Res-Ga Ljy, LLC. v. Y. D. I., Inc. A/K/A Ydi, Inc.

• Court: Court of Appeals of Georgia
• Decided: July 2, 2013
• Docket: A13A0188
• Status: Published

Opinion

FOURTH DIVISION DOYLE, P. J., MCFADDEN and BOGGS, JJ.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/

July 2, 2013

In the Court of Appeals of Georgia A13A0188. RES-GA LJY, LLC v. Y. D. I., INC. a/k/a YDI, INC. et al.

MCFADDEN, Judge.

RES-GA LJY, LLC (hereinafter, “RES-GA”) appeals from the trial court’s

order denying a resale of real property under OCGA § 44-14-161 (c) after the trial

court denied its petition to confirm a foreclosure sale on the property. Finding no

abuse of discretion, we affirm.

RES-GA is an entity formed for the special purpose of taking title to specific

property securing a loan that a related entity obtained in a bulk purchase of loans

from the Federal Deposit Insurance Corporation. In that capacity, RES-GA was

assigned a deed to secure debt executed by Y. D. I., Inc., a/k/a YDI, Inc. (hereinafter,

“YDI”) that secured an indebtedness of $6,000,000. When YDI defaulted on the underlying debt, RES-GA foreclosed on the real property securing that debt and

purchased the property at a foreclosure sale for $742,500. RES-GA then brought a

complaint for confirmation of the sale against YDI and Jimmy York, who guarantied

the debt.

The parties stipulated that the foreclosure sale was advertised and conducted

properly. At the confirmation hearing, RES-GA presented testimony that, prior to the

foreclosure sale, it had obtained an appraisal of the property’s true market value at

$600,000. The loan workout asset manager who made decisions about the foreclosure

sale on RES-GA’s behalf reviewed the appraisal, consulted with a team of former real

estate developers and market specialists about it and, out of precaution, chose a bid

price for the property that was higher than the appraisal. RES-GA presented evidence

of a second appraisal of the property at $705,000 which it obtained after the

foreclosure sale in preparation for the confirmation hearing. YDI presented evidence

of two appraisals for the property – at $1,200,000 and $930,000 – that it also obtained

after the foreclosure sale in preparation for the confirmation hearing.

The trial court found that RES-GA did not show that the property brought its

true market value at the foreclosure sale, and the court declined to confirm the sale.

See OCGA § 44-14-161 (b). In its order, the trial court identified problems in the

2 appraisals submitted by RES-GA. Specifically regarding the $600,000 appraisal, the

trial court found that it “contained numerous errors” in its use of comparable sales.

The trial court found that RES-GA

apparently relied upon the opinion contained in the $600,000.00 appraisal in determining its bid price. However, a cursory review of that appraisal would have alerted [RES-GA] to the numerous errors contained therein. Having found that [RES-GA] did not show that the subject property brought its true market value . . . , [the court] finds that no good cause was shown by [RES-GA] to order a resale of the subject property.

See OCGA § 44-14-161 (c).

RES-GA moved the trial court to reconsider its ruling regarding a resale. After

a hearing on the motion, the trial court issued an order denying reconsideration.

Therein, the trial court stated that it did not find either of RES-GA’s appraisals to be

credible and that it found the $930,000 appraisal submitted by YDI to be “the most

credible of the four.” It further stated that its consideration regarding resale did not

turn on whether RES-GA acted in bad faith or good faith, but it held that RES-GA did

not “prove ‘good cause’ to the satisfaction of the [c]ourt” and expressly found “no

good cause to grant a resale.”

3 On appeal, RES-GA disagrees with but does not challenge the trial court’s

determination that the property was not sold for its true market value at the

foreclosure sale. See generally Statesboro Blues Dev. v. Farmers & Merchants Bank,

301 Ga. App. 851, 853 (690 SE2d 205) (2010) (as trier of fact in confirmation

proceeding, trial court is entitled to find one appraiser’s testimony credible and to

accept his opinion over that of another appraiser). It challenges only the ruling

denying resale. OCGA § 44-14-161 (c) provides that, if a trial court denies

confirmation of a foreclosure sale, it “may order a resale of the property for good

cause shown.” This confers upon the trial court broad legal discretion to grant or deny

a resale. See Adams v. Gwinnett Commercial Bank, 238 Ga. 722, 723 (235 SE2d 476)

(1977) (construing prior version of the Code section); Eagle GA I SPE v. Atreus

Communities of Fairburn, 319 Ga. App. 844, 848 (2) (738 SE2d 675) (2013); The

Village at Lake Lanier v. State Bank & Trust Co., 314 Ga. App. 498, 499 (1) (724

SE2d 806) (2012); Resolution Trust Co. v. Morrow Auto Center, 216 Ga. App. 226,

227 (2) (454 SE2d 138) (1995); Govt. Nat. Mtg. Assn. v. Belue, 201 Ga. App. 661,

662 (2) (411 SE2d 894) (1991). On appeal, “we determine only whether that

discretion was abused. Traditionally, where a trial court is vested by statute with

broad discretion, appellate courts do not disturb that exercise of discretion unless it

4 is clearly, patently, and manifestly abused.” The Village at Lake Lanier, 314 Ga. App.

at 500 (1) (citations and punctuation omitted). Accord McDowell v. Regions Bank,

311 Ga. App. 600, 600-601 (716 SE2d 638) (2011).

Although reviewing for abuse of discretion “is a deferential standard of review,

it is not toothless.” Jones v. Brown, 299 Ga. App. 418, 419 (683 SE2d 76) (2009)

(citation & punctuation omitted). The abuse of discretion standard of review is “at

least slightly less deferential than the ‘any evidence’ test.” Reed v. State, 291 Ga. 10,

13 (3) (727 SE2d 112) (2012) (citations omitted). “An abuse of discretion occurs

where a ruling is unsupported by any evidence of record or where that ruling

misstates or misapplies the relevant law.” Lewis v. Lewis, 316 Ga. App. 67, 68 (728

SE2d 741) (2012) (citations and punctuation omitted). In this case, RES-GA argues

that the trial court abused its discretion in denying a resale because the evidence

showed that the foreclosure sale price was based on RES-GA’s good faith reliance

upon an appraisal. While we are sympathetic to this argument, RES-GA has not

shown either that the trial court’s ruling was unsupported by any evidence of record

or that its ruling misstated or misapplied the relevant law, and for that reason we

cannot find that the trial court clearly, patently and manifestly abused its discretion.

5 First, RES-GA has not shown that the trial court’s ruling was unsupported by

any evidence of record. “[T]o reverse a trial judge exercising his legal discretion

[regarding a resale] we would have to find as a matter of law that ‘good cause’ was

shown.” Fed. Deposit Ins. Corp. v. Ivey-Matherly Const. Co., 144 Ga. App. 313, 317

(2) (241 SE2d 264) (1977) (construing prior statute). OCGA § 44-14-161 (c) does not

define what constitutes “good cause.” The Village at Lake Lanier, 314 Ga. App. at

500 (1) (a); Resolution Trust Co., 216 Ga. App. at 228 (2). RES-GA correctly asserts

that its good faith reliance on an appraisal in buying the property for less than its true

market value could have authorized the trial court to find good cause for resale. See,

e.g., Adams, 238 Ga. at 722-723 (trial court did not err in finding that creditor’s act,

in good faith, of having property appraised before sale authorized resale); Greg A.

Becker Enterprises v. Summit Investment Mgmt. Acquisition I, 314 Ga. App. 721,

723-724 (1) (725 SE2d 841) (2012) (trial court did not abuse its discretion in finding

good cause for resale where there had been no showing that creditor lacked good faith

in conducting foreclosure proceedings and evidence supported finding that creditor

did not intentionally bid less than property’s true market value at foreclosure sale);

Gutherie v. Ford Equip. Leasing Co., 206 Ga. App. 258, 261 (2) (424 SE2d 889)

(1992) (resale “would be authorized” under OCGA § 44-14-161 (c) where creditor

6 “did not prove that it sold the property for true market value but did obtain an

appraisal (albeit a fatally flawed one) before the sale and did sell the property for an

amount equal to that appraisal”) (citations omitted); Damil, Inc. v. First Nat. Bank of

Dalton, 165 Ga. App. 678 (302 SE2d 600) (1983) (affirming trial court’s order

granting resale on ground that “a failure to sell for the true market value is good cause

to order a resale”).

Nevertheless, facts that could authorize a finding of good cause for resale do

not necessarily demand that the trial court make such a finding. Fed. Deposit Ins.

Corp., 144 Ga. App. at 317 (2). We discussed this distinction and the reasons for it

at length in Resolution Trust Co. v. Morrow Auto Center, supra, 216 Ga. App. 226.

Therein, we held that OCGA § 44-14-161 (c) does not entitle a creditor to resale for

any reason and that the Code section’s permissive language does not create an

inference that resale is authorized as a matter of law if a creditor relies on a flawed

appraisal. 216 Ga. App. at 227-228 (2). We explained that

to hold that ‘good cause’ for resale is shown and a resale is demanded whenever a foreclosure sale fails to bring true market value . . . would obliterate the statute, would remove the trial court’s discretion, and would encourage creditors to engage in any unfair practice at foreclosure sale, with the only penalty being a possible resale.

7 Id. at 227 (2). We further held that the trial court, in denying a resale, need not find

“bad faith or negligence in the appraisal or sale,” explaining that “[w]e have declined

to set restrictions on the trial court’s discretion in denying resale, for to set

restrictions would require evidence of misfeasance, malfeasance or defect in the sale

before a sale can be denied, which would put the burden of proof on the debtor.” Id.

at 228 (2) (emphasis omitted). Instead, the creditor bears the burden of showing good

cause for resale. Id. at 227 (2). Accord Dee Ranch Corp. v. Fed. Land Bank of

Columbia, 148 Ga. App. 734, 736 (2) (252 SE2d 662) (1979) (construing prior

statute). We recently applied this holding and rationale to uphold a trial court’s

exercise of discretion in denying a resale in Eagle GA I SPE v. Atreus Communities

of Fairburn, supra, 319 Ga. App. 844.

Applying to this case the holding and rationale expressed in Eagle GA I SPE

and Resolution Trust Co., the evidence that RES-GA acted in good faith in relying

upon an appraisal to sell the property for less than its true market value at foreclosure

did not compel the trial court to find good cause for resale. Moreover, in its order

denying the resale, the trial court found that RES-GA should have detected the flaws

in the appraisal upon which it relied. Although RES-GA disputes this finding, there

was evidence from which the trial court could have found that the decision-maker for

8 RES-GA had the experience, sophistication and resources to detect the flaws. Under

these circumstances, we cannot say that the trial court’s ruling was unsupported by

any evidence.

RES-GA also has not shown that the trial court misstated or misapplied the law

relevant to whether to grant a resale. The transcript of the confirmation hearing shows

that the trial court recognized the resale decision was a matter within its discretion.

Compare Walton v. Elberton-Elbert County Hosp. Auth., 229 Ga. 26, 27 (189 SE2d

66) (1972) (holding that trial court’s ruling, ordinarily within its discretion, must be

reversed where ruling shows trial court did not exercise its discretion but rendered

judgment based on erroneous view of law that precluded exercise of discretion) with

The Village at Lake Lanier, 314 Ga. App. at 500 (1) (a) (finding no abuse of

discretion where there was no evidence that trial court failed to exercise discretion in

ordering resale or that trial court acted under belief that it was required to direct resale

simply because property did not sell for true market value). In its order denying

resale, the trial court properly identified the dispositive issue to be whether RES-GA

showed good cause for resale, and in both that order and on reconsideration the trial

court determined that RES-GA did not meet its burden. As discussed above, the

evidence did not compel a different conclusion.

9 RES-GA points to the following finding of fact in the trial court’s order

denying reconsideration: “The property was to secure a loan in the principal amount

of $6,000,000.00. The property was appraised by [RES-GA] at the foreclosure sale

at $600,000.00.” The trial court drew no specific conclusions from this factual

finding. RES-GA asserts that this factual finding was irrelevant and its inclusion in

the order demands reversal. We cannot say, however, that this finding was so devoid

of relevance to the good cause determination that its inclusion demonstrated that the

trial court misapplied the law in denying a resale.

Judgment affirmed. Doyle, P. J., and Boggs, J., concur.