Watson v. Cartee et al

Filing 125

REPORT AND RECOMMENDATION: The Magistrate Judge recommends that the second motion for an order of sale of the property by Mr. Ingram (Docket Entry 105) be granted. The Magistrate Judge recommends that the Court enter an order authorizing the sale of the property identical to the order previously entered by the undersigned at Docket Entry 114. Signed by Magistrate Judge Joe Brown on 11/30/2016. (xc:Pro se party by regular and certified mail.)(DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(eh)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
AT NASHVILLE
GLEN C. WATSON, III, TRUSTEE,
Plaintiff
v.
DIANA L. DAY CARTEE, et al.,
Defendants
TO:

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No. 3:14-0580
Judge Campbell/Brown

THE HONORABLE TODD J. CAMPBELL
REPORT AND RECOMMENDATION
For

the

reasons

stated

below,

the

Magistrate

Judge

recommends that the second motion for an order of sale of the
property by Mr. Ingram (Docket Entry 105) be granted.
BACKGROUND
This case has a long and tortured history, which is best
summarized by the Court of Appeals’ decision on the merits of the
case (Docket Entry 102). In that decision the Court set forth the
factual background of the case, which is adopted for the purpose of
this report and recommendation. The property in question was sold
at a foreclosure sale in December 2013. At the sale Mr. Ingram
submitted the highest bid, and after he paid the trustee $1,513,000
the trustee conveyed the property to him in the form a substitute
trustee deed. The proceeds from the foreclosure sale satisfied the
Cartees’ debt to the Citizens’ deed of trust and resulted in the
surplus of $281,632.74.
In January 2014, to determine the appropriate allocation
of the surplus proceedings, the trustee filed an interpleader

action, which was removed by the United States to federal court.
After the surplus proceeds were paid into the District Court, the
trustee (Mr. Watson) was dismissed from the action in May 2014.
Subsequently, in May 2014 Regions Bank filed a motion for
summary judgment alleging that it had the highest priority claim to
the surplus proceeds. The Cartees filed a third-party complaint
against the purchaser, Mr. Ingram, alleging that he did not hold
valid

title

to

the

property

because

of

defects

in

the

acknowledgment of the Citizens’ deed of trust. They also filed
objections to Regions motion making the same argument.
In December 2014 Ingram filed a motion for summary
judgment on the third-party complaint. The Cartees filed their own
motion for summary judgment on their third-party complaint in
January 2015. Subsequently, the District Court (1) granted Regions’
motion for summary judgment and awarded the surplus proceedings to
Regions; (2) granted Ingram’s motion for summary judgment; (3)
denied the Cartees’ motion for summary judgment, and (4) denied the
Cartees’ request to certify a state law statutory interpretation
question to the Tennessee Supreme Court (Docket Entry 73).
In March the Cartees filed a motion to alter the judgment
arguing–for the first time–that the Court lacked jurisdiction over
their own third-party complaint (Docket Entry 86). The District
Court denied the Cartees’ motion the following month (Docket Entry
90), and the appeal to the Sixth Circuit followed (Docket Entry
91). The Sixth Circuit then analyzed the pleadings in the matter

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and affirmed the District Court’s decisions with the exception that
the Sixth Circuit felt that it need not determine whether the
District Court abused its discretion in failing to certify to the
Tennessee Supreme Court the state law issue as to whether T.C.A. §
66-24-101(e), which was enacted in 2005, to provide that was an
otherwise properly recorded instruments, that was not properly
acknowledged, shall nevertheless place “all interested parties . .
. on constructive notice of the contents of the instrument” applied
retroactively to deeds of trust that were recorded before the
effective date of the statute.
The Sixth Circuit noted that while it did not endorse the
District Court’s conclusions that the statute applied retroactively
it specifically held that the Cartees had no right to assert the
claim on Regions’ behalf because Regions, as first in line for any
surplus, did not raise the issue.
LEGAL DISCUSSION
Mr. Ingram, the present title holder, requested an order
authorizing sale of the property (Docket Entry 105), with a minimum
sales price of $2,500,000. He noted then that since he purchased
the

property

on

December

23,

2013,

because

of

the

ongoing

litigation he has been prevented from selling the property despite
spending money to prepare it for sale, and he continues to have
ongoing monthly expenses. He contends it is wasteful not to allow
the sale of the property. He noted that the Cartees themselves
asked for a sale of the property and that no other party to the

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litigation has ever asked for any of the relief requested by the
Cartees or objected to the sale. The only opposition to the motion
for authorization to sell was filed by the Cartees on August 16,
2016,

through

their

attorneys

(Docket

Entry

108).

In

their

objections they argue that they have filed a petition for writ of
certiorari to the Supreme Court and the Court should not act until
the Supreme Court has acted on their writ. The Cartees did not
request a stay from the District Court, nor did they post any type
of bond, which would normally accompany a request to stay the sale
in a case of this nature. They also argue that the minimum sale
price of $2,500,000 is commercially unreasonable. They do not point
to anyone that has made a higher offer, and given their efforts to
tie up the proceedings for many years, it is unlikely that a higher
price could be obtained. To the extent the Cartees believe that the
price is too low, it is a problem of their own making.
As the moving party, Mr. Ingram, points out in his reply
brief (Docket Entry 111) the District Court retains jurisdiction to
approve the sale so long as it has not been stayed or superceded.
He notes that if the original contract cannot now be enforced
because of the delay, that he be allowed to sell to any other
willing bidder for a minimum price of $2,500,000. This appears
reasonable to me as a minimum price. Mr. Ingram, of course, will be
financially benefitted to the extent that he can sell the property
for a higher price. He certainly has no incentive to sell the
property

for

a

price

that

is

4

not

commercially

reasonable.

Accordingly, the Magistrate Judge adopts the arguments set forth by
Mr. Ingram in his pleadings.
RECOMMENDATION
For

the

reasons

stated

above,

the

Magistrate

Judge

recommends that the Court enter an order authorizing the sale of
the property identical to the order previously entered by the
undersigned at Docket Entry 114.
Under Rule 72(b) of the Federal Rules of Civil Procedure,
any

party

has

14

days

from

receipt

of

this

Report

and

Recommendation in which to file any written objections to this
Recommendation with the District Court. Any party opposing said
objections shall have 14 days from receipt of any objections filed
in this Report in which to file any responses to said objections.
Failure to file specific objections within 14 days of receipt of
this Report and Recommendation can constitute a waiver of further
appeal of this Recommendation. Thomas v. Arn, 474 U.S. 140 106 S.
Ct. 466, 88 L.Ed.2d 435 (1985), Reh’g denied, 474 U.S. 1111 (1986).
ENTER this 30th day of November, 2016.
/s/
Joe B. Brown
JOE B. BROWN
United States Magistrate Judge

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