Brown Lakeland Props v. Renasant Bank

• Decision Date: 06 February 2018
• Docket Number: NO. 2016–CA–01448–COA,2016–CA–01448–COA
• Citation: 243 So.3d 784
• Parties: BROWN LAKELAND PROPERTIES and Charles H. Brown, Appellants v. RENASANT BANK, Appellee
• Court: Mississippi Court of Appeals

243 So.3d 784

BROWN LAKELAND PROPERTIES and Charles H. Brown, Appellants

v.RENASANT BANK, Appellee

NO. 2016–CA–01448–COA

Court of Appeals of Mississippi.

February 6, 2018

Rehearing Denied May 29, 2018

ATTORNEYS FOR APPELLANTS: PAMELA L. HANCOCKJEFFREY BRYAN MCGUIRE, Jackson

ATTORNEYS FOR APPELLEE: SCOTT R. HENDRIX L. BRADLEY DILLARD ROBERT BRANNON KAHLSTORF, Tupelo

BEFORE LEE, C.J., FAIR AND GREENLEE, JJ.

LEE, C.J., FOR THE COURT:

¶ 1. In this appeal we must decide whether the trial court properly granted summary judgment in favor of Renasant Bank, finding it was entitled to a deficiency judgment against Brown Lakeland Properties LLC (BLP) and Charles Brown (Brown). Finding no error, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2. In November 2012, BLP executed two commercial promissory notes to Renasant Bank for the loan amounts of $2,880,320.87 (Note One) and $906,786.40 (Note Two). Note One was secured by a 635–acre parcel of land in Yazoo County, Mississippi, and a 2.93–acre parcel of property in Brandon, Mississippi, on which a bowling alley sat. Note Two was secured by a 6.75–acre parcel of land on Old Fannin Road, also in Brandon, Mississippi. At the time the loans were made, Brown executed and delivered to Renasant Bank multiple continuing guaranties related to the notes, and in doing so, individually guaranteed to Renasant the indebtedness due on the notes. BLP defaulted on both loans, and Renasant foreclosed on the properties that had been pledged as security under the notes. Renasant purchased all three parcels at a public foreclosure sale.

¶ 3. In anticipation of the foreclosure sales, Renasant Bank obtained appraisals for all three parcels of land. The appraisals reported that the 2.93–acre, bowling-alley parcel had a market value of $1,500,000 and a disposition value (foreclosure or liquidation value) of $900,000; the 635–acre tract in Yazoo County had a market value of $1,240,000 and a disposition value of $930,000; and the 6.75–acre tract in Brandon had a market value of $1,475,000 and a disposition value of $885,000. In December 2014, at a public foreclosure sale, Renasant purchased the Rankin County properties—the 2.93–acre parcel for $778,100 and the 6.75–acre parcel for $780,000. Renasant purchased the Yazoo County 635–acre parcel for $900,000 at a public foreclosure sale in March 2015. BLP and Brown were given notice of the sales but did not attend either sale or bid on the properties.

¶ 4. In April 2015, Renasant sold the Yazoo County property to a third-party purchaser for an amount greater than that obtained at the foreclosure sale. Accordingly, Renasant applied the excess proceeds of $198,774.44—being the difference between the proceeds from the foreclosure sale and the proceeds from the third-party purchase—as a credit to the indebtedness owed under the notes. Likewise, in May 2015, Renasant sold the Rankin County properties to a third-party purchaser for an amount greater than that obtained at the foreclosure sale. Renasant also applied the excess proceeds from this sale, $228,501.59, as a credit to the indebtedness due under the notes.

¶ 5. After the collateral was liquidated and the excess proceeds from the third-party sales applied as credits to the notes, BLP and Brown remained indebted under the notes and continuing guaranties for the amount of $1,375,824.69. In July 2015, Renasant filed a complaint against BLP and Brown individually, seeking payment for the indebtedness due under the notes and continuing guaranties, as well as attorneys' fees and costs. In September 2015, BLP and Brown filed their answer, generally denying all of Renasant's claims and asserting all available defenses. BLP also filed a counterclaim, alleging that the foreclosure sales should be set aside for inadequate purchase prices, and that Renasant was negligent for failing to sell the properties in a commercially reasonable manner by failing to secure purchase prices that reflected the fair market values of the properties.

¶ 6. In May 2016, Renasant moved for summary judgment, asserting that it was entitled to relief under the terms of the notes and continuing guaranties due to the default of BLP. Renasant also moved for summary judgment with regard to BLP's counterclaim, asserting that there was no genuine issue of material fact regarding the commercial reasonableness of the sale. After a hearing on the motion, the trial court granted Renasant's motion for summary judgment, holding that BLP and Brown owed Renasant $1,416,722.86, which included legal fees, pre- and post-judgment interest, and costs. The trial court also dismissed BLP's counterclaim with prejudice. BLP and Brown now appeal and assert the following issues: 1) Renasant failed to demand the post-foreclosure deficiencies; 2) Renasant failed to establish that its bids represented the fair market value of the properties; and 3) the appraisals of the properties were deficient.

STANDARD OF REVIEW

¶ 7. This Court reviews a trial court's grant of summary judgment de novo. Donovan v. Burwell , 199 So.3d 725, 729 (¶ 10) (Miss. Ct. App. 2016) (citing Evans v. Howell , 121 So.3d 919, 922 (¶ 14) (Miss. Ct. App. 2013) ). Under Mississippi Rule of Civil Procedure 56(c), summary judgment should be granted to the party seeking it, "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." We review the evidence in the light most favorable to the nonmoving party. Donovan , 199 So.3d at 729 (¶ 10). However, the party opposing summary judgment "may not rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." M.R.C.P. 56(e). "If he does not so respond, summary judgment, if appropriate, shall be entered against him." Id.

DISCUSSION

I. Demand for Post–Foreclosure Deficiency

¶ 8. BLP and Brown argue that Renasant "failed to show as a matter of record that any demand for the post-foreclosure deficiencies was ever made," and that this alone should have precluded summary judgment. For support, BLP cites only one case, Gutierrez v. Gutierrez , 153 So.3d 703, 708 (¶ 13) (Miss. 2014), wherein the Mississippi Supreme Court stated, "The record does not contain evidence that demand has ever been made for the deficiency on the second mortgage, which is required under Mississippi law before a mortgagee can collect a post-foreclosure deficiency." However, we do not find that this isolated statement from Gutierrez is applicable to the instant case.

¶ 9. In Gutierrez , an appeal arising from a divorce action, the husband asserted that the chancellor erred in the calculation of assets and liabilities, resulting in an erroneous equitable distribution.

Id. at 707–08 (¶ 10). The parties'—husband and wife—marital home was subject to two mortgages. Id. at 708 (¶ 11). Before trial, the bank holding the first mortgage foreclosed, which covered the first mortgage, but there was a balance remaining on the second mortgage. Id. The chancellor assessed the balance on the second mortgage equally between the husband and wife as a liability, even though the wife had not signed the promissory note and the chancellor had, in his alimony analysis, listed the second mortgage as the debt of the husband. Id. at (¶¶ 11–12). The supreme court's statement that the second mortgagee must make demand was specifically in relation to the fact that the chancellor assigned part of the deficiency on the second mortgage as a liability to the wife without "address[ing] the parties' respective obligations in the event the second mortgagee did obtain a deficiency judgment," and the holder of the second mortgage had not yet evidenced any intention to collect on the remaining balance. Id. at (¶ 13). Gutierrez simply does not apply here. The instant case does not deal with a second mortgage, nor does it deal with a mortgagee who has not shown an intention to collect on the indebtedness owed to it.

¶ 10. Moreover, the record in the instant case supports that demand was made. In his sworn affidavit, Scott Williams, vice president and special-assets officer with Renasant Bank, stated that Renasant had made demand upon BLP as borrower and Brown individually as guarantor, to pay in full the principal and interest due and owing under the notes and guaranties. And finally, under the terms of the promissory note, BLP "waive[d] any required notice of ... demand" and, in the event of default, Renasant could "pursue any remedy available" under the loan documents, at law, or in equity. In a forbearance agreement executed to extend the maturity date of the loan, BLP and Brown acknowledged that the loan documents were valid and enforceable and that it had no defenses. BLP does not dispute that it defaulted, nor does it allege that the foreclosure was wrongful. This issue is without merit.

II. Fair Market Value

¶ 11. In its second issue on appeal, BLP argues that Renasant failed to establish that its bids at the foreclosure sales represented fair market value of the property because its bids were less than the appraised values.

¶ 12. "The creditor has no right to a deficiency judgment until he satisfies the court that it would be equitable, in the light of the sale price, to authorize a deficiency judgment." Hartman v. McInnis , 996 So.2d 704, 710 (¶ 21) (Miss. 2007) (quoting Wansley v. First Nat'l Bank , 566 So.2d 1218, 1225 (Miss. 1990) ). "Something more than a difference between the price paid at the foreclosure and the amount of the indebtedness must be demonstrated before the mortgagee is entitled to a deficiency judgment." Id. (quoting Wansley , 566 So.2d at 1224 ). "Where the foreclosing creditor buys at foreclosure, it must give the debtor fair credit for the commercially reasonable value of the...