Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_12-cv-03598/USCOURTS-alnd-2_12-cv-03598-2/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1332 Diversity-Negotiable Instrument

---

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

SYNOVUS BANK,

Plaintiff,

v.

RALPH Q. SUMMERFORD,

Defendant.

)

)

)

)

)

)

)

)

)

)

Case No.: 2:12-CV-3598-VEH

 

MEMORANDUM OF DECISION

1

I. PROCEDURAL AND FACTUAL BACKGROUND2

Synovus Bank ("Synovus") filed this lawsuit against Ralph Q. Summerford

("Summerford") and Tarrie Hyche ("Hyche") in October of 2012 to recover

amounts due on a commercial loan made to these individuals, jointly and severally

(the "Loan"). (Doc. 1.) Hyche subsequently filed bankruptcy (Doc. 8), and the

Court dismissed him from this action without prejudice. (Doc. 15.) Summerford

answered and counterclaimed against Synovus. (Doc. 13.) By memorandum

opinion and partial final judgment order dated May 10, 2013, this Court dismissed

1No trial transcript having been filed in, this Memorandum of Decision was prepared based on the

undersigned’s recollection and trial notes, the exhibits admitted at trial, and the pleadings of record

in this case.

2This section is taken virtually verbatim from the court’s Pretrial Order (Doc. 46).

1

FILED

 2014 Nov-20 AM 10:07

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 1 of 19
Summerford's counterclaims with prejudice. (Docs. 28 and 29.)

In September of 2013, Synovus moved for summary judgment on Count I of

its Complaint, for breach of the promissory note evidencing the Loan, and

requested judgment against Summerford in the amount of $3,739,469.36 plus

pre-judgment interest from September 18, 2013, to the date of entry of judgment,

as well as post-judgment interest on the principal portion of the damages award at

the contract interest rate. (Doc. 36.) In February of 2014, while its summary

judgment motion was pending, Synovus foreclosed the real estate mortgaged to it

to secure the Loan, resulting in a reduction in the indebtedness owed on the Loan.

(Doc. 42.) Accordingly, Synovus moved to amend its summary judgment motion

in order to reduce the recovery sought by it. (Id.)

By memorandum opinion and order dated July 2, 2014 (Doc. 43), the Court

granted partial summary judgment in favor of Synovus on its claim against

Summerford, ordering: (A) that there was a contract, that Synovus performed

under the contract, that Summerford did not perform, and that Synovus was

damaged because of Summerford's non-performance; and (B) that Synovus had

incurred damages in the amount of $3,733,969.36 as of September 17, 2013. (Doc.

43 at 23, ¶¶ 2-3.) The Court denied Synovus's motion to amend and determined

that there remained genuine issues of material fact as to the amount of the

deficiency and the exact amount of damages incurred by Synovus after September

2

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 2 of 19
17, 2013 through the date of judgment. (Id. at 23, ¶ 4.) The Order states, "[T]he 

case will proceed to trial on those issues alone." (Id.) (emphasis in original).

In the Pretrial Order, the parties stipulated to the calculation of the principal,

interest, and late fees owing on the Loan as of August 14, 2014, but Summerford

disputed the sufficiency of Synovus’s credit bids (at foreclosure of the three real

estate parcels that secured the Loan) and denied liability for the deficiency.

Further, the parties also stipulated that, from and after August 14, 2014, interest

accrued at the rate of $146.62 per diem.

No party requested a jury trial. Synovus submits that it is entitled to

judgment against Summerford for the deficiency owing on the Loan, including

unpaid principal, accrued unpaid interest, late fees, and attorneys' fees and

expenses. Summerford denies that Synovus is entitled to judgment against him.

(Doc. 46 at 3). Further, he disputes the sufficiency of the credit bid for the Smith

Lake Property. He no longer disputes the sufficiency of the credit bid for the other

two parcels.

3 Additionally, he does not dispute that there are no additional

reductions due to be applied to the Loan beyond those set out in the Pretrial Order.

4

A one day bench trial was held on November 10, 2014, before the

undersigned judge. Pre-trial briefs were filed by both parties. No post-trial briefs

3Oral stipulation by the parties at trial.

4Oral stipulation by the parties at trial.

3

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 3 of 19
were requested.

Pursuant to Rule 52, Fed.R.Civ.P., the Court now finds the facts specially

and states separately its conclusions of law thereon.

II. FINDINGS OF FACT

A. Undisputed Facts

5

1. The Loan was secured by three real estate parcels (the "Real Property") more

particularly described in the Mortgage Foreclosure Deeds (the "Foreclosure

Deeds") attached as Exhibit 1 to the Affidavit of Jeffrey Spielberger dated

February 20, 2014. (Doc. 42.)

2. True and correct copies of the Foreclosure Deeds are filed of record in the

case. (Doc. 42-2).

3. As evidenced by the Foreclosure Deeds, Synovus conducted mortgage

foreclosure sales of the parcels comprising the Real Property and was the

prevailing bidder for the Real Property at the mortgage foreclosure sales.

4. Prior to foreclosing, Synovus obtained appraisals of the three parcels

comprising Real Property (collectively, the "Appraisals").

5. One Appraisal, dated May 1, 2013, listed the "as is" market value of one of

the parcels (referred to herein as the "Smith Lake Property") as $1,975,000.00, in

the opinion of the appraiser, as of April 23, 2013.

5These facts are taken from the Pretrial Order.

4

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 4 of 19
6. A second Appraisal, dated November 10, 2013, listed the "as is" market

value of another of the parcels (referred to herein as the "Timber Tract") as

$52,000.00, in the opinion of the appraiser, as of November 1, 2013.

7. The third Appraisal, dated November 5, 2013, listed the "as is" market value

of the third parcel (referred to herein as the "Lake House") as $217,000.00, in the

opinion of the appraiser, as of November 5, 2013.

8. Based on the Appraisals, the Real Property had an aggregate appraised value

of not less than $2,244,000.00 according to the opinions contained in the

Appraisals.

9. Synovus's credit bids for the Real Property totaled $2,086,920.00 (the

"Credit Bid Amount"), $1,836,750.00 for the Smith Lake Property, $201,810.00

for the Lake House, and $48,360.00 for the Timber Tract.

10. In each case, Synovus’s credit bid was 93 percent (93.0 %) of the appraised

value for the parcel based on its Appraisal thereof.

11. Both Summerford and Hyche have a statutory right to redeem the Real

Property from the foreclosure sales thereof.

12. No party holding a statutory right to redeem the Real Property from the

foreclosure sales thereof has exercised that right to date.

13. Synovus applied the Credit Bid Amount to the unpaid principal balance of

the Loan on February 3, 2014, reducing the unpaid principal balance of the Loan to

5

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 5 of 19
$1,337,846.86.

14. On July 31, 2014, Synovus received from Hyche and his spouse, Hilda

Hyche, a check in the amount of $18,253.12 for insurance proceeds payable in

respect of the foreclosed Lake House.

15. The insurance proceeds were applied to the unpaid principal balance of the

Loan on July 31, 2014, further reducing the unpaid principal balance of the Loan to

$1,319,593.74.

16. Based on the above reductions to the principal balance of the Loan, the

unpaid principal balance of the Loan totaled $1,319,593.74 as of August 14, 2014,

accrued unpaid interest on the Loan totaled $255,308.01 as of August 14, 2014,

and late fees totaled $13,548.69 as of August 14, 2014. Summerford does not

dispute the calculation of the principal, interest and late fees owing on the Loan as

of August 14, 2014, based on the Credit Bid Amount, but Summerford does

dispute the sufficiency of Synovus's credit bid (as to the Smith Lake Property only)

and denies liability for any deficiency.

17. From and after August 14, 2014, and based on the unpaid principal balance

set forth above, interest is accruing on the unpaid principal balance of the Loan at

the rate of $146.62 per diem. This per diem interested rate was computed on the

basis that each year contains 360 days, by multiplying the unpaid principal amount

by the per annum interest rate floor of four percent (4.00%) and dividing the

6

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 6 of 19
product so obtained by 360. Summerford does not dispute the calculation of the

per diem rate of interest, but Summerford does dispute the sufficiency of Synovus's

credit bid (as to the Smith Lake Property only) and denies liability for any

deficiency.

18. Based on a Loan Modification Agreement dated effective December 19,

2011, the interest rate on the Loan specified by the December 19, 2011 promissory

note was reduced from prime plus 1.00% with a 5.00% floor to prime with a 4.00%

floor. Interest has accrued on the Loan at the interest rate floor of 4.00% since

December 19, 2011.

19. In the second amended disclosure statement for Hyche's chapter 11

bankruptcy plan (filed with the United State Bankruptcy Court on July 18, 2013),

Hyche listed the value of the Smith Lake Property at $3,290,000.00 based on

"Debtor's personal valuation;" the value of the Lake House at $235,640.00 based

on a tax assessor's valuation of the property; and the value of the Timber Tract,

described as including 40 acres, at $46,000.00 based on a tax assessor's valuation

of the property.

20. During his August 14, 2013, deposition, Hyche testified that, in his opinion,

the Smith Lake Property had a value of "somewhere between six and seven

million;" that the Lake House had a value of $300,000; and that the Timber Tract

had a value of "somewhere around $2,500 an acre."

7

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 7 of 19
21. During his August 23, 2013, deposition, Summerford testified that, in his

opinion, the Smith Lake Property is "probably worth somewhere around $5 or $6

million" assuming "an orderly development and sale of the property."

24. The current tax assessor value of the Smith Lake Property is $1,645,000.00;

the current tax assessor value of the Lake House is $219,960.00; and the current

tax assessor value of the Timber Tract is $46,000.00.

B. Disputed Facts

25. The court finds, for the reasons set out in its memorandum opinion and order

dated July 2, 2014 (Doc. 43), which is incorporated herein by reference: (A) that

there was a contract between Synovus and Summerford, that Synovus performed

under the contract, that Summerford did not perform, and that Synovus was

damaged because of Summerford's non-performance; and (B) that Synovus had

incurred damages in the amount of $3,733,969.36 as of September 17, 2013. (Doc.

43 at 23, ¶¶ 2-3.).

26. Based on the undisputed trial testimony of Jeffrey Spielberger, and the

exhibits introduced related to that testimony, since September 17, 2013, Synovus

has incurred, as of November 10, 2014, the following amounts in additional fees

and costs to collect the Loan, which the court expressly finds to be reasonable:

• Attorneys fees, other fees, and costs.................................. $ 96,933.10

8

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 8 of 19
27. As an owner of the property, Summerford testified that the value of the

Smith Lake Property as of the foreclosure date was between $5,000,000 (Five

Million Dollars) and $6,000,000 (Six Million Dollars).

28. Travis Prewett, the MAI-certified real estate appraiser who appraised the

Smith Lake Property in April, 2013, testified that the “as is” appraised value of

such property, as set out in that appraisal, was $1,975,000 (One Million Nine

Hundred Seventy-Five Thousand Dollars) as of April 23, 2013, the date of the

appraisal. The court credits that testimony in full, and finds that value to have been

established.6

29. Prewett calculated the “at completion” value of that property as $2,430,000

(Two Million Four Hundred Thirty Thousand Dollars), assuming a July 23, 2013,

completion date. (Plaintiff’s Trial Ex. 6 at p. 11.)

30. Prewett testified, and there was no evidence to the contrary, that no lots have

sold at Smith Lake since 2012, and that there has been no “appreciable change” in

real estate market conditions at Smith Lake between the date of the April 2013

appraisal and February 14, 2014, the date of the foreclosure sale.

31. Specifically, the court finds that the methodology used by Prewett (referred

to be Summerford as a “bulk sale” or “fire sale” analysis) was an appropriate

6The undersigned is aware that it is not required to accept any expert's opinion as the final word. See

Helvering v. Natl. Grocery Co., 304 U.S. 282, 295, 58 S.Ct. 932, 82 L.Ed. 1346 (1938) (“This Court

is not bound by the opinion of any expert witness and may accept or reject expert testimony in the

exercise of sound judgment.”).

9

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 9 of 19
methodology generally employed by real estate appraisers,

7

and was more reliable

than the stated but inadequately explained methodology employed by Summerford.

32. Further, Summerford’s valuation testimony was not persuasive due to: (i) his

lack of experience, training, or expertise in real estate appraisals;(ii) his failure to

explain why, as a non-expert, he could rely on the appraisal performed by Prewett

but substitute what he considered to be a more appropriate value for the lots8; (iii)

his failure to explain why it was reasonable for him to consider, in arriving at the

value he placed on the Smith Lake Property, that there would be a total of 35

waterfront lots, when no documents showed that any “lots” had ever even been

surveyed9

other than the first phase lots, comprised of 13 waterfront lots and 7 nonwaterfront lots; (iv) his failure to explain why an eight-year across-the-board sellout period was a more reasonable time period to apply than the 4.5 year period

applied by Prewett to waterfront lots and the 6.5 year period applied by Prewett to

7At trial, Synovus established Prewett’s credentialsto testify asto his opinion and further established

his methodology underlying his opinion and that such methodology was consistent with his

experience and training as a certified real estate appraiser. At no time did Summerford, either

through his testimony or through his counsel’s cross-examination of Prewett, call into question

Prewett’s credentials or methodology in general. Specific criticisms of Prewett’s opinion will be set

out in more detail in the body of this opinion.

8The court is aware of no evidentiary or other rule creating a hearsay exception for non-experts such

that Summerford could properly testify in this manner, even though, if he were an expert, such

testimony would clearly be proper. See United States v. Steed, 548 F.3d 961, 975 (11th Cir.2008)

(holding that, pursuant to Federal Rule of Evidence 703, an expert witness may base his testimony

on inadmissible information so long as such information is “regularly relied upon by experts in his

field.”)

9Summerford testified that no “plat” of the proposed subdivision was ever filed, even as to the “first

phase,” which would consist of 20 lots --- 13 waterfront and 7 non-waterfront.

10

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 10 of 19
non-waterfront (e.g. “interior”) lots; (v) his failure to explain why his 9% discount

factor was more appropriate than the 25% discount fact applied by Prewett;10and

(vi) his direct financial interest in the case.11

33. There are no facts to indicate that the Synovus’s February 14, 2014,

foreclosure sale of the Smith Lake Property, at which it was the purchaser, was not

conducted in good faith and fairly.

34. It is undisputed that Synovus’s Credit Bid for the Smith Lake Property was

$1,836,750 (One Million Eight Hundred Thirty-Six Thousand Seven Hundred

Fifty Dollars). That sum is 93% of the “as is” market value of the Smith Lake

Property as set out in the April 2013 appraisal prepared by Prewett. It also is more

than 100% of the tax assessed value of the Smith Lake Property; 55.8% of

the value ascribed to the Smith Lake Property by Hyche, a co-owner, in his July

18, 2013 bankruptcy disclosure statement; and (4) 36.7% of the $5.0 million value

ascribed to the property by Summerford during his August 23, 2013 deposition,

which valuation assumed "an orderly development and sale of the property."

35. An appraisal of real estate is subjective (testimony of Prewett).

10Conversely, Prewett satisfied the court, both through his trial testimony and his written appraisal

(Plaintiff’s Trial Ex. 6), as to the reasonableness of his methodology, including the number of lots

he considered, the manner in which he compared those lots to other lots at Smith Lake, and the 25%

discount factor he applied to the Smith Lake Property.

11To be clear, although the court has set out six reasons for finding Summerford’s testimony not

persuasive, it specifically finds that each reason is independently and alternatively sufficient for the

court not to be persuaded by Summerford’s testimony.

11

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 11 of 19
III. CONCLUSIONS OF LAW

A. This Court already has determined that Summerford is liable to

Synovus for breach of the subject promissory note (as modified, the "Note") and

related Loan documents. (See Doc. 43 at 23, ¶¶ 2-3.) The only issues before the

Court are the exact amount of the deficiency owed on the Loan following the

foreclosure of the Real Property and the damages incurred by Synovus after

September 17, 2013 through the date of judgment. (Id. at 23, ¶ 4.)

B. As set forth in the Court's Pretrial Order (Doc. 46), Synovus's

calculation of the principal, interest, and late fees owing on the Loan, after

applying all post-September 17, 2013 credits, is not disputed by Summerford. (See

Doc. 46 ¶ 5(b)(xvi).) Summerford acknowledges that Synovus's foreclosure credit

bids (totaling $2,086,920.00) and a post-foreclosure payment made by Hyche (in

the amount of $18,253.12) were applied to the unpaid principal balance of the

Loan, reducing the principal balance to $1,319,593.74 as of August 14, 2014. (See

Doc. 46 ¶ 5(b)(xi), (xiii)-(xv).) Further, Summerford acknowledges that, based on

the aforementioned reductions to the principal balance of the Loan, the accrued

interest on the Loan totaled $255,308.01 as of August 14, 2014, and the late fees

owed as of August 14, 2014 totaled $13,548.69. (See id. at ¶ 5(b)(xvi)-(xvii).)

Summerford also agrees that interest is accruing on the principal balance of the

Loan at the prime rate with a floor of four percent (4.0 %) per annum. (See id. at ¶

12

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 12 of 19
5(b)(xvii).) The evidence presented at trial showed that Synovus has not received

or applied any additional payments or credits since the date of the Pretrial Order,

and established the precise amount of the interest accrued from August 14, 2014,

through the date of trial.

C. Based the Court's prior summary judgment rulings, the parties'

stipulations in the Pretrial Order, and the evidence presented at trial, Synovus has

established its prima facie right to recover a judgment for (1) the outstanding

principal balance of the Loan in the amount of $1,319,593.74, (2) the accrued

interest on the Loan as of the date of trial in the amount of $268,210.70, and (3) the

late fees in the amount of $13,458.69. See, e.g., Ross v. Rogers, 25 So.3d 1160,

1166-1168 (Ala. Civ. App. 2009); Farm Credit of Northwest Florida, ACA v.

McKelvy, 2011 WL 2516708, at *3 (M.D. Ala. June 23, 2011).

D. Synovus also is entitled to pre- and post-judgment interest on the

unpaid, principal portion of Synovus's damages award at the interest rate specified

by the parties' agreements, which is prime with a floor of four percent (4.0%). See

ITT Diversified Credit Corp. v. Lift & Equip. Serv., Inc. (In re Life & Equip. Serv.,

Inc.), 816 F.2d 1013, 1018 (5th Cir. 1987); see also Planned Furniture

Promotions, Inc. v. Benjamin S. Youngblood, Inc., 2007 WL 1970879, at *FN2

(M.D. Ga. 2007).

E. In addition to the principal, interest, and late fees owing on the Loan,

13

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 13 of 19
the Court previously held that Synovus was entitled to an award of its attorneys'

fees and expenses incurred as of September 17, 2013, in the amount of

$121,751.76, which amount remains unpaid. The evidence presented at trial shows

that, since September 17, 2013, Synovus has incurred additional attorneys' fees and

expenses to collect the Loan in the amount of $96,933.10. Like the pre-September

17, 2013, attorneys' fees incurred by Synovus, Synovus is entitled to recover its

reasonable, post-September 17, 2013 attorneys' fees and expenses. Further, ‘[t]he

court is presumed to have knowledge, even without evidence, from which it may

set such a fee’.” Robbins v. Smith, 495 So. 2d 577, 580 (Ala. 1986) (citation

omitted); see also Wells Fargo Bank, N.A. v. Vergos, 2012 WL 206169, at *4 (S.D.

Ala. Jan. 24, 2012) (same). The Court concludes that an award of $96,933.10 for

Synovus's post-September 17, 2013, fees and expenses, is reasonable.

F. In defense to Synovus's claim for the deficiency owed on the Loan,

Summerford challenges the sufficiency of Synovus's foreclosure Credit Bid for the

Smith Lake Property. Alabama case law is well settled regarding the duties of a

mortgagee in conducting a power of sale foreclosure. In the seminal ruling from

the Alabama Supreme Court, the court held that a foreclosure sale will not be set

aside on inadequate price alone unless the price realized “is so inadequate as to

shock the conscience.” Hayden v. Smith, 113 So. 293, 295 (Ala. 1927). “The fair

market value of the property at the time of the foreclosure is the key fact in

14

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 14 of 19
deciding this issue.” In re Sharp, 425 B.R. 620, 632 (Bankr. N.D. Ala. 2010).

While each case must be judged on its own facts and circumstances, the Alabama

Supreme Court has held that a foreclosure bid equal to 81% of the appraised value

of the subject property is not inadequate. Mt. Carmel Estate, Inc. v. Regions Bank,

853 So. 2d 160 (Ala. 2002); see also Vision Bank v. Lanza, 2011 WL 5190847, at

*4 (S.D. Ala. 2011) (the Southern District, applying Alabama law, held that a

reasonable fact finder could not find that a foreclosure price of 72% of the

property’s alleged fair market value was shockingly inadequate); Breen v. Baldwin

County Federal Savings Bank, 567 So. 2d 1329, 1332-1333 (Ala. 1990) (affirming

the trial court’s grant of summary judgment despite debtor’s claim that the bank’s

credit bid accounted for only 54% of the alleged fair market value of the property); 

Walker v. North America Sav. Bank, 142 So.3d 590, 598-99 (Ala. Civ. App. 2013)

(upholding a foreclosure bid price equal to 91.5% of the alleged fair market value

of the property, which was based on the tax assessor's records); Perry v. Federal

National Mortgage Association, 100 So.3d 1090, 1102 (Ala. Civ. App. 2012)

(upholding foreclosure bid price equal to 84% of the alleged fair market value of

the property, which was based on the tax assessor's records).

G. Significantly, in a recent unpublished Eleventh Circuit decision

interpreting Alabama law, the Court of appeals affirmed the trial court’s ruling that

a foreclosure sale price equal to 20%, 30%, or 66% of a property’s fair market

15

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 15 of 19
value (depending on the appraisal used) was not so inadequate as to shock the

judicial conscience). See CS Assets, LLC v. W. Beach, LLC, 370 Fed. Appx. 45, 46

(11th Cir. 2010). As the Court of Appeals explained:

In the case at issue, the lender acquired the property for 20%, 30%, or 66%

of its fair market value, depending on the appraisal used. But the choice of

percentage is not as determinative in the end as the observation that no

misconduct tainted the auction. The pleadings in the district court created no

genuine issue as to the propriety of the sale or the adequacy of the notice.

The investors concede they knew about the auction. (We also note that the

investors declined to exercise their statutory right of redemption in the year

following the sale.) In the absence of any issue of impropriety, this sale must

stand. The trial court did not err in concluding the sale price did not shock

the judicial conscience.

Id.

H. Ultimately, Summerford's challenge to the sufficiency of Synovus's

foreclosure credit bid is an affirmative defense,12 on which Summerford bears the

burden of proof as to all essential elements. See Ross v. Rogers, 25 So.3d 1160,

1166-1167 (Ala. Civ. App. 2009) (holding that the defendants—who contended the

mortgagee had created an artificial deficiency on a promissory note by bidding an

12

"[A] defense...asserting errors in the foreclosure process is a collateral attack on a foreclosure."

Campbell v. Bank of America, N.A., 141 So.3d 492, 494 (Ala. Civ. App. 2012). "In a proceeding

involving a collateral attack on a foreclosure...only those circumstances that would render the

foreclosure sale void may be raised as an affirmative defense." Id. "In Alabama, the following

circumstances may render a foreclosure sale void: (1) when the foreclosing entity does not have the

legal right to exercise the power of sale, as, for example, when that entity is neither the assignee of

the mortgage...nor the holder of the promissory note... at the time it commences the foreclosure

proceedings; (2) when 'the debt secured by the mortgage was fully paid prior to foreclosure'...; (3)

when the foreclosing entity failed to give notice of the time and place of the foreclosure sale...; and

(4) when the purchase price paid is ‘so inadequate as to shock the conscience, it may itself raise a

presumption of fraud, trickery, unfairness, or culpable mismanagement, and therefore be sufficient

ground for setting the sale aside.'" Id. at 495-96 (citations omitted).

16

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 16 of 19
inadequate amount at foreclosure—failed to satisfy their burden of proof; the

defendants had offered no evidence of the value of the property at the time of the

foreclosure sale, "a necessary factual predicate for any determination as to whether

the price paid at the foreclosure sale 'was so inadequate as to raise a presumption of

fraud, unfairness, or culpable mismanagement'"); see also Renasant Bank v. Lake

Cyrus Development Co., Inc., 2012 WL 3637603, at *10 (N.D. Ala. August 20,

2012) (holding that it is the defendant's burden to offer sufficient evidence on

which a reasonable fact-finder could conclude that the foreclosure bid price was so

low as to shock the conscience); Breen v. Baldwin County Federal Sav. Bank, 567

So. 2d at 1331-1332.

I. Summerford has not satisfied his burden of proof. There is no dispute

that Synovus's Credit Bid for the Smith Lake Property, which was $1,836,750: (1)

equaled 93% of "as is" market value of the Smith Lake Property set forth in the

May 2013 Appraisal of the Smith Lake Property prepared for Synovus; (2) equaled

more than 100% of the current tax assessor value of the Smith Lake Property; (3)

equaled 55.8% of the value ascribed to the Smith Lake Property by Hyche, a coowner, in Hyche’s July 18, 2013 bankruptcy disclosure statement; (4) equaled

36.7% of the low end of the value ascribed to the property by Summerford ($5

Million to $6 Million), and 30.6% of the high end of that value. A foreclosure sale

price equal to 30.6%, 36.7%, 55.8%, 93%, or more than 100% of the value of the

17

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 17 of 19
Smith Lake Property (depending on the valuation used) is not so low as to shock

the judicial conscience in the absence of any challenge to the propriety or notice of

the sale. See, e.g., CS Assets, LLC v. W. Beach, LLC, 370 Fed. Appx. at 46.

J. Although it is undisputed that Summerford, Hyche, and Wayne Riggs

purchased the Smith Lake Property for $3,830,000.00 on November 10, 2006, and

that Synovus obtained an appraisal that valued the property at $4,026,000.00 as of

January 3, 2007, the dates of the November 2006 sale and January 2007 appraisal

are so remote as to render the sale price and appraised value of little, if any,

relevance to the question of the value of the property as of the date of the

foreclosure, particularly give the intervening downturn in the real estate market.

See generally Thornton v. City of Birmingham, 250 Ala. 651, 653-657, 35 So.2d

545, 546 (Ala.1948) ("The general rule, supported by overwhelming authority, is

that evidence of the price paid by the owner for the property...is admissible as

tending to illustrate or bearing probatively on its market value, unless the sale was

too remote in point of time from the...proceedings as to afford no fair criterion of

present value, or if otherwise shown to be without probative force, as where the

sale was not a voluntary one or where other special considerations conduced the

sale at other than the true market value."). However, even accepting the November

2006 sale price and January 2007 appraisal as credible evidence of the value of the

property as of the date of the foreclosure, Synovus's credit bid equaled 47.96% of

18

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 18 of 19
the original purchase price of the property, and 45.6% of the 2007 appraised value.

Such a credit bid is not so low as to shock the judicial conscience.

K. Based on the foregoing, the Court concludes that, as of November 20,

2014, Synovus is entitled to judgment against Summerford in the total amount of

$1,821,414.19, which includes (1) the outstanding principal balance of the Loan in

the amount of $1,319,593.74, (2) the accrued interest on the Loan as of the

November 10, 2014, trial in the amount of $268,210.70, (3) late fees in the amount

of $13,458.69, (4) Synovus's pre-September 17, 2013, attorneys' fees and expenses

in the amount of $121,751.76, (5) Synovus's post-September 17, 2013, attorneys'

fees and expenses in the amount of $96,933.10, and (6) pre-judgment interest from

November 11, 2014, through November 20, 2014, in the total amount of $1,466.20

(calculated on the basis of the stipulated per diem amount of $146.62 per day).

Synovus is also awarded post-judgment interest on the unpaid, principal portion of

Synovus's damage award at the contract rate of prime with a floor of four percent

(4.0%) per annum, to be calculated on the basis of an Actual/360 computation.

DONE and ORDERED this 20th day of November, 2014.

 

 VIRGINIA EMERSON HOPKINS

United States District Judge

19

Case 2:12-cv-03598-VEH Document 62 Filed 11/20/14 Page 19 of 19