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McKenzie v. Brandywine Homeowners' Association, Inc.

Court of Appeals of Tennessee, Jackson

June 12, 2019


          Assigned on Briefs April 1, 2019

          Appeal from the Chancery Court for Shelby County No. CH-16-1422 JoeDae L. Jenkins, Chancellor

         This appeal involves a non-judicial foreclosure by Brandywine Homeowners' Association (the HOA) for non-payment of assessments due to the HOA by former property owner, plaintiff Michael McKenzie. It is undisputed that there was no irregularity in the recording, notice or foreclosure of the HOA's lien on the property. Plaintiff argues that the foreclosure sale price, $4, 445.90, is shockingly low in light of the trial court's finding that the property was worth about $100, 000. Plaintiff does not allege, nor did the trial court find, any "misconduct, fraud, or unfairness on the part of the [HOA] that caused or contributed to an inadequate price." Holt v. Citizens Central Bank, 688 S.W.2d 414, 416 (Tenn. 1984). The trial court granted the HOA summary judgment, refusing plaintiff's request to set aside the foreclosure on equitable grounds. Because the Supreme Court in Holt held that the "lone infirmity" of a "conscience shocking inadequate price . . . will no longer justify voiding a foreclosure sale," id., we are compelled to affirm the trial court's judgment.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed; Case Remanded

          Ted I. Jones, Memphis, Tennessee, for the appellant, Michael McKenzie.

          Dawn Davis Carson, Hal S. Spragins Jr., and Dylan J. Gillespie, Memphis, Tennessee, for the appellee, Brandywine Homeowners' Association, Inc.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and Andy D. Bennett, J., joined.



         The trial court succinctly set forth the pertinent facts in its order granting summary judgment. Neither party takes issue with any of these findings. The following is a verbatim quote from the trial court's order, with numbering omitted and the sentences reorganized into paragraphs.

This is an action for damages and to set aside the non-judicial foreclosure of certain real estate formerly owned by the plaintiff . . . (the "Property"). The Property is subject to certain covenants, conditions, and restrictions found in the Declaration of Covenants, Conditions, and Restrictions (the "CCR"). Article VII, Sections 1 and 2 of the CCR subject all owners of real estate in the Brandywine subdivision to certain assessments or dues for the regular operation and upkeep of the subdivision.
In the event of nonpayment of assessments or dues, the CCR permits the defendant homeowners' association (the "HOA") to place a lien on the relevant lot for the outstanding amount, plus interest and collection costs. The CCR further provides that the HOA may proceed directly against the delinquent homeowner for the amount owed or foreclose the lien and sell the lot at a public auction. Should the HOA choose to foreclose its lien, the CCR provides certain prerequisite conditions: the time and place of the foreclosure sale must be published for twenty-one (21) days by three (3) consecutive weekly publications in a newspaper circulated in Shelby County, Tennessee, and the owner of the subject lot must be notified of the time and place of the sale by written notice at his or her last known address.
On July 11, 2014, the HOA placed and recorded a lien on the Property following the plaintiff's nonpayment of assessments levied pursuant to the CCR. On July 20, 2015, the HOA obtained a judgment against the plaintiff in the Shelby County General Sessions Court for the outstanding assessment amount. The HOA then opted to foreclose its lien on the Property, and notified Plaintiff of its intent and the time and place of the foreclosure sale by certified mail to the plaintiff's last known address and published the same in The Memphis Daily News for three consecutive weeks.
On June 17, 2016, the foreclosure sale took place, and the HOA, the sole bidder, obtained the property for $4, 445.90. The property had a fair market value of approximately $100, 000.00 at the time of the foreclosure sale.
The foreclosure sale price shocks the Court's conscience; however, pursuant to Brooks v. Rivertown on the Island Homeowner Association, Inc., No. W2011-00326-COA-R3-CV, 2011 WL 6034781 (Tenn. Ct. App. Dec. 6, 2011), applying Holt v. Citizens Central Bank, 688 S.W.2d 414 (Tenn. 1984), a conscience-shocking foreclosure sale price standing alone, absent some irregularity in the ...

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