiser erroneously estimated the building’s square footage, and the lender bid only $1.1M instead of the building’s true market value of $1.425M.
The Court of Appeals noted several key points about when resale is proper:
OCGA § 44-14-161 (c) pertinently provides that the trial court “may order a resale of the property for good cause shown.” Under this statutory provision, the trial court is vested with “considerable discretion” in determining whether to order a resale. []“[T]he statute does not define what constitutes ‘good cause’ ” and “does not require evidence of bad faith or negligence.” [] We have declined to establish restrictions on the trial court’s discretion in determining whether the circumstances warrant a resale. []
Greg A. Becker Enterprises Ltd. v. Summit Inv. Management Acquisitions I LLC, Case No. A11A1620 (Ga.App. March 12, 2012) (internal citations omitted).
The full text of the decision follows: [Read more →]
Comments OffTags:
In Duke Galish LLC v. SouthCrest Bank, the Georgia Court of Appeals affirmed an order for resale of property, and affirmed the trial court’s authority to require bond as a condition of supersedeas during the appeal.
Several observations may be taken away from the decision:
(1) Though the Court of Appeals affirmed the denial of the debtors’ motion for summary judgment, it did not expressly disapprove of the use of the summary judgment procedures in OCGA § 9-11-56 during a confirmation proceeding.
(2) If a lender fails to record the assignment of the security deed prior to exercising the power of sale, as required by OCGA § 44-14-162, the lender may dismiss the confirmation of the first foreclosure, and then cure any invalidity in the first foreclosure by conducting a second foreclosure.
(3) A lender does not act in “bad faith” if it does not attempt to remedy the cloud upon title created by the first foreclosure before re-foreclosing (e.g. record cancellation of the first Security Deed).
(4) The trial court has discretion to determine whether a lender’s failure to update a property appraisal before re-foreclosing, and failure to sell and buy the property at its fair market value, is intentional or constitutes bad faith.
(5) If an unsuccessful party appeals from an order denying confirmation and ordering re-sale, the trial court has authority to require a bond as a condition of supersedeas, because the order falls “within the disposition-of-property provision of the [supersedeas] statute” OCGA § 5-6-46 (a).
(6) The trial court has discretion regarding the amount of the supersedeas bond. Where the debtor is not making payments on the note pending the appeal, interest continues to accrue on the note pending appeal, taxes on the property will be payable during the appeal, and that the appeal delays the lender from pursuing the resale, an additional confirmation, and action for deficiency judgment, then a significant supersedeas bond is warranted. In this case, where theoriginal principal amount of the debt was $1,720,346.72, and the foreclosure sale price was $795,000.00, the Court of Appeals found that the trial court did not abuse its discretion in requiring a $300,000 bond.
The full decision follows: [Read more →]
Comments OffTags:
In the case of Building Block Enterprises, LLC v. State Bank & Trust Co., Case No. A11A1819 (Ga. App. Feb. 16, 2012), the Court of Appeals held that a trial court erroneously granted a declaratory judgment that a lender need not institute a confirmation proceeding before seeking a deficiency.
In relevant part, the Court of Appeals held:
The superior court held that State Bank was not required to confirm the January 5, 2010 foreclosure sale under OCGA § 44-14-161, as it had an enforceable default judgment for the full amount of the indebtedness as of that date. But that holding was an erroneous advisory opinion.
The Court of Appeals reasoned that a court cannot “rule[] in a party’s favor as to future litigation.”
The full text of the decision follows: [Read more →]
Comments OffTags:
In the case of Nexgen Cumming, LLC v. State Bank and Trust Co., Case No. A11A2170 (Jan 26, 2012), the Court of Appeals affirmed the confirmation of a nonjudicial foreclosure sale, and rejected a challenge to the sufficiency of the evidence regarding the legality of the advertisement.
First, the debtors challenged a Publisher’s Affidavit as hearsay. However, the Court of Appeals ruled that, because a paralegal testified that her firm asked the newspaper to publish the notice, and that the ad was indeed published for four consecutive weeks, that the affidavitwas competent proof of the contents of the advertisement and dates of publication.
Second, the debtors challenged the advertisement based upon a discrepancy between the publication dates alleged in the report of sale, and the publication dates included in the affidavit. The Court of Appeals ruled that this challenge was not relevant, but under either set of facts, the advertisement ran four times in the four weeks immediately preceding the foreclosure sale.
The full text of the decision follows: [Read more →]
Comments OffTags: