CITIFINANCIAL MORTG. CO., INC. v. Clark

Greene, J.:

Citifmancial Mortgage Company, Inc., appeals the district court’s refusal to grant relief to it in confirmation proceedings after it failed to participate in a sheriff s sale of property subject to its first mortgage lien in excess of $70,000, resulting in an order confirming the sale to Lorin Gerald Brunsvold for his bid of $6,050. Citifmancial argues the district court failed to exercise its equity powers under K.S.A. 60-2415 as construed by controlling caselaw. We agree, vacate the confirmation order, and remand for further proceedings.

Factual and Procedural Background

Citifmancial initiated this residential real estate foreclosure proceeding in December 2005 and received a judgment of foreclosure in April 2006 for $70,481.83 plus interest, including an order for sale at sheriffs auction. After notice as provided by law, the sale was held in May 2006, with Brunsvold the highest bidder at $6050. Due to a communications error between Citifinancial’s counsel, *151there was no appearance at the sale to protect CitifinanciaTs interest.

Brunsvold acquired an assignment of redemption rights from the mortgagor and filed a motion to confirm the sale. Citifinancial filed a motion to substitute bid and confirm sheriff s sale at upset price or in the alternative set aside the sale under K.S.A. 60-2415(b) due to a substantially inadequate bid.

After a bench trial, the district court concluded that 60-2415(b) equitable protections applied only for the benefit the mortgagor and that Citifinancial was not entitled to equity because of its failure to appear at the sale. The sheriff s sale was confirmed, and a motion for reconsideration was denied in January 2007. Citifinancial appeals.

Standards of Review

Kansas appellate courts review the confirmation of a sheriff s sale for an abuse of discretion. See Olathe Bank v. Mann, 252 Kan. 351, 357, 845 P.2d 639 (1993). Judicial discretion is abused when judicial action is arbitrary, fanciful, or unreasonable, which is another way of saying that discretion is abused where no reasonable person would take the view adopted by the trial court. Farm Credit Bank of Wichita v. Zerr, 22 Kan. App. 2d 247, 255, 915 P.2d 137 (1996). The facts supporting the confirmation, however, must be supported by the record. See Olathe Bank, 252 Kan. at 357; Zerr, 22 Kan. App. 2d at 255.

A district court can abuse its discretion when its decision goes outside the legal framework or fails to properly consider statutory limitations or legal standards. State v. Edgar, 281 Kan. 30, 38, 127 P.3d 986 (2006). Accordingly, an appellate court reviews whether the district court’s discretion was guided by erroneous legal conclusions. State v. Gary, 282 Kan. 232, 236, 144 P.3d 634 (2006). Whether the district court made all the necessary findings before confirming the sheriff s sale is also a question of law. See Gary, 282 Kan. at 236; Edgar, 281 Kan. at 38; Zerr, 22 Kan. App. 2d at 255. Ultimately, the district court’s decision whether to confirm the sheriff s sale is reviewed for an abuse of discretion so long as *152the court applied the proper legal framework and made the necessary findings.

To the extent that the parties’ arguments require the court to interpret K.S.A. 60-2415, this court has unlimited review. LSF Franchise REO I v. Emporia Restaurants, Inc., 283 Kan. 13, 19, 152 P.3d 34 (2007) (“The interpretation of a statute is a question of law over which this court has unlimited review.”).

Did the District Court Abuse Its Discretion in Refusing to Exercise Its Equity Powers Under K.S.A. 60-2415?

K.S.A. 60-2415 governs the confirmation of a sheriff s sale and provides:

“(a) Certificate of purchase. The sheriff shall at once make a return of all sales made under this article to the court. All taxes due or delinquent shall be noted on the sheriff s return. If the court finds the proceedings regular and in conformity with law and equity, it shall confirm the same, direct die clerk to make such entry upon the journal and order the sheriff to make to the purchaser the certificate of sale or deed provided for in this article.
“(b) Equity powers of court. The court may decline to confirm the sale where the bid is substantially inadequate, or in ordering a sale or a resale, may, in its discretion, if conditions or circumstances warrant and after a proper hearing, fix a minimum or upset price at which the property must be bid in if the sale is to be confirmed; or the court may, upon application for the confirmation of the sale, if it has not theretofore fixed an upset price, conduct a hearing to establish the value of the property, and as a condition to confirmation require the fair value of the property be credited upon the judgment, interest, taxes and costs. A sale for the full amount of the judgment, taxes, interest and costs shall be deemed adequate.” (Emphasis added.)

In refusing relief to Citifinancial, the district court explained its reasoning in a Memorandum Decision, which stated in material part:

“Having reviewed the authorities submitted by counsel, the Court finds that those authorities apply to instances where the mortgagor will suffer an inequity due to a bid that was substantially inadequate when compared to the fair market value of the property. In this case the mortgagors are in default, and assigned their redemption rights and do not seek to set aside the sale.
“Plaintiff seeks to invoke the equitable power of the Court to set aside the sale. It is found that the foreclosure was initiated by die plaintiff and that it was aware of each stage of the proceeding throughout the case and that in this instance equity should follow the law and not allow a remedy tiiat is contrary to law.
*153“The Court further finds that the real estate was advertised and sold in conformity with law and that the purchaser thereof was a bonified [sic] purchaser for value and therefore is entitled to confirmation of sale.”

At the outset, we acknowledge that K.S.A. 60-2415 gives the court discretion in determining whether to grant a resale, fix an upset price, or otherwise refuse to confirm the sale. See Federal Land Bank of Wichita v. Cummings, 12 Kan. App. 2d 134, 137, 735 P.2d 1110 (1987). Other more recent appellate caselaw, however, seems to guide the district court’s discretion and to clarify the court’s options.

In Cimarron Feeders v. Bolle, 28 Kan. App. 2d 439, 451, 17 P.3d 957, rev. denied 271 Kan. 1035 (2001), this court indicated that before confirming a sale, the court must hold a hearing and determine, even without an objection, that the bid is adequate. And in the Olathe Bank case, this court held that the district court has three options in a confirmation proceeding:

“(1) confirm the sale if the bid is substantially adequate; (2) order resale of the property if the bid is substantially inadequate; (3) give the creditor the option of either giving the debtor credit upon the judgment, interest, taxes, and costs for the value of the property; or reselling." Olathe Bank, 252 Kan. at 357 (citing with apparent approval Cummings, 12 Kan. App. 2d at 138).

In Olathe Bank, our Supreme Court also implied that the district court must determine the fairness of the price paid at a foreclosure sale. The court stated:

“The price paid for property at a foreclosure sale should reflect the intrinsic value of the property, taking into consideration all the circumstances affecting the underlying worth of the property at the time of the sale and should not be affected by the impact of the foreclosure proceedings on its value. Allowing a mortgagee bank to reduce the purchase price due to the inherent disabilities associated with a foreclosure sale allows the mortgagee the double recovery that K.S.A. 1991 Supp. 60-2415 was designed to prevent.” 252 Kan. 351, Syl. ¶ 3.

Are the Equitable Considerations Under K.S.A. 60-2415(b) Solely for the Benefit of tire Mortgagor?

We reject the district court’s apparent belief that the statute’s equity powers should be invoked only to protect the mortgagor; clearly the legislature could have so limited the court’s equity powers in the statute, but we discern no such language or intent within *154the statute itself. The legislature is presumed to have expressed its intent through the language of the statutory scheme; when a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed, rather than determine what the law should or should not be. Winnebago Tribe of Nebraska v. Kline, 283 Kan. 64, 77, 150 P.3d 892 (2007).

Although much if not all of the caselaw cited by Brunsvold to the contrary applies the statute in circumstances where the mortgagor’s interest was at stake, this does not mean that the statute is strictly for the benefit of the mortgagor. Brunsvold has cited no authority wherein the appellate courts have exclusively examined the mortgagee’s interests and held that these interests were not entitled to protection at confirmation. Moreover, we note that it is inherently in the mortgagor’s interest for the sale price to be substantially adequate.

Finally, we believe that applying the statute for the protection of both the mortgagor and mortgagee is consistent with caselaw developed prior to the amendment of 60-2415. For example, in Dewey v. Linscott, 20 Kan. 684 (1878), the court set aside the sale of property where a bid of $50 had been made on real estate with a value of $600 to $1100. The court observed that both the mortgagee and mortgagor would be harmed by the grossly inadequate sale:

“Evidently a great hardship will inure to both [mortgagee and mortgagor] if this sale is permitted to stand. The [mortgagee’s] mortgage is lost to him, and the [mortgagor’s] debt not paid, while a stranger, for a mere song, obtains that which would have satisfied the mortgage, and paid the [mortgagee’s] debt.” 20 Kan. at 688.

Although this old case far predates the current version of 60-2415, express language in the original version of the statute we now know as 60-2415 embraced preexisting authority regarding equity powers in such circumstances, stating: “This act is intended as declaratory of the equity powers now existent in the courts . . . .” See L. 1933, ch. 218, sec. 1.

We conclude and hold that the equitable powers specified by K.S.A. 60-2415 are not solely to be invoked for the mortgagor, but *155rather the statute must be construed more broadly to apply to all parties with interests in the confirmation proceeding.

Should CitifinanciaPs Failure to Attend the Foreclosure Sale Bar Relief in Equity at the Confirmation Proceeding?

Clearly, the district court was troubled by Citifinancial s failure to appear at the foreclosure sale and protect its interests. It would appear the district court may have denied equitable relief to Citifinancial even if the court had more broadly construed K.S.A. GO-2415. We reject this analysis as contrary to the letter and spirit of the statute.

We acknowledge that although one who sleeps on his or her rights may lose them (see, e.g., Fidelity Bank v. King, 281 Kan. 1278, 1286, 136 P.3d 465 [2006]), Citifinancial did not sleep on its rights at the confirmation proceeding. Even if it should have appeared and protected its interest at the sale itself, we view the confirmation proceeding as a separate step in the statutory scheme of foreclosure at which interested parties have rights and obligations distinguishable from those inuring as a part of other steps. Clearly, if Citifinancial had sought to have its intended bid recognized as though it had appeared and participated in the sale, the district court could have refused to grant this relief. Moreover, if Citifinancial had failed to participate both in the sale and the confirmation proceedings, the district court could have refused to grant any relief. See Fidelity Bank, 281 Kan. 1278. By its participation in the confirmation proceeding, however, Citifinancial was entitled to assert the rights implicitly recognized by the statutory scheme.

Brunsvold argues that for Citifinancial to have rights at confirmation after failing to attend the sale lends unpredictability if not chaos to the law of foreclosure in Kansas. He argues:

“Citifinancial’s proposition would result in no requirement for mortgagees to attend sheriff s sales whatsoever and obviate the predictability and clarity desired in Kansas law. Instead, under Citifinancial’s reasoning, a mortgagee may simply wait until the sheriffs sale is concluded to see if it is satisfied with the bid result; if not, the mortgagee could claim the bid is ‘substantially inadequate’ and bid in ‘fair value’ at a later date. Such a procedure would make sheriff s sales meaningless and overburden the courts with confirmation disputes.”

*156We disagree. Allowing Citifinancial to fully participate in the confirmation proceeding despite its failure to appear at the sale will not encourage mortgagees to sit out foreclosure sales; we believe mortgagees will not be so inclined because they will stand the risk of a sale at less than their mortgage interest being confirmed if not “substantially inadequate.” Moreover, they will not necessarily be entitled to a resale, but rather may face an upset price not consistent with their precise interests. Unquestionably, a mortgagee will always best protect its interests by participating in the sale itself.

We conclude and hold that Citifinancial was not barred from equitable relief at confirmation solely by reason of its failure to participate in the foreclosure sale.

Did Citifinancial Acquiesce in the Judgment hy Its Failure to Stay Execution?

Finally, Brunsvold argues that Citifinancial acquiesced in the judgment of the district court because it took no action to stay the execution of the judgment. He also states in his appellate brief that he has undertaken improvements to the real estate, paid real estate taxes, maintained insurance premiums for the real estate, and otherwise exercised ownership rights to the real estate since the sheriff s deed issued pursuant to the district court’s order confirming sale.

Because acquiescence involves a question of the appellate court’s jurisdiction, the matter raises a question of law subject to unlimited review. Layne Christensen Co. v. Zurich Canada, 30 Kan. App. 2d 128, 137, 38 P.3d 757 (2002).

A party acquiesces in the judgment when he or she voluntarily accepts the benefits or assumes the burdens of the judgment. D.A.N. Joint Venture III v. Turk, 36 Kan. App. 2d 353, 357, 138 P.3d 1253, rev. denied 282 Kan. 788 (2006). A party who voluntarily complies with a judgment cannot thereafter adopt an inconsistent position and appeal that judgment. Layne Christensen Co. v. Zurich Canada, 30 Kan. App. 2d 128, 137, 38 P.3d 757 (2002).

Here, Citifinancial simply took no action to stay execution of the judgment, such as posting a supersedeas bond under K.S.A. 60-2103(d). Our appellate courts have held that the mere failure to *157stay execution of the judgment by filing a supersedeas bond does not constitute acquiescence. See State v. Downey, 198 Kan. 564, 426 P.2d 55 (1967); Van Nguyen v. Ortiz, No. 94,884, unpublished opinion filed March 23, 2007.

Brunsvold cites no specific benefits accepted or burdens assumed by Citifinancial that would serve as acquiescence, nor does he cite any authority for the proposition that acquiescence may be found solely by reason of failing to stay execution of a judgment.

We reject Brunsvold’s assertion that Citifinancial has acquiesced to the judgment.

Summary and Conclusion

We vacate the district court’s order confirming the sale and remand with directions to consider invocation of equitable powers under K.S.A. 60-2415(b) on behalf of all the parties, including Citifinancial, and to otherwise follow the dictates and consider the equitable options specified by the statute.

Vacated and remanded with directions.