243 So. 3d 784
Miss. Ct. App.2018Background
- Brown Lakeland Properties, LLC (BLP) executed two commercial promissory notes to Renasant Bank in 2012 secured by three parcels (two in Rankin County and one in Yazoo County); Charles Brown signed continuing guaranties.
- BLP defaulted; Renasant foreclosed and purchased the three parcels at public sales. BLP/Brown received notice but did not attend or bid.
- Renasant later sold the foreclosed properties to third parties for amounts in excess of the foreclosure-sale prices and applied the excess proceeds to the loan balances.
- After applying credits from third‑party sales, a balance remained of roughly $1.375 million; Renasant sued BLP and Brown for the deficiency and attorneys’ fees.
- The trial court granted Renasant summary judgment for $1,416,722.86 (including fees and interest) and dismissed BLP’s counterclaim challenging the commercial reasonableness of the sales.
- On appeal BLP/Brown challenged (1) alleged lack of demand for deficiency, (2) that foreclosure bids did not reflect fair market value, and (3) alleged deficiencies in the appraisals.
Issues
| Issue | Plaintiff's Argument (BLP/Brown) | Defendant's Argument (Renasant) | Held |
|---|---|---|---|
| Whether Renasant made required demand for post-foreclosure deficiency | No record proof demand was made; absence should preclude recovery | Bank produced affidavit from loan officer stating demand was made; note waived notice/demand | Demand was sufficiently shown; waiver in loan documents and affidavit dispel issue; claim fails |
| Whether foreclosure purchase prices were below fair market value so deficiency is inequitable | Foreclosure bids were below appraisals; sale prices should preclude deficiency | Bank introduced recent appraisals and subsequent third-party sales demonstrating fair market value and applied credits | Bank established fair market value by appraisals and third‑party sales; BLP offered no competent contrary evidence; held for bank |
| Whether appraisals were inadequate to establish value | Appraisals used improper/insufficient methods and thus are unreliable | Appraisers used accepted approaches (comparative, income, cost) and reconciled opinions; sales corroborated values | Appraisals were adequate; BLP failed to rebut with expert evidence; issue rejected |
| Liability of individual guarantor (Brown) | (Implicit) challenge to fairness of foreclosure price as to guarantor | Guaranty waived defenses; guarantor liable upon borrower default without requirement to show commercial reasonableness | Guarantor liable; bank need not prove commercial reasonableness against guarantor |
Key Cases Cited
- Gutierrez v. Gutierrez, 153 So. 3d 703 (Miss. 2014) (discusses requirement of demand for deficiency in particular factual context)
- Hartman v. McInnis, 996 So. 2d 704 (Miss. 2007) (deficiency judgment requires court to find equity given sale price and must establish fair market value)
- Wansley v. First Nat’l Bank, 566 So. 2d 1218 (Miss. 1990) (foreclosing creditor must give debtor fair credit for commercially reasonable value when creditor buys at foreclosure)
- Allied Steel Corp. v. Cooper, 607 So. 2d 113 (Miss. 1992) (fair market value must be established; mere offers for part of parcel are insufficient)
- Bosarge v. LWC MS Props. LLC, 158 So. 3d 1137 (Miss. 2015) (individual guarantor can be immediately liable upon borrower default; foreclosed-price fairness not required against guarantor)