Court Opinion

ID: 9479472
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:19:42.695768+00
Date Added: 2024-06-11T17:47:04.120991
License: Public Domain

CUDAHY, Circuit Judge,
dissenting.
While conceding, at least arguendo, the merit of the majority’s discussion of “excusable neglect,” I cannot accept the other, and necessary, branch of its argument. As the majority notes, the district court determined that the disparity between the value of the property and the sale price was so great as to shock the conscience. A willing and informed buyer was ready to pay $33,233.64 in exchange for title to the property. The majority suggests possible reasons why this bid ceiling might have reflected special considerations. But a bid in hand seems to me more probative than several appraisals in the bush. It at least creates a presumption of gross discrepancy between “value” and the $1000 actually received at the sale. The fact that $33,233.64 was loaned against the property does not suggest to me that it was likely worth only $1000. Before our concluding that the Lo-mas & Nettleton bid was totally non-probative, I think it was up to Kasten to provide a persuasive reason why this is the case. On the record before us, this has not been done.
Whether the price realized at a sheriff’s sale is so inadequate as to “shock the conscience” of the court supervising the sale is obviously a highly discretionary judgment, which depends on the particular circumstances surrounding the sale in question. The Indiana courts have stressed that, when ruling on a petition to set aside a sheriff’s sale, “the [trial] court has wide discretion to avoid ‘hardship and sacrifice.’ ” Michigan Mortgage Corp. v. Oakley, 68 Ohio App.2d 83, 426 N.E.2d 1195, 1196 (1980) (noting that court had discovered only one reported case in which a trial court’s ruling on a petition to set aside a foreclosure sale had been reversed for *972abuse of discretion), cited with approval in Smith v. Federal Land Bank of Louisville, 472 N.E.2d 1298, 1303 (Ind.App.1985). “Each case of this kind must depend largely upon its own peculiar facts. Whether the circumstances under which the sale is held, coupled with inadequacy of price, are sufficient to justify setting aside the sale is a matter largely within the discretion of the trial court, subject, of course, to review for an abuse thereof.” Fox v. Jackson, 116 Ind.App. 390, 394, 64 N.E.2d 799, 801 (1946).
The majority chides Lomas & Nettleton for neglecting to present evidence of the property’s “actual value” to the district court. Apparently the majority views this defect as fatal to Lomas & Nettleton’s case, and sufficient to support a finding that Judge Sharp abused his discretion by invalidating the sheriff’s sale. I believe that Indiana law is exactly the opposite of the majority’s holding — under Indiana law, evidence of the “actual” fair market value of the property may be irrelevant to the issues involved here. Instead, the only way a party can establish that the price realized at a sheriff’s sale is inadequate is by presenting evidence of what that party intended to bid if he or she had attended the sale.
In Indiana, the issue in a proceeding to set aside a sheriff’s sale is not how the price at the sheriff’s sale compares to the “fair market value” of the property, considered in the abstract. Instead, the relevant comparison is between the price realized and the price that could have been attained at a proper sheriffs sale but for the non-attendance of the party petitioning to set aside the sale. Thus, not only was the evidence Lomas & Nettleton presented about its contemplated bid relevant; it was the only evidence it could have offered to establish the inadequacy of the sale price.
For example, in Fox v. Jackson, 116 Ind.App. 390, 64 N.E.2d 799 (1946), the party seeking to set aside the sale did exactly what the majority faults Lomas & Nettle-ton for failing to do — the petitioner presented evidence of the “actual” fair market value of the property ($6,000), and argued that the price realized at the sheriff’s sale ($3,000) was grossly inadequate. The court held that the petitioner had failed to present competent evidence to establish a price disparity justifying equitable relief.
The evidence would support the belief that the property had a market value of something over $6000, but the test of adequacy of price is not what the property is worth, but what it will bring at a fair sheriffs sale, which is, of course, a forced sale. No witness expressed an opinion as to what price the property would bring at a forced sale, but the court was entitled to believe that such a price might be substantially less than the fair market value.
Id. at 394, 64 N.E.2d at 801 (emphasis added; citation omitted).1 In the present case, Lomas & Nettleton presented the sort of evidence found lacking in Fox — evidence of what an “actual” bidder who had planned to attend the sheriff’s sale was willing to pay. Yet the majority now finds that this evidence too is inadequate. I cannot agree with the majority that Lomas & Nettleton failed to offer proper evidence to establish that the sheriff’s sale produced a grossly inadequate price.
Contrary to the majority, therefore, I conclude that Lomas & Nettleton presented evidence that was fully competent to establish what the price would have been at a fair sheriff’s sale. In the present case, in which the price paid at the sheriff’s sale was at most one-thirtieth of the amount which could have been realized at a proper sale, Lomas & Nettleton has clearly shown a price disparity which, in the district *973court’s discretion, could be found to “shock the conscience.” In other cases involving an attorney’s negligent failure to attend a sheriff’s sale, far smaller relative price disparities have been found sufficiently “shocking” to justify invalidating the sale. See, e.g., Newhouse v. Farmers Nat’l Bank of Shelbyville, 532 N.E.2d 26, 28 (Ind.App.1989) (disparity between $3,000 paid at sheriff’s sale and $34,200 which attorney for mortgagor was authorized to bid “would permit, [but] not compel, the vacation of the sheriff’s sale”); Michigan Mortgage, 68 Ohio App.2d 83, 426 N.E.2d 1195 (1980) (property sold at first sale for $16,000, but ultimately realized $25,700 after first sale properly set aside). In situations involving other types of mishaps in connection with a sheriff’s sale, relative price disparities of far less moment than in the present case have also been found sufficient to warrant equitable intervention.2
Apparently, the majority holds that the lack of an appraisal defeats Lomas & Net-tleton’s claim as a matter of law. In the face of the bid Lomas & Nettleton was prepared to make, this is not a prudent rule. Indiana law affords much more leeway to the court supervising a sheriff’s sale. As the Indiana Supreme Court has recognized, “[t]he purpose of the [sheriff’s] sale is not to afford some stranger ap opportunity to make off with the property of the judgment defendant” for a pittance, Home Owners’ Loan Corp., 220 Ind. at 592, 44 N.E.2d at 991; instead, the sale is intended to realize the highest practicable price in satisfaction of debts which are in default. By reversing the district court’s judgment in this case, the majority renders the sheriff’s sale as arbitrary and capricious as a lottery, whereby those lucky enough to be in attendance may take advantage of the careless mistakes of others more interested in the property. Judge Sharp was entirely justified in finding a discrepancy which shocks the conscience. Therefore, I respectfully dissent.

. See abo Arnold v. Melvin R. Hall, Inc., 481 N.E.2d 409, 412 (Ind.App.1985) (noting that "[f]air market value is defined [ ] as 'the price at which property would change hands between a willing buyer and willing seller, neither being under any compulsion to consummate the sale' fair market value therefore of little rele-vanee in gauging adequacy of price at sheriffs sale), aff’d, 496 N.E.2d 63 (Ind.1986); Gilbert v. Lusk, 123 Ind.App. 167, 183, 106 N.E.2d 404, 413 (1952) (“a Sheriffs sale is a forced sale, and the test of inadequacy of price is not what the property is worth, but what it will bring at a fair Sheriffs sale”).

. See, e.g., Home Owners’Loan Corp. v. Braxtan, 220 Ind. 587, 591-93, 44 N.E.2d 989, 991-92 (1942) (sheriffs sale properly set aside where property sold for $1,025, but another bidder arrived later with $6,000 cash in hand); Fletcher v. McGill, 110 Ind. 395, 399, 10 N.E. 651, 653 (1887) (property valued at $7,000 sold for $900; "[t]hat the price ... was grossly inadequate admits of no discussion’’); cf. Ballentyne v. Smith, 205 U.S. 285, 27 S.Ct. 527, 51 L.Ed. 803 (1907) (setting aside sheriffs sale under pre-Erie "general common law,” where price realized at sale at least seven times below value, even though no indication that conduct of sale irregular).