SANDPOINT — The Idaho Supreme Court is reinstating the sale of a nearly 20-acre property in Bonner County for $1,000.
First District Judge Steve Verby set aside the sheriff’s auction sale in 2010 because the price paid was “so grossly inadequate as to shock the judicial conscience.”
However, the high court ruled on Friday that the sale stands because the gross inadequacy of the price alone is insufficient grounds to set aside the transaction.
The Byzantine civil dispute began in 2009, when Leon Phillips and Earline Chance sued Carole Blazier-Henry for nonpayment of promissory notes. Phillips and Chance won a $87,000 default judgment against Blazier-Henry and levied upon the property to satisfy the judgment.
Although the property had an appraised value of $99,000, it was sold to Roy Jacobson at auction for a mere $1,000.
Phillips and Chance did not appear at the auction and their attorney at the time, Fonda Jovick, erroneously believed it was the county’s responsibility to submit a credit bid — a bid based on the outstanding debt — on their behalf during the auction.
Phillips and Chance, who stood to recover only a fraction of the debt owed by Blazier-Henry, moved to have the sale set aside and Verby agreed.
Verby held that there was no Idaho case law which addressed the circumstances at hand, prompting him to rely upon five cases cited in American Law Reports that dealt specifically with the question of setting aside sheriff’s sales due to inadequacy of price.
Those cases held that such sales should be set aside when the disparity of the property’s value and the successful bid is so great that it “shocks the conscience” of the court.
Jacobson appealed, while Phillips and Chance cross-appealed.
Justice Jim Jones sided with Jacobson’s counsel, Brent Featherston, who argued that the shocks-the-conscience standard is not the standard in Idaho and pointed to several cases where gross inadequacy in price was not enough to set aside a sheriff’s sale.
Gross inadequacy of price can factor into the setting aside of a sale, although it must be coupled with an additional circumstances. Phillips and Chance argued that their counsel’s misunderstanding of sheriff’s sale rules constituted the necessary additional circumstance.
But Jones ruled that a misunderstanding of the law does not provide an additional circumstance for granting relief and that Phillips and Chance failed to protect their interests in the sale by failing to submit a credit bid.
“Chance was the precipitating cause of the injury that she now seeks to have cured by the Court. If anybody was injured by Chance’s inattention, it was the judgment debtor, Blazier-Henry, who lost the real property and only had $1,000 applied against the Chance judgment,” Jones said in the 11-page ruling.
Jones further ruled that Phillips and Chance’s cross-appeal was without merit. Chance’s counsel argued for the sale to be set aside or, alternately, to extend the time period to try to obtain redemption of the property.
Although the two remedies are inconsistent with one another, Chance sought the benefit of both. Jones said there are multiple legal doctrines which would prevent that from happening.
“However, the most powerful doctrine to apply to these facts is that of common sense or, better stated, you can’t have your cake and eat it, too,” Jones wrote.
Chief Justice Roger Burdick concurred, as did justices Daniel Eismann, Warren Jones and Joel Horton.