Opinion ID: 201972
Heading Depth: 3
Heading Rank: 2

Heading: Adequacy of Price Obtained

Text: 29 TAT emphasizes that the $1,200,000.00 price paid in the second auction was 40% lower than the $2,000,000.00 bid offered independently by Micu, who could not complete the sale, and by Florence, who made his offer outside of the bidding process. TAT argues that this reduction in price is evidence of SRC's lack of reasonable diligence and good faith. 30 Under Massachusetts law, [a]bsent evidence of bad faith or improper conduct . . . mere inadequacy of price will not invalidate a sale unless it is so gross as to indicate bad faith or lack of reasonable diligence. Resolution Trust Corp. v. Carr, 13 F.3d 425, 430 (1st Cir.1993) (emphasis in original) (internal quotations and citations omitted); see also Seppela & Aho Contr. Co., Inc. v. Petersen, 373 Mass. 316, 367 N.E.2d 613, 620 (Mass.1977) (finding that a showing that foreclosure sale price was less than fair market value was not enough to support any basis of liability). 31 Generally, to determine whether a sales price is grossly inadequate, the price is compared with a fair market value appraisal of the property. See Elder Care Servs., 82 F.3d at 528. The $2,000,000.00 comparison figure stated by TAT is based on the Micu bid and Florence offer and not on an appraisal of the fair market value of the property. TAT has not offered any such appraisal information. Even assuming a comparison of a previous uncompleted bid and final sale price is appropriate, other courts have found similarly-sized differences to be not so gross as to indicate bad faith or a lack of reasonable diligence. See Elder Care Servs., 83 F.3d at 528 (disparity between estimated liquidation price of $2,000,000 and later sales price of $300,000 not so gross as to withstand summary judgment motion); Resolution Trust Corp., 13 F.3d at 430 (disparity between appraisal price of $350,000 and sales price of $195,000 not enough to withstand a summary judgment motion); Fairhaven Savings Bank v. Callahan, 391 Mass. 1011, 462 N.E.2d 112, 114 (1984) (purchase price of $10,000 on property securing a $40,000 debt not so inadequate as to constitute a breach of fiduciary duty as a matter of law); Sher v. South Shore Nat'l Bank, 360 Mass. 400, 274 N.E.2d 792, 794 (1971) (disparity between alleged fair market value of $52,500 and sales price of $35,500 not so gross as to withstand a motion to dismiss); Cambridge Sav. Bank v. Cronin, 289 Mass. 379, 194 N.E. 289, 289-90 (1936) (disparity between alleged fair market value of $51,000 and sales price of $20,000 warranted direct verdict against the challenger of the sale). 32