People's United Bank v. Alana Provencale, Inc.

• Citation: 2018 VT 46
• Decision Date: 27 April 2018
• Docket Number: No. 2017-250,2017-250
• Court: United States State Supreme Court of Vermont
• Parties: People's United Bank, NA v. Alana Provencale, Inc., et al. (R.E.E. & C. Capital Management Services, Inc., Appellant)

2018 VT 46

People's United Bank, NA v. Alana Provencale, Inc., et al. (R.E.E. & C. Capital Management Services, Inc., Appellant)

No. 2017-250

Supreme Court of Vermont

December Term, 2017

April 27, 2018

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

On Appeal from Superior Court, Bennington Unit, Civil Division

William D. Cohen, J.

John A. Serafino and Elizabeth A. Glynn of Ryan Smith & Carbine, LTD., Rutland, for Plaintiff-Appellee.

Merrill E. Bent of Woolmington, Campbell, Bernal & Bent, P.C., Manchester Center, for Interested Party-Appellant.

PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

¶ 1. CARROLL, J. R.E.E. & C. Capital Management Services, Inc. (buyer) appeals a trial court order granting People's United Bank's motion to compel buyer to complete the purchase of a foreclosed property. Buyer raises three arguments: first, that it is not a party to the foreclosure sale, and the court therefore lacked jurisdiction to compel it to purchase the property; second, that the trial court erred in declining to apply the statutory remedy; and, third, that the trial court erred in ordering specific performance because an adequate remedy at law exists. We reverse and remand for proceedings consistent with this opinion.

¶ 2. This case arises from the foreclosure sale of a commercial property located in Manchester, Vermont. Prior to this dispute, the Bank issued loans to mortgagors and secured these loans with a mortgage on the property. Mortgagors were unable to repay the loan and eventually defaulted on the obligation to the Bank. The Bank then sought a judgment of foreclosure on the property and an order of public sale. The foreclosure proceeded without opposition or controversy and in September 2016, the court issued a judgment and decree of foreclosure by judicial sale.

¶ 3. The foreclosure judgment ordered that the property "shall be sold as a whole, to the highest bidder at public sale." The property was subsequently auctioned in November 2016. During the auction, seven registered bidders lodged twenty-eight bids on the property. Buyer placed the highest bid, which was one thousand dollars above the runner-up's highest bid. Buyer made the required deposit and signed an auction purchase and sale agreement. This buyer's agreement documents buyer's obligation to purchase the property, subject to the trial court's confirmation of the sale. The buyer's agreement also recognized the Bank's right, pursuant to 12 V.S.A. § 4954(e), to request relief from the court in the event buyer failed to pay the balance of the purchase price.

¶ 4. The Bank filed a motion for confirmation of the sale to buyer and provided all of the relevant reports to the court and to buyer. The trial court granted the Bank's motion and confirmed the sale in December 2016. The confirmation order names buyer and states that "the sale reported is hereby confirmed and title to the lands and premises shall be transferred to R.E.E. & C. Capital Management Services, Inc." This order, as well as the auctioneer's report of sale, refers to buyer by name and indicates buyer as the high bidder at the public sale. The confirmation order also listed the property's sale price and confirmed buyer's obligation to purchase the property.

¶ 5. On the day the court issued the confirmation order, the Bank's attorney sent the confirmation order to buyer's attorney; the two parties agreed to close on the property on February10, 2017. On February 8, 2017, two days before the scheduled closing, buyer wrote to the Bank, stating that "[i]t is with much regret that I need to inform you that I am not able to follow through with this transaction at this time." Buyer further stated that his "current investment group [had] decided that even at [the sale] price it [was] too risky to proceed with a new endeavor at this time." Thus, no closing occurred.

¶ 6. The Bank then filed a motion with the trial court requesting that it enforce the confirmation order and arguing that, as the high bidder, buyer subjected itself to the court's jurisdiction and undertook an obligation to the court to purchase the property. Specifically, the Bank argued that specific performance was the appropriate remedy and that, therefore, the court should act in equity to compel buyer to close on the property. The Bank did not request forfeiture of the deposit or that the confirmation order be vacated. Buyer did not dispute that it defaulted on its obligation to purchase the property pursuant to the parties' purchase agreement but otherwise opposed the Bank's motion. In opposition, buyer argued that since it was not a party to the underlying foreclosure action, the court lacked jurisdiction over buyer, and therefore the court could not order buyer to close on the sale of the foreclosed property. Buyer also argued that the statute dictated an exclusive remedy—that the court could only order buyer to forfeit its deposit and vacate the confirmation order, and because the statute provided for an exclusive remedy, the court was barred from ordering the common law remedy of specific performance.

¶ 7. The court heard oral argument on the motion to enforce, but no evidence was offered at the hearing. The court granted the motion to enforce, finding first that by bidding at a judicial sale, a bidder, such as buyer, subjects itself to the court's oversight, becoming a "quasi-party." The court then concluded that it could issue orders as to the high bidder in furtherance of its statutorily mandated judicial obligation to oversee the foreclosure process. With respect to the Bank's right, pursuant to the foreclosure statute, to ask the court to order forfeiture of the deposit and to vacate the confirmation order, the court concluded that those were not the Bank's exclusiveand mandatory remedies. The court determined that the mandatory language in the relevant statutory provision requires the court to order this remedy only when a bank chooses that option. Ultimately, the court concluded that specific performance was a permissible and appropriate remedy and ordered buyer to close on the property. Buyer appealed.¹

¶ 8. "[A] decree for specific performance of a contract is not a matter of right and rests in the sound discretion of the court." Davis v. Hodgdon, 133 Vt. 49, 53, 329 A.2d 669, 672 (1974). We review a trial court's discretionary rulings for abuse of discretion, and we will find an abuse of discretion only upon "a showing that the trial court has withheld its discretion entirely or that it was exercised for clearly untenable reasons or to a clearly untenable extent." Quenneville v. Buttolph, 2003 VT 82, ¶ 11, 175 Vt. 444, 833 A.2d 1263 (quotation omitted). Our interpretation of a statute, as a question of law, is de novo. State v. Therrien, 2011 VT 120, ¶ 9, 191 Vt. 24, 38 A.3d 1129. "When construing a statute, our paramount goal is to effectuate the intent of the Legislature." State v. Thompson, 174 Vt. 172, 174, 807 A.2d 454, 458 (2002). Our review begins with a statute's plain language—if that language conveys the Legislature's intent clearly, we need go no further. Id. at 174-75, 807 A.2d at 458.

¶ 9. We begin with buyer's argument that the court lacked authority to compel it to act because buyer was not a party to the underlying foreclosure action. We disagree and hold that a high bidder's successful bid in a judicial sale, and the court's subsequent confirmation of the foreclosure sale pursuant to 12 V.S.A. § 4954(a), renders a buyer a limited party such that the court is authorized to issue orders directing the buyer's action relative to the property's purchase. Section 4954 of Title 12 vests in the superior court the authority and discretion to confirm the sale of a property foreclosed by judicial sale. See HSBC Bank USA v. McAllister, 2018 VT 9, ¶ 7, ___ Vt. ___, ___ A.3d ___. The buyer of a foreclosed property thus comes within the superior court'sjurisdiction in the court's order confirming the sale of the property, such that "[t]he order of the court confirming the sale shall be conclusive evidence as against all persons that the foreclosure and sale were conducted in accordance with" statutory requirements. 12 V.S.A. § 4954(a). The civil division of the superior court has "exclusive jurisdiction to hear and dispose of any requests to modify or enforce orders in civil cases previously issued by" the court. 4 V.S.A. § 31(4). Therefore, the superior court has continuing jurisdiction regarding the court's own confirmation of the sale of a foreclosed property as to the parties to the sale, including the buyer of the foreclosed property, and is authorized to issue orders concerned with the transfer of the property between the two parties.

¶ 10. Our conclusion here echoes the trial court's conclusion on this issue with one exception—the trial court characterized buyer as a "quasi-party." In this context, "limited party" is a more appropriate designation. "Quasi" lends its usefulness to many situations where it is meant as "having some resemblance to," "seemingly," or "apparently." Webster's New International Dictionary 2035 (2d ed. 1961). Here, a more concrete and actual relationship exists that deserves a designation fitting to reality—that the party is subject to the authority of the court, but only for a limited purpose.²

¶ 11. We now turn to buyer's primary argument, that the trial court erred in ordering specific performance because the court was required to apply an exclusive statutory remedy, and, moreover, the buyer's agreement required the same remedy. First, we disagree with buyer that the Bank was limited to the remedy...