Halifax Fin. Grp., L.P. v. Lawson
Decision Date | 08 August 2014 |
Docket Number | NO. 2013-CA-001114-MR,2013-CA-001114-MR |
Parties | HALIFAX FINANCIAL GROUP, L.P. APPELLANT v. KELLY LAWSON; ROBERT HARRIS; PAULA HARRIS; COMMONWEALTH OF KENTUCKY, COUNTY OF WOLFE APPELLEES |
Court | Kentucky Court of Appeals |
NOT TO BE PUBLISHED
APPEAL FROM WOLFE CIRCUIT COURT
Halifax Financial Group, L.P. appeals the trial court's bench order which set aside a court-ordered sale on the basis that the assessed value of the property was insufficient to reflect the true value of the property.On appeal, Halifax argues that the court erred when it sua sponte concluded that the appraised value was insufficient to reflect the true value of the property and setaside the judicial sale.After a thorough review of the parties' arguments, the record, and the applicable law, we believe that remand is necessary for an evidentiary hearing on the irregularity of the proceedings.Accordingly, we reverse and remand this matter for an evidentiary hearing.
Kelly Lawson was the owner of land in Wolfe County, Kentucky.In 2001, he executed an oil and gas lease.1In 2004, Lawson deeded the real estate to attorney Barbara Anderson for payment of legal fees.The land deeded was comprised of two tracts.2The real estate was subsequently sold to Appellees, Robert and Paula Harris.Central Bank loaned money to the Harrises to purchase the real estate.3The title search attorney for Central Bank found several royalty tax obligations which had not been paid by Lawson pursuant to an oil lease but failed to discover the tax owed for 2001.
In March of 2009, Halifax purchased a Certificate of Delinquency on a mineral interest located in Wolfe County, Kentucky.This certificate was for 2001 delinquent taxes, with the named taxpayer being Kelly Lawson.The amount due for the taxes was $104.52.Halifax paid $250.36 for the certificate of delinquency.Halifax filed a complaint in foreclosure against Lawson inSeptember 2011.After obtaining discovery from the Kentucky Department of Revenue, Halifax learned that the current owners of the mineral interest were the Harrises.Halifax filed an amended complaint on February 15, 2012, which added the Harrises as defendants.The Harrises filed an answer stating that there was no valid foreclosure lien and denied all claims except the allegation that tax on royalties for the year 2001 had not been paid.
On April 2, 2012, Halifax filed a motion for judgment and order of sale.It was noticed to be heard on April 19, 2012.The motion was passed.4A renewed motion for judgment and order of sale was made and on August 23, 2013, the court heard Halifax's counsel.The Harrises did not respond to the motion or attend the hearing.Counsel for the Harrises asserts that they were not provided notice of the hearing or served the judgment as reflected in the record, to which Halifax disagrees.Additionally, counsel for the Harrises argues that neither counsel nor the Harrises were served with the order referring the case to the Master Commissioner, the appraisal notice of sale or the Master Commissioner Report of Sale.The court entered a default judgment against Lawson, granted summary judgment against the Harrises and ordered the sale of "all undivided gas and oil mineral rights and royalty interests formerly owned by Kelly Lawson and now owned by Robert Harris and Paula Harris in the lands covered by the Booth Rdg Unit-South Lease, Lease #4813550268, formerly Lease # 7333550262, in Wolfe County, Kentucky."
Thereafter, the oil and mineral rights and royalty interests were sold at a judicial sale conducted at the courthouse.The appraised value was approximately $11,239.00.Halifax purchased this property interest for approximately$7,500.00.The Harrises claim that the first notice they received of the action was when they received the notice that objections to the sale must be made within ten days.The Harrises filed objections to the report of the sale.The parties then filed multiple responses.Included therein were the assessment values of the oil and mineral rights from 2006-2012 from $28,781.00 to $46,748.00.5
The court heard counsels' arguments and on April 19, 2013, set aside the sale citing that the assessed value was too low.Halifax argues that the court improperly reconsidered the assessed value and entered an order setting aside the judicial sale sua sponte and, accordingly, they appeal this order.
On appeal6 Halifax argues (1)the trial court erred when it set aside the judicial sale and (2)the court had no basis under the law for doing so.The Harrises argue (1)the court did not err when it set aside the judicial sale pursuant to exceptions filed by the Harrises;7(2)the court was entitled to set aside the judicial sale when the appraisal was so low as to be unconscionable and when the foreclosure sale was performed pursuant to the wrong statute.8
Gross v. Gross, 350 S.W.2d 470, 471(Ky.1961).With this in mind we turn to the dispositive issue on appeal, whether the court erred in setting aside the sale citing that the assessed value was insufficient to reflect the true value of the property.
It has long been held:
[M]ere inadequacy in price, standing alone, is not a sufficient ground for the setting aside of a sale, unless the inadequacy is so great as to create a presumption of fraud or shock the conscience of the court, but when the inadequacy is accompanied by circumstances which would tend to cause the inadequacy, or where the inadequacy is attended by any apparent unfairness or impropriety or oppression on the part of those connected with the sale, the sale will be set aside, though such circumstances are slight, and, by themselves, do not furnish a sufficient reason for vacating the sale.
Morton v. Wade, 175 Ky. 564, 194 S.W. 802, 804(1917).
We believe that this matter should be remanded to the trial court for an evidentiary hearing as there have been issues raised challenging the sufficiency of notice and service upon which the court, in its sound discretion, may take into consideration along with the alleged inadequate valuation in determining whether to set aside the sale.9,10
Moreover, "When a party whose redemption rights are at stake believes the appraisal of his property is inadequate in any way, he is entitled to an evidentiary hearing to determine whether the appraisal was "irregular, fraudulent, or so erroneous as to be unconscionable[.]"Eagle Cliff Resort, LLC v. KHBBJB, LLC, 295 S.W.3d 850, 852-53(Ky. App.2009), citingBurchett v. Bank Josephine, 474 S.W.2d 66, 68(Ky.1971).11Upon remand, after the evidentiary hearing, thecourt may well determine that the appraisal had been irregular, fraudulent, or so erroneous as to be unconscionable; thus, the trial court should then determine the true value of the property as of the date of the appraisal.12SeeBurchettat 68.
In light of the aforementioned, we reverse and remand this matter for an evidentiary hearing.
Barbara Anderson
1.The Harrises argue that the deed reserved the Lawson conveyance of an oil and gas lease owned by Hooker Investments LTD., d/b/a Ravenna Oil Company.On remand, the court will need to determine if this entity was a necessary party to the action.
2.On remand, the court will have the opportunity to assess whether the correct tract was involved in the lease.We remind the Harrises that the real property was not ordered to be sold; the sale was only of the gas and mineral rights.
3.It appears that the attorney for the Appellees believed that Central Bank had a mortgage on the property and had not been notified of the action.It was later learned that the mortgage on the property had been released in 2007, prior to Halifax's purchase of the Certificate of Delinquency.
4.Both parties allege various improprieties against the other concerning the motion hearings.On remand, the trial court will be able to address these concerns.Moreover, the court can entertain the arguments concerning whether Halifax provided the Harrises with the payoff amount.
5.We believe that these assessments were for tax purposes.
6.We note the slightly confusing positions taken by the parties on this appeal.Halifax argues that the proper recourse for the Harrises was to appeal the order of sale and not through a bill of exceptions to a subsequent report of the sale.We note that the Harrises have not appealed.We agree with Halifax that an order of sale may be considered final and appealable.SeeSecurity Federal Savings & Loan Association of...
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