Court Opinion

ID: 5157326
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:25:21.207025+00
Date Added: 2024-06-11T08:25:25.902676
License: Public Domain

Justice COATS,
dissenting.
11 50 Unlike the majority I would not be so quick to relieve the Bank of its obligation to at least substantially comply with the statutory prerequisites for a court-authorized foreclosure sale. Even if I were to agree, however, that constructive notice bars a challenge to the validity of a foreclosure sale once it has already taken place, I would nevertheless disagree with the majority's imputation of notice to the Righetti Estate, under the cireumstances of this case. Because I would void the judicial authorization and subsequent foreclosure sale in this case, without regard to the claim of bid-rigging, solely on the basis of a challenge by the not-yet-closed estate of a deceased tenant in common that went completely unidentified in the Bank's verified motion for authorization to proceed, I respectfully dissent.
1 51 I understand the majority to hold that a foreclosure sale will not be set aside for failure of the party seeking foreclosure to include an interested party of record in its motion for judicial authorization, as required by Rule 120 and section 38-88-105, C.R.S. (2011), as long as that interested party had constructive notice of the foreclosure proceeding but nevertheless failed appear and oppose the sale sometime before it actually took place. Without further analysis, the majority finds that the Righetti Estate had constructive notice of the foreclosure proceeding, apparently considering it self-evident that if Righetti's widow had actual notice, and she was a personal representative of the estate, then the estate must have been on constructive notice. Not only is this proposition not self-evident, I actually consider it to be erroneous, as a matter of law, or logic, or both.
1 52 Apparently agreeing that an inference of notice to the estate and its beneficiaries could hardly be considered self-evident, the court of appeals attempted to justify it by expressly reasoning that as a fiduciary a personal representative is also an agent, whose knowledge is imputed to her principal according to accepted principles of agency law. While an agency is a fiduciary relationship in which the agent has fiduciary obligations to his principal, it is not necessarily the case, however, that a fiduciary relationship also involves an agency relationship. Whether a fiduciary is additionally the agent of his principal depends entirely on the circumstances of the particular relationship and involves a separate legal inquiry. Restatement (Third) of Agency § 1.01 emt. g (2006). By way of example, the Comments to the Restatement make clear that "a trustee is not an agent of the settlor or beneficiaries unless the terms of the trust subject the trustee to the control of either the settlor or the beneficiaries. Principals in ageney relationships have power to terminate authority and thus remove the agent; trust beneficiaries, in contrast, do not have power to remove the trustee." Id.
T 53 Not only, therefore, is it erroneous to assume that a fiduciary relationship is necessarily governed by ageney principles, but the close analogy between estates and trusts militates against finding an agency relationship in the former, any more than in the latter, in the absence of express provisions of a statute or will to the contrary. As with a trustee, *1268heirs or devisees lack the power to terminate a personal representative, in the absence an express provision of the will, and by statute in this jurisdiction, the liability of a personal representative for breach of his fiduciary duties is precisely the same as that of "a trustee of an express trust." § 15-12-714, C.R.S. (2011). While a trustee, or personal representative, by the very nature of a fiduciary relationship, has a heightened duty of care to beneficiaries of the trust or will, it would literally stand the relationship on its head to conclude that the beneficiaries are for that reason alone also liable to third parties for the fiduciary's action or inaction.13
{54 In any event, Righetti's widow was not the personal representative of the Righ-etti Estate but merely a co-representative, along with the decedent's daughter. By statute, co-representatives do not independently have the powers of a personal representative but rather share those powers, which must be exercised cooperatively, with the consent of the other co-representatives. § 15-12-717. Because the statute expressly bars one co-representative from exercising the power of an agent to bind the estate with regard to the administration or distribution of estate property, it is not clear to me that a lone co-representative retains any greater power to waive interests of the estate. Even if I agreed with the majority that a foreclosure sale should not be voided merely because an interested party with actual notice of the proceedings was not designated, as statutorily required, in the motion for judicial authorization, I would still not decline to void this particular sale.
55 The majority's exclusive focus on notice, however, points to an even more fundamental objection to its rationale. From both its explanation and the authorities on which it relies, it appears that the majority is concerned only that the minimum notice requirements of procedural due process were satisfied. By contrast, not only do I not believe the notice requirements of our statute and rule are designed to ensure only this minimal degree of notice, I do not even consider notice the sole concern of our insistence on judicial authorization as a prerequisite to the exercise of a power of sale.
€56 In this jurisdiction, before a public trustee may conduct a foreclosure sale, the holder of the evidence of debt must obtain a court order complying with C.R.C.P. 120. In addition to providing notice, that rule requires the filing of a verified motion in the district court stating the names and addresses of the various interested parties and anyone liable upon the secured indebtedness. Id. Before the motion may be granted, the court must examine it and be satisfied that the moving party is entitled to an order authorizing a sale on the facts. Id. Any sale held without an order issued in compliance with the statute and rule is statutorily declared invalid. See § 38-88-105(2)(a), C.R.S. (2011).
T 57 In this case, the Bank not only failed to serve the estate, whose representative the Bank knew to stand in the shoes of the decedent debtor and owner by tenancy in common of the subject property; perhaps even more importantly, it failed to designate the estate as a necessary interested party in its verified motion for court authorization, as required by Rule 120. Without being made aware that the decedent's widow was not the sole owner through a right of survivorship, as implied by the motion naming only her, and instead that the decedent's half interest in the property would pass through his estate to unnamed beneficiaries, the district court *1269lacked the required information to assess the merits of the motion, as contemplated by statute and rule. While compliance with the dictates of the rule is clearly required for a valid sale by both statute and case law, regardless of the nature of the complaining party, it seems particularly ironic for the majority to excuse compliance with regard to an estate, statutorily subject to claims only upon written notice to, or litigation against, the personal representative, or filing with the clerk of the probate court, regardless of actual notice. See In re Estate of Ongaro, 998 P.2d 1097, 1100 (Colo.2000) (requiring compliance with section 15-12-804, notwithstanding the personal representative's awareness of a potential claim).
158 For one final touch of irony in this case, no reader of the court of appeals opinion below can fail to appreciate that the majority finds itself relieving the Bank of its obligation to comply with the requirements of Rule 120 for failure of any demonstration of prejudice only because the decedent's widow, who produced the required payment to the public trustee within the statutory redemption period, was held strictly, without any required showing of prejudice, to compliance with an additional 15-day notice requirement, which she missed by some 9 days.
159 Because I believe there has always been and yet remains very good reason for validating a foreclosure sale by the public trustee only upon compliance with the express procedural requirements of the rule and a valid court order, I would not abandon those requirements at all, much less in a case such as this. I therefore respectfully dissent.

. To the extent the majority's "see" cite to the 'Personal Service" provisions of C.R.C.P. 4 is intended to imply that a personal representative is a designated agent of her estate for purposes of service of process, I consider that suggestion not only mistaken but also irrelevant. As a general matter, the manner of presenting claims against an estate is prescribed at section 15-12-804, C.R.S. (2011), but proceedings to enforce a mortgage or other lien against property of an estate are expressly exempted from this provision and are governed instead by C.R.C.P. 120, which contains service requirements of its own, separate and distinct from those of Rule 4. In any event, Rule 4(e)(4) delineates persons upon whom delivery of process naming a particular entity will be considered adequate, not persons from whom notice of an ongoing proceeding will be imputed to that entity, regardless of adequate service. In this case, it is undisputed that neither the estate itself nor anyone in the capacity of personal representative for the estate was ever even named in the motion for a foreclosure sale, much less served with notice of the sale.