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COURT OF APPEALS
DECISION
DATED AND FILED
September 29, 2010
A.
John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT II
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Lowell Management Services, Inc.,
Plaintiff-Appellant,
v.
Geneva National
PQC, LLC,
Defendant,
Security Bank of Kansas
City,
Defendant-Third-Party
Plaintiff-Respondent,
v.
Geneva National Community Association, Inc., Geneva
National Condominium Master Association, Inc. and Paloma
Geneva National,
LLC,
Third-Party
Defendants.
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APPEAL
from an order of the circuit court for Walworth County: Robert
J. Kennedy, Judge. Affirmed.
Before Brown, C.J., Neubauer, P.J., and Anderson, J.
¶1 PER CURIAM. Lowell Management Services, Inc.
appeals from an order confirming the foreclosure sale of property on which it
held a construction lien. We previously
decided Lowell’s
appeal from the judgment of foreclosure.
Lowell Mgmt. Serv. Inc. v. Geneva Nat’l PQC,
LLC, 2009 WI App 149, 321 Wis.
2d 589, 774 N.W.2d 811 (Lowell I), review denied (WI Mar. 9, 2010) (No. 2008AP2533). In Lowell I, we held that Lowell’s construction lien was junior to the mortgage lien
held by Security Bank of Kansas City. Id.,
¶1. We also held that Lowell’s
complaints about alleged deficiencies in Security Bank’s summary judgment
motion could be addressed in a challenge to the judgment of foreclosure and
that the issue before the circuit court and on appeal related to the priority
of Lowell’s and Security Bank’s respective liens. Id.,
¶9.
¶2 The pending appeal is from the order confirming the
foreclosure sale. After we set lien
priorities, the circuit court entertained sale and confirmation
proceedings. At the confirmation
hearing, the court noted that Security procured an appraisal of the property
and that Security bid the appraised value at the foreclosure sale. Lowell argued
that the appraisal was flawed and that the sale price was too low, depriving Lowell of proceeds from
which it might be paid on its construction lien. In support of this claim, Lowell submitted the affidavit of its
president, Scott Lowell. Scott Lowell
opined that he was familiar with the property and that the foreclosed property
would sell for a higher price if the parcels were organized differently for
sale. The court rejected Lowell’s challenge to the
sale. The court concluded that the
property was properly offered for sale in the parcels determined in the
judgment of foreclosure, and the bid was in line with the appraisal, which the
court found to be fair. The court
confirmed Security’s bid at the foreclosure sale. Lowell
appeals.
¶3 We will only reverse an order confirming a foreclosure sale
if the circuit court misused its discretion in confirming the sale. Bankers Trust Co. of Cal. N.A. v. Bregant,
2003 WI App 86, ¶10, 261 Wis. 2d 855, 661 N.W.2d 498. A court may decline to confirm a foreclosure
sale “if there is an apparent inadequacy in the price which was caused by
mistake, misapprehension or inadvertence on the part of the interested parties
or possible bidders.” Id. (citation omitted). In addition, a court may decline to confirm
“if the bid price was so inadequate so as to shock the conscience of the
court.” Id. (citation omitted). The confirmation court inquires whether the
sale was conducted as required by the judgment of foreclosure. See Citizens
Bank of Sheboygan v. Rose, 59 Wis. 2d 385, 390, 208
N.W.2d 110 (1973).
¶4 On appeal, Lowell
challenges the sale of the property in parcels.
The judgment of foreclosure set out how the parcels were to be treated,
yet Lowell’s
prior appeal from the judgment of foreclosure (Lowell I) focused on the
insufficiency of Security Bank’s summary judgment pleadings, not on the
contents of the judgment of foreclosure and its treatment of the property in
parcels. Lowell I, 321 Wis. 2d 589, ¶9. We addressed the appellate issues raised in Lowell
I. A party must raise and argue an issue with some prominence in order to
allow this court to address the issue and make a ruling. State v. Ledger, 175 Wis.
2d 116, 135, 499 N.W.2d 198 (Ct. App. 1993). We affirmed the judgment of foreclosure in Lowell
I, and the judgment of
foreclosure provided the guidelines for the
foreclosure sale. We will not revisit
the provisions of that judgment in this appeal from the confirmation of the
sale.
¶5 Lowell argues that the
circuit court misused its discretion because it confirmed the sale for less
than the value of the property. This
argument is premised on Lowell’s
claim that the properties should have been sold individually or as timeshares
rather than as a unit of developed or to-be-developed condominiums. The judgment of foreclosure controlled the
manner in which the property was sold.
¶6 Lowell next argues that
its president’s affidavit highlighted a flaw in Security’s appraisal: the appraiser compared property that would
accommodate a large duplex with single-family lots, thereby reducing the value
of the foreclosed property by $2.45 million.
Lowell
also contends that the appraiser failed to account for the fact that owners of
the property at issue (originally destined to be timeshares) would have access
to the development’s amenities (clubhouse and swimming pool) that are not
available to other property owners in the development. Considering these two errors, Lowell opined that the
property had a value of $15,843,500, not $7,737,500 per Security’s appraisal
and successful bid. The higher value
would have permitted Lowell
to be paid from the sale proceeds after satisfaction of Security’s claim.
¶7 The
circuit court found that Security’s appraisal was appropriate because it
reflected an intention to develop the property as a planned condominium
association on which additional structures could be built. This approach was premised upon the judgment
of foreclosure’s treatment of this property.
¶8 A
foreclosure sale must be for fair value defined as “the price which a person
willing and able to buy the property would reasonably pay for it, not for
purposes of speculation, but for that use to which it has been or reasonably
may be put.” First Wis.
Nat’l Bank of Oshkosh v. KSW Invs., Inc.,
71 Wis. 2d
359, 368, 238 N.W.2d 123 (1976). Here,
the court did not find the sale price to be shockingly low or grossly
inadequate, and the court considered the use to which the property may be put.
¶9 Lowell objects to the
appraiser’s use of a twenty-eight percent discount rate for holding and sales
costs. This argument dovetails with Lowell’s complaints about
the manner in which the property was organized for sale. We have rejected those complaints as directed
to the judgment of foreclosure which is not before us on appeal.
¶10 The
circuit court’s decision to confirm the foreclosure sale was based upon the evidence
before it, including the appraisal and the judgment of foreclosure which set out
how the property was to be sold. We
conclude that the circuit court did not misuse its discretion in confirming the
foreclosure sale.
By
the Court.—Order affirmed.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.