lisa norman here on behalf of the apollo and smart coldwell and i actually call the district course court in this case erred by denying the appellant's objection to the sale of the collateral and by confirming the sale of that collateral when the sale prices were so shocking and are at me and they were sold for a fraction virtually a tenth of the fair market value price of the collateral and when the bank in this instance artificially deflated the bidding by starting the bids at so low a price the opponents are requesting a reversal of the order confirming the sales and or a finding that no deficiency exists in this case the bank can foreclose on the collateral under both the ship mortgage act coupled with the judicial sales act but when they do so they must look at the fair market value of the collateral that they are seeking to sale in this case the fair market value is determined by the surveys that the bank had in its possession and which the bank admitted during the hearing on the objection to the sale  at that point in time it will at that point time they were not under attack they were the only appraisals that existed no other praises had been commissioned at all by the bank and in fact in fact the bank's officer admitted that the only other difference is seven hundred thousand dollars just the work you are intitled to and work you go yes and in addition to the vessels there were also docks on a barge and the collective value of a fair market value of the collateral was a little over a million dollars with less than a half a million on the debt when the bank opened the bid for the first of us all at only fifty thousand dollars and that then sat the where the betters were going to jump the jumping off point for them which in this case they said a thousand dollars more will do fifty one ok great sold it has been established that bidding the for amount of the debt and in this case the bank had asked to bed the full amount of the debt and received an order more for the vessels from those who possess the title do the vessel now only if the bidding were restarted and the sale were conducted again in a proper format and how could that occur under the circumstances of this case in this case the more likely option because the title has already vested would be for a finding of no deficiency all right now your final of no deficiency in the loan to the bank the twelve thousand dollars nobody alleges for older collusion or anything in terms of the sale you know but the bank now is going to pay the price for the marshal sale in one hundred twelve thousand dollars  why i don't understand why it was only going to be a thousand dollars more there was only going to be one other bidder and that's the part of the story i don't get the bank could have and should have started the bidding where they asked the court to start which was they asked for and obtained an order from the district court to start the bidding at four hundred fifty four thousand three hundred fifty three dollars walking into that sale everyone in the room understood that at least from our perspective and from what the bank itself had asked for that that where that was the jumping off point nearly half a million dollars why did they have to start the bidding higher why can't they just watch it progress in the bin more if it's a better value well they have an obligation to  obtain the fair market value who are the sales and if they're going to create an artificial of bars in the marketplace we're willing to pay th in this case have the banks started the bidding where they intended to start it when they walked in the room and what they told the district court they were going to do which was the four hundred fifty four thousand and the bidding would have started from there and the betters in the room would have had to bid higher than that in order to me why were you store dictates where you find is where the bidding began and former dictate where the bidding well it certainly would inform that you wouldn't end any lower than that it sets the floor of where you're going to begin and in this case the floor walking into that room would have been coming out with no deficiency either way but when the bank artificially created a deficiency by bidding only a tenth of the price when they knew and had in their possession not only the surveys but additional fair market value evidence that the president of the owner of the vessel had provided to it prior to the sale to walk in to the sale without any new appraisals and having appraisals in your hand showing you have collateral worth over a million dollars and you start the bidding at only fifty thousand dollars what you do is you create an artificial deficiency that ends up shocking the conscience to such an extent that you end up with a case like what you had in hell are a lot vian and where the sale price has to be set aside but there was a third party bidder there's no evidence that there was collusion between the bank and the third party here so in those cases there was not a third party why would it the whole idea of introducing the third party is because you are getting a fair market value this case because the bank started the bidding so low they created a deficiency that never should have existed in the bidders naturally would only start bidding from the fifty thousand as opposed to from the five four hundred fifty four argument and the only person who's going to suffer an account in damages as a result of your argument is the bank is that correct there are two alternatives either setting aside the sale or finding  no deficiency exists and gas had a bank would be the one that would in your words suffer but in our words that would be the just outcome considering that it was the bank that created this situation to begin with every time when i'm trying to get his or the the set aside the sale price did not confirm the sale but that has no effect on the title that by saying yes and that and that this court can enter a finding that there is no deficiency that's what you're not really arguing your other point every time judge jolly ask you a question about the should that's should the wholesale be set aside which is what one of your two room of these of the just started up with you say well no really what we're asking for is deficiency because it seems harsh to the third party so are you are you only arguing for there to be a deficiency it's our position that this court can do either but to answer a question that you asked on the prior case what's the easiest course of action for this courts to take for this court to take the easiest course would be to find no deficiency based upon the what case says that we can take the sale away from the third party none of those cases have to do with third parties correct john or the closest case that we have is the howard case and the lobbying case in both cases where the sails were set aside so you know in those you do that but there's no i'm saying both of those cases give you the power to do that but in our situation where you're dealing with a guarantor and an alleged here and tour as the poets as opposed to the owner of the vessel you have a different case before you than what he lothian visions but in either case both of those courts found that when the bank knew of the appraised value the fair market value of the vessels and chose to bid far below the fair market value or to start the bidding far for the below the fair market value in the court has the power to set those sales aside is is it your position that that the four hundred fifty four thousand dollars was a binding obligation of the bank at the time it went into the sale for it to bid that amount no do you order that obtained from the court was that it could bid up to four hundred fifty four thousand three hundred fifty three dollars plus interest costs up to use which would say that you could bid one dollar absolutely you could not bid one dollar your honor because they do have an obligation when they are when when they walk into that sale and they are the opening bid what gives that obligation you keep saying they have they must start the bidding higher to signal to everybody else in the room what case or law or obligate gives them that obligation when there are third party bidders in the room the ship mortgage act under forty six u s c thirty one three twenty one and the judicial sale act forty six u s c thirty one three twenty them to sell the collateral but also requires that there not be a significant disparity between the sale price and the value of the clowder well as those two statutes have been interpreted in business the banks low bids in this case depressed the auction prices and resulted in the grossest deficiency yet the bank and every financial reason to try to get as much of that bid as they could place and i'm myself frequently and conducting auctions on the house on behalf of the bank and walk in knowing that fair market value is what we're the bank is going to be starting bidding at and i myself was absolutely shocked when the bank opened the bidding at fifty thousand dollars when we had collateral sitting there that was all worth almost double what the note value and city did also against the interest of the bank itself for them to be fifty thousand dollars and that's what astonished you it is stunning just me that they would not bid the fair market value of the vessels and that they would create an artificial deficiency when none existed when they had in their possession collateral that was worth double what the amount that was owed on the note to start the bidding at such a low amount or is that the easiest explanation sometimes the simplest explanation is the right one that the it wasn't actually worth the amount of the two year old or several year old appraisals anymore earle's they would have turned around and bid fifty one thousand and ended up being able to sell it later for much more actually in this case not only did they have the appraisals they had additional fair market value information that was provided to them by the president of the owner of the vessels and as that individual mr caldwell testified at the hearing shortly after the sales one of these bidders turned around and came to him and said ok i know i can sell this for eight times what it's worth do you want to buy it back for me now everyone in that room when the bank started the bidding at only fifty thousand dollars was shocked but for the bidders it was a pleasant surprise if there were multiple bidders why wasn't there a bidding frenzy at that point if what you're saying is true there were only there weren't there was only one better on one of the vessels and i believe one on the second one and then on the third one there were two individuals that bed there were a roomful of people that came that observed mostly within the industry and other individuals that are in that industry around the clearlake area who have an interest in what's going on with their competitors but in terms of active betters there were not that many activities but that doesn't comport with you saying the person turned around said i can get eight times more right this second if there are knowledgeable people in the industry all standing around at the auction type of full of bidding then they too would since that great deal and want to try to get in on and get it and less there's some kind of other secret thing going on but what you're saying doesn't make sense in the marketplace well in this case because the bank only started at fifty thousand dollars it would make no sense that the better would come in and say ok i'll do four hundred straight off the bat they they went up by a thousand and next betting started and they went up by a thousand so it was fifty one fifty one and five thousand was the plaintiffs a bit price on the third vessel ok i think we have your argument and you save time for rebuttal and you've answered our questions can thank be represented by counsel have come up with a very novel creative argument which would i think have a very negative effect long term on deficiency actions have not taken into consideration  the full factor of the evidence was presented in the bank takes such a hit why did they take such a hit yes if if they could have gotten so much more than just i think that's that's the i think  astute question the market as judge will comment it set the price at that auction and that day that's what the law on the circuit is that the fair market value absent any evidence of fraud collusion or gross inadequa of price is the value of the vessel as it was determined when the gavel fell in the marshals and you don't have to knowledge seems to me that if they did in fact appraise eight hundred thousand two years earl and some from one eight to two years later that that is a columnist worthy of looking into absolutely your honor and the district court did look into that the district court not only heard the evidence of the utility i guess the utility of these loans that the bank extended to this cruise dinner cruise operator was for the maintenance and upkeep of these vessels and that is an issue that was before the court on what had been done what was the condition of the vessels now the appellant's would very much like to put the burden that they have to show of gross inadequacy of price on on the bank by saying that the was another subsequent survey that the bank had to obtain because it was carrying a hole in the sheen or in protection indemnity insurance on these thousands while they were in the substitute custodians possession so it had to do this for the insurance company and again mr frenzel the marine surveyor was appointed and in our record excerpt he conducted three to three evaluation surveys and that's in the record five ninety nine six zero five six fourteen and six twenty he indicated that the two most valuable bustles which appellants indicate are worth well in excess of four hundred thousand dollars worth of only sixty thousand dollars in the very year that they were sold so i think that this was evidence that the district court heard and weighed you know but what's the court supposed to do is this is this the best evidence sixty thousand dollars for the price of the store cruiser sixty thousand dollars for the price of the star gazer and when they each sold for fifty one thousand auction and that's an open public auction or is is that these three year old valuation surveys which conveniently would leave the debtors with no deficiency would that a valuation survey on a marine asset last forever i think that we'd be in a different situation that's no that's not what there's no standard that i found in any case is that indicate that that's something that this quarter the district court could rely on we have a market that  dictates what the prices and by the way the pellets of tried to implicate the bank in not acting in a commercially reasonable nature it bears noting that the debtors to this case had an obligation as well to try to eliminate their deficiency and one of the unusual aspects about this case is the following the during the confirmation of sale hearing they entered an impromptu upset bid which exceeded the value of the vessels but they didn't bid anywhere near what the valuation surveys were they they in an impromptu upset bit of two hundred thousand dollars and this was again without deference to you know this circuit's rules on in ram versus in in persona proceedings one of the issues that we've raised is whether or not this court even has standing to render an opinion on the and time and that would have been the consequence if you don't know that that isn't a very interesting question on what would what would happen to the vessels i think i think that the district court probably did not have jurisdiction after title had passed but so long as the u s marshal still had custody as agents of the court the district court could have set aside the cell continue to hold those assets ordered another option to be conducted that can you help me a little bit with the chronology of the joint order that was brought in for for the jets the district court to sign was that while the while the market stalls i mean while they unusual aspect to what is typically should have been a simple marine asset sale for closure the chronology was the vessels were arrested by the u s marshal service they were held in custody with the substitute custody in the bank published don't us of the arrest in the galveston daily news an auction was later held and importantly the appellant's in this case were given notice of that arrest and the notice required them to come forward and i see i'm almost out of time to try to get through this and as quickly as i can they were given notice of the arrest but they did not file a claim of order of ownership which would allow them to come in and contest being a walking tour the sale so what happened is as mr norman mentioned she was at the auctions as well as the appellant's they waited until after the gavel still they waited until the hearing to confirm the sale or they were there late most to set aside the cell and offered more money as an upset bid from what the successful bettors made and so then the bank was willing to go get that extra hundred thousand dollars or whatever it was absolutely your honor that the bank was acting in its best interest shareholders to try to recoup as much money as it could when it was presented with an offer more than it received a judicial option it took it but the important part about that is it was up to the court whether or not to confirm that upset did and set aside the previous one so i think to answer your question the issue of whether the district court could have set aside the civil yes but it did not it was within his discretion yes your honor and and one other important part of that was is that the motion to set aside the cell that was filed by the appellants in this case the interested buyer supa mr so represents and he'll go next we're not given notice of that most just set aside t i see that i'm out of time if the panel is a have any more questions i thank you for your time this morning thank don't know that i do and the issue the reason i'm here today is because that's not a concession that has been clear throughout this is pretty even today i think counsel although she admitted that they're not asking for the best back walk that back a little bit when she's talking about her two alternative forms of relief she still claims that the court has the power to to reseize those vessels and i'm here to argue to the court that that's simply not true that because the appellant's were unsuccessful in obtaining a stay of the ordered firming the sale of vessels because they did not have obtain a stay before the u s marshals issued bills of sale those vessels have now been transferred free and clear of all lanes inc allegiance bank have an interest in those vessels any longer i think that this court's decisions and community bank in eurasia and dynamic which are citing our brief make it very clear that there is no that if we should reverse the district court and say you made a mistake in confirming this so you because it is grossly inadequate and we want you to set aside the sale where would you be then your honor i do not believe that a jet that happened where would you  be i think would be the same position your honor because the vessels cannot be received there cannot be a subsequent sale of this vessel so essentially what would what would issue would be a useless judgment under the community bank case because you have a judgment setting aside the sale but for something that was totally unnecessary and that if you had not won it would have damaged your position and till the court confirmed the sale and until the u s marshals issued a bill of sale that the court under the supplemental maritime rolls could could have happened your honor but because they did not the order was was was entered the bills of sale were issued the court this this was an interim claim against the vessels those vessels are no longer in the courts possession they are there in the possession of the at the apple leaves and there's simply no in the u s marshals sale issued their their respective ventures in the us have been extinct and you didn't like do this in the middle of the night or something everybody knew this was happening and going down and it was done in court and everything and they could have s don't believe these vessels can be taken away but it's going on from your here in the next three minutes and fifty seconds isn't necessary i believe that the court has the authority to to read least i think you made that point council of well there are no further questions at alton the remainder of my time back to the court thank you thank you i didn't say we agreed with you i just said you made the point you know how that's with regard to the stay appellants requested a stay both of the district court and also requested a stay of the squirt the request for the stay was denied the issue of the joint order judge already had some questions about that at the hearing on the objections of the sail protest bid was made now they say somebody said he was going to tell us why this wasn't technically a protested was it a technically a technical protest it was and that issue was raised as well with the district court about whether it was technically a protest vote in the court did accept it as a protest bed why didn't you or if you were if you were going to do this but we filed they had filed their objections why are we having this hearing without them didn't they have an interest in the matter we filed the objection to the sale with the court the idea of the protest bid was not anything that was contemplated in advance at all it was just setting aside the sale but they did ask that they be considered as well and they be allowed time to object all the parties agreed that they should be allowed to put their response to the objection to the sale on the record we then had a subsequent hearing after they filed their response the bitters filed their response with regard to the objection to the sale and entry of the protested it was after that that the bank and the hurried into the joint order and filed a motion in the district court together the bank and the appellant asking the court jointly to set aside the sale to these betters and to confirm the protest bed remind me when you saw the sale i mean this day in the court of appeals had the vessels already been transferred at that time no they had not yet and that is why we believe that the court did abuse its just question there were a number of issues specifically with regard to the adequacy of the sale price that needed to be fully considered before the buses were released and as pointed out there are three factors that this court looks at in determining whether they're going to set aside a stay or find that there's no deficiencies now i did in the court could have gone about its business yes and that's part of the reason why we're here because we believe that the court abused its discretion and denying it while we're not looking at fraud or collusion we are looking at the third factor that this court has considered and has found as grounds for setting aside the sale we're finding no deficiency and that is gross inadequacy of price that is the ground upon which we moved for this for the as sale to be set aside or for entry of no deficiency to be found by the court you see the groups anonymously is the result of the artificially low open in that is correct the artificial deficiency that was created by the banks opening bid the depressed opening bed if you could offered an opening bid was fifty they did they opened with fifty thousand dollars well the cordon and serco considered that very question about where you start and where you land and found that the prospective purchasers look at where you start to determine where you were and and that bidding the full amount of the deficiency debt would drive up the price in the event that there are other bidders there instead it was fifty thousand dollars at the store guess that's correct rebuses and blocked there were yes the hundred thousand dollars and it ultimately s necessarily lower compared to what the three of them will to be sold for and now at the fifty thousand dollar opening bid for the games there was low because the fair market value evidence that the bank had its possession at the time of the sale which is the point that we look at at the time of the sale was six hundred thousand dollars for the fair market value of that vessel that they and there then was a second sale with regard to the cruiser and the bank open the bit at fifty thousand dollars while they had evidence guess if it was so crucial to get a certain opening bid them why didn't you ask the district court to not say up to that amount but to say between this amount  that i'm out why did why did you not object to the order that said up did that that allowed for this the order itself is what allowed for this and i don't think there was a timely objection to the form of that order no your honor and in fact we weren't the vessel owner and so the motion itself with regard to the default judgment was against the vessel owner we were representing the guarantors and thank you very much for your time