Chase Home Finance, LLC v. Jacob Fox

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

14-489

CHASE HOME FINANCE, LLC,
SUCCESSOR BY MERGER TO
CHASE MANHATTAN MORTGAGE CORPORATION
A/K/A JPMORGAN CHASE BANK, N.A.

VERSUS

JACOB FOX, ET AL.

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APPEAL FROM THE
TWENTY-SEVENTH JUDICIAL DISTRICT COURT
PARISH OF ST. LANDRY, NO. 11-C-2061, DIVISION “A”
HONORABLE JAMES P. DOHERTY, JR., DISTRICT JUDGE

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JAMES T. GENOVESE
JUDGE

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Court composed of J. David Painter, James T. Genovese, and Phyllis M. Keaty,
Judges.

AFFIRMED.

Matthew D. Henrich
Katharine Dugal Henrich
Henrich & Henrich APLC
113 S. Budd Street
Sunset, Louisiana 70584
(337) 662-5245
COUNSEL FOR APPELLANT:
Matthew D. Henrich

Daniel A. Reed
Seale, Smith, Zuber & Barnette
8550 United Plaza Boulevard, Suite 200
Baton Rouge, Louisiana 70809
(225) 924-1600
COUNSEL FOR PLAINTIFF/APPELLEE:
JPMorgan Chase Bank, N.A.,
Successor by Merger to Chase Home Finance, LLC

Chad P. Pitre
111 North Court Street
Opelousas, Louisiana 70570
(337) 942-8587
COUNSEL FOR APPELLEE:
St. Landry Parish Sheriff, Bobby Guidroz

GENOVESE, Judge.

Matthew D. Henrich, a third party purchaser of immovable property at

sheriff’s sale, appeals the trial court’s grant of a Motion to Annul Sheriff’s Sale

filed on behalf of JPMorgan Chase Bank, N.A., Successor by Merger to Chase

Home Finance, LLC (Chase), the seizing creditor. For the following reasons, we

affirm.

FACTUAL AND PROCEDURAL HISTORY

On April 28, 2011, Chase filed a Petition for Executory Process against

Jacob Fox for the seizure of immovable property located in St. Landry Parish

owned and mortgaged by Mr. Fox1 to satisfy his indebtedness on a mortgage note

he executed with Chase. The petition asserted that there was a $77,597.49

outstanding balance on the note, plus interest of 6.00% per annum from August 1,

2009, until paid. Chase also sought attorney fees and all costs incurred in

connection with the proceedings. The trial court ordered the seizure and sale of the

property as requested by Chase.

The sale of the property by the St. Landry Parish Sheriff (Sheriff) was

scheduled, cancelled, and eventually reset for January 22, 2014. Chase was not

present at the sale.2 When the opening bid for the property was announced, it was

erroneously stated to be two-thirds of the appraised value.3 The net appraisal value

1
Chase’s petition also names Lacey Gautreaux, a “Third Party Non-Defendant in this
matter reflected by the signing of the mortgage wherein she acknowledged and agreed to the
indebtedness and the conditions contained in the mortgage and as a co-owner of the property
[Chase requests] that she be served with a copy of these proceedings, and the Sheriff seize and
sell all of his/her interest in the property.”
2
Chase asserts it failed to get proper notice of the sale date.
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Although Mr. Henrich challenges their veracity, the Deputy Supervisor of the Civil
Division for the Sheriff and his Civil Deputy Clerk testified that they mistakenly believed that
Mr. Henrich, who is an attorney, was representing Chase at the sale. When Mr. Henrich returned
to pay for the property and to have title issued to him, the error was discovered.

was $44,500.00; accordingly, the minimum bid was announced to be two-thirds of

that amount, or $29,667.00. Mr. Henrich paid the purchase price of $29,667.00.

Following the sale, Chase notified the Sheriff’s office that it disputed the

sale and that the Sheriff should not issue the deed to the property to Mr. Henrich.

Chase advised that the writ amount exceeded $100,000.00; thus, Mr. Henrich’s bid

of $29,667.00 was insufficient to purchase the property.

Upon learning that Chase disputed the validity of the sale, Mr. Henrich filed

a Writ of Mandamus and Rule to Show Cause requesting that the trial court order

the Sheriff to file a proces verbal and bill of sale issuing title of the property to

him.4 In response, Chase filed a Motion to Annul Sheriff’s Sale. Following a

hearing, the trial court denied Mr. Henrich’s Writ of Mandamus and granted

Chase’s Motion to Annul Sheriff’s Sale.5 From said judgment, Mr. Henrich

appeals.

ASSIGNMENTS OF ERROR

Mr. Henrich presents the following assignments of error for our review:

1. The trial court failed to rule ownership passed to the third party
purchaser at the time the sale was perfected.

2. In rendering final judgment in favor of Chase Bank, the trial court
erred by ruling the sale to the innocent third party purchaser was
invalid.

3. The trial court erred by allowing Chase Bank’s redress for the
violation of La.[Code Civ.P. art. 2338](B) to be against an
innocent third party purchaser.

LAW AND DISCUSSION

In addressing the assignments of error raised in this appeal, we note that the

facts are not in dispute. In such instances, this court has stated:
4
Mr. Henrich also filed a Peremptory Exception of No Cause of Action and No Right of
Action.
5
The trial court also denied Mr. Henrich’s Exception of No Cause of Action and No Right
of Action. The trial court’s rulings on those exceptions are not before this court on appeal.
2

However, “[i]n a case where there are no contested issues of fact[ ]
and the only issue is the application of the law to the undisputed facts,
. . . the proper standard of review is whether or not there has been
legal error.” Tyson v. King, 09-963, p. 2 (La.App. 3 Cir. 2/3/10), 29
So.3d 719, 720 (quoting Bailey v. City of Lafayette, 05-29, p. 2
(La.App. 3 Cir. 6/1/05), 904 So.2d 922, 923, writs denied, 05-1689,
05-1690, 05-1691, and 05-1692 (La.1/9/06), 918 So.2d 1054, 1055,
and the cases cited therein).

Daigle v. Merrill Lynch, 12-1016, p. 3 (La.App. 3 Cir. 2/6/13), 107 So.3d 901, 903.

Therefore, the standard of review which we are to apply in this case is whether the

trial court’s ruling constituted legal error.

On appeal, Mr. Henrich first assigns as error the trial court’s failure to rule

that ownership of the subject property passed to him, a third party purchaser, at the

time the sale was perfected. In support thereof, Mr. Henrich cites La.R.S. 9:3158

which provides that an “adjudication is the completion of the sale; the purchaser

becomes the owner of the article adjudged, and the contract is, from that time,

subjected to the same rules which govern the ordinary contract of sale.”

Additionally, he refers this court to La.Code Civ.P. art. 2342 which states that

“[w]ithin fifteen days after the adjudication, the sheriff shall pass an act of sale to

the purchaser, in the manner and form provided by law. The act of sale adds

nothing to the force and effect of the adjudication, but is only intended to afford

proof of it.”

Based upon the foregoing provisions, Mr. Henrich contends that he acquired

ownership of the property upon his paying the bid price which “consummated” the

sale. Therefore, he concludes that “[g]iven the jurisprudence and public policy

protecting innocent third party purchaser[s], the trial court erred in granting

[Chase’s] Motion to Annul Sheriff’s Sale.”

This assignment of error presupposes that the “sale was perfected.”

However, in its ruling, the trial court expressly found that the sale was invalid.

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Thus, the trial court’s error, vel non, necessarily emanates from its determination,

as stated in Mr. Henrich’s second assignment of error, that the trial court erred in

ruling that the sale was invalid. Axiomatically, if the sale was invalid, there was

no sale to be perfected, and ownership could not have passed.

Undisputedly, Chase was not present at the sale of the subject property.

Therefore, the minimum purchase price for the property was governed by La.Code

Civ.P. art. 2338 (emphasis added) which provides:

A. If the security interest, mortgage, lien, or privilege of the
seizing creditor is superior to other security interests, mortgages, liens,
and privileges on the property, he may require that the property be
sold, even though the price is not sufficient to satisfy his or the
inferior security interests, mortgages, liens, and privileges.

B. If the seizing creditor is not present or represented at the
sale, the property shall not be sold for less than the amount
necessary to fully satisfy his writ plus the costs.

In considering Chase’s Motion to Annul the Sheriff’s Sale, the trial court

reasoned:

When the language is clear and unambiguous, the [c]ourt is to follow
the language[,] and it is my opinion that the language of 2338(B) of
the Code of Civil Procedure is very clear that [the property] is not to
be sold [for] less than the amount to fully satisfy the writ plus costs.

Based upon the evidence, the trial court ruled as follows:

The [c]ourt finds in this case from the evidence that was
adduced and the testimony of the witnesses that’s what happened.
Chase had no one present at the sale. The amount of the bid did not
satisfy the amount of the writ; therefore, the sale is invalid. It’s a null
sale. It’s just invalid. With an invalid sale, it didn’t give
[Mr. Henrich] any rights.

For these reasons, the trial court annulled the sale and ordered the Sheriff to return

any money paid by Mr. Henrich, and it denied his request for mandamus.

Mr. Henrich acknowledges in brief that “[t]here are no cases directly

addressing the validity of a sale made in violation of La.[Code Civ.P. art.]

2338(B)[.]” Recognizing that in General Motors Acceptance Corp. v. Tullier,
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453 So.2d 329, 331 (La.App. 3 Cir. 1984), the creditor appealed a trial court’s

dismissal of a suit for a deficiency judgment, we note that this court has opined:

“If in fact the property was sold at the first offering for less than two-thirds of its

appraised value, the sale could be declared null as having been made in violation of

[La.Code Civ.P. art.] 2336. Monroe v. Jones, 136 La. 143, 66 So. 759 (1914).”

Mr. Henrich emphasizes that “[t]he rights of ownership of a third party

purchaser are held sacrosanct by Louisiana courts” and that “the ownership rights

of third party purchaser[s] must be protected.” As between a seizing creditor and

a third party purchaser, he concludes that “the ownership rights of a third party

purchaser must be protected.” However, there is no legal authority to support his

contention that his status as a third party purchaser negates the requirement that

when the seizing creditor is not present, property being sold at sheriff’s sale cannot

be sold for less than the amount required to satisfy the writ plus costs.

Mr. Henrich cites Reed v. Meaux, 292 So.2d 557 (La.1973), in an effort to

demonstrate the protection of rights of a third party purchaser relative to executory

proceedings. With respect to Mr. Henrich’s reliance on Reed, we note that

subsequent to that supreme court decision, La.R.S. 13:4112 was enacted. As noted

by Chase, the provisions of La.R.S. 13:4112 address Mr. Henrich’s concern for the

protection of third party purchasers. Louisiana Revised Statutes 13:4112

(emphasis added) provides:

Actions to set aside or annul judicial sales in executory proceedings

No action may be instituted to set aside or annul the judicial
sale of immovable property by executory process by reason of any
objection to form or procedure in the executory proceedings, or by
reason of the lack of authentic evidence to support the order and
seizure, where the sheriff executing the foreclosure has either filed
the proces verbal of the sale or filed the sale for recordation in the
conveyance records of the parish. Any party seeking to annul or set
aside a judicial sale of immovable property through executory
proceedings filed for record before the adoption of this Section must
5

do so within six months of September 12, 1975. Nothing herein shall
be construed to affect legal defenses otherwise available to any person
against whom a deficiency judgment is sought after the public sale of
immovable property through executory proceedings.

This court discussed Reed and La.R.S. 13:4112 in Guillory v. Fontenot, 413

So.2d 328, 331 (La.App. 3 Cir. 1982) (second emphasis added), stating as follows:

In Reed, supra, the suit was filed after the proces verbal and sale
had been recorded. In the case at hand, the suit for injunctive relief
was filed after the property was adjudicated to Fontenot by virtue of
the executory proceedings, but before the sheriff had filed the proces
verbal of the sale or had filed the sale to Fontenot in the conveyance
records. Such a procedure is clearly authorized by R.S. 13:4112.

This statute prohibits an attack upon the validity of a judicial
sale by executory process after the recordation of the proces verbal of
the sale or the recordation of the sale by the sheriff. The statute does
not limit the attack to those instances where the property is
adjudicated to the foreclosing creditor. It follows, therefore, that
an attack on the validity of the sale by executory process can be
made under the statute even though the adjudication was not
made to a foreclosing creditor, provided that such attack is made
prior to the recordation of the proces verbal or the recordation of
the sale. This suit, having been filed before the recordation of the
proces verbal or the recordation of the sale to Fontenot, is authorized
by LSA-R.S. 13:4112.

There being no dispute that substantive defects existed in the
executory process, the trial court properly rendered judgment granting
the permanent injunction.

Based upon the foregoing, we agree with Chase that by virtue of

La.R.S. 13:4112, a third party purchasers’ “rights are protected, but the law defines

the ‘consumation’ of the sale as the issuance of the proces verbal or the deed, not

the tendering of the bid price” as argued by Mr. Henrich. In this case, ownership

of the property did not pass to Mr. Henrich as the sale was never perfected.

Additionally, pursuant to La.R.S. 13:4112, an action to annul a judicial sale may be

instituted if it is timely done prior to the sheriff’s filing of “the proces verbal of the

sale or fil[ing] the sale for recordation in the conveyance records of the parish[,]”

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which had not yet been done in this case. The statute does not limit or prohibit

such an action when the property has been sold to a third party purchaser.

In this case, the evidence established that Chase was not present at the sale,

thereby implicating the mandatory provisions of La.Code Civ.P. art. 2338. The

amount bid by Mr. Henrich was insufficient to satisfy the writ amount plus costs as

required. Therefore, we find no error in the trial court’s ruling that the sale to

Mr. Henrich was invalid because the sale was in violation of the provisions of

La.Code Civ.P. art. 2338.

Finally, in his third assignment of error, Mr. Henrich asserts that Chase’s

redress should not be against him. Instead, he argues that “[d]isputes relating to

the sheriff making procedural defects should be settled between Chase Bank and

the St. Landry Parish Sheriff’s Department, not with the innocent third party

purchaser.” Although Mr. Henrich may not agree with the result, the remedy

expressly provided for in La.R.S. 13:4112 is that the sale be annulled. Thus, we

find no merit to this contention.

DECREE

For the reasons assigned, the judgment of the trial court granting the Motion

to Annul Sheriff’s Sale on behalf of JPMorgan Chase Bank, N.A., Successor by

Merger to Chase Home Finance, LLC, and denying Matthew D. Henrich’s request

for a Writ of Mandamus is affirmed. Costs of this appeal are assessed to Matthew

D. Henrich.

AFFIRMED.

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