Charles Sanders Homes, Inc. v. Cook

• Decision Date: 14 May 2020
• Docket Number: Case No. 115,458
• Parties: CHARLES SANDERS HOMES, INC., Plaintiff/Appellee, v. COOK & ASSOCIATES ENGINEERING, INC. and Justin Cook, Defendants/Appellants.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

465 P.3d 1278

CHARLES SANDERS HOMES, INC., Plaintiff/Appellee,

v.COOK & ASSOCIATES ENGINEERING, INC. and Justin Cook, Defendants/Appellants.

Case No. 115,458

Court of Civil Appeals of Oklahoma, Division No. 2.

FILED MAY 14, 2020

Mandate Issued: June 17, 2020

Scott R. Eudey, Melinda A. Aycock, ROSS & EUDEY, PLLP, Broken Arrow, Oklahoma, for Plaintiff/Appellee

Lawrence D. Taylor, Tulsa, Oklahoma, for Defendants/Appellants

OPINION BY JANE P. WISEMAN, PRESIDING JUDGE:

¶1 Cook & Associates Engineering, Inc., and Justin Cook appeal the denial of their motions to vacate certain deficiency orders in this mortgage foreclosure action.¹

The Cooks filed their motions pursuant to 12 O.S.2011 § 1031(3), arguing that the trial court's failure to use the property's appraised value, rather than the price paid at the sheriff's sale, for determining the fair market value of the property and the amount of their deficiency is an "irregularity" justifying vacation of the deficiency orders. We hold that using the price paid at the sheriff's sale as the property's fair market value to determine the amount of the Cooks' deficiency was improper, requiring us to vacate the orders and remand for further proceedings.

BACKGROUND

¶2 Charles Sanders Homes, Inc. (Homes) sold commercial property to Cook & Associates in 2006. In partial satisfaction of the purchase price, Cook & Associates and Justin Cook signed a promissory note secured by a real estate mortgage on the property. When the note was in default, Homes sued to collect the balance due and to foreclose its mortgage on February 12, 2012. Both Cook & Associates and Justin Cook were served with the petition on March 9, 2012, but chose not to defend the action. Believing that their equity in the property was in excess of $30,000, neither defendant appeared, "desiring instead for the case to proceed to judgment and sheriff's sale quickly and without unnecessary expense."

¶3 On May 17, 2012, Homes was granted a default judgment against both defendants in the amount of $279,769.78. Neither defendant appealed, and that judgment is final. See Funk v. Payne , 1938 OK 270, ¶ 2, 183 Okla. 332, 82 P.2d 976 (in order to assert errors in a judgment of foreclosure, it is necessary to appeal from that judgment); see also First Nat'l Bank of Tulsa v. Colonial Trust Co ., 1917 OK 360, ¶ 3, 66 Okla. 106, 167 P. 985 (a judgment of foreclosure is final if not appealed). The facts of Cook & Associates' and Justin Cook's liability to Homes and the amount of that liability, subject to credit for the fair market value of the property, have been determined and are not challenged in this appeal.

¶4 After entry of the May 2012 judgment, the property was ordered sold at sheriff's sale. Three appraisers, appointed as required by law, appraised the value of the property at $279,000. The Cooks did not appear at the sheriff's sale or submit a bid. The property was sold to Homes, the only bidder at the sheriff's sale, for $186,000, an amount equal to exactly two-thirds of the appraised value. The trial court's order confirming the sheriff's sale was filed on August 28, 2012, and not appealed. The Cooks have not challenged the order confirming the sheriff's sale in this appeal.

¶5 Pursuant to a motion for deficiency, the case was then set for hearing to determine the amount, if any, of the deficiency for which the Cooks would be liable. Neither defendant appeared at the hearing, and a default deficiency order against Cook & Associates was filed on October 30, 2012, in the amount of $93,769.78, the difference between the $186,000 sale price and the amount of Homes' judgment. A default deficiency order against Justin Cook for the same amount was filed on February 6, 2013. This appeal concerns the trial court's denial of subsequent motions filed by Cook & Associates and Justin Cook to vacate those deficiency orders.

STANDARD OF REVIEW

¶6 A motion to vacate a judgment "is addressed to the sound legal discretion of the trial court and the order made thereon will not be disturbed on appeal unless it clearly appears that the trial court has abused its discretion." Hassell v. Texaco, Inc ., 1962 OK 136, ¶ 14, 372 P.2d 233. An abuse of discretion standard of review includes examination of both fact and law issues and an "abuse occurs when the ruling being reviewed is based on an erroneous legal conclusion or there is no rational basis in the evidence for the decision." Tibbetts v. Sight 'n Sound Appliance Ctrs., Inc. , 2003 OK 72, ¶ 3, 77 P.3d 1042.

ANALYSIS

¶7 This is the Cooks' second appeal challenging the deficiency orders. In the first appeal, we addressed a motion to vacate the October 30, 2012 deficiency order that Cook & Associates filed on June 18, 2013. In its motion, filed pursuant to 12 O.S.2011 § 1031(3), Cook & Associates claimed there had been an "irregularity in obtaining a judgment or order." It argued that the irregularity resulted from the trial court's use of the $186,000 sheriff's sale price rather than the $279,000 appraised value in determining the amount of the deficiency Cook & Associates would be liable for after the sale. It asserted that the only evidence from which the trial court could have determined the "fair and reasonable market value" of the property, as required by 12 O.S.2011 § 686, was the appraised value reflected on the return filed by the appraisers. The trial court denied Cook & Associates' motion in a "minute order" filed on July 26, 2013. We dismissed Cook & Associates' appeal of that ruling for lack of a final appealable order. Charles Sanders Homes, Inc. v. Cook and Assocs. Eng'g, Inc. , 2016 OK CIV APP 45, ¶ 12, 376 P.3d 945.

¶8 On September 23, 2016, the trial court entered a "Journal Entry of Final Order" denying Cook & Associates' June 18, 2013 motion to vacate the October 30, 2012 deficiency order. Cook & Associates' petition in error in this appeal was timely filed to obtain appellate review of the September 2016 order.

¶9 On February 3, 2016, Justin Cook filed a motion to vacate the February 6, 2013 deficiency order. The trial court denied that motion in a "Journal Entry of Final Judgment" filed on September 23, 2016. Justin Cook's petition in error in this appeal was timely filed to obtain appellate review of that order.

¶10 In the first appeal involving these parties and their challenge to the deficiency orders, we also reviewed a motion to vacate filed by Cook & Associates and Justin Cook on September 11, 2013. That motion was directed at both the October 30, 2012 deficiency order against Cook & Associates and the February 6, 2013 deficiency order against Justin Cook. They cited 12 O.S.2011 § 1038 in their motion and claimed the deficiency orders were facially void because the notice of the deficiency hearings was constitutionally defective in that it did not state that a number other than the appraised value could be used as the fair market value of the property to determine the amount of their deficiency liability. The trial court denied that motion in a "Journal Entry of Final Order" filed on January 22, 2014. We held that the notice was not defective and affirmed the denial of the motion to vacate. "The district court's January 22, 2014 Final Order denying the Cooks' September 11, 2013 motion to vacate is affirmed." Charles Sanders Homes , 2016 OK CIV APP 45, ¶ 19, 376 P.3d 945.

¶11 In this second appeal, we address two different motions to vacate, Cook & Associates' June 18, 2013 motion to vacate the October 30, 2012 deficiency order and Justin Cook's February 3, 2016 motion to vacate the February 6, 2013 deficiency order. Both motions cite 12 O.S.2011 § 1031(3) as authority. Section 1031(3) provides that a judgment or final order may be vacated: "For mistake, neglect, or omission of the clerk or irregularity in obtaining a judgment or order." The Cooks assert that the "irregularity" in obtaining the judgment resulted from basing the amount of the deficiency on the price for which the property sold at the sheriff's sale rather than the appraised value of the property. In the first appeal, we did "not address the argument that the district court erred in using the sheriff's sale price rather than the appraised value of the property when determining the Cooks' deficiency liability." Charles Sanders Homes , 2016 OK CIV APP 45, ¶ 23, 376 P.3d 945. As a result, the current appeal is not barred by the settled-law-of-the-case doctrine. See Panama Processes, S.A. v. Cities Serv. Co. , 1990 OK 66, n. 27, 796 P.2d 276 (explaining that the " ‘settled-law-of-the-case’ doctrine operates to bar relitigation of issues that have been settled by an earlier appellate opinion in that case").

¶12 As distinguished from the claim preclusion doctrine, which bars relitigation of all claims that were or could have been raised, the settled-law-of-the-case doctrine "operates to bar relitigation of only those issues that have been settled by an appellate opinion." Mobbs v. City of Lehigh , 1982 OK 149, n. 5, 655 P.2d 547. "To properly apply the law of the case doctrine the appellate court in the second appeal must decide exactly what the first appellate decision determined expressly or impliedly." Tibbetts v. Sight 'n Sound Appliance Ctrs., Inc ., 2003 OK 72, ¶ 10, 77 P.3d 1042 (citing Shoemaker v. Estate of Freeman , 1998 OK 17, ¶ 15, 967 P.2d 871 ). As a result, successive motions to vacate would not be prohibited if they are filed within the time permitted by 12 O.S.2011 § 1038 and raise issues not previously decided by an appellate opinion. See Joe Walsh Adver., Inc. v. Phillips Tire & Supply Co. , 1972 OK 90, 498 P.2d 1391 (holding that a petition to vacate default judgment, relying on the same grounds as a previous motion to vacate, was barred by the doctrine of res judicata as ruling on prior motion was not timely appealed and became final adjudication of the issue); cf. Salyer v. Nat'l Trailer Convoy, Inc. , 1986 OK 70, 727 P.2d 1361 (regarding successive motions to vacate) and Yery v. Yery , 1981...