Principal Residential Mortg., Inc. v. Nash, 990132.

• Citation: 606 N.W.2d 120,2000 ND 21
• Decision Date: 22 February 2000
• Docket Number: No. 990132.,990132.
• Parties: PRINCIPAL RESIDENTIAL MORTGAGE, INC., Plaintiff and Appellee, v. Zann NASH, Defendant and Appellant, Montgomery Ward Credit and A.R. Audit Services, Inc., Defendants.
• Court: United States State Supreme Court of North Dakota

606 N.W.2d 120

2000 ND 21

PRINCIPAL RESIDENTIAL MORTGAGE, INC., Plaintiff and Appellee, v. Zann NASH, Defendant and Appellant, Montgomery Ward Credit and A.R. Audit Services, Inc., Defendants.

No. 990132.

Supreme Court of North Dakota.

February 22, 2000.

Glen R. Bruhschwein of Mackoff, Kellogg, Kirby & Kloster, PC, Dickinson, for plaintiff and appellee.

John J. Gosbee, Mandan, for defendant and appellant. SANDSTROM, Justice.

[¶ 1] Zann Nash appeals from an order denying her motion to vacate a foreclosure sale and for other relief. We vacate the order confirming the sale and remand for further proceedings.

I

[¶ 2] On April 16, 1996, Principal Residential Mortgage, Inc., ("PRM") began an action to foreclose its mortgage on Nash's home. Nash fully participated in the foreclosure action. On March 11, 1997, a judgment was entered foreclosing the mortgage and directing the property be sold at public auction by the sheriff. Nash was served with notice of entry of the judgment and a copy of the judgment. Nash did not appeal the foreclosure judgment, but filed a Chapter 13 bankruptcy petition. She made some payments under the bankruptcy plan, but when she discontinued making payments, her bankruptcy case was dismissed in June 1998.

[¶ 3] The sheriff's sale was scheduled for August 18, 1998, and notice was published in the local newspaper in July and August of 1998. On August 17, 1998, PRM's counsel faxed and mailed to the sheriff a letter bidding $33,367.19 for the property on behalf of PRM. The letter also requested that if PRM was the high bidder, the sheriff file with the court several enclosed documents, including an affidavit of publication, notice of sale, report of sale, and a proposed order confirming the sale. PRM's bid was the only bid at the sale. The sheriff executed the report of sale and apparently submitted the documents to the judge. The judge signed PRM's proposed order confirming the sale on August 20, 1998. All of the above-mentioned documents were filed with the court on August 25, 1998.

[¶ 4] PRM did not provide separate mailed notice of the time and place of the sheriff's sale to Nash or her counsel, nor did PRM provide copies of the August 17 letter or enclosures. Nash claims she did not learn of the August 1998 sale of her home until January 1999. She then promptly filed a motion to vacate the foreclosure sale and for other relief. The district court denied Nash's motion, and she has appealed.

II

[¶ 5] Nash asserts PRM was required under North Dakota law to provide her with prior notice of the time and place of the sheriff's sale. She asserts PRM's failure to provide such notice invalidates the sheriff's sale of her property.

A

[¶ 6] Section 32-19-08, N.D.C.C., provides:

Sales made by whom and where—Notice. All sales of mortgaged premises under a judgment of foreclosure must be made in the county where the premises, or some part of them, are situated, by the sheriff of that county or the sheriff's deputy, or by some person appointed by the court for that purpose, upon the notice and in the manner prescribed by law for the sale of real property upon execution.

Section 28-23-04, N.D.C.C., provides:

Sale of real property—Notice of sale— Contents. Before any real property or interest therein taken on execution may be sold, the officer making the sale shall give public notice of the time and place of the sale:

1. If a newspaper is printed in the county where the real property to be sold is situated, the notice must be given by advertisement in a newspaper printed in the county once a week for three successive weeks, the last publication to be at least ten days prior to the making of the sale....

[¶ 7] Nash concedes notice was published as required by statute. She argues, however, that she should have been served under N.D.R.Civ.P. 5(a) with copies of the notice of sale, affidavit of publication, and report of sale¹ prior to the date of the sale. Rule 5 of the North Dakota Rules of Civil Procedure requires the personal service of "every written notice." Rule 5(a), N.D.R.Civ.P., provides in part:

Service-When Required. Except as otherwise provided in these rules, every order required by its terms to be served, and, unless otherwise ordered by the court, every pleading subsequent to the original complaint, every paper relating to discovery required to be served upon a party, every written motion other than one which may be heard ex parte, every proposed order, order for judgment, decree, finding of fact and conclusion of law, every paper filed with the clerk or submitted to the judge, and every written notice, appearance, demand, offer of judgment, designation of record on appeal, and similar paper must be served on each of the parties.

(Emphasis added).

[¶ 8] The notice of sale given by the sheriff under N.D.C.C. § 28-23-04 is clearly a written notice, governed by our rules of civil procedure. The scope of the North Dakota Rules of Civil Procedure is found in Rule 1: "[t]hese rules govern the procedure in the district courts in all suits of a civil nature whether cognizable as cases at law or in equity, with the exceptions stated in Rule 81. They shall be construed and administered to secure the just, speedy, and inexpensive determination of every action." See Reliance Ins. Co. v. Public Service Comm'n, 250 N.W.2d 918, 921-22 (N.D.1977)

(holding the North Dakota Rules of Civil Procedure, including Rules 81 and 5(a), apply to administrative proceedings because there is no inconsistency between the statutes and the rules). See also Leek v. American Express Property Cas., 591 N.W.2d 507, 510 (Minn.Ct. App.1999) (holding the rules of civil procedure apply to a district court's review of an arbitration award); Cable v. Hatfield, 202 W.Va. 638, 505 S.E.2d 701 (1998) (holding the rules of civil procedure apply to extraordinary writs); Romero v. Star Markets, Ltd., 82 Hawai'i 405, 922 P.2d 1018, 1024-25 (Haw.App.1996) (holding the rules of civil procedure apply to workers' compensation cases proceeding in circuit courts).

[¶ 9] Rule 5, N.D.R.Civ.P., provides for the service of documents that are not process. Matter of Estate of Bieber, 256 N.W.2d 879, 881 (N.D.1977). There is no requirement the notice must be filed with the clerk or submitted to the judge for the obligation of personal service to attach. This is illustrated, for example, by the fact an offer of judgment is required to be personally served under N.D.R.Civ.P. 5 even though filing or submission to the judge would be improper except under certain circumstances. See N.D.R.Civ.P. 68.

[¶ 10] Ohio, which has a statute, Ohio Rev.Code Ann. § 2329.26, that parallels our N.D.C.C. § 28-23-04 (requiring notice by publication of the time and place of an execution sale be given before the real property is sold), and a rule, Ohio R.Civ.P. 5(a), which parallels our N.D.R.Civ.P. 5(a) (providing "every written notice" shall be served upon the parties), has ruled due process requires a party with an interest in a foreclosure be given actual notice by mail when that party's address "is known or easily ascertainable." See Central Trust Co. v. Jensen, 67 Ohio St.3d 140, 616 N.E.2d 873, 875-76 (1993). See also Federal Deposit Ins. Corp. v. Duerksen, 810 P.2d 1308, 1310 (Okla.App.1991)

(citing Cate v. Archon Oil Co., 695 P.2d 1352 (Okla.1985)).

[¶ 11] There are important reasons to give notice of a sheriff's sale to both the public and the debtor. "The legislative purpose in requiring the publication of such a notice evidently was to attract the attention of those persons who would be likely to become prospective bidders at the sale ... to protect the rights of the interested persons by securing competitive bids at the sale." Bailey v. Hendrickson, 25 N.D. 500, 143 N.W. 134, 142 (1913) (Fisk, J., dissenting); see Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798-99, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983)

; State v. Sloan, 134 Fla. 632, 184 So. 128 (1938).

[¶ 12] A homeowner such as Nash has different, yet extremely important, interests in receiving personal notice of a foreclosure sale. Given proper notice of the time and place of the sale, Nash would have been able to attend the sale to ascertain the sale was being properly conducted according to the statutory requirements. See N.D.C.C. §§ 28-23-05, 28-23-07, and 28-23-08. Further, Nash would have been able to attend the sale and bid on the property herself, had she so desired.

[¶ 13] PRM incorrectly argues N.D.R.Civ.P. 81 would preclude application of Rule 5 here. Under Rule 81, N.D.R.Civ.P., special statutory proceedings "are excepted from these rules insofar as they are inconsistent or in conflict with the procedure and practice provided by these rules." In Tormaschy v. Tormaschy, we said "silence is not an inconsistency." 1997 ND 2, ¶ 14, 559 N.W.2d 813. In that quiet title action, we held the defendant's answer must specifically plead waiver as required by N.D.R.Civ.P. 8(c) even though quieting title is a special proceeding under Rule 81, and the N.D.C.C. § 32-17-09 provisions relating to the quiet title answers do not require specific pleading of waiver. Id. at ¶¶ 12-17. As we said, "We will not interpret Rule 81 to remove all principles of due process and equity." Id. at ¶ 15.²

B

[¶ 14] Nash argues PRM was required by N.D.R.Civ.P. 5(a) to serve her with a copy of the proposed order confirming the sale.

[¶ 15] Rule 5(a) specifically requires service of "every proposed order" upon opposing parties who have appeared in the action. A proposed order confirming the sale calls upon the court to exercise its discretion and perform judicial acts. Section 28-23-13, N.D.C.C., requires the court to "carefully examine[ ] the proceedings" of the sheriff, and determine whether the sale has been legally performed and "made in all respects in conformity to the provisions of this chapter." The court is also required to determine application of the proceeds of the sale and order disposition of...