Garden v. Central Nebraska Housing Corp. et al

Filing 27

MEMORANDUM AND ORDER - Defendant Central Nebraska Housing Corp.'s cross Motion for Partial Summary Judgment (Filing No. 12 ) is denied. Defendants Rick Roberts and Loretta Sue Robertss cross Motion for Partial Summary Judgment (Filing No. 13 ) is granted. The "Objections" (Filing Nos. 16 , 20 , 25 ) are terminated. Ordered by Judge Laurie Smith Camp. (AOA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
RICHARD P. GARDEN, JR., Trustee,
Plaintiff,
v.
CENTRAL NEBRASKA HOUSING
CORP., PINNACLE BANK OF
NEWCASTLE WYOMING, SECURITY
FIRST BANK, RICK ROBERTS,
LORETTA SUE ROBERTS, JOHN
ZAPATA, COLJO INVESTMENTS,
LLC, PINNACLE BANK, and
UNVERZAGT FEED LOT,
Defendants.

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CASE NO. 8:11CV292

MEMORANDUM
AND ORDER

This matter is before the Court on the cross Motions for Partial Summary Judgment
filed by Defendant Central Nebraska Housing Corp (“CNH”) (Filing No. 12) and Defendants
Rick Roberts and Loretta Sue Roberts (Filing No. 13). The Court has considered the
briefs1 (Filing Nos. 14, 17, 23, 26) and evidence (Filing Nos. 15, 18, 19, 21, 22) the parties

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This case is before the Court after being transferred from the United States Bankruptcy Court for the
District of Nebraska. The Bankruptcy Court found that it lacked subject m atter jurisdiction over the
interpleader Com plaint. (Filing No. 1.) The parties to this case have responded to the cross Motions with their
“Objections.” The Nebraska Rules of Bankruptcy Procedure state:
A party resisting a m otion for sum m ary judgm ent m ust file a written objection or resistance
. . . A brief in support of the resistance, along with any evidentiary m aterials not previously
filed on which the objecting party relies, should be filed at the sam e tim e as the resistance
or objection.
Neb. R. Bankr. P. 7056-1(B)(1), (3). There is no rule in the Neb. R. Bankr. P. allowing a m ovant to file a reply
to an “objection,” and the parties here have not done so. Although this Court’s local rules state a “party
opposing a m otion m ust not file an . . . ‘objection’ . . . [but] m ust file a brief that concisely states the reasons
for opposing the m otion and cites to supporting authority,” NECivR 7.0.1(b)(1)(A), and also allows the m oving
party to file a reply brief addressing issues raised in the opposing brief, Id. at 7.0.1(c), the Court,
“[n]otwithstanding contrary authority, in the interest of justice . . . m ay deviate from this [C]ourt’s rules or
procedures.” NEGenR 1.1(c). The Neb. R. Bankr. P. will apply to the cross Motions at issue.

submitted in support of their respective positions. For the reasons discussed below, CNH’s
Motion will be denied, and the Robertses’ Motion will be granted.
UNDISPUTED FACTS
Based on the Court’s review of the parties’ briefs and the evidentiary record, the
following facts are not in dispute.
On January 22, 2010, Rick and Loretta Roberts filed for Chapter 7 Bankruptcy. At
that time, they owned and lived on a 143.06 acre tract of land known as Unit #54 of Mirage
Flats Irrigation Project (“Unit #54"). CNH held a first deed of trust on Unit #54. Defendant
Pinnacle Bank held a second deed of trust in Unit #54. The Robertses claimed a
homestead exemption in Unit #54 pursuant to Neb. Rev. Stat. §§ 40-101 to 40-108
(Reissue 2008). CNH obtained relief from the automatic stay and filed notices of default
and elections to sell Unit #54. The trustee of the Robertses’ bankruptcy estate abandoned
the estate except to the extent the Robertses’ homestead exemption did not cover Unit
#54.
Plaintiff Richard P. Garden is the trustee of the first deed of trust on Unit #54. (Filing
No. 1.) On November 15, 2010, Greg Frayser, acting as Garden’s representative,
conducted a trustee’s sale of Unit #54 at auction. A bid sheet was used to record the bids.
It stated, in part, the “[t]he Trustee’s Sale will remain open for ten (10) minutes and I will
accept any bids offered during that time.” (Filing No. 15-3, ex. 3.) Before Frayser started
to accept bids, the bid sheet also stated:
After 10 minutes have elapsed:
This concludes the Trustee’s sale. The highest and prevailing bidder is
_________________which/who bid $______________________.
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(Id.) CNH made an opening bid of $50,000. After other parties submitted their bids, but
just before the ten-minute period expired, CNH submitted a bid of $113,000. Frayser
announced the expiration of the ten-minute period, and the president of Pinnacle Bank,
Faron Ferguson, protested. Frayser consulted Garden regarding Pinnacle Bank’s protest.
Thereafter, Frayser accepted additional bids. CNH protested these bids as outside the
original ten-minute period, but made another bid of $166,100. Defendant Gittaway Ranch
placed the final and high bid of $166,500, and the property was sold to Gittaway Ranch.
The final bid sheet states that Gittaway Ranch was the prevailing bidder with its bid of
$166,500. (Filing No. 15-4, ex. 4.)
On December 16, 2010, Garden filed his interpleader Complaint to allow the
Defendants to litigate the rightful distribution of the Unit #54 sale proceeds.
DISPUTED FACTS
Based on the Court’s review of the parties’ briefs and the evidentiary record, the
following facts are in dispute.
CNH contends that an announcement was made that the trustee sale had
concluded upon the expiration of the ten-minute period, and then the sale reopened after
Frayser consulted with Garden. (Filing No. 15-1, Dep. of John Zapata, ex. 1 at ¶ 8.) The
Robertses contend that no declaration was made that Unit #54 was sold to CNH, and that
the sale did not close, but continued after Frayser consulted with Garden. (Filing No. 18,
Aff. of Rick Roberts, at ¶ 7.) The Robertses also contend that no one at anytime made an
announcement when the ten-minute period began or when it was about to end. (Id. at ¶
8.) Pinnacle Bank asserts that, although the auctioneer announced that he would keep the
sale open for ten minutes, he did not announce that the sale would close after ten minutes
and no other bids would be accepted. (Filing No. 21, Aff. of Faron Ferguson, at ¶ 3.)
Pinnacle Bank also asserts that immediately after CNH placed its $113,000 bid, the
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auctioneer announced without warning that the bidding had closed and did not ask if any
other bidder wished to submit a bid. (Id. at ¶ 5.) Pinnacle Bank’s president, Faron
Ferguson, stated that “[a]t the commencement of the sale, Mr. Frayser . . . announced he
would keep the sale open for ten minutes[,]” and described the end of the ten-minute
period as “Mr. Frayser clos[ing] the sale without providing opportunities for any other
bidders[.]” (Id. at ¶¶ 3, 6.)
STANDARD
Summary judgment is only proper when the Court, viewing the evidence in the light
most favorable to the nonmoving party and drawing all reasonable inferences in the
nonmoving party’s favor, determines the evidence “show[s] that there is no genuine issue
as to any material fact and that the moving party is entitled to judgment as a matter of law.”
Semple v. Fed. Express Corp., 566 F.3d 788, 791 (8th Cir. 2009) (quoting Fed. R. Civ. P.
56(c)).2 “[W]here the nonmoving party will bear the burden of proof at trial on a dispositive
issue, . . . Rule 56(e) permits a proper summary judgment motion to be opposed by any
of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings
themselves.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The moving party need
not negate the nonmoving party’s claims by showing “the absence of a genuine issue of

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“W hen deciding or reviewing cross-m otions for sum m ary judgm ent, the approach is only slightly
m odified.” W illiams v. City of Omaha, 8:02cv451, 2004 W L 390929, at *1 n.1 (D. Neb. Mar. 2, 2004); accord
Nuzum v. Chlorella, No. 8:05cv335, 2006 W L 3825111, at *5 n.5. (D. Neb. Dec. 27, 2006). As explained in
Int’l Bhd. of Elec. W orkers, Local 176 v. Balmoral Racing Club, Inc., 293 F.3d 403, 404 (7th Cir. 2002):
The usual Rule 56 standard of review applies to cross-m otions for sum m ary judgm ent, and
our review is de novo. . . . To the extent that [the losing party] challenges the court's decision
to grant sum m ary judgm ent in favor of the [prevailing party], we construe the record in the
light m ost favorable to [the losing party]. . . . To the extent that [the losing party] asserts that
the court erred in refusing to grant its own m otion for sum m ary judgm ent, the record is
evaluated in the light m ost favorable to [the prevailing party]. . . . Either way, sum m ary
judgm ent is proper if the record dem onstrates that there is no genuine issue as to any
m aterial fact and that the m oving party is entitled to judgm ent as a m atter of law under the
fam iliar standards of Fed. R. Civ. P. 56(c).

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material fact.” Id. Instead, “the burden on the moving party may be discharged by
‘showing’ . . . that there is an absence of evidence to support the nonmoving party’s case.”
Id. at 325.
In response to the movant’s showing, the nonmoving party’s burden is to produce
specific facts demonstrating “‘a genuine issue of material fact’ such that [its] claim should
proceed to trial.” Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir. 2009), cert.
denied, 130 S. Ct. 1074 (2010) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986)). The nonmoving party is required to demonstrate a “genuine
issue of material fact” that is outcome determinative–“a dispute that might ‘affect the
outcome of the suit under the governing law.’” Bloom v. Metro Heart Group of St. Louis,
Inc., 440 F.3d 1025, 1029 (8th Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986)). Thus, a “genuine issue” is more than “‘some metaphysical doubt
as to the material facts,’” Nitro, 565 F.3d at 422 (quoting Matsushita, 475 U.S. at 586), and
“‘the mere existence of some alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment.’” Bloom, 440 F.3d at 1028-29
(quoting Anderson, 477 U.S. at 247-48) (emphasis in original).
In other words, in deciding “a motion for summary judgment, [the] 'facts must be
viewed in the light most favorable to the nonmoving party only if there is a “genuine”
dispute as to those facts.'” Ricci v. DeStefano, 129 S. Ct. 2658, 2677 (2009) (quoting Scott
v. Harris, 550 U.S. 372, 380 (2007)). Otherwise, where the Court finds that “the record
taken as a whole could not lead a rational trier of fact to find for the non-moving
party”–where there is no “genuine issue for trial”–summary judgment is appropriate.
Matsushita, 475 U.S. at 587.

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DISCUSSION
The Robertses argue, relying on the Nebraska Supreme Court’s decision in Gilroy
v. Ryberg, 667 N.W.2d 544 (Neb. 2003), that allowing the additional bids beyond the tenminute period allowed the trustee sale to realize an additional $53,500 in the sales price
and, therefore, CNH cannot set aside the sale of Unit #54 to Gittaway Ranch for $166,500.
CNH argues that it is not seeking to set aside a foreclosure sale, but is seeking to enforce
a binding contract created between CNH and Garden when CNH submitted its $113,000
bid immediately before the expiration of the ten-minute bidding period. CNH argues that
allowing an auctioneer to change the rules mid-auction due to the protest of a bidder would
go against the policy of promoting stability and integrity at trustee sales the Nebraska
Legislature announced when it enacted the Nebraska Trust Deeds Act.
I. CNH’s Motion
“A party attempting to enforce a contract . . . has the burden of proving that there
was a definite offer and an unconditional acceptance.” Marten v. Staab, 543 N.W.2d 436,
443 (Neb. 1996). In other words, the party must show “that a valid, legally enforceable
contract exists.” Id. Where a party asserts that a contract is formed during an auction, the
Court must classify the type of auction that took place: (1) “with reserve,” or (2) “without
reserve.” Id. (citing 1 Arthur L. Corbin, Corbin on Contracts § 4.14 (Joseph M. Perillo rev.
ed. 1993)). An auction is presumed to be “with reserve.” Id. In an auction “with reserve,”
“[t]he bidder is deemed to be the offeror, while the auctioneer is the offeree.” Id.3 “[T]he
auctioneer, as agent of the seller, invites bids (offers) with the understanding that no
bargain exists until the seller has made a further manifestation of assent; the auctioneer

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In an auction “without reserve,” the roles are reversed; “the seller becom es the offeror and the bidder
the offeree[.]” Marten, 543 N.W .2d at 443 (quotations and citation om itted).

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may reject all bids and withdraw the goods from sale until he announces completion of the
sale.” Id. (quotations and citation omitted).4
CNH bears the burden of proving that a contract for the sale of Unit #54 formed
between it and Garden. The auction is presumed to be an auction “with reserve,” Id.; see
also Neb. Rev. Stat. § 76-1009 (Reissue 2009) (“Every bid shall be deemed an irrevocable
offer”), and CNH points to nothing in the record that shows the auction was “without
reserve.” Therefore, at the auction, Frayser invited bids “with the understanding that no
bargain exist[ed] until” he announced the sale was complete, and until the seller, Garden,
made a further manifestation of assent to the sale. See Martin, 543 N.W.2d at 443.
At the end of the ten-minute period, Frayser announced that he was closing the
bidding. He did not announce that the property had been sold to CNH. Frayser then
consulted with Garden, the trustee and seller of the property, after the ten-minute period
terminated. Frayser likely would not have allowed parties to submit additional bids after
he consulted with Garden had Garden made a manifestation of further assent to the sale
and accepted CNH’s offer. The final bid sheet states that Gittaway Ranch was the
prevailing bidder. Nothing indicates that CNH’s name ever appeared on the line indicating
that it was the prevailing bidder. Therefore, CNH’s Motion for Partial Summary Judgment

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See also In re NextW ave Personal Commc’ns, Inc., 200 F.3d 43, 60, 61 (2d Cir. 1999) (quotations
and citations om itted):
[T]he close of the auction-traditionally the drop of the ham m er-signals acceptance of an offer
and form s an enforceable contract. . . . The tim ing of acceptance, and therefore of the
creation of a contractual obligation, is different if the auction sale is conducted ‘with reserve’:
W here the seller reserves the right to refuse to accept any bid m ade, a binding sale is not
consum m ated between the seller and the bidder until the seller accepts the bid.
...
Auctions with reserve stand or fall as a m atter of the seller’s discretion, usually on the basis
of the pecuniary sufficiency of the bids.

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is denied.5 See Joseph Heiting and Sons v. Jacks Bean Co., 463 N.W.2d 817, 821 (Neb.
1990) (“When the issue is whether an acceptance of an offer was sufficient to create a
contract, the issue is one of fact and summary judgment is not proper”).
II. The Robertses’ Motion
The Robertses ask the Court to find that there is no genuine issue of material fact
regarding the trustee’s valid sale of Unit #54 to the highest bidder at the price of $166,500.
CNH contends that it does not seek to set aside the trustee sale, but is attempting
to enforce a contract for the sale of Unit #54. Even if CNH entered into a contract for the
sale of Unit #54 and has a cause of action for breach of contract,6 it does not necessarily
follow that Unit #54 was not sold to Gittaway Ranch. CNH acknowledges in its Statement
of Undisputed Facts that after Frayser accepted additional bids, Unit #54 “was sold to

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CNH relies on Commercial Fed. Sav. & Loan Ass’n v. ABA Corp., 431 N.W .2d 613 (Neb. 1988), for
its assertion that allowing the auctioneer to change its rules m id-auction would go against the policy of
prom oting integrity and stability at trustee sales. However, the court in that case determ ined that the integrity
and stability of a judicial sale would be underm ined if it allowed a party to subm it a sham bid to discourage
other bidders, only to revoke that bid and subm it a lower bid, thereby resulting in a reduced sales price. Id.
at 616. Here, the record does not indicate that Pinnacle Bank, or any other bidder at the auction, subm itted
a sham bid in order to discourage other bidders. Instead, the record indicates that m ultiple bidders would
have continued to bid had there been no ten-m inute period, or would have subm itted their bids prior to the end
of the ten-m inute period had they known when that period was going to end. Further, reopening or resum ing
the bidding resulted in an increased, not a decreased, sales price.
The Court also notes that there m ight be an issue of whether the alleged contract is unenforceable
because of the Statute of Frauds. See Richard A. Lord, 1 W illiston on Contracts § 4:12, 537-40 (4th Ed. 2007)
(footnotes om itted):
One further note about offers and acceptances in the auction setting is in order. . . . [T]he
contract thus form ed m ay be unenforceable under the Statute of Frauds. As a general rule,
the auctioneer at an auction sale is the agent not only of the seller, but also of the buyer for
purposes of m aking and signing a m em orandum sufficient to satisfy the Statute. . . . The
signature of the auctioneer m ust generally be m ade im m ediately following the sale, and,
according to the traditional view, between the tim e the ham m er falls (or the closing of the sale
is otherwise announced) and the m em orandum is written, the bidder m ay withdraw its bid or
the owner m ay properly revoke the auctioneer’s authority to sign on the owner’s behalf.
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See Richard A. Lord, 25 W illiston on Contracts § 66:81, 16 (4th Ed. 2002) (”A purchaser who is not
in default under a contract for the sale of real estate has a cause of action for dam ages where the vendor
wrongfully fails or refuses to convey in accordance with the term s of the contract”).

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[Gittaway Ranch].” (Filing No. 14, at ¶ 16.) As a result, CNH’s entitlement to the proceeds
of the sale of Unit #54 still depends upon whether it can set aside the sale of Unit #54 to
Gittaway Ranch.
The Nebraska Supreme Court held in Gilroy that a party seeking to set aside a
trustee’s sale must show “(1) the defect, by its nature, would have a tendency to result in
a reduced sale price and (2) the sale price was inadequate.” Gilroy, 667 N.W.2d at 555,
559.
CNH claims that allowing for bids after the expiration of the ten-minute period was
improper because Frayser announced he would accept bids during a ten-minute period
and did not expressly state that he would accept bids after that period. This alleged
“defect, by its nature, [did not] have a tendency to result in a reduced sale price.” Gilroy,
667 N.W.2d at 555, 559. To the contrary, the record reveals that acceptance of additional
bids resulted in an increased sale price–one that was $53,500 higher than if bids had been
refused at the expiration of the ten-minute period. Even viewing the facts in the light most
favorable to CNH, no reasonable finder of fact could conclude that accepting bids after the
expiration of a ten-minute time limit–especially a time limit beginning at a moment not
specifically revealed to bidders and ending immediately after CNH’s bid with no opportunity
for others to offer a higher bid–would have a tendency to result in a reduced sale price.
Nor could any reasonable finder of fact conclude that $166,500, when compared to
$113,500, was inadequate. Therefore, the Robertses’ cross Motion for Partial Summary
Judgment is granted.

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Accordingly,
IT IS ORDERED:
1.

Defendant Central Nebraska Housing Corp.’s cross Motion for Partial
Summary Judgment (Filing No. 12) is denied;

2.

Defendants Rick Roberts and Loretta Sue Roberts’s cross Motion for Partial
Summary Judgment (Filing No. 13) is granted; and

3.

The “Objections” (Filing Nos. 16, 20, 25) are terminated.

DATED this 5th day of October, 2011.
BY THE COURT:

s/Laurie Smith Camp
United States District Judge

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