CHARLES E. BUTLER, JUDGE.
somewhat unusual case, the bank moved to foreclose a mortgage
on a property and the homeowner defaulted in appearance. That
much is hardly unusual, but after the default had been
granted, the bank realized that it had neglected to include
the amount due on a second mortgage in its calculation of the
judgment amount. The bank, unsure whether to "go back to
GO" by restarting a mortgage foreclosure proceeding with
corrected numbers or simply amend its existing judgment to
reflect the default in the second mortgage, elected to amend
the judgment. This happened after the default judgment had
been granted but before the amount of the lien had been
posted publicly in connection with the auction of the
initial default judgment foreclosed on a $7, 000 first
mortgage. The amended default judgment, reflecting the second
mortgage that was also in default, was for approximately $80,
event, the foreclosure sale proceeded apace and Dayan, LLC
("Dayan") was the winning bidder with a bid of
$210, 000, more than enough to satisfy the bank's
interest in the sale. After the conclusion of the sale, but
before "confirmation, " Dayan, filed the instant
Motion to Deny Confirmation and Set Aside Sheriffs Sale.
discerning reader will notice that Dayan is not a party in
the caption in this matter. And so the question becomes
obvious: what standing does Dayan have to deny the
confirmation and set aside the sheriffs sale? Why would it
want to cancel a sale at which it was the winning bidder? The
answers eluded the Court in the initial pleadings and the
Court invited Dayan to respond further to see if it could
articulate the harm it suffered and confirm its standing.
the Court notes, parenthetically, that the defendant in the
action, Mr. Johnson has never appeared to defend any part of
it. So the question of whether the bank acted properly in
simply amending its judgment or should have recommenced a new
mortgage foreclosure proceeding was not raised by the debtor
and most certainly affected by the bank's decision to
simply amend the existing judgment. And the Court can
sympathize with the bank's indecision, particularly in
the context of a defaulted judgment because, by their very
nature, there is little in the way of stare decisis
in an unopposed, default judgment upon which to be
guided. The Court understands that it may be
called upon to decide the question posed by the bank's
decision, but that duty only arises if there is a party
before the Court that has standing to press the case.
has asked the Court to consider the case of Burge v.
Fidelity Bond and Mortgage Company This was a case
in which the mortgage company clearly erred, this time at the
auction itself. Its agent made a unilateral error and
underbid on the property by $50, 000 the amount he was
authorized to bid. A different bidder was successful and,
when the mortgagee realized its error, it sought to set aside
the sale. That did not please the successful bidder, which
intervened in the mortgagee's efforts. The ultimate
resolution of that dispute is not germane to us here. Dayan
cites the case for the proposition that it "addresses
the issue of the standing of a third party high bidder at
sheriffs sale to object to the sale or, in the Burge
case, to object to a plaintiff mortgage company's motion
to set the sale aside."
connection with standing, the Burge Court said
"a party may challenge a sheriffs sale which is
procedurally correct if the party can demonstrate that he or
she has suffered a detriment." So, in what way has Dayan
demonstrated that it has suffered a detriment?
where Dayan has some difficulty. The auction sale's
confirmation extinguishes even the rights of the defaulting
borrower to complain about any irregularities in the sale and
the purchaser thus takes title to the property free and clear
of any "cloud" or encumbrance existing before the
sale. This protects the successful bidder from
any claim by a latecomer that there was something untoward in
the default or the judgment process. Dayan is thus insulated
from the error, if any, by the bank in its default judgment
paperwork. All bidders understood the bank was seeking to
protect the full amount of both defaulted mortgages. Dayan
does not complain of some lack of notice or detrimental
reliance on a defective judgment.
says this "flaw" in the default judgment will be
noticed by a competent real estate attorney and will cause
any subsequent sale of the property to fail. Then, says
Dayan, it will have to spend time and money to fix the flaw.
And then the next buyer, seeing the previous failed sale,
will "low ball" a purchase price and thus Dayan
will suffer prejudice caused by the delay, a lower sales
price and counsel fees spent trying to fix the flaw.
Court remains unconvinced that this "flaw" is a
flaw at all or, if it is, that it is one that requires
"fixing." It would seem that if it is a problem
that needs fixing, confirmation of the sale does just that.
Moreover, Dayan gives no hint in its pleadings just what it
would do, if permitted, to "fix" the
"flaw." It is not a party to the underlying
foreclosure proceedings, it was not the party aggrieved by
the bank's "adjustment" of the amount due under
the default judgment, it does not even allege that it knew
about this change in the amounts due until some point long
after the auction was over, and it does not allege that its
bid at auction was entered based upon the figures adjusted by
the bank to reflect the default in the second mortgage.
Indeed, in light of the mortgage arrearage of about $80, 000
and the ultimate bid of over $200, 000, it does not appear
that the default judgment amount was a consideration at all.
Court therefore concludes that Dayan has not made out a case
to justify cancelling the confirmation or setting aside the
Sheriffs sale at which it was the successful bidder.
Accordingly, Dayan's Motion ...