United States of America v. Massey et al

Filing 38

ORDER granting 32 Motion for Default Judgment; terminating 32 Motion for Hearing. The Clerk of Court is directed to enter judgment in favor of Plaintiff in the amount of $325,443.22 plus interest at a per diem rate of $31.5428 beginning on January 24, 2017. The Clerk of Court is directed to enter a judgment of foreclosure as to Plaintiff's security interest in Masseys real and personal property at issue in this matter. Signed by Honorable Bruce Howe Hendricks on 2/3/2017.(abuc)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
GREENWOOD DIVISION
United States of America,

)
)
Plaintiff,
)
)
v.
)
)
Benjamin Roy Massey, Havird Oil Co.,
)
J. Brandon Crawford, Carter Trucking Co.,)
South Carolina Department of Revenue, )
Branch Banking & Trust Co. of South
)
Carolina, and Saluda County,
)
)
Defendants.
)
)

Civil Action No. 8:16-cv-147-BHH

DECREE AND JUDGMENT OF
FORECLOSURE AND SALE

BACKGROUND AND FACTUAL/LEGAL DETERMINATIONS
Plaintiff commenced this action to foreclose on property located in Saluda
County, South Carolina, for failure to repay loans made through the United States
Department of Agriculture. Defendants in this suit include the debtor, Benjamin Roy
Massey (“Massey” or “debtor”), and several parties with lien interests in the debtor’s real
and/or personal property.
Plaintiff’s action stems from four promissory notes. Massey executed the first
note (“Note 1”) on May 29, 2007, promising to pay to the order of the United States the
sum of $188,400.00 at an interest rate of 5.125% per annum. (ECF No. 7-2 at 1-3.)
Massey executed the second note (“Note 2”) on June 11, 2007, promising to pay to the
order of the United States the sum of $200,000.00 at an interest rate of 5.125% per
annum. (Id. at 4-6.)1 Massey executed the third note (“Note 3”) on July 28, 2008,

1

Plaintiff inadvertently attached an unexecuted copy of Note 2 to the amended complaint and the motion
for default judgment. (See ECF Nos. 7-2 at 4-6; 32-2 at 4-6.) However, an executed copy of Note 2 has
since been filed as a supplement to the default judgment motion. (ECF No. 36.)

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promising to pay to the order of the United States the sum of $105,000.00 at an interest
rate of 5.000% per annum. (Id. at 7-10.) Massey executed the fourth note (“Note 4”) on
July 28, 2008, promising to pay to the order of the United States the sum of $75,000.00
at an interest rate of 3.625% per annum.2 (Id. at 11-14.)
Plaintiff has pled that Massey, in order to provide security for the loans, granted
and delivered to Plaintiff three real estate mortgages, dated May 29, 2007, June 11,
2007, and July 28, 2008, covering certain real property situated in Saluda County,
South Carolina. (Am. Compl., ECF No. 7 ¶ 8.) Plaintiff represents: (1) that the tract of
land secured by the mortgages dated May 29, 2007 and June 11, 2007 was foreclosed
upon by South Carolina Rural Rehabilitation Corporation (“SCRRC”) and sold on
September 6, 2011; (2) that Plaintiff’s mortgages on that tract of land were subordinate
to SCRRC’s mortgage; and (3) that after SCRRC’s mortgage was paid off, Plaintiff
received surplus proceeds from the foreclosure in the amount of $158,620.54, which
were applied to Massey’s outstanding balance owed to Plaintiff.3 The mortgage filed on
July 28, 2008 (“the mortgage”) secures the property that is the subject of this action and
is of record in the Office of the Clerk of Court for Saluda County, South Carolina in Book
849, at Page 7. (ECF No. 7-3.) The mortgage secures two tracts of land, more
specifically described in Exhibit A thereto. (See id. at 5.)
To further secure his indebtedness owed Plaintiff, Massey executed security
agreements dated May 29, 2007, June 11, 2007, and July 28, 2008, which granted to
2

Note 4 confusingly states the interest rate both as “THREE AND FIVE EIGHTS [sic] percent” and
“3.685%” per annum. (ECF No. 7-2 at 11.) The numerical representation appears to be an inaccurate
calculation of the agreed upon rate of three and five eighths (3 ) percent. The accurate calculation of the
rate is 3.625%, not 3.685%. Plaintiff does not dispute this, given Plaintiff’s own itemization of the
applicable rate as “3.625%” in paragraph 6 of the amended complaint. (See ECF No. 7 at 2.)
3
Accordingly, Plaintiff did not attach the May 29, 2007 and June 11, 2007 mortgages to the amended
complaint, nor are they a subject of the instant proceeding.

2

Plaintiff a security interest in beef cows, dairy cows, and bred heifers, then owned or
thereafter acquired, together with all increases, replacements, substitutions, and
additions thereto, as well as a security interest in certain crops grown on acreage
located in Saluda County, and all equipment and fixtures associated with the dairy barn.
(ECF No. 7-4.) Plaintiff has plead that it perfected its security interest by filing two
financing statements, duly recorded in the Office of the Secretary of State of South
Carolina on June 4, 2007 and July 30, 2008,4 a continuation statement on April 11,
2013, also duly recorded (see ECF No. 32-5 at 4), and a fixture filing, duly recorded in
the Office of the Saluda County Clerk of Court on July 28, 2008 (see id. at 1-3).
Plaintiff filed this suit on January 15, 2016, claiming that Massey defaulted on the
loans, and that Plaintiff is therefore entitled to: (1) judgment on the debt; (2) foreclosure
on the real property; (3) foreclosure on the personal property; and (4) costs and
expenses, including reasonable attorney fees. The initial complaint alleges the following
competing lien interests in Massey’s property: (1) Havird Oil Co. (“Havird”) may have a
claim by virtue of a judgment dated November 24, 2009 and recorded December 3,
2009; (2) J. Brandon Crawford (“Crawford”) may have a claim by virtue of a judgment
dated August 2, 2010 and recorded August 5, 2010; (3) Carter Trucking Co. may have a
claim by virtue of a judgment dated September 20, 2010 and recorded September 30,
2010; (4) the South Carolina Department of Revenue (“SCDOR”) may have a claim by
virtue of tax liens recorded January 14, 2010, August 4, 2010, and an unpaid balance
for 2015; (5) Branch Banking & Trust Co. of South Carolina (“BB&T”) may have a claim
by virtue of a deficiency judgment recorded June 7, 2011; and (6) the Internal Revenue
Service may have a claim by virtue of a federal tax lien recorded on August 31, 2012.
4

These financing statements are not attached to the amended complaint or motion for default judgment.

3

(ECF No. 1 ¶¶ 12-17.)
Plaintiff filed an amended complaint on February 1, 2016, removing Martha Ann
Massey as a defendant and adding Saluda County as a defendant. The amended
complaint alleges an additional competing lien interest in Massey’s property: Saluda
County may have a claim as a result of unpaid property taxes in Massey’s name, owed
to Saluda County for the year 2015. (ECF No. 7 ¶ 18.)
All defendants were served with the summons, complaint, and amended
complaint; only Crawford and SCDOR filed answers (ECF Nos. 10; 12; 17). On August
8, 2016, Plaintiff filed a motion for default judgment and request for a damages hearing
(ECF No. 32). None of the defendants responded to Plaintiff’s motion for default
judgment and request for a damages hearing.
Having reviewed the evidence and the entire record in this case, the Court
concludes as follows:
1.

Massey has defaulted on the obligations set out in Note 1, Note 2, Note 3,

and Note 4.
2.

Massey’s refusal to pay the amount owed required Plaintiff to hire counsel

and incur costs to collect on the notes. Since the inception of the action, Plaintiff’s
counsel have assumed responsibility for the institution of this action and have searched
and updated the title on the real property from the date the current owner received the
property, or the date the mortgages were executed, to the date of the filing of the lis
pendens. Plaintiff’s counsel have been responsible for the preparation of the following:
(1)
(2)
(3)
(4)

Lis pendens;
Summons and Complaint;
Amended Complaint;
Motion for Default Judgment and Request for Damages Hearing;
4

(5)
(6)

Proposed Decree of Foreclosure and Sale;
Other documents as applicable pertaining to service and finalization of this
action.

Further duties will include: forwarding copies of this Order to each defendant;
advising each defendant of the date the property will be sold; arranging and
coordinating the amount to be bid by Plaintiff; representing Plaintiff at sale; and
preparing after sale documentation, as required.
The promissory notes provide that Plaintiff is entitled to collection costs including
reasonable attorneys’ fees, and Plaintiff requests that the Court award $1,750.00 in
attorneys’ fees. (See Ryan Aff., ECF No. 37-2.) In light of the potential liabilities inherent
in a property action and the amount of the mortgage debt at issue, the attorneys’ fees
requested by Plaintiff are reasonable and shall be added to the total debt owed.
3.

As of January 24, 2017, the amount due and owing on the notes, with

interest at the rates provided therein, and other costs and expenses of collection,
including attorneys’ fees, secured by the notes and mortgage was as follows:
a.
b.
c.

Principal due and interest as of 1/24/17
at the rate of $31.5428 per diem
Cost of collection prior to hearing
(service, filing, etc.)
Attorneys’ fees

TOTAL debt secured by notes and mortgage,
including interest to January 24, 2017:

$322,147.82
$
$

1,545.40
1,750.00

$325,443.22

(See Fee Aff., ECF No. 37-1; Ryan Aff., ECF No. 37-2.)
4.

Interest continues to accrue on the debt stated above at a per diem rate of

$31.5428.
5.

The lien interests of Havird, Crawford, Carter Trucking Co., SCDOR,

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BB&T, and Saluda County are junior to Plaintiff’s lien interest in the real property.5 As a
result, Plaintiff’s mortgage lien against Massey constitutes a first mortgage lien on the
real property described in “Exhibit A to Mortgage From Benjamin Roy Massey To
USDA/Farm Service Agency Dated July 28, 2008” (ECF No. 7-1).
6.

The security interests against Massey’s personal property (livestock,

equipment, and fixtures associated with the dairy barn) are perfected and also
constitute a first lien on the property described in the documents entitled, “Security
Agreement (Chattels and Crops),” dated May 29, 2007, June 11, 2007, and July 28,
2008 (ECF No. 7-4).
7.

Therefore, Plaintiff is entitled to foreclose on its mortgage and to recover

the personal property in which it has a security interest. Further, Plaintiff is entitled to
sell the property described in its mortgage (see ECF No. 7-1) and security agreements
(see ECF No. 7-4) and apply the proceeds first to the costs and expenses of this action,
next to the payment and discharge of the debt Massey owes Plaintiff.

5
In his three-paragraph answer, Crawford “denies each and every allegation contained in the Amended
Complaint of the Plaintiff not specifically admitted hereto.” (ECF No. 17 ¶ 1.) Crawford does not does not
explain how its interest in the real property at issue is putatively superior to Plaintiff’s interest. Indeed,
Crawford does not expressly contest priority. Nor did Crawford respond to Plaintiff’s motion for default
judgment. Crawford’s answer merely states: “this Defendant would show that it holds a judgment upon
the subject real property.” (Id. ¶ 3.) This much is true; however, that judgment was recorded in August
2010 (see ECF No. 32-7), two years after Plaintiff recorded the Mortgage, and the Court finds that
Plaintiff’s interest in the real property is superior. Similarly, in its three-paragraph answer, SCDOR denies
in conclusory fashion “each and every allegation” in the amended complaint, save for the fact that it may
have a claim in the property described in the amended complaint by virtue of state tax liens. (ECF No. 12
¶¶ 1, 3.) SCDOR attaches fifteen pages of tax liens to substantiate its potential claim; however, fourteen
of these pages pertain to a 6% sales tax and a “local option sales” tax owed by a corporate entity,
“MASSEYS TIRE AUTO & FEED INC” (presumably a business owned by Massey), and not to Massey
individually. (See ECF No. 12-1 at 1-14.) The one SCDOR tax lien that applies to Massey in his individual
capacity, showing the address of the real property that is the subject of this action as his address of
record, was assessed in December 2014 and filed with the Clerk of Court Saluda County in February
2015, long after Plaintiff perfected its interest in the real and personal property at issue here. (See ECF
Nos. 12-1 at 15; 32-8 at 1.) SCDOR, in its answer, made no attempt to explain how the tax liens it
maintains are putatively superior to Plaintiff’s interest in the subject property. Nor did SCDOR respond to
Plaintiff’s motion for default judgment. Accordingly, the Court finds that Plaintiff’s interest in the subject
property has priority over any interest maintained by SCDOR.

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8.

Finally, the Court notes that Plaintiff requests a deficiency judgment.
LEGAL STANDARD

Although “the government’s power to foreclose [on property] emanates from state
law, [28 U.S.C. §§ 2001 and 2002] govern the procedures to be followed [by federal
courts].” U.S. v. Wise, No. 5:14-cv-844-FL, 2015 WL 5918027, at *6 (E.D.N.C. Oct. 9,
2015). Pursuant to § 2001, a federal court has wide discretion to determine the terms
and conditions under which the sale of real property shall be executed; however, the
sale must take place “at the courthouse of the county . . . in which the greater part of the
property is located, or upon the premises or some parcel thereof located therein, as the
court directs.” Further, under § 2002, notice shall be “published once a week for at least
four weeks prior to the sale in at least one newspaper regularly issued and of general
circulation in the county, state, or judicial district of the United States wherein the realty
is situated.” When personal property is sold under federal court order, 28 U.S.C. § 2004
states that it should be sold in accordance with § 2001, unless the court directs
otherwise.
ORDER OF FORECLOSURE AND SALE
It is hereby ORDERED:
1.

The Clerk of Court is directed to enter judgment in favor of Plaintiff in the

amount of $325,443.22 plus interest at a per diem rate of $31.5428 beginning on
January 24, 2017.
2.

The Clerk of Court is directed to enter a judgment of foreclosure as to

Plaintiff’s security interest in Massey’s real and personal property at issue in this matter,
as more fully described in “Exhibit A to Mortgage From Benjamin Roy Massey To

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USDA/Farm Service Agency Dated July 28, 2008” (ECF No. 7-1), and the documents
entitled, “Security Agreement (Chattels and Crops),” dated May 29, 2007, June 11,
2007, and July 28, 2008 (ECF No. 7-4).
3.

The Special Referee, or his designee, shall sell at public auction the

property described in “Exhibit A to Mortgage From Benjamin Roy Massey To
USDA/Farm Service Agency Dated July 28, 2008” (ECF No. 7-1) at the Saluda County
Courthouse in Saluda, South Carolina, at the earliest possible date after having
published notification of the sale in the Saluda Standard-Sentinel, a newspaper of
general circulation in Saluda County, South Carolina, once a week for four weeks prior
to the sale. The Special Referee, or his designee, shall sell at public auction the
property described in the documents entitled, “Security Agreement (Chattels and
Crops),” dated May 29, 2007, June 11, 2007, and July 28, 2008 (ECF No. 7-4), at public
auction at the Saluda County Courthouse in Saluda, South Carolina, or another
commercially reasonable location(s) as may be determined by the Special Referee, or
his designee, at the earliest possible date after having published notification of the sale
in the Saluda Standard-Sentinel for four weeks prior to the sale. The sale of the real
and personal property itemized above shall be made on the following terms:
a. For cash: The Special Referee, or his designee, shall require the highest
bidder, other than the Plaintiff, to make a cash deposit of 5% of the bid as
a guaranty of good faith and as security for compliance with the bid;
b. If the highest bidder should fail to comply with the terms of the sale within
10 days after acceptance of the bid, the entire deposit shall be forfeited
and applied to the debt owed Plaintiff. Thereafter, the Special Referee, or
his designee, shall re-advertise and resell the real and personal property
itemized above on the earliest possible date and on the same terms and
conditions described herein;
c. The sale shall be subject to taxes and assessments, which includes real
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property taxes, existing easements, and easements and restrictions of
record.
The following additional terms shall apply to the sale of the real property
described in “Exhibit A to Mortgage From Benjamin Roy Massey To USDA/Farm
Service Agency Dated July 28, 2008” (ECF No. 7-1):
a. Interest on the balance of the bid shall be paid to the day of compliance at
the per diem rate of $31.5428;
b. Purchaser is to pay for the deed stamps and costs of recording the deed;
c. As Plaintiff requests a deficiency judgment, bidding shall remain open until
the 30th day after the sale, exclusive of the day of the sale, and any
person other than the highest bidder at the sale or any representative
thereof may enter a higher bid by making a cash deposit of 5% of the bid
as a guaranty of good faith, and thereafter within the 30 day period any
other person, other than the highest bidder at the sale or any
representative thereof, may in a like manner raise the last highest bid. The
successful purchaser shall be the person who submitted the highest bid
within the 30 days and made the necessary deposit. If the 30th day falls
on a Sunday, the bidding shall be closed on the Monday immediately
following;
d. Plaintiff may become a purchaser at the sale, but Plaintiff is precluded
from making any bid on the property other than the last bid made by it on
the day of the sale;
e. Each defendant named herein and all persons, whoever claiming under
them, shall be forever barred and foreclosed of all right, title, interest, and
equity of redemption in the real and personal property itemized above, or
any part thereof;
f. If Plaintiff or Plaintiff’s representative does not appear at the scheduled
sale of the real and personal property itemized above, then the sale of the
property shall be null, void and of no force and effect. In such event, the
sale will be rescheduled for the next available sales day.
4.

The Special Referee, or his designee, shall apply the proceeds of the sale

of the property described in “Exhibit A to Mortgage From Benjamin Roy Massey To
USDA/Farm Service Agency Dated July 28, 2008” (ECF No. 7-1) and the documents

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entitled, “Security Agreement (Chattels and Crops),” dated May 29, 2007, June 11,
2007, and July 28, 2008 (ECF No. 7-4), as follows:
a. To the payment of the amount of the costs and expenses of this action
and the expenses of the sale;
b. To Plaintiff, or Plaintiff’s attorney, for the debt and interest Massey owes
Plaintiff, or such thereof as the purchase money will pay on the same;
c. Any surplus funds will be held pending further order of this Court.
5.

If Plaintiff is the successful bidder at the sale for a sum not exceeding the

amount of costs, expenses, and debt Massey owes Plaintiff, Plaintiff may pay to the
Special Referee, or his designee, only the amount of the costs and expenses,
accrediting the balance of the bid to Massey’s indebtedness.
6.

After the sale of the real property described in “Exhibit A to Mortgage

From Benjamin Roy Massey To USDA/Farm Service Agency Dated July 28, 2008”
(ECF No. 7-1), the Special Referee, or his designee, shall make and deliver to the
purchaser a deed in fee simple, and the purchaser shall be let into possession of that
real property upon production of the deed. All persons holding adversely to the
purchaser shall be ejected by the United States Marshal (or deputy).
7.

The undersigned will retain jurisdiction to do all necessary acts incident to

this foreclosure, including, but not limited to, the issuance of a Writ of Assistance. After
sale of the property described in “Exhibit A to Mortgage From Benjamin Roy Massey To
USDA/Farm Service Agency Dated July 28, 2008” (ECF No. 7-1), and as soon as the
sale by the Special Referee, or his designee, is complete and has been approved by the
court, Massey or other persons in possession, shall within 15 days of the date of
approval by the Court, move from the premises, and give up the real property itemized

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above without damage or vandalism. Upon the failure of Massey or any other persons in
possession, to vacate the property within 15 days of the date of approval by the Court,
the United States Marshal (or deputy) is authorized, empowered, and directed to enter
upon the real property itemized above and evict them therefrom, unless prior to such
date, Massey or other persons in possession, obtain from the Court an order extending
the time which Massey or any other persons in possession shall have to vacate the
property. The United States Marshal (or deputy) is also authorized to effect removal
from the real property itemized above any furniture or other possessions of Massey or
other persons in possession, and any interference with the activities of the Special
Referee or the United States Marshal (or deputy) will be upon pain of contempt of Court.
8.

Massey shall assemble and turn over possession of all personal property

described in the documents entitled, “Security Agreement (Chattels and Crops),” dated
May 29, 2007, June 11, 2007, and July 28, 2008 (ECF No. 7-4), plus any increases,
replacements, or substitutions, to Plaintiff within 30 days of the date of this Order.
Massey may contact the Farm Service Agency Supervisor’s Office in Saluda County,
South Carolina, to arrange a mutually agreeable time to turn over this property. Should
Massey fail to turn over the personal property itemized above within 30 days, the United
States Marshal (or deputy) is directed and authorized to take all reasonable steps
necessary to seize that personal property and turn it over to Plaintiff for sale. This may
include entering onto the real property described in “Exhibit A to Mortgage From
Benjamin Roy Massey To USDA/Farm Service Agency Dated July 28, 2008” (ECF No.
7-1), to locate and seize the personal property itemized above. Should the United
States Marshal (or deputy) be required to seize the property, Plaintiff shall be

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responsible for taking possession of the property for purpose of sale.
IT IS SO ORDERED.
/s/ Bruce Howe Hendricks ___
United States District Judge

Greenville, South Carolina
February 3, 2017

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