Case Information
*1 IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 38666
LEON PHILLIPS, an unmarried man, and )
EARLINE CHANCE, аn unmarried woman, ) ) Boise, February 2013 Term
Plaintiffs-Respondents-Cross ) Appellants, ) 2013 Opinion No. 45 ) v. ) Filed: April 11, 2013 ) CAROLE BLAZIER-HENRY, an individual, ) Stephen W. Kenyon, Clerk ) Defendant-Respondent, ) SUBSTITUTE OPINION. ) THE COURT’S PRIOR and ) OPINION FILED ON ) MARCH 29, 2013 IS HEREBY ROY JACOBSON, ) WITHDRAWN ) Intervenor-Appellant-Cross Respondent. )
_______________________________________ )
Appeal from the District Court of the First Judicial District of the State of Idaho, Bonner County. The Honorable Steve Verby, District Judge.
The judgment of the district court is reversed and the case is remanded.
Featherston Law Firm, Chtd., Sandpoint, for appellant. Brent C. Featherston argued. Bistline Law, PLLC, Coeur d’Alene, for respondents. Arthur M. Bistline argued. _____________________
J. JONES, Justice.
This is an appeal from an order setting aside a sheriff’s sale of real property. The respondents, Earline Chance and Leon Phillips (collectively “Chance”), who are deed of trust beneficiaries and judgment creditors, failed to attend or bid at the sheriff’s sale but claimed the successful bidder, appellant Roy Jacobson, obtained the property for a grossly inadequate price. The district court agreed and set the sale aside. We reverse.
I.
FACTUAL AND PROCEDURAL HISTORY
Between February of 2005 and August of 2007, Carole Blazier-Henry executed a series of promissory notes in favor of Chance. The notes were secured by a deed of trust on a less-than- twenty-acre parcel of real property owned by Blazier-Henry in Bonner County. Blazier-Henry failed to make timely payments on the notes, and on March 30, 2009, Chance filed a Complaint for Foreclosure of the deed of trust. Blazier-Henry did not answer the Complaint, and a default judgment was entered against her in the amount of $72,667.25, together with late fees and accrued interest on the principal balance at the rate of 10% per annum.
The court issued a Writ of Execution showing the amount owing to be $87,211.07, which included late fees, interest, and attorney fees. Chance levied upon Blazier-Henry’s real property to satisfy the judgment. A sheriff’s sale was set for June 2, 2009, at 10:00 a.m. in Bonner County. At the sheriff’s sale, Jacobson purchased the reаl property for $1,000. Chance did not appear at the sheriff’s sale, either personally or through counsel, and did not submit a credit bid.
Chance was represented by attorney Jovick during the foreclosure proceedings, until January 19, 2010, when attorney Bistline substituted in as counsel for Chance. On the date of the sheriff’s sale, Jovick’s paralegal received a call from the Bonner County Sheriff’s Department informing her that the property had sold for $1,000. When the paralegal objеcted that the “credit bid was around Eighty Seven Thousand,” the sheriff’s employee responded that “she had nothing in writing regarding a credit bid.” In an affidavit subsequently submitted to the district court, Jovick faulted Bonner County for failing to enter a credit bid on behalf of Chance. She asserted that in her experience in Kootenai County, it was common practice for the sheriff to provide a form that could be used by a judgment creditor in requesting a credit bid at a sheriff’s sale. In this instance, Bonner County provided her with no such form.
On July 22, 2009, Jovick prepared a stipulation to set aside the sheriff’s sale, which was signed by Bonner County’s civil counsel on November 11, 2009, and entered in the court record on November 17, 2009. The stipulation provided that “[f]or factual reasons that will remain undisclosed, the Bonner County Sheriff’s Department and [Chance] hereby stipulate to set aside said sale.” The stipulation also provided that the Sheriff and Chance “agree that gross inadequacy of consideration, coupled with very slight additional circumstances is sufficient ground for setting aside the Sheriff’s Sale as articulated by the Idaho Supreme Court in Gaskill v. Neil [sic], 77 Idaho *3 428 (1956).” Based on the stipulation, the court entered an order setting aside the sheriff’s sale on November 20, 2009.
On December 30, 2009, Jacobson filed a motion to quash the order setting aside the sheriff’s sale and the court quashed the order. Thereafter, Jacobson moved the court to require issuance of the sheriff’s deed for the propеrty he purchased at the sheriff’s sale. In response, Chance moved the court to set aside the sheriff’s sale or, alternately, extend the redemption period. On May 5, 2010, a hearing was held to address the motions submitted by the parties, and on May 19, 2010, the court issued an Order Re: Motion to Set Aside Sheriff’s Sale, whereby it set the sheriff’s sale aside.
Jacobson then filed a motion to reconsider and a motion to amend the court’s order. The court issued its decision on January 14, 2011, denying Jacobson’s motion to reconsider and granting his motion to amend the court’s order to reflect that Jacobson was entitled to all of the money he paid for the property plus attorney fees and costs and any lost profit or business opportunities.
On February 9, 2011, the Court entered its Final Judgment. [1] Jacobson appealed to this
Court and Chance cross-appealed.
II.
ISSUES ON APPEAL
1. Did the district court err in setting aside the sheriff’s sale?
2. Did the district court err in making its valuation of the property?
3. Did the district court err in granting equitable relief?
4. Is Jacobson’s appeal moot because he did not raise the issue of redemption on appeal? 5. Is either party entitled to attorney fees on appeal?
III.
DISCUSSION
A. Standard of Review.
“Whether to set aside an execution sale lies largely within the trial court’s discretion.”
Suchan v. Suchan
,
(1) whether the trial court сorrectly perceived the issue as one of discretion; (2) whether the trial court acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason.
Sirius LC v. Erickson
,
B. The district court erred in setting aside the sheriff’s sale.
At the May 5, 2010 motion hearing, the district judge stated that “in balancing the equities, it appears apрropriate under these circumstances to set aside the sheriff’s sale or allow redemption.” The district court found:
[U]nder these circumstances and there does not appear to be any issue in terms of these material facts, that a $1,000.00 bid for the real property at issue was grossly inadequate and would be -- would constitute gross inadequacy of consideration. It does appear to be coupled with very slight additional circumstances, those circumstanсes as being shown from the record, the affidavits.
Fourteen days later the district court signed an order submitted by Chance, setting the sale aside. However, the district court’s Memorandum Decision on reconsideration, stated:
On reconsideration, there does not appear to be very slight circumstances accompanying the gross inadequacy of the price in this instance. Rather, this Court concludes that the disparity between the value of the real property sold and the successful $1,000.00 price paid is so grossly inadequate as to shock the judicial conscience.
The district court perceived the issue as one of first impression and indicated that no Idaho case law appropriately addressed the circumstances at hand. As a result, the court looked to 5 A.L.R. 4th Inadequacy of Price as Basis for Setting Aside Execution or Sheriff’s Sale–Modern Cases § 794, in making its holding. The court stated, “The logic of the cases cited in 5 A.L.R. 4th 794 … holding that an execution sale should be set aside when the difference between the valuе of the property and the successful bid ‘shocks the conscience’ of the court is persuasive. Accordingly such reasoning is adopted.”
On appeal, Jacobson argues that the district court erred in setting aside the sheriff’s sale. Jacobson sets forth two related arguments. First, Jacobson asserts that the district court erred because it set aside the sale based solely on inadequacy of consideration, which by itself is not *5 sufficient to set aside a sheriff’s sale in Idaho. Second, Jacobson asserts that the district court’s adoption of the “shocks the conscience” standard for setting aside a sheriff’s sale was in error because that is not the standard in Idaho.
Chance argues that the district court did not err in applying the “shocks the conscience” standard and correctly applied the standard. Chance contends that the law in Idaho allows a court to set aside a sheriff’s sale if the price is so inadequate that it shоcks the judicial conscience. Specifically, Chance argues that this Court’s holding in Gibbs v. Claar , 58 Idaho 510, 75 P.2d 721 (1938), supports the district court’s decision to set aside the sheriff’s sale based solely on inadequate consideration. The Court in Gibbs stated:
[A] sale will not be set aside for mere inadequacy of price unless that inadequacy be so gross as to shock the conscience, or unless there be additional circumstances against its fairness. But if there be great inadequacy, slight circumstancеs of unfairness in the conduct of the party benefited by the sale will be sufficient to justify setting it aside.
Id. at 520, 75 P.2d at 725 (quoting Ballentyne v. Smith , 205 U.S. 285, 290 (1907)). Jacobson argues that Gibbs does not apply here because it was a judicially-supervised sale of real property belonging to a defunct corporation rather than a sheriff’s sale subject to Idaho’s execution statutes.
The Gibbs decision is inapposite here. Indeed, it is not clear why the Gibbs Court included the Ballentyne quote in its decision. Gibbs was not a case involving a “great inadequacy” of price so the Ballentyne quote was not necessary to the decision. More importantly, Gibbs involved a judicially-supervised sale of property rather than a sheriff’s sale conducted under Idaho’s execution statutes. Third, Gibbs involved a circumstance against its fairness. The Ballentyne quote was obiter dictum .
The real property in the
Gibbs
case belonged to a defunct corporation and was sold in a
private sale to Gibbs, the appellant, for $4,000 by three court appointed trustees.
Id.
at 513, 75
P.2d at 722. At a hearing where the trustees sought to obtain the district court’s approval of the
sale, the court declined to grant approvаl when it appeared “that further and larger bids might be
made for said property.”
Id.
at 514, 75 P.2d at 722. The court continued the sale for a week,
providing notice that the property would be sold at that time to the highest bidder.
Id.
On the date
of the public sale the court approved a bid of $5,026 submitted by another party.
Id.
at 516, 75
P.2d at 723. On appeal, this Court stated that “confirmation of a judicial sale is a judicial act
necessitating the exercise of discretion.”
Id.
at 521,
Gibbs
does not apply here, nor does the 5 A.L.R. 4th § 794 commentary that the district
court relied upon for the “shocks the conscience” standard. This Court’s decisions have set out a
consistent and appropriate standard to apply in cases seeking to set aside a sheriff’s sale
conducted under Idaho’s execution statutes. We statеd that standard in
Federal Land Bank of
Spokane v. Curts
: “As a general rule mere inadequacy of consideration is not sufficient ground
for setting aside a sheriff’s sale, but it is uniformly held that gross inadequacy of consideration,
coupled with very slight additional circumstance, is sufficient.”
In all of the reported cases where relief has been granted from a sheriff’s sale involving a
grossly inadequate purchase price, some additional circumstance was involved. In
Suchan
, this
Court observed that, both in
Gaskill
and
Curts,
there had been not only an inadequate sale price,
but the sheriff conducting the execution sаle sold the property in parcels, rather than as a unit, at
the direction of persons not authorized to direct the manner and order of the sale, and the sheriff
also improperly ignored the highest bid offered at the sale and instead accepted a much lower
bid.
Suchan,
On the other hand,
Suchan
was a case where the judgment creditor sought relief for an
alleged inadequate sale price. The judgment creditor levied on the judgment debtor’s property for
*7
satisfaction of a debt in the amount of $100,000, plus interest. 113 Idaho at 108, 741 P.2d at
1295. A purchaser bought 800 acres of the real property levied upon for $12,000, assuming a
mortgage in the amount of $59,000, for an effective price of $71,000.
Id.
at 110, 741 P.2d at
1297. The Court noted that the property had been appraised at $680,000, but evidence at the time
of sale placed the value at $300,090.
Id.
The Court said that the low sale price was affected by
water permit problems, a depressed market price for farm land, rock outcrops, the potential for
further lien claims by the judgment creditor, and “the fact forced sales commonly produce low
prices.”
Id.
The
Suchan
Court did not find that the sale price was grossly inadequate but, more
relevant to this case, found there was no irregularity in the sale.
Id.
The Court indicated that the
judgment creditor’s “misunderstanding of her legal rights, though unfortunate, is not an
irregularity in the sale itself.”
Id.
at 109,
Suchan provides two items of interest for the present case. First, a misunderstanding of the law does not provide a “slight additional circumstance” for granting relief from a sheriff’s sale, and the judgment creditor who fails to protect its interests in the sale might not find a sympathetic ear in the courts. In this case, Chance realized only $1,000 from the sale and lost the remaining value of the property by failing to submit a credit bid in any amount. Chance was the precipitating cause of the injury that she now seeks to have cured by the Court. If anybody was injured by Chance’s inattention, it was the judgment debtor, Blazier-Henry, who lost the real property and only had $1,000 applied against the Chance judgment.
Chance argues that counsel Jovick’s belief that a credit bid would be entered by the Bonner County Sheriff on her behalf constitutes a slight additional circumstance, allowing the execution sale to be set aside. However, Chance offers no authority for the proposition that an attorney’s misunderstanding of the law constitutes a slight additional circumstance that, when paired with an inadequate purchase price, warrants setting a sheriff’s sale aside. The Suchan holding indicates quite to the contrary. In its decision on rehearing, the district court declined to find that counsel Jovick’s lack of familiarity with the Bonner County foreclosure proceedings constituted even а slight additional circumstance. And, there is no legal authority to support the contention that a sheriff is obligated to enter a credit bid on behalf of a judgment creditor at a sheriff’s sale when the judgment creditor has given no instructions to that effect. Without clear *8 instruction from a judgment creditor, the sheriff does not know if the creditor wishes to submit a full credit bid, a partial credit bid or no credit bid. As a matter of fact, requiring a sheriff to enter a credit bid without proper authorization frоm a judgment creditor might well have the effect of subjecting the sheriff to liability.
Having laid out the circumstances where a sheriff’s sale is properly set aside, the issue becomes whether the district court abused its discretion in setting aside the sheriff’s sale in this case. To determining whether the district court abused its discretion, this Court asks:
(1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the outer boundaries of its discretion аnd consistently with the legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason.
Sirius LC
,
The district court properly understood that the question of whether to set the sheriff’s sale aside was a discretionary matter. However, the district court did not act consistently with the legal standards applicable to the specific choices available to it. This Court has nоt previously held that gross inadequacy of price, standing alone, provides grounds for setting aside a sheriff’s sale. Our decisions have uniformly held that there must be some irregularity in the sale or other slight additional circumstance. There was no slight additional circumstance in this case that weighed in favor of setting the sale aside. Rather, additional circumstances weighed against Chance, the judgment creditor― first, Chance failed to protect her own interests by submitting a credit bid or attеnding the sale and, second, Chance failed to take timely action to try to obtain redemption of the property. [2] Thus, the district court erred in setting aside the sheriff’s sale.
We therefore vacate the order setting aside the sheriff’s sale and reverse the judgment. Reversal of the judgment moots two of the issues raised on appeal by Jacobson―whether the district court erred in valuing the property and whether Chance had an adequate legal remedy. Thus, we havе no need to address those two issues.
C. The cross-appeal is without merit.
On cross-appeal, Chance claims that Jacobson’s appeal is mooted by virtue of the fact that the district court provided Chance with two alternate forms of relief and Jacobson only appealed one form and not the other. Chance had moved to set aside the sheriff’s sale or, *9 alternately, extend the redemption period. At the May 5, 2010 hearing on the motion, after concluding that Chance was entitled to relief, the district court said:
So in balancing the equities, it appears appropriate under these circumstances to set aside the sheriff’s sale or allow redemption. And I am going to direct this back to counsel . . . . So I’m gonna wait for you all to talk, figure out what you want to do in light of my ruling and then submit an Order or have this noted again and we’ll go from there.
After the motion hearing, Chance’s counsel submitted an Order Re: Motion to Set Aside Sheriff’s Sale that provides “[t]he matter hаving come before the Court on May 5 th , 2010, and for the reasons set forth on the record in open Court, it is hereby Ordered that the sheriff sale which occurred on June 2 nd 2009, is set aside.” The order was entered on May 19, 2010.
Chance argues that this Court should not address the merits of Jacobson’s appeal because the district court’s ruling was premised on alternative legal theories and Jacobson has only challenged one―whether the sale should have been set aside. Chanсe asserts that because the court’s ruling regarding the extension of the redemption period has not been appealed, the Court should consider Jacobson’s case moot. Chance argues that it is moot because, even if this Court finds that the sale should not have been set aside, the lower court also ruled that the redemption period should have been extended.
Jacobson argues that Chance’s alternative legal theory argument is “disingenuous at best” and asserts that at no point did the district court actually enter any relief extending the redemption period. Jacobson further contends that Chance abandoned her motion to extend the redemption period by failing to include it within any court order or raising it in any subsequent hearing.
Chance’s alternative legal theory argument is wholly without merit. Chance confuses alternate legal theories for relief and alternate remedies. Here, there was only one legal theory for relief―seeking relief from the sheriff’s sale based on equitable grounds. The district court mentioned two remedies that have been allowed in such cases―setting aside the sheriff’s sale and extending the redemption period. The judge did mention that either remedy might be available, leaving it up to the attorneys to select the appropriate one. Chance submitted the proposed order seeking the remedy of setting aside the sheriff’s sale. It is disingenuous for Chanсe to now complain that both remedies were available and ordered by the court. The remedies are inconsistent but Chance nevertheless wishes to have the benefit of both. Multiple *10 legal doctrines come to mind that would prevent Chance from prevailing on this argument: election of remedies, judicial estoppel, and waiver. However, the most powerful doctrine to apply to these facts is that of common sense or, better stated, you сan’t have your cake and eat it, too.
D. Neither party is entitled to attorney fees on appeal.
Both Jacobson and Chance argue that they are entitled to attorney fees on appeal under I.C. § 12-121. Both parties believe that the opposing party brought, pursued, or defended its case frivolously, unreasonably, or without foundation.
“In any civil action, the judge may award reasonable attorney’s fees to the prevailing
party.” I.C. § 12-121. “An award of attorney fees under [I.C.] § 12-121 is not a matter of right to
the prevailing party.”
Michalk v. Michalk
, 148 Idaho 224, 235, 220 P.3d 580, 591 (2009).
However, this Court “permits the award of attorneys fees to the prevailing party if the court
determines the case was brought, pursued or defended frivolously, unreasonably or without
foundation.”
Commercial Ventures, Inc. v. Rex M. & Lynn Lea Family Trust
, 145 Idaho 208,
218–19,
Because the district court’s decision to set aside the sheriff’s sale is reversed, Jacobson is the prevailing party on appeal. As a result, Jacobson is eligible for attorney fees under I.C. § 12- 121. However, Chance has not pursued or defended this case frivolously, unreasonably or without foundation. Thus, neither party is awarded attorney fees on appeal.
IV.
CONCLUSION The order setting aside the sheriff’s sаle and the judgment are reversed. The case is remanded for further proceedings consistent with this opinion. Jacobson is awarded costs on appeal.
Chief Justice BURDICK, and Justices EISMANN, W. JONES and HORTON CONCUR.
Notes
[1] Of interest is the fact that the Final Judgment says nothing about setting aside the sheriff’s sale. The order setting aside the sale was an interlocutory order entered on May 19, 2010. The Final Judgment merely grants a monetary award to Jacobson in the amount of $1,000, representing a return of his purchase money, рlus $744.33, representing property taxes he paid on the property, together with prejudgment interest on those amounts and together with attorney fees, costs, and any lost profit or business opportunities “as proven by separate filing.”
[2] As the judgment creditor, Chance did not have a “right” of redemption under I.C. § 11-402, since I.C. § 11-401 grants that right only to the judgment debtor and any junior lien creditor. However, Chance could have sooner negotiated to obtain an assignment of Blazier-Henry’s redemption right.