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Citifinancial Mortgage Co., Inc. v. Clark

February 29, 2008

CITIFINANCIAL MORTGAGE COMPANY, INC., F/K/A/ ASSOCIATES HOME EQUITY SERVICES, INC., APPELLANT,
v.
JOHN T. CLARK, NOW DECEASED; WYOTA JOAN CLARK; AND STATE OF KANSAS, DEPARTMENT OF REVENUE, ET AL., APPELLEES.



Appeal from Jefferson District Court; GARY L. NAFZIGER, judge.

SYLLABUS BY THE COURT

1. Generally, a district court's decision whether to confirm the sheriff's sale in a foreclosure proceeding is reviewed for an abuse of discretion so long as the court applied the proper legal framework and made the necessary findings.

2. The district court has an obligation under K.S.A. 60-2415 to assure that a foreclosure sale is in conformity with equity. The statute provides the court with equitable power to consider several alternative remedies where the bid is substantially inadequate, including: (1) ordering a new sale; (2) fixing a minimum or upset price; or (3) requiring the fair value of the property to be credited upon the judgment. Recent appellate case law has clarified equitable considerations under K.S.A. 60-2415.

3. The price paid for property at a foreclosure sale should reflect the intrinsic value of the property, taking into consideration all the circumstances affecting the underlying worth of the property at the time of the sale and should not be affected by the impact of the foreclosure proceedings on its value.

4. The equitable powers of the district court in a confirmation proceeding that are specified by K.S.A. 60-2415 are not solely to be invoked for the mortgagor, but rather the statute must be construed more broadly to apply to all parties who may have interests in the confirmation proceeding.

5. It is a fundamental principle of equity that one who sleeps on his or her rights may lose them.

6. The confirmation proceeding in a foreclosure action is a separate step in the statutory scheme of foreclosure at which interested parties have rights and obligations distinguishable from those inuring as a part of other steps in the statutory foreclosure scheme. By its participation in the confirmation proceeding, a mortgagee is entitled to assert the rights implicitly recognized by the statutory scheme even if it failed to participate in the foreclosure sale.

7. A mortgagee involved in a foreclosure proceeding will always best protect its interests by participating in the foreclosure sale itself, even if its interests are subject to equitable considerations at confirmation.

8. A party acquiesces in the judgment when he or she voluntarily accepts the benefits or assumes the burdens of the judgment.

9. The mere failure to stay execution of the judgment by filing a supersedeas bond does not constitute acquiescence in the judgment so as to forfeit the right of appeal.

The opinion of the court was delivered by: Greene, J.

Vacated and remanded with directions.

Before GREENE, P.J., McANANY and BUSER, JJ.

Citifinancial Mortgage Company, Inc., appeals the district court's refusal to grant relief to it in confirmation proceedings after it failed to participate in a sheriff's sale of property subject to its first mortgage lien in excess of $70,000, resulting in an order confirming the sale to Lorin Gerald Brunsvold for his bid of $6,050. Citifinancial argues the district court failed to exercise its equity powers under K.S.A. 60-2415 as construed by controlling caselaw. We agree, vacate the confirmation order, and remand for further proceedings.

Factual and Procedural Background

Citifinancial initiated this residential real estate foreclosure proceeding in December 2005 and received a judgment of foreclosure in April 2006 for $70,481.83 plus interest, including an order for sale at sheriff's auction. After notice as provided by law, the sale was held in May 2006, with Brunsvold the highest bidder at $6050. Due to a communications error between Citifinancial's counsel, there was no appearance at the sale to protect Citifinancial's interest.

Brunsvold acquired an assignment of redemption rights from the mortgagor and filed a motion to confirm the sale. Citifinancial filed a motion to substitute bid and confirm sheriff's sale at upset price or in the alternative set aside the sale under K.S.A. 60-2415(b) due to a substantially inadequate bid.

After a bench trial, the district court concluded that 60-2415(b) equitable protections applied only for the benefit the mortgagor and that Citifinancial was not entitled to equity because of its failure to appear at the sale. The sheriff's sale was confirmed, and a motion for reconsideration was denied in January 2007. Citifinancial appeals.

Standards of Review

Kansas appellate courts review the confirmation of a sheriff's sale for an abuse of discretion. See Olathe Bank v. Mann, 252 Kan. 351, 357, 845 P.2d 639 (1993). Judicial discretion is abused when judicial action is arbitrary, fanciful, or unreasonable, which is another way of saying that discretion is abused where no reasonable person would take the view adopted by the trial court. Farm Credit Bank of Wichita v. Zerr, 22 Kan. App. 2d 247, 255, 915 P.2d 137 (1996). The facts supporting the confirmation, however, must be supported by the record. See Olathe Bank, 252 Kan. at 357; Zerr, 22 Kan. App. 2d at 255.

A district court can abuse its discretion when its decision goes outside the legal framework or fails to properly consider statutory limitations or legal standards. State v. Edgar, 281 Kan. 30, 38, 127 P.3d 986 (2006). Accordingly, an appellate court reviews whether the district court's discretion was guided by erroneous legal conclusions. State v. Gary, 282 Kan. 232, 236, 144 P.3d 634 (2006). Whether the district court made all the necessary findings before confirming the sheriff's sale is also a question of law. See Gary, 282 Kan. at 236; Edgar, 281 Kan. at 38; Zerr, 22 Kan. App. 2d at 255. Ultimately, the district court's decision whether to confirm the sheriff's sale is reviewed for an abuse of discretion so long as the court applied the proper legal framework and made the necessary findings.

To the extent that the parties' arguments require the court to interpret K.S.A. 60-2415, this court has unlimited review. LSF Franchise REO I v. Emporia Restaurants, Inc., 283 Kan. 13, 19, 152 P.3d 34 (2007) ("The interpretation of a statute is a ...


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