Cmty. 1st Credit Union v. Hart
| Decision Date | 02 November 2022 |
| Docket Number | 21-0555 |
| Parties | COMMUNITY 1ST CREDIT UNION, Plaintiff-Appellee, v. JONATHAN L. HART, Defendant-Appellant, and ASHLEY R. HART, KEVIN SMITH, KEVIN SMITH EXCAVATING, L.L.C., DAVE SMITH, ELECTRICAL ENGINEERING AND EQUIPMENT COMPANY, LOCKRIDGE, INC., VAN METER, INC., KATHERINE LUTON, CATERPILLAR FINANCIAL SERVICES CORPORATION, AGRILAND FS, INC., CANTRIL FEED & GRAIN, LLC, HBF HAYCO, LLC, FARM CREDIT SERVICES OF AMERICA, PCA, SEBOLT CONSTRUCTION LLC, ONDECK CAPITAL INC., JANET WILLIER, C. SCOTT SEBOLT, HELEN STEVENS, JOHN HUEBNER, BRYCE RIESSEN, GEORGE REYNOLDS, RICHARD REYNOLDS, and PARTIES IN POSSESSION, Defendants. |
| Court | Iowa Court of Appeals |
Appeal from the Iowa District Court for Appanoose County, Myron L Gookin, Judge.
Jonathan Hart appeals from the district court order rejecting his request to set aside the sheriff's sale in a foreclosure action.
Jonathan L. Hart, Centerville, self-represented appellant.
Gayla R. Harrison of Harrison, Moreland, Webber &Simplot, P.C. Ottumwa, for appellee.
Considered by Tabor, P.J., Badding, J., and Vogel, S.J. [*]
In February 2019, Community 1st Credit Union (Community 1st) filed a petition to foreclose its mortgages and seek in rem judgment against the various mortgaged properties. The petition named Jonathan Hart and Ashley Hart[1] as mortgagors who allegedly defaulted on multiple promissory notes to Community 1st. It also named several other persons and entities as potential inferior lien holders on the mortgaged real estate. The district court granted default judgment against Hart, and in July the court entered a foreclosure decree. On September 26, Community 1st purchased the real estate at a sheriff's sale for a bid of $1,600,000. In January 2020, Hart filed for bankruptcy. In February 2021, the bankruptcy court granted partial relief from the automatic stay, "to permit the Iowa District Court in Appanoose County to address . . . the effect of the sheriff's deed not being issued to date." With limited exceptions, Hart remained under the protection of the bankruptcy court's stay through the time of this appeal.
On February 12, 2021, Hart filed a motion asserting the sheriff's sale was defective because no sheriff's deed had been recorded as required by statute. Community 1st acknowledged a sheriff's deed had not yet been recorded, but it asserted no deed could be recorded because the sheriff had yet to issue a deed. At a hearing on the motion, Hart's attorney clarified his requested relief: The district court rejected Hart's motion, finding, "Hart suffers no harm by the delay in recording the sheriff's deed" and such did not warrant setting aside the sheriff's sale. It then instructed the sheriff to deliver the deed to Community 1st. Hart appeals.
We generally review foreclosure proceedings de novo. Compeer Fin. Servs., FLCA v. Braaksma, 966 N.W.2d 297, 301 (Iowa Ct. App. 2021). However, when a foreclosure proceeding involves the interpretation of a statute, "[w]e review questions of statutory interpretation for correction of errors at law." Mlady v. Dougan, 967 N.W.2d 328, 332 (Iowa 2021) (quoting Standard Water Control Sys., Inc. v. Jones, 938 N.W.2d 651, 656 (Iowa 2020)). Statutory interpretation "begins with the language of the statute" in order "to determine the ordinary and fair meaning of the statutory language at issue." Doe v. State, 943 N.W.2d 608, 610 (Iowa 2020).
Hart argues the sheriff's sale violates Iowa Code section 654.16A (2019). Section 654.16A, titled "Right of first refusal following recording of sheriff's deed to agricultural land," states:
1. Not later than the time a sheriff's deed to agricultural land used for farming . . . is recorded, the grantee[2] recording the sheriff's deed shall notify the mortgagor of the mortgagor's right of first refusal. The grantee shall record the sheriff's deed within one year and sixty days from the date of the sheriff's sale.
(Emphasis added.) The right of first refusal gives the mortgagor ten days from notice of a sale of the mortgaged property to match the terms and price of the sale. See Iowa Code § 654.16A(4).
Community 1st does not dispute that section 654.16A applies here and that no sheriff's deed was recorded within one year and sixty days of the sale. However, Community 1st asserts the Iowa Code does not provide statutory authority to set aside a sale for failure to timely file a sheriff's deed, and Hart points to no such authority. We thus turn to our general rule on execution sales: S. Ottumwa Sav. Bank v. Sedore, 394 N.W.2d 349, 351 (Iowa 1986).
Hart does not assert fraud or collusion, and he claims little in the way of prejudice from the failure to timely record a sheriff's deed. The plain language of section 654.16A(1) shows the statute's purpose is to ensure the mortgagor is notified "of the mortgagor's right of first refusal." Hart's property is still under the bankruptcy stay, and therefore Community 1st has not attempted to sell the realty; thus, Hart has had no opportunity to exercise his right of first refusal. As the district court noted, Hart is still entitled to notice and exercise of...
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