HSBC Bank USA N.A. (Jeffrey C. Riley, Appellant)
Scott A. McAllister and Eddy Mulder
Appeal from Superior Court, Windham Unit, Civil Division
Michael R. Kainen, J.
Jeffrey J. Hardiman of Shechtman Halperin Savage, LLP,
Pawtucket, Rhode Island, for Plaintiff-Appellee.
Alexander W. Shriver of Phillips, Dunn, Shriver &
Carroll, PC, Brattleboro, for Intervenor-Appellant.
PRESENT: Reiber, C.J., Skoglund, Robinson and Eaton, JJ., and
Dooley, J. (Ret.), Specially Assigned
1.Appellant Jeffrey C. Riley asks this Court to reverse the
superior court's denial of his motion to confirm a
foreclosure sale in his favor and its order for HSBC Bank USA
(bank) to conduct a second foreclosure sale. For the reasons
below, we affirm.
2. The relevant history is as follows. The superior court
entered a Judgment of Foreclosure and Sale in favor of bank
on October 26, 2015, for the property at issue. The
foreclosure judgment provided the standard six-month
redemption period under 12 V.S.A. § 4946(b), expiring on
April 29, 2016. Once the redemption period lapsed, bank
organized a public auction of the property in accordance with
the foreclosure judgment and 12 V.S.A. § 4952. Bank
retained an auctioneer to conduct the auction. Before the
auction, bank gave the auctioneer an electronic bid, which
was to be entered at the auction. The auction was held on
July 28, 2016. Only the auctioneer and appellant were
physically present at the property during the auction- bank
did not send a personal representative. Once the auctioneer
opened the bidding, appellant entered a bid for $10, 000. The
auctioneer then entered bank's bid of $57, 000. When
appellant did not bid again, the auctioneer issued a report
of sale for bank.
3. Bank moved to confirm the sale and waive the deficiency
judgment on August 29, 2016. Soon thereafter,
appellant moved to intervene and confirm the sale of the
property to himself. In his motion and during a hearing held
on September 22, 2016, appellant argued that bank
"violated the rule that the auctioneer in a judicial
foreclosure sale must be independent, and therefore a
mortgagee such as [bank] may not simultaneously hire the
auctioneer in a judicial foreclosure and contract with [the]
auctioneer to enter bids on its behalf." To support this
argument, appellant cited a superior court opinion. Bank
of N.Y. Mellon v. Campbell, Nos. 229-4-10 Wrcv, 78-2-12
Wrcv, 568-10-11 Wrcv, 319-5-12 Wrcv, 2013 WL 6631044 (Vt.
Super. Ct. Dec. 2, 2013),
[https://perma.cc/575P-PHY8]. In Campbell, the court
considered four judicial foreclosure cases in which the
mortgagees hired auctioneers who simultaneously conducted the
public auctions and entered bids on behalf of the mortgagees.
Id. at *4. The Campbell court held that an
auctioneer in a judicial foreclosure sale may not enter bids
on behalf of any party that is not present at the auction.
Id. at *12.
4. In this case, the superior court was convinced by
Campbell's reasoning and adopted the holding.
Thus, because the auctioneer had entered a bid on behalf of
bank who was not present at the auction, the superior court
denied bank's motion for a confirmation order and waiver
of deficiency. The superior court went on to deny
appellant's motion for confirmation of the sale in his
name, noting it did not "believe it would be equitable
in this case to confirm a sale to [appellant], leaving the
[mortgagor] with a more than $100, 000 deficiency" and
that it had concerns regarding the lack of an in-person
bidding requirement in the foreclosure judgment. Therefore,
the court ordered bank to give notice and conduct a new
judicial foreclosure sale in accordance with the foreclosure
judgment entered on October 26, 2015 and the newly adopted
in-person bidding requirement. Bank did not appeal this
5. This appeal followed. Appellant first argues that this
Court should review the appeal de novo because the superior
court was faced with a pure question of law. Second,
appellant argues that the superior court erred in giving bank
a second chance to hold the auction because bank should have
known that it needed to send a live representative to the
auction based on several sources, including Vermont statutes,
this Court's caselaw, applicable caselaw from other
states, Vermont superior court caselaw, informal rules
established through practice by the judge presiding in the
superior court, and the actual judgment order and decree of
foreclosure in this case. Third, appellant argues that the
superior court's holding was based in unfounded concerns
about the deficiency judgment. Fourth, appellant argues that
the superior court erred in noting the lack of an explicit
requirement of in-person bidding in its judgment and decree
of foreclosure by judicial sale. Finally, appellant argues
that public policy considerations favor not giving bank a
second chance to hold the auction.
6. Regarding the standard of review, appellant asserts that
the superior court faced a pure question of law at the
hearing for the confirmation order-whether Vermont law
requires in-person bidding at foreclosure auctions and if so,
whether the only live bid made at an auction must be
honored-and thus this Court must review the question de novo.
See Cenlar FSB v. Malenfant, 2016 VT 93, ¶ 13,
__ Vt. __, 151 A.3d 778. While the question of whether
Vermont law requires in-person bidding at foreclosure
auctions is a legal question and thus requires de novo
review, it is not the question presented in this appeal. As
noted, bank did not appeal the superior court's refusal
to confirm its bid, and thus the issue is not addressed in
this decision. Two questions are directly presented in this
appeal: (1) whether the superior court has the authority to,
on equitable grounds, decline to confirm a bid, and (2)
whether the superior court was within its discretion in
exercising that authority in this present case.
7. The first question-whether the superior court had the
authority to decline to confirm the sale-is a legal one to be
reviewed de novo that can be answered by looking at the
statute. Confirmation of a foreclosure sale is a
discretionary judicial action, the purpose of which is to
ensure fairness in the foreclosure process. See 12 V.S.A.
§ 4954(a) ("The court may issue an order
of confirmation of the sale without hearing, unless the court
in its discretion determines that a hearing is necessary. The
order of the court confirming the sale shall be conclusive
evidence . . . that the foreclosure and sale were conducted
in accordance with this section." (emphasis added)).
Regardless of whether the superior court holds a hearing, if
it finds that the sale was not conducted according to
statutory requirements or the foreclosure judgment's
requirements-or if it finds that there is another reason to
be concerned with the integrity of the sale-it has the
authority, in its discretion, refuse to confirm the sale and
order another one. Id.
8. The second question-whether the superior court acted
within its discretion-is reviewed for abuse of discretion.
"A trial court's discretionary rulings are examined
under an abuse of discretion standard of review, which
'requires 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 (quoting Vt. Nat'l
Bank v. Clark, 156 Vt. 143, 145, 588 A.2d 621, 622
(1991)). The statute governing confirmation orders does not
set forth specific criteria for setting aside a judicially
ordered public sale. See 12 V.S.A. § 4954. Therefore, we
consider the entirety of the reasoning behind the superior
court's decision to determine if it abused its
9. In deciding whether to confirm the sale in appellant's
favor, the superior court looked to other courts'
consideration of the issue,  and its own concerns over the
integrity of the sale at issue. The superior court noted that
appellant's bid was relatively low and that the
foreclosure judgment lacked an explicit in-person bidding
requirement. Further, there was significant uncertainty as to
the status of bank's competing virtual bid. Based on