Whitefish Credit Union v. Prindiville

Whitefish Credit Union v. Prindiville, 2015 MT 328 (Nov. 24, 2015) (Rice, J.) (6-0, aff’d & rev’d)

Issue: (1) Whether the district court erred by holding that a hearing was required as a matter of law to determine the fair market value of the foreclosed property; (2) whether the district court’s valuation of the foreclosed property was supported by credible evidence; and (3) whether the district court erred by improperly admitting evidence at the hearing.

Short Answer: (1) No; (2) the Court does not reach this issue because (3) yes, the district court abused its for a rehearing.

Affirmed & reversed & remanded

Facts: Defendants Prindivilles, Shinns, and Rothschild acquired more than 600 acres of land on Patrick Creek Road with a loan from Whitefish Credit Union for $2.237 million. After a series of amendments, Defendants signed a promissory note to WCU for $1,949,466.81, which was secured by mortgages on the property. Defendants defaulted in 2011 with a principal balance of $1,951,670.81 owing, and offered WCU a deed in lieu of foreclosure. WCU refused and filed for foreclosure and any deficiency judgment.

WCU moved for summary judgment in October 20122, and the parties stipulated to a foreclosure sale. The property sold for $1.1 million, and WCU moved for entry of a deficiency judgment of $745,365.79. Defendants argued the FMV of the property exceeded the loan balance and requested a hearing. The district court granted partial summary judgment to WCU but held it must hold a hearing to determine the FMV and thereby any deficiency owing.

Procedural Posture & Holding: At the hearing, both parties presented appraisals and expert testimony. The district court found the FMV of the property on the date of the sale was $2,366,667 and determined no deficiency was due WCU. WCU appeals, and the Supreme Court affirms and reverses and remands for a rehearing.

Reasoning: (1) A hearing to determine the FMV of property prior to entering a deficiency judgment is not mandated by statute or case law. However, the district court had the discretion to act in equity and did not a its discretion in conducting a hearing. When exercising its equitable powers, the district court is charged with fashioning an equitable result for both parties.

(2) The district court’s valuation is not discussed as the Court remands on issue (3).

(3) WCU raises three evidentiary issues: the Barrie appraisal, Lard’s undisclosed opinion, and Elm’s testimony. It holds that the district court abused its discretion in admitting the Barrie appraisal and Lard’s undisclosed opinion, and further erred by relying upon the Elm affidavit for a valuation of the property. The Court reverses and remands for further proceedings.