Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

U.S. Bank National Association v. Courtyards University of Kentucky, LLC

Court of Appeals of Kentucky

November 15, 2019

U.S. BANK NATIONAL ASSOCIATION (AS SUCCESSOR-IN-INTEREST TO BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO LASALLE BANK NATIONAL ASSOCIATION), AS TRUSTEE, IN TRUST FOR THE REGISTERED HOLDERS OF BANC OF AMERICA MERRILL LYNCH COMMERCIAL MORTGAGE INC., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES 2007-1 APPELLANT
v.
COURTYARDS UNIVERSITY OF KENTUCKY, LLC; AND IB NEW VENTURES, LLC APPELLEES

          APPEAL FROM FAYETTE CIRCUIT COURT HONORABLE ERNESTO M. SCORSONE, JUDGE ACTION NO. 17-CI-01000

          BRIEFS FOR APPELLANT: Griffin Terry Sumner Louisville, Kentucky

          BRIEF FOR APPELLEE IB NEW VENTURES, LLC: Anne A. Chesnut P. Branden Gross Lexington, Kentucky

          BEFORE: CLAYTON, CHIEF JUDGE; JONES AND LAMBERT, JUDGES.

          OPINION

          CLAYTON, CHIEF JUDGE.

         U.S. Bank National Association (USBNA)[1] appeals from a Fayette Circuit Court judgment[2] confirming the judicial sale of property following a mortgage foreclosure.

         On March 17, 2017, USBNA initiated a foreclosure action on a student housing complex located in Lexington. USBNA held a mortgage loan on the property of $16.875 million. The circuit court appointed a receiver and on March 7, 2018, it entered an order foreclosing on the property. The order set an initial date of April 9, 2018, for the judicial sale of the property by the Master Commissioner.

         As provided under the terms of the foreclosure order, USBNA canceled the date and moved the Master Commissioner to reschedule the sale, tendering a proposed order to be filled in with the new date. The Master Commissioner rescheduled the sale to June 11, 2018. USBNA's law firm received the order indicating the new date and placed the order in a file, but inadvertently failed to notify USBNA's counsel or to send the order to USBNA.

         The upcoming sale was publicly noticed and duly advertised. It was well-attended with standing room only. The Master Commissioner opened the bidding on the property at $9.666 million, two-thirds of the appraised value of $14.5 million. A representative of IB New Ventures, LLC, bid the full amount. As there were no other bids on the property, IB New Ventures was declared the highest bidder and the auction closed.

         Approximately one hour later, USBNA learned of the sale and immediately contacted the Master Commissioner's office in an unsuccessful attempt to stop the bid from being accepted. USBNA thereafter filed a motion for relief and objections to the Master Commissioner's report of sale and an affidavit from its counsel explaining the clerical error and how USBNA could not possibly have known of the sale. Following a hearing, the circuit court denied the motion for relief and objections. IB New Ventures filed a motion to confirm the amended report of sale and to cause delivery of the deed. USBNA objected and the circuit court held another hearing at which it orally granted IB New Ventures' motion to confirm. The circuit court entered an order confirming the amended report of sale, payment and distribution of proceeds, and delivery of deed. The deed was transferred to IB New Ventures. USBNA posted a supersedeas bond but because the deed had already been transferred it ultimately acquiesced to the bond being released by the circuit court. This appeal by USBNA followed.

         USBNA argues the circuit court abused its discretion in failing to set aside the judicial sale because the sale price of $9.666 million was grossly inadequate and USBNA was unfairly surprised by the sale. It contends the Master Commissioner and circuit court unfairly prioritized the purported rights of a mere bidder over USBNA, the secured creditor.

         "Whatever the value of the property, it has long been the rule in this jurisdiction that mere inadequacy of price is an insufficient ground for setting aside a judicial sale." Sterling Grace Mun. Securities Corp. v. Central Bank & Trust Co., 926 S.W.2d 670, 673 (Ky. App. 1995), as modified on denial of reh'g (Mar. 1, 1996) (citations omitted). "For an inadequate price to require reversal for a new sale, the amount brought in the original sale must be so grossly inadequate as to 'shock the conscience' of the circuit court or raise the presumption of fraud." Id. (citation omitted). On the other hand, "where the inadequacy is accompanied by circumstances, though only slight and insufficient in themselves, which tend to cause it, or where it is attended by apparent unfairness or impropriety or oppression on the part of those connected with the sale, the sale ought to be and will be set aside." Gross v. Gross, 350 S.W.2d 470, 471 (Ky. 1961) (citation omitted).

         The reluctance to overturn judicial sales furthers the salutary policy of engendering and maintaining confidence in the stability of such sales. Id. "If a judicial sale is to be set aside upon slight grounds and a resale ordered upon a promise of an increase in the purchase price, judicial sales would become so unstable as practically to put a premium upon the bad faith of bidders, and take from the purchaser his right under the law of having a reasonably speedy determination of his case." Jones v. Deposit & People's Bank, 180 Ky. 395, 202 S.W. 907, 910 (1918).

         The circuit court's decision to confirm or vacate a judicial sale is reviewed for an abuse of discretion. Lerner v. Mortgage Electronic Registration Systems, Inc., 423 S.W.3d 772, 773 (Ky. App. 2014). The test for abuse of discretion is whether the trial court's decision was "arbitrary, unreasonable, unfair, or unsupported by sound legal principles." Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999) (citations omitted). A sale "ought not to be lightly disapproved where it was conducted in a ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.