Resolution Trust Corp. v. Morrow Auto Center, Ltd.

• Decision Date: 06 January 1995
• Docket Number: No. A94A2106,A94A2106
• Citation: Resolution Trust Corp. v. Morrow Auto Center, Ltd., 454 S.E.2d 138, 216 Ga.App. 226 (Ga. App. 1995)
• Parties: RESOLUTION TRUST CORPORATION v. MORROW AUTO CENTER, LTD. et al.
• Court: Georgia Court of Appeals

Page 138

454 S.E.2d 138

216 Ga.App. 226

RESOLUTION TRUST CORPORATION v.MORROW AUTO CENTER, LTD. et al.

No. A94A2106.

Court of Appeals of Georgia.

Jan. 6, 1995.

Reconsideration Denied Feb. 6, 1995.

McCalla, Raymer, Padrick, Cobb, Nichols & Clark, Carol V. Clark, Linda S. Finley, Atlanta, for appellant.

Oliver, Duckworth, Sparger & Winkle, G. Robert Oliver, Jonesboro, for appellees.

BIRDSONG, Presiding Judge.

This is a suit for confirmation of a foreclosure sale and deficiency.AppellantResolution Trust Corporation(RTC) foreclosed on a development property in the Atlanta metropolitan area.The original loan amount was $725,000.The amount of default is not cited to us nor is it stated in RTC's demand letter or its petition, but the default was more than the $425,000 for which RTC bought the property at its foreclosure sale.In its order denying confirmation of the sale, the trial court recited that the appraiser/witness for RTC testified that the market value for the property at the time of sale was $425,000, whereas two appraisers for Morrow Auto Center testified that the market value at the time of sale was $812,000 and $790,000.

The trial court also denied a resale.On appeal, RTC contends a resale is authorized as a matter of law by OCGA § 44-14-161(c) if the property did not sell for its true market value and if, as in this case, the trial court made no finding of bad faith.Held:

1.The trial court did not err in denying confirmation.SeeOCGA § 44-14-161.

2.OCGA § 44-14-161(c) provides: "The court may order a resale of the property for good cause shown."(Emphasis supplied.)This statute confers upon the trial court a legal discretion in determining whether to order a resale.Govt. Nat. Mtg. Assn. v. Belue, 201 Ga.App. 661, 411 S.E.2d 894.

RTC contends resale is authorized as a matter of law under Gutherie v. Ford Equip. Leasing Co., 206 Ga.App. 258, 261, 424 S.E.2d 889, where we held: "Given that [the creditor] did not prove that it sold the property for true market value but did obtain an appraisal (albeit a fatally flawed one) before the sale and did sell the property for an amount equal to that appraisal, a resale would be authorized."Gutherie cites Adams v. Gwinnett Commercial Bank, 140 Ga.App. 233, 230 S.E.2d 324, aff'd, 238 Ga. 722, 235 S.E.2d 476; Gutherie further cites Davie v. Sheffield, 123 Ga.App. 228, 180 S.E.2d 263.

According to Adams, this court in Davie held that "[a] failure to sell for the true market value constitutes good cause for ordering a resale."Adams, 140 Ga.App. at 234(2), 230 S.E.2d 324.According to Gutherie, the Davie case held that "resale may be had for mere inadequacy of price."Gutherie, 206 Ga.App. at 262(2), 424 S.E.2d 889.In fact, in Davie, confronted with a contention that the court could not order a resale for mere inadequacy of price, we held that under previous statutory law, mere inadequacy of price was not a sufficient reason to order a resale, but under present law the court"may order a re-sale"(id., 123 Ga.App. at 230, 180 S.E.2d 263;emphasis supplied) for several reasons, "including failure to sell [at the property's] true market value."Id.The headnote in Davie states: "The court may ... order its resale for good cause shown, which may be the inadequacy of the price received for the property."(Emphasis supplied.)These are permissive statements only, and they are a far cry from the mandatory inference made by RTC from Gutherie's and Adams' later characterizations of Davie.The holding in Davie should not be taken out of its true context, and is not to be converted to a holding that "good cause" for resale is shown, and a resale is demanded whenever a foreclosure sale fails to bring true market value.This would obliterate the statute, would remove the trial court's discretion, and would encourage creditors to engage in any unfair practice at foreclosure sale, with the only penalty being a possible resale.

The language of the confirmation statute places the burden of proof on the creditor not only to show that the sale brought true market value of the property (Wheeler v. Coastal Bank, 182 Ga.App. 112, 114, 354 S.E.2d 694), but also to show good cause for a resale, and the statute vests "considerable discretion" in the trial court in this determination.Five Dee Ranch Corp. v. Fed. Land Bank of Columbia, 148 Ga.App. 734(2), 252 S.E.2d 662.The statute does not entitle the creditor to a resale, either for mere failure to show the sale brought true market value, for a mere "flawed" appraisal, or for any reason.The provision that resale "may [be granted] for good cause shown"(§ 44-14-161(c)) means there is no presumption in favor of resale and there is no entitlement to a resale.The statutory language authorizing resale is entirely permissive and not mandatory.

Moreover, the statute does not define what constitutes "good cause," does not require a finding by the trial court of bad faith or negligence in the appraisal or sale, and does not even require evidence of bad faith or negligence.We have declined to set restrictions on the trial court's discretion in denying resale, for to set restrictions would be to require evidence of misfeasance, malfeasance, or defect in the sale before a resale can be denied, which would put the burden of proof on the debtor.To the contrary, we have held: "Where no 'good cause' has been shown which would demand a resale, there is no abuse of the exercise of the trial court's discretion, as a matter of law"(Five Dee Ranch Corp., supra) and we have repeatedly held that the burden to show "good cause" which "may" authorize a resale is on the creditor.Wheeler, supra.We have held in particular cases that a resale was "authorized," but this does not constitute a holding that a resale was demanded in those cases or that there would be any "entitlement" to resale in other cases with similar...