Fleisher v. Southern Agcredit, et al.
| Docket Number: | 2010-CA-01594-COA Linked Case(s): 2010-CA-01594-COA ; 2010-CT-01594-SCT ; 2010-CT-01594-SCT ; 2010-CT-01594-SCT |
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| Court of Appeals: |
Opinion Link Opinion Date: 04-10-2012 Opinion Author: Fair, J. Holding: DA-Affirmed; CA-Reversed and remanded. |
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| Additional Case Information: |
Topic: Contract - Loan deficiencies - Bankruptcy proceedings - Personal guaranty Judge(s) Concurring: Lee, C.J., Irving and Griffis, P.JJ., Ishee, Roberts, Maxwell and Russell, JJ. Concurs in Result Only: Carlton, J., concurs in result only without separate written opinion. Procedural History: Summary Judgment Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 08-30-2010 Appealed from: Stone County Circuit Court Judge: Lisa P. Dodson Disposition: AWARDED SOUTHERN AGCREDIT DEFICIENCY JUDGMENT OF $351,300.75 PLUS COSTS AND ATTORNEY’S FEES Case Number: 2009-0027 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | David E. Fleisher |
NICHOLAS VAN WISER
DAWN ELIZABETH LARSH NORRIS
DANA CARL MATTHEWS |
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| Appellee: | Southern Agcredit, FLCA f/k/a Land Bank South, FLCA | JEFFREY MONROE WILLIAMS MATTHEW ROBERT DOWD | ||
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| Topic: | Contract - Loan deficiencies - Bankruptcy proceedings - Personal guaranty |
| Summary of the Facts: | Southern AgCredit filed a complaint against David Fleisher, seeking judgments on four loans that were in default. Following discovery, both parties moved for summary judgment. The trial court granted partial summary judgment to Southern AgCredit. The court found that Fleisher had personally guaranteed the loans, but a fact question still existed as to the amounts owed under the loans. Fleisher’s motion was denied. A bench trial was held on the issue of whether the value of the properties was sufficient to satisfy the loans held by Southern AgCredit. The trial court found it was not, and Fleisher owed Southern AgCredit a deficiency of $351,300.75 on three of the four loans. The court did not make a ruling on the fourth loan because it was in bankruptcy and under the protection of the automatic stay. Fleisher appeals, and Southern AgCredit cross-appeals. |
| Summary of Opinion Analysis: | Issue 1: Loan deficiencies Fleisher argues he owes no deficiencies on the loans because Southern AgCredit failed to prove the foreclosure sales were just and equitable. To be entitled to a deficiency judgment, Southern AgCredit bore the burden of proving that it had endeavored to collect the indebtedness out of the land. An additional burden is imposed because Southern AgCredit was the mortgagee and purchased the property at the foreclosure sale. Where the foreclosing creditor buys at foreclosure, it must give the debtor fair credit for the commercially reasonable value of the collateral. To determine the adequacy of the purchase price in satisfying the debt, the mortgagee must establish the fair market value of the property. The trial court noted that while the price paid at foreclosure was lower than the appraised values plus the timber values, it was not so low as to shock the conscience under the standard set by the Mississippi Supreme Court. In order to shock the conscience, the bid price must be so inadequate that it would be impossible to state it to a man of common sense without producing an exclamation at the inequality of it. The record lacked evidence of current timber values. However, the trial court used the evidence available to estimate the fair market value of the property with the timber values. The trial court’s findings are supported by reasonable evidence and not manifestly wrong. Issue 2: Bankruptcy proceedings The trial court found it would be premature to award Southern AgCredit a judgment against Fleisher for one of the loans because bankruptcy proceedings were pending. Southern AgCredit argues it is entitled to the deficiency on this loan regardless of the bankruptcy proceedings because of Fleisher’s personal guaranty. The personal guaranty states: “it will not be necessary for Creditor, in order to enforce such payment by Guarantor, first to . . . enforce its rights against any security that shall ever have been given to secure the Guaranteed Indebtedness.” Also, provision 6(d) of the agreement states: “Guarantor agrees that [his] obligations under the terms of this guaranty will not be released, diminished, impaired, reduced, or affected by . . . bankruptcy.” However, the trial court found that an inequitable result may be reached if Southern AgCredit was allowed to collect from Fleisher before the plan of reorganization is complete. The guaranty establishes that Fleisher is obligated for 35% (140% of his 25% interest) of the unpaid balance due on the note. Southern AgCredit is entitled to a judgment in that amount now and not later. A circuit court does not have the authority, legal or equitable, to deny Southern AgCredit a judgment enforcing its constitutionally protected contractual rights. Nor may the court deny Southern AgCredit the right to utilize all legal means to collect it. Speculation about what a federal bankruptcy court will do in the future with the property is not sufficient reason to deny Southern AgCredit’s contractual rights to a judgment. Likewise, speculation about what Southern AgCredit may do in the future to collect its judgment from Fleisher would be equally inappropriate. Thus, the case is remanded. |
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