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Bank of America, N.A. v. O'Kelly

Supreme Court of Vermont

July 27, 2018

Bank of America, N.A.
v.
Seamus P. O'Kelly, Jennifer S. O'Kelly and State of Vermont Department of Taxes and Sandra J. Lockerby

          On Appeal from Superior Court, Washington Unit, Civil Division Mary Miles Teachout, J.

          William R. Dziedzic and Rachel K. Ljunggren of Bendett and McHugh, P.C., Farmington, Connecticut, and Connie Flores Jones of Winston & Strawn LLP, Houston, Texas, for Plaintiff-Appellant.

          John P. Riley of Rice & Riley, PLLC, Montpelier, for Intervenor-Appellee Sandra J. Lockerby.

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

          CARROLL, J.

         ¶ 1. Bank of America appeals a trial court order confirming the sale of a foreclosed property in favor of Sandra Lockerby. For the reasons below, we reverse and remand for proceedings consistent with this opinion.

         ¶ 2. The property at issue was foreclosed by judicial order in December 2015. The foreclosure order included a six-month redemption period, permitting Seamus and Jennifer O'Kelly and the Vermont Department of Taxes to redeem the property before or during June 2016.[1]The foreclosure order further provided that if the property was not redeemed, it would be sold to the highest bidder at a public sale. A year later, six months after the redemption period expired, Bank of America held a foreclosure sale of the property. The Bank retained an auctioneer for the sale. The Bank's bid package, which was emailed to the auctioneer on the morning of the sale, included a blank report of sale and a purchase and sale agreement. The bid package also included the amount that the Bank planned to bid for the property at the foreclosure sale. In addition to the auctioneer, the Bank also retained a representative to appear in person at the sale on behalf of the Bank and enter the Bank's bid.

         ¶ 3. The Bank's representative had difficulty locating the property on the day of the foreclosure sale and did not arrive at the sale in time to enter the Bank's bid. The auctioneer entered the Bank's bid on behalf of the Bank. Sandra Lockerby, the only bidder who appeared in person at the foreclosure sale, entered a bid approximately one-third the amount of the Bank's bid.

         ¶ 4. The Bank subsequently filed a motion to void the foreclosure sale, noting that the Bank's representative was not able to find the property in time for the sale and therefore could not enter the Bank's bid.[2] The Bank requested that the trial court grant it sixty days in which to hold a new foreclosure sale. The trial court held a hearing on the Bank's motion in April 2017. The court issued an order after the hearing stating that the auctioneer's bid on behalf of the Bank would not be confirmed because it was "improper" under Bank of New York Mellon v. Campbell, a nonprecedential decision issued by the same trial court in 2013. Nos. 229-4-10 Wrcv, 78-2-12 Wrcv, 568-10-11 Wrcv, 319-5-12 Wrcv, 2013 WL 6631044 (Vt. Sup. Ct. Dec. 2, 2013), https://www.vermontjudiciary.org/sites/default/files/documents/2013-12-5-7.pdf [https://perma. cc/N3U4-TH8J]. The court further stated that it had learned during the hearing that a bidder was present at the foreclosure sale and "may be entitled to have his or her bid declared as the successful bid." The court ordered that a second hearing be held on the Bank's motion to void the foreclosure sale and that the Bank serve the bidder with the court's order and notice of the hearing on the Bank's motion. Shortly thereafter, Sandra Lockerby, the bidder described in the trial court's order, filed a motion to intervene in the proceedings, which the trial court granted.

         ¶ 5. The trial court held a second hearing on the Bank's motion to void the foreclosure sale in May 2017. The auctioneer, the Bank's representative, and Sandra Lockerby testified at the hearing. The Bank argued that the trial court had the discretion to deny confirmation of the foreclosure sale to Sandra Lockerby, and that it should do so for two reasons-first, because the Bank representative's failure to appear at the foreclosure sale was due to excusable neglect, and second, because Sandra Lockerby's bid was significantly lower than both the Bank's bid and the foreclosure judgment and, therefore, not commercially reasonable. The Bank specifically stated that it was not arguing that a bank could simply bid through an auctioneer without sending a representative to be present at the sale and place a bid. Rather, the Bank's argument focused on asking the trial court to exercise its discretion to decline confirmation of the foreclosure sale where, the Bank argued, excusable neglect in the failure to appear and the commercial reasonableness of bids received supported voiding the foreclosure sale. The court questioned the Bank regarding its discretion to void a foreclosure sale because the bids received were not commercially reasonable in the following exchange:

THE COURT: And where are you saying that I have discretion? Just by the fact that it's an equitable proceeding?
THE BANK: Right. I mean, if you don't have discretion, then you'd have to, I mean, approve every sale.
THE COURT: Which we do. We have lots and lots and lots of cases where the judgment might have climbed up to 120, 000 dollars but the property goes for fifteen, thirty, twenty. There ...

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