Arsali v. Chase Home Fin. LLC

• Decision Date: 11 July 2013
• Docket Number: No. SC12–600.,SC12–600.
• Citation: Arsali v. Chase Home Fin. LLC, 121 So. 3d 511 (Fla. 2013)
• Parties: Nicholas ARSALI, Petitioner, v. CHASE HOME FINANCE LLC, et al., Respondents.
• Court: Florida Supreme Court

121 So.3d 511

Nicholas ARSALI, Petitioner,

v.CHASE HOME FINANCE LLC, et al., Respondents.

No. SC12–600.

Supreme Court of Florida.

July 11, 2013.

Beth M. Coleman, St. Petersburg, FL, for Petitioner.

Joseph D. Wargo and Ryan D. Watstein of Wargo & French, LLP, Atlanta, GA; and Marshall J. Osofsky of the Law Office of Paul A. Krasker, P.A., West Palm Beach, FL, for Respondents.

PERRY, J.

This case is before the Court for review of the decision of the Fourth District Court of Appeal in Arsali v. Chase Home Finance, LLC, 79 So.3d 845 (Fla. 4th DCA 2012). In its decision the district court posed the following question, which the court certified to be of great public importance:

DOES THE TEST SET FORTH IN ARLT V. BUCHANAN, 190 So.2d 575, 577 (Fla.1966), FOR VACATING A FORECLOSURE SALE APPLY WHEN ADEQUACY OF THE BID PRICE IS NOT AT ISSUE?

Id. at 849. We have jurisdiction. Seeart. V, § 3(b)(4), Fla. Const.

For the reasons we explain below, we approve the results of the decision on review insofar as it affirms the judgment of the trial court that vacated the judicial foreclosure sale and the certificate of sale issued by the clerk of the circuit court, and dismissed its final judgment of foreclosure in favor of Chase Home Finance, LLC (“Chase”). We further approve the Fourth District's decision to the extent it affirms the trial court's order for the return of all monies paid by the third-party purchaser in the ill-fated judicial foreclosure sale of the residential property at issue. However, we clarify that inadequacy of the bid price is not necessary to be alleged and proven when a litigant is seeking to set aside a judicial foreclosure sale.

BACKGROUND AND FACTS

On September 8, 2010, the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County entered a final summary judgment of foreclosure against Amy Wilson and Christopher D. Manning (“the borrowers”) regarding their shared residence. The trial court's judgment was for the sum of $86,979.93. The trial court scheduled a sale of said real property to take place on May 9, 2011. The borrowers neither moved for rehearing, nor appealed the trial court's final judgment.

However, nearly one month before the scheduled judicial foreclosure sale, Chase, the borrowers' mortgagee, authorized its foreclosure counsel to offer the borrowers an opportunity for the reinstatement of their mortgage, and dismissal of the foreclosure action. The offer was conditioned on the borrowers making a lump-sum payment of $12,018.98 no later than May 6, 2011, at 9:00 AM. On May 3, 2011, the borrowers sent a cashier's check for the full reinstatement amount to Chase's counsel by way of overnight mail. Chase's counsel received the borrower's cashier's check on May 4, 2011. However, Chase's counsel neglected to arrange for the cancelation of the foreclosure sale with the clerk of court, so the sale took place as scheduled. On May 9, 2011, the borrowers were not aware that the scheduled judicial sale of their residence had not been canceled. A third-party purchaser, Iron National Trust, LLC (“INT”), submitted the winning bid price of $125,300. In turn, INT assigned all of its apparent rights to the sold residential property to Nicholas Arsali.

After learning about the judicial sale of their residence, on May 13, 2011, the borrowers filed an objection to the judicial sale with the trial court, pursuant to section 45.031, Florida Statutes (2010). The borrowers' objection was in the form of a motion to vacate the judicial foreclosure sale and the certificate of sale based on their fulfillment of their reinstatement agreement with Chase. On May 24, 2011, Arsali moved the trial court for leave to intervene in the case, which was granted. On May 26, 2011, the trial court held a hearing on the borrowers' motion to vacate.

During the hearing on the borrowers' motion the trial court also considered evidence, including a copy of the reinstatement offer letter, the borrowers' cashier's check, and the overnight mail receipts. Immediately following the hearing the trial court granted the borrowers' motion to vacate the judicial foreclosure sale and the certificate of sale issued by the clerk of court. The trial court also ordered the clerk of court to return all funds paid by the third-party purchaser. The September 8, 2010, final judgment of foreclosure was also vacated, and the foreclosure case was dismissed. Arsali moved the trial court for rehearing, and for it to impose court sanctions on Chase's foreclosure counsel. The trial court denied Arsali's motions. Neither the parties nor intervenor Arsali alleges that there was anything unlawful about how the scheduled judicial foreclosure sale was conducted. Instead, the dispute surrounded the equities pertaining to the non-cancelation of the judicial foreclosure sale and its eventual vacation by the trial court.

Arsali appealed the trial court's judgments in the Fourth District, arguing that the trial court erred in vacating the judicial foreclosure sale and certificate of sale issued by the clerk of court. Arsali further argued that the borrowers failed to show that the winning bid price of $125,300 was grossly inadequate. In addition, Arsali asserted that the trial court erred by not holding an evidentiary hearing before setting aside the judicial foreclosure sale at issue.

The Fourth District, sitting en banc, affirmed the trial court's judgments in Arsali, 79 So.3d at 845. In its decision, the Fourth District explained that it was receding from its decision in Blue Star Investments, Inc. v. Johnson, 801 So.2d 218 (Fla. 4th DCA 2001), to the extent it requires that inadequacy of price be applied to every attempt to set aside a foreclosure sale. The Fourth District correctly concluded that the requirement it adopted in Blue Star is contrary to the proposition set forth in Moran–Alleen Co. v. Brown, 98 Fla. 203, 123 So. 561 (1929). See Arsali, 79 So.3d at 847–48. The Fourth District further explained that it agreed with the Second District's decision in Ingorvaia v. Horton, 816 So.2d 1256 (Fla. 2d DCA 2002), which established two tests that should be applied in judicial foreclosure sale set aside actions: (1) Brown should be applied when grounds other than inadequacy of bid price are at issue; and (2) Arlt v. Buchanan, 190 So.2d 575 (Fla.1966), should be applied when the inadequacy of the bid is at issue. See Arsali, 79 So.3d at 848–49.

Arsali filed a timely notice to invoke this Court's jurisdiction for discretionary review. We granted review, considered the parties' briefs, and held oral argument in this case.

ANALYSIS

The certified question of great public importance asked by the Fourth District is based on its conclusion that this Court's decisions in Brown and Arlt are in conflict. See Arsali, 79 So.3d at 849 (“We agree with the second district that Brown can be read to conflict with Arlt, in that Brown states ‘that gross inadequacy of price alone is a sufficient ground to set aside a foreclosure sale whereas Arlt requires that other grounds must also be proven.’ ”). We address the premise from which the certified question springs by first stating our disagreement with the Fourth District's conclusion that a conflict exists between Brown and Arlt. Regarding a certified question of great public importance, this Court undertakes de novo review of questions that present a pure question of law. See Boatman v. State, 77 So.3d 1242, 1247 (Fla.2011); Insko v. State, 969 So.2d 992, 997 (Fla.2007). Therefore, under our de novo review of the pure legal issue raised by the certified question of great public importance, we rephrase it as follows:

DOES INADEQUATE BID PRICE NEED TO BE ALLEGED AND PROVEN IN ORDER TO SET ASIDE A JUDICIAL FORECLOSURE SALE?

We answer our rephrased question in the negative.

I. No Conflict Exists between this Court's Brown and Arlt Decisions

Our respective decisions in Brown and Arlt provide guidance about why the trial courts' broad discretion to weigh the equities that were presented in those cases should have been upheld. Thus, as discussed below, our Brown and Arlt decisions are in harmony, even though the Fourth District (i.e., Arsali ), Second District (i.e., Ingorvaia ), and the Fifth District (i.e., Josecite v. Wachovia Mortgage Corp., 97 So.3d 265 (Fla. 5th DCA 2012)) read them as conflicting decisions.

In Brown, this Court heard an appeal from mortgagors who sought to vacate a judicial sale on grounds of “gross inadequacy of consideration, surprise and fraud imposed on complainants, irregularity in the conduct of the sale, and the admission of irrelevant and incompetent testimony.” Brown, 123 So. at 561. However, the trial court denied their motion to set aside the sale, and dismissed the action. Id. This Court determined that the judgment below was based on competent, substantial evidence and affirmed it. Id. In Brown we plainly acknowledged our decisions in judicial foreclosure sale actions dating back to the turn of the twentieth century in this state. Id. We noted:

On the question of gross inadequacy of consideration, surprise, accident, or mistake imposed on complainant, and irregularity in the conduct of the sale, this court is committed to the doctrine that a judicial sale may on a proper showing made, be vacated and set aside on any or all of these grounds.

Id. Thus, we conclude that the Second, Fourth, and Fifth Districts have misread our Brown decision as establishing the basis for a test that should be applied when grounds other than inadequacy of bid price is at issue.

According to the district courts, Brown established the basis for a test that should be applied in judicial foreclosure sale cases when the adequacy of a bid price is not at issue. See Josecite, 97 So.3d at 266–67;Arsali, 79 So.3d at 848–49;Ingorvaia, 816 So.2d at 1257–58. In addition, the district courts assert Brown established that there are certain indispensable equitable factors that must be alleged and proven in...