Court Opinion

ID: 2751061
Source: CourtListenerOpinion
Date Created: 2014-11-13 19:03:07.369294+00
Date Added: 2024-06-11T10:17:46.243551
License: Public Domain

SECOND DIVISION
                                 ANDREWS, P. J.,
                              MCFADDEN and RAY, 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/

                                                                   November 13, 2014

In the Court of Appeals of Georgia
 A14A1093. YELLOW CREEK INVESTMENTS, LLC et al. v.
     MULTIBANK 2009-1 CRE VENTURE, LLC.

        MCFADDEN, Judge.

        This is an appeal from the confirmation of a foreclosure sale. The debtors and

guarantors maintain that the sale should not have been confirmed and therefore that

they should not be liable for any deficiency of the sale price to satisfy the secured

debt.

        The present case is the second confirmation proceeding arising out of the

foreclosure at issue. In 2011, Multibank 2009-1 CRE Venture, LLC (“Multibank”)

unsuccessfully sought to confirm a foreclosure sale of property securing a loan

evidenced by a promissory note executed by Yellow Creek Investments, LLC and

guarantied by two individuals (collectively, “Yellow Creek”). The trial court instead
ordered a resale of the property, which Multibank conducted in early 2013, resulting

in the sale of the property to its wholly-owned subsidiary, MB REO-GA Land, LLC.

The trial court confirmed the 2013 sale, and Yellow Creek appeals.

      Yellow Creek argues that Multibank lacked title to the property at the time of

the 2013 sale because the trial court did not rescind the 2011 sale, but the trial court’s

resale order had the effect of setting aside the 2011 sale and Yellow Creek’s

challenge to Multibank’s title falls outside the ambit of a confirmation proceeding.

Yellow Creek argues that Multibank’s advertisement of the 2013 sale was defective

as a matter of law because its description of the property did not match the legal

description in the deed to secure debt, but we find that the evidence authorized the

trial court to find the advertisement’s description was sufficient. Finally, Yellow

Creek argues that Multibank did not show that it consummated its sale of the property

to MB REO-GA Land, but the evidence authorized the trial court to find that the sale

was consummated. Accordingly, we affirm.

      In ruling on a confirmation petition, a trial court “is required not only to

determine whether the property sold brought its true market value but also to pass

upon the legality of the notice, advertisement, and regularity of the sale.” Martin v.

Fed. Land Bank of Columbia, 173 Ga. App. 142 (325 SE2d 787) (1984) (citations and

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punctuation omitted); see OCGA § 44-14-161. “The trial court is the trier of fact in

a confirmation proceeding, and an appellate court will not disturb its findings if there

is any evidence to support them. We apply a de novo standard of review to any

questions of law decided by the trial court.” Citizens Bank of Effingham v. Rocky

Mountain Enterprises, 308 Ga. App. 600, 601 (708 SE2d 557) (2011) (citations and

punctuation omitted).

      So viewed, the record shows that in 2011, Multibank (the successor to original

lender Magnet Bank ) initiated foreclosure proceedings on two tracts of property after

Yellow Creek defaulted on its obligations under a promissory note and guaranties.

After selling the property at foreclosure to MB REO-GA Land, Multibank sought

confirmation of the sale. Errors were identified in the legal description of the property

found in the deed to secure debt from Yellow Creek to Magnet Bank; the deed’s legal

description omitted a land lot reference and did not match the metes and bounds

survey of the property in other respects. Yellow Creek argued that these errors

invalidated the foreclosure sale, but the trial court did not agree, instead finding that

“[n]o evidence has been introduced that the errors in the legal description were

discovered prior to the sale or that the errors affected the bidding,” and concluding

that the “foreclosure procedures complied with the legal requirements as to notice,

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advertisement and regularity of the sale.” Nevertheless, the trial court was persuaded

by Yellow Creek’s expert appraisal witness that the property’s true market value was

higher than what it had brought at foreclosure and, accordingly, denied confirmation.

The trial court also ordered that the property be resold.

      Accordingly, in January 2013 Multibank advertised a second foreclosure sale

of the property, this time using a description that corrected the errors previously

identified in the deed to secure debt’s legal description. Multibank also stated in the

advertisement that it would provide the purchaser at foreclosure a title insurance

policy on the property. MB REO-GA Land again purchased the property at

foreclosure. Subsequently, Multibank applied the foreclosure purchase price to the

amount Yellow Creek owed under the promissory note, thereby reducing that amount.

      Multibank again sought confirmation. In response, Yellow Creek argued,

among other things, that Multibank did not have title to the property at the time of the

2013 foreclosure sale; that the advertisements of the second sale inadequately

described the property because they did not match the legal description found in the

deed to secure debt; and that Multibank had not shown that the foreclosure sale was

consummated because it did not present evidence of the transfer of consideration

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from MB REO-GA Land to Multibank. After an evidentiary hearing, the trial court

confirmed the second foreclosure sale. Yellow Creek appeals.

      1. Title to the property.

      Yellow Creek argues that the trial court erred in confirming the 2013 sale on

the ground that “the subject foreclosure sale was invalid because, as of the date of that

sale (February 5, 2013), [Multibank] had already transferred title to the Property

through a recorded Deed Under Power [related to the first foreclosure sale] that had

not been rescinded.” We are not persuaded.

      OCGA § 44-14-161 (c) permitted the trial court to “order a resale of the

property for good cause shown.” The trial court’s order required Multibank to resell

the property. See Adams v. Gwinnett Commercial Bank, 140 Ga. App. 233 (1) (230

SE2d 324) (1976). The resale order also had the effect of setting aside the 2011 sale.

See Frank S. Alexander, Ga. Real Estate Finance and Foreclosure Law, § 9:5 (2014)

(“A denial of confirmation which is accompanied with an order of resale is itself an

order setting aside the foreclosure.”) (citations omitted). Accordingly, that order,

“denying confirmation and setting aside the foreclosure sale[,] return[ed] the parties

to the position they occupied prior to the sale.” Id. (citations omitted). Although

Yellow Creek questions the fairness of this procedure in cases involving a third-party

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purchaser, this court has recognized that “the purchaser at public outcry, whether a

party to the debt, or a third person, bids at the sale with full knowledge of” the

possibility that the trial court will order a resale in connection with a subsequent

confirmation proceeding. Davie v. Sheffield, 123 Ga. App. 228, 230 (180 SE2d 263)

(1971). See generally Homes of Tomorrow v. Fed. Deposit Ins. Corp., 149 Ga. App.

321, 323 (3) (245 SE2d 475) (1979) (issue of and potential for resale is part of every

confirmation case).

      Moreover, Yellow Creek’s challenge to Multibank’s title to the property at the

time of the 2013 sale

      falls outside the ambit of OCGA § 44-14-161. Confirmation proceedings
      brought under OCGA § 44-14-161 do not adjudicate title. And even if
      title of the property was not clear on the date of the [second foreclosure]
      sale, [Yellow Creek] has not shown that, under the circumstances of this
      case, a cloud of title adversely affected any protection afforded [them]
      as debtor[s] under OCGA § 44-14-161.

Friedman v. Regions Bank, 288 Ga. App. 57, 58-59 (653 SE2d 507) (2007) (citations

omitted). Accordingly, this claim of error provides no ground for reversal.

      2. Sufficiency of property description in advertisement.

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      Yellow Creek argues that the trial court erred in confirming the 2013 sale

because the corrected property description in Multibank’s sale advertisement did not

match the incorrect legal description in the deed to secure debt. We disagree.

      “A nonjudicial foreclosure sale must be advertised in the same manner as a

judicial foreclosure sale. OCGA § 44-14-162 (a). That manner is set forth in OCGA

§§ 9-13-140 (a) and 9-13-141[.]” Nexgen Cumming, LLC v. State Bank & Trust Co.,

313 Ga. App. 715, 716 (722 SE2d 428) (2012). “OCGA § 9-13-140 (a) . . . requires

that the advertisement include a full and complete description of the property to be

sold. . . . In the case of real property, such advertisement shall include the legal

description of such real property[.]” Dan Woodley Communities v. Suntrust Bank, 310

Ga. App. 656 (714 SE2d 145) (2011) (punctuation omitted). The requirements

prescribed in OCGA § 9-13-140 (a) are the “minimum legal requirements of a

foreclosure advertisement . . . , and only a failure to properly include those items will

render the advertisement defective as a matter of law.” Southeast Timberlands v.

Security Nat. Bank, 220 Ga. App. 359, 360 (1) (469 SE2d 454) (1996) (citation

omitted; emphasis supplied).

      If a foreclosure advertisement is not defective as a matter of law, defects
      in it will prevent confirmation only if the factfinder determines those

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      defects chilled bidding and caused an inadequate selling price. A
      primary object of the advertisement is to attract buyers who will
      compete against one another so as to yield the highest price; its contents
      are important to the process. Thus, errors that would not confuse the
      bidding intentions of any potential bidder of sufficient mental capacity
      to enter a binding contract for the sale of the real property do not show
      a chilling of the sale so that a fair market value bid was not obtained.

Dan Woodley Communities, 310 Ga. App. at 657 (citation and punctuation omitted).

      There was evidence at the confirmation hearing that advertisement for the 2013

sale contained a correct legal description of the property. Accordingly, the trial court

was authorized to find that the advertisement met the minimum legal requirements

prescribed by OCGA § 9-13-140 (a). See Collier v. Vason, 12 Ga. 440, 443 (1853)

(requirement that advertisement contain full and complete description of property can

be met by description “by which the public may readily understand what particular

property is embraced in the advertisement,” considering the particular characteristics

of that property, and whether description met requirement was question of fact for

factfinder) (emphasis omitted). We find no merit in Yellow Creek’s argument that our

decision in Diplomat Constr. v. State Bank of Texas, 314 Ga. App. 889 (726 SE2d

140) (2012), renders an advertisement containing a correct legal description defective

as a matter of law if that correct description does not match the description found in

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the deed to secure debt. Instead, Diplomat Constr. stands for the proposition that an

advertisement containing an incorrect legal description nevertheless meets the

requirements of OCGA § 9-13-140 (a) if the description matches that found in the

deed to secure debt. Diplomat Constr., 314 Ga. App. at 894-895 (3). Moreover, in

Shantha v. West Ga. Nat. Bank, 145 Ga. App. 712, 713 (244 SE2d 643) (1978), we

held that a foreclosure advertisement’s property description, which corrected

“misdescriptions in the warranty deed and loan deed,” was “fully adequate.”

      There also was evidence that the discrepancies between the incorrect

description in the deed to secure debt and the correct description in the advertisement

did not chill the bidding. Multibank’s expert witness testified that the discrepancies

were minor, the advertisement informed potential bidders that Multibank would

provide a title insurance policy covering any title concerns related to the

discrepancies, and parties other than MB REO-GA Land (the eventual purchaser)

were present at the sale. See Oates v. Sea Island Bank, 172 Ga. App. 178, 179 (2) (a)

(322 SE2d 291) (1984) (evidence supported trial court’s finding that incorrect plat

book number in legal description in advertisement did not have chilling effect on sale,

where there was evidence that parties other than bank were present at sale, appraisal

witness had no trouble locating property using description in advertisement, and

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appellant presented no evidence to support contention of chilling effect). The trial

court was not required to deny confirmation on account of the legal description used

in the advertisement for the 2013 sale. See Shantha, 145 Ga. App. at 714.

      3. Transfer of consideration.

      Yellow Creek argues that the trial court erred in confirming the foreclosure sale

because Multibank failed to show the transfer of consideration required to

consummate the sale. See Tampa Investment Group v. Branch Banking & Trust Co.,

290 Ga. 724, 727 (1) (723 SE2d 674) (2012) (“Until a deed under power is transferred

and consideration is passed, the sale itself has not occurred; there is only a contract

to buy and sell.”) (citations and punctuation omitted).

      The evidence supported the trial court’s determination that the sale had been

consummated. There was no dispute that Multibank conveyed the property to the

buyer, its wholly-owned subsidiary MB REO-GA Land, through a deed under power

that was recorded. And the fact that Multibank reduced Yellow Creek’s debt by the

sale amount permitted the inference that Multibank had received consideration in that

amount. Given these facts, we disagree with Yellow Creek that Multibank was

required to show more specific details about the transfer of consideration in order to

prove that the sale had been consummated. Cf. Adcock v. Berry, 194 Ga. 243 (1) (21

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SE2d 605) (1942) (foreclosure sale was not invalidated by subsequent arrangement

between seller and highest bidder whereby seller accepted bidder’s note in lieu of

cash but was accountable for the note as cash in settling with debtor).

      Judgment affirmed. Andrews, P. J., and Ray, J., concur.

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