Stooksbury v. Ross et al

Filing 1389

MEMORANDUM AND ORDER. The Court finds that the Receiver's Motion to Approve Sale of Real Property 1345 is well-taken, and it is GRANTED. Signed by Magistrate Judge H Bruce Guyton on 9/4/14. (JBR)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
ROBERT T. STOOKSBURY, JR.,
Plaintiff,
v.
MICHAEL L. ROSS, et al.,
Defendants.

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No. 3:09-CV-498-TAV-HBG

MEMORANDUM AND ORDER
This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court,
and the referral of the Chief District Judge [Doc. 1353].
Now before the Court is the Receiver’s Motion to Approve Sale of Real Property [Doc.
1345]. In his motion, the Receiver moves the Court to approve and order the sale of the real
property described as 3400 S. Ocean Boulevard, 5F-1, Palm Beach, Florida, (“the Property”),
which was previously identified as property of the receivership estate, titled in the name of
Judgment Debtor Michael L. Ross. The Receiver represents that, through a broker, he has
obtained an offer to sell and purchase the Property for $878,000.00.
The Receiver states that, pursuant to the terms of the contract for sale, it is projected that
the sale will generate funds sufficient to satisfy the sale expenses, broker fees, moneys owed to
the homeowner’s association, and to repay lienholder Wells Fargo. The Receiver moves the
Court to waive any requirement of independent appraisals, because such appraisals are unlikely
to provide any further information about the price and because the Property Assessor’s office in
Palm Beach County, Florida, identifies the Property’s market value as $640,000.00.

The

Receiver has attached a copy of the contract for sale [Doc. 1345-1] and the 2013 Notice of
Property Taxes [Doc. 1345-2] to his motion.
Athena of S.C., LLC, (“Athena”), has responded to the Receiver’s motion. [Doc. 1357].
Athena asserts that it is the owner of the Property as the result of a Sheriff’s sale conducted in
2013. However, Athena states that “it takes no position on the Receiver’s Motion and if this
Court deems it is appropriate to approve the sale, the Court may do so.” [Id. at 1].
Wells Fargo1 has filed a response stating that it does not object to the proposed sale, in
principle. [Doc. 1358]. However, Wells Fargo maintains that it cannot determine from the
information provided by the Receiver if the proposed sale will generate sufficient funds to satisfy
Wells Fargo’s mortgage. [Id. at 1]. Wells Fargo requests that any Order approving the sale of
the Property contain conditional language allowing Wells Fargo to review the final settlement
statement to determine if the sale as proposed by the Receiver is acceptable. [Id. at 2].
In his reply, the Receiver states that he is not able to produce a final closing statement at
this time. [Doc. 1365]. However, the Receiver has filed the preliminary closing statement [Doc.
1379-1], and he states that the $751,536.81 owed to Wells Fargo will be paid in full at the
closing. [Doc. 1365 at 2].
The Court has broad powers and wide discretion to determine the appropriate relief in an
equity receivership. SEC v. Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986). The Court finds that
the relief requested by the Receiver falls within the broad power and wide discretion to
determine appropriate relief in this receivership.
Further, the Court finds that the Receiver’s request to waive the requirement to obtain
appraisals of the Property is well-taken. Again, the Court finds that this waiver falls within the

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HSBC Bank USA, N.A. alleges that it is Trustee for Wells Fargo Asset Security Corporation, Mortgage Passthrough Certificates Series 2006-7, and herein is referred to as “Wells Fargo.”

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broad power and wide discretion to determine appropriate relief in this receivership.

See

generally, Tanzer v. Huffines, 412 F.2d 221, 222-23 (3rd Cir. 1969).
The fair market value of property is the price at which the property would change hands
between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
and both having reasonable knowledge of the relevant facts. This principle is well-established
and codified in federal regulations. See, e.g., Akers v. C.I.R., 799 F.2d 243, 245 (6th Cir. 1986)
(discussing use of this principle in 26 C.F.R. § 1.170A-1 for purposes of evaluating the value of
non-taxable gifts); see also Gross v. Comm’r of Internal Revenue, 272 F.3d 333, 342-43 (6th Cir.
2001). There is no dispute that the Property was presented for sale on the open market through a
broker, nor is there any allegation that either the buyer or seller were under compulsion or lacked
information. Further, the Court finds that the agreed-upon sales price exceeds the Property
Assessor’s appraisal by over $200,000.00. Thus, the Court finds that the agreed-upon sales price
is reasonable, and the Court finds that it is appropriate to waive the requirement that the Receiver
obtain an appraisal.
The Court has considered Wells Fargo’s concern about not being fully compensated. The
Court has reviewed the preliminary settlement statement, which provides for full payment of the
moneys owed to Wells Fargo.

For obvious reasons, the Receiver cannot provide a final

settlement statement until the day of the closing or the day before the closing. The Court finds
that the preliminary statement provides Wells Fargo with sufficient assurance that it will be paid.
The Court finds that Wells Fargo’s request the Court’s Order approving the sale provide for
Wells Fargo to review the final settlement statement and a right to approve the transaction would
be unduly burdensome and likely to delay the sale. Instead, the Court will Order the Receiver or

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his counsel to contact counsel for Wells Fargo prior to the closing if any change, material to
Wells Fargo’s interest, were to be made to the final settlement statement.
Accordingly, the Court finds that the Receiver’s Motion to Approve Sale of Real
Property [Doc. 1345] is well-taken, and it is GRANTED, as follows:
1. The Receiver is ORDERED to schedule the closing as referenced within the
Residential Contract for Sale and Purchase [Doc. 1345-1] as soon as practicable;
2. The Receiver is AUTHORIZED to endorse the appropriate documents
transferring title to the Property to the prospective purchasers upon completion of
the closing of the transaction;
3. The Receiver, or his counsel, are ORDERED to contact Mr. Robert R. Carl prior
to the closing, if any change, material to Wells Fargo’s interest, were to be made
to the final settlement statement;
4. It is ORDERED that title to the Property is transferred free and clear of any
claims by Judgment debtors, Judgment creditors and the interests of other persons
or entities, subject to the appropriate satisfaction of those interests as set forth
herein to satisfy the interest of the mortgage holder, the condominium association
and broker as proposed by the Receiver; and
5. It is ORDERED that any excess proceeds generated from the sale of the Property
be placed within the receivership estate subject to further Order of this Court.
IT IS SO ORDERED.
ENTER:

United States Magistrate Judge

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