Amirfazli v. Vatacs Group Inc.Vatacs Group Inc. v. Amirfazli.
| Decision Date | 23 January 2012 |
| Docket Number | Nos. A11A1165,A11A1166.,s. A11A1165 |
| Citation | 311 Ga.App. 471,716 S.E.2d 523,11 FCDR 2516 |
| Parties | AMIRFAZLIv.VATACS GROUP, INC.VATACS Group, Inc.v.Amirfazli. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Amelia Terry Phillips, Atlanta, for appellant.
Stevens & Stevens, Ronald S. Stevens, Andrew M. Stevens, Atlanta, for appellee.McFADDEN, Judge.
These appeals arise out of a nonjudicial foreclosure sale under power. Mohammed Amirfazli (“the debtor”) sued VATACS Group, Inc. (“the secured creditor”) to set aside the foreclosure sale, alleging fraud, bad faith, and unjust enrichment. Both parties moved for summary judgment, and the trial court set aside the foreclosure after concluding that, as a matter of law, the sale did not comply with advertising requirements. It then held a bench trial regarding outstanding amounts owed by the debtor on the underlying promissory note. Based on the evidence presented, the trial court entered judgment for the secured creditor in the amount of $63,096.32.
In Case No. A11A1166, the secured creditor appeals from the trial court's summary judgment order setting aside the foreclosure sale. It argues that the sale was conducted fairly and complied with Georgia law. The debtor appeals in Case No. A11A1165, challenging the money judgment entered following the bench trial. He claims that the trial court erred in refusing to consider his fraud claim, improperly found him liable for property taxes and interest on those taxes, and erred in awarding the secured creditor interest on the promissory note. Because questions of fact remain regarding the fairness of the foreclosure sale, we agree that the trial court erred in setting aside the sale on summary judgment. Accordingly, we reverse the judgment in Case No. A11A1166. Moreover, because the final money judgment in Case No. A11A1165 was entered in reliance on the order setting aside the foreclosure, it must be vacated.
1. The debtor argues that we should dismiss the secured creditor's appeal for failure to comply with Court of Appeals Rule 25, which requires an appellant to support its claims of error with record citations. He notes that the secured creditor's brief contains record references, but that they do not correspond to the record in Case No. A11A1165. In its notice of appeal, however, the secured creditor clearly stated that it would submit a record appendix pursuant to Supreme Court Rule 67 and Court of Appeals Rule 17. The references in the secured creditor's brief are supported by that record appendix. Dismissal is not warranted.
2. Summary judgment is appropriate when no genuine issues of material fact remain and the movant is entitled to judgment as a matter of law. OCGA § 9–11–56(c). We review the grant of summary judgment de novo, construing the evidence and all reasonable inferences drawn from it in the light most favorable to the nonmovant. See Bassett v. Jasper Banking Co., 278 Ga.App. 698, 699, 629 S.E.2d 434 (2006).
Viewed in this manner, the record shows that in December 1992, the debtor purchased land in Gwinnett County with financing from First Capital Bank f/k/a Central Gwinnett Bank (“the bank”). As security, the debtor granted the bank a deed to secure debt in the property. The debtor refinanced the loan in February 1997, giving the bank a promissory note secured by the original deed to secure debt. His business partner guaranteed the indebtedness.
The debtor missed payments in March and April 1997, and the bank wrote him and his partner on April 17, 1997, informing them that they needed to pay the past due amounts. Payment, however, was not received. On May 6, 1997, the bank again wrote the partners, declaring the loan in default, accelerating the indebtedness, and demanding immediate payment within ten days. The letter included a Notice of Sale Under Power and indicated that absent payment, the property securing the note would be sold at an upcoming foreclosure sale.
The Notice, which identified the bank as the foreclosing party, ran in the Gwinnett Daily Post on May 9, May 16, May 23, and May 30, 1997. On May 19, 1997, in the midst of this advertising period, the bank sold and assigned the indebtedness to VATACS, the secured creditor that is a party to this appeal. An assignment document referencing the secured creditor and the security deed was filed with the clerk of the Gwinnett County Superior Court on May 30, 1997.
The secured creditor conducted the advertised foreclosure sale on June 3, 1997, bid on the property itself, and purchased it for $61,100. A few days later, the debtor sued the secured creditor to set aside the foreclosure, asserting that the sale was not conducted in good faith, was infected by fraud, and resulted in a price significantly lower than the property's fair market value. Apparently, however, no written order was entered in that case for five years, and the complaint was dismissed by operation of law. See OCGA § 9–2–60(b). The debtor filed the instant action within the six month renewal period following the dismissal. See OCGA §§ 9–2–60(c); 9–11–41(e).
The parties subsequently filed cross-motions for summary judgment. Addressing the foreclosure issue, the trial court determined that the foreclosure proceedings were fatally flawed because the two advertisements published after the assignment to the secured creditor listed the bank—rather than the secured creditor—as the foreclosing party. It thus set aside the foreclosure sale.
It is true that “[i]f a notice or advertisement of a foreclosure sale under power does not substantially meet the legal requirements, the sale should be set aside.” Williams v. South Central Farm Credit, 215 Ga.App. 740, 742(2), 452 S.E.2d 148 (1994). To void a sale, however, irregularities or errors in the advertisement must chill the price bid for the property. Id. “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.” Id.
The trial court found that the sale in this case was chilled as a matter of law because the May 23 and May 30 advertisements inaccurately identified the bank as the foreclosing party. To support this conclusion, it cited Cummings v. Anderson, 173 B.R. 959 (Bankr.N.D.Ga.1994), aff'd, 112 F.3d 1172 (11th Cir.1997), a bankruptcy court decision from the Northern District of Georgia. But Cummings is distinguishable on its facts, and we therefore decline to follow it. There, a creditor accelerated the indebtedness remaining on a promissory note following default and advertised the property for a foreclosure sale. On the day of the sale, the creditor assigned the indebtedness to a third individual, who conducted the sale and ultimately purchased the property.
The bankruptcy court in Cummings set aside the foreclosure sale, finding numerous problems with the proceedings. Among other things, it determined that the advertising for the sale was inadequate, given the last-minute assignment. As explained by the court, the foreclosure “was conducted by a party and an attorney who did not advertise for foreclosure and gave no notice to anyone prior to foreclosure.” Cummings, supra at 963. The court concluded that these circumstances chilled the bidding process by “effectively prevent[ing] the borrower, plaintiff, or anyone else, from reaching [the party conducting the sale], obtaining information concerning the foreclosure, or attending the foreclosure sale.” Id.
Relying on Cummings, the trial court determined that potential bidders were led to believe that the bank was the foreclosing lender in this case and thus “had no way to either contact [the secured creditor] about the impending foreclosure or appear at the [secured creditor's] foreclosure sale.” Unlike in Cummings, however, the evidence demonstrates that interested bidders and parties had notice of the secured creditor's involvement, despite the advertising error. The debtor testified that he and his partner knew about the assignment before the foreclosure sale. Moreover, the assignment document recorded in Gwinnett County on May 30, 1997, informed the public that the bank had transferred...
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