IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

JP Morgan Chase Bank, National
Association, :
: C. A. No. S18L-07-047 CAK
Plaintiff, ¢

V.

William M. Shea and Providence
Owners Association, Inc.

Defendants

OPINION AND ORDER
Upon Plaintiff's Motion to Set Aside Sheriff's Sale

GRANTED

The dual goal of any Sheriffs Sale is to follow the procedural
rules and achieve the highest price. This Sheriffs Sale involved a bidding error,
and a sale price that was either just below or just above 50% of the value of the
property, depending upon which appraiser’s opinion I accept. I have wide
discretion to review Sheriff's Sales. In my view, the high bid at this sale was
insufficient and prejudicial to both the lender and the owner. The low price was
primarily the result of a bidding error of the lender’s agents. Had I addressed the

issue of whether a unilateral bidding error by the lender was sufficient to set aside
a Sheriff Sale on my own, I might have answered no. However, the Delaware
Supreme Court twenty five years ago answered yes,’ as I will do. Given the low
price and the bidding error, I am exercising my discretion to set aside the sale.
Under the circumstances, and because of the lender’s error, I also will require the
lender to make the successful bidder whole.
FACTS

The facts are simple and undisputed (with the sole exeception of the
appraisal of the property). Plaintiff JP Morgan Chase Bank, National Association,
(“JP Morgan”) filed a foreclosure action against a landowner, Defendant William
M. Shea (“Shea”) to sell residential real property owned by Shea with a postal
address of 5 John Hall Drive, Ocean View, Delaware, the property went to sale
and was purchased by 1995 Property Management, Inc. (“1995") for the price of
$109,000. Shortly after the sale was completed, JP Morgan realized its agents had
made a mistake in executing its bidding instructions. In short, an error was made
by the law firm for JP Morgan, and the firm did not bid up to the maximum bid
price of just under $206,800, as directed. When JP Morgan realized the error, and

within a week of the sale, it notified 1995, and shortly thereafter filed this Motion.

 

'Burge v. Fidelity Bond and Mortgage Co., 648 A.2d 414 (Del. 1994)
ANALYSIS

“Judicial review of a contested Sheriff's

Sale implicates the Court’s inherent equitable

power to control the execution process

and functions to protect the affected parties

from injury or injustice.”
Mistake of fact, including a unilateral mistake, may be grounds to set aside a
Sheriff’s Sale.’ The Superior Court has broad discretion to confirm or set aside a
Sheriff's Sale.

In the scale of reasons to set aside a Sheriff’s Sale, a bidder’s
unilateral error is towards the weaker end. As 1995 argues, the unilateral error of
JP Morgan to justify setting a sale aside gives the lender rights which are superior
to all other bidders. For me, though, when that error is coupled with an inadequate
price, the tipping point has been reached.

The sale price of $109,000 is less than half of the property value, if
the appraisal by JP Morgan is accepted, or just over 53% of the property value, if
the appraisal provided by 1995 is accepted. [ utilize the appraisal provided by

1995. It is for more comprehensive and includes a review and analysis of both the

interior and exterior of the property. The appraisal provided by JP Morgan was a

 

* Burge y. Fidelity Bond and Mortgage Co., 648 A.2d 414 (1994), at 420.
"Id.

“Td.
classic “ride by” appraisal which fails to consider a number of issues in the
interior.

The math works as follows: 1995's appraisal gave a value of
$204,000. $109,000 divided by $204,000 equals 53%. JP Morgan’s appraisal was
$240,000. $109,000 divided by $240,000 equals 45%.

Delaware law provides a bright line. If a property is sold at Sheriff's
Sale for less than half its fair market value (the 50% test), it “shocks the
conscience of the Court”, and justifies setting aside the sale.°

Acceptance of 1995's appraisal puts the price-to-value ratio at just
over 50%. I find little solace that this exceeds the necessarily arbitrary figure of
50 percent, especially when the difference, as here, is nominal. The low price
coupled with the bidding error is enough for me. I also think it is important that
Shea get the maximum reduction of his indebtedness to JP Morgan.

Bidders at foreclosure sales often look for bargains. This bargain in
my mind was too much.

As in Burge, supra, 1995 here makes the argument that JP Morgan
should be estopped from raising its error (through its agents) as a reason for
setting aside the sale. | find that the error was the agents’ not JP Morgan’s, and

reject the estoppel argument for the same reasons it was rejected in Burge.

 

°Home Beneficial Life Insurance Co. v. Blue Rock Etc, 379 A.2d 1147 (Del. Super. 1977)
There is a price to pay, however, by JP Morgan for its error. 1995 is
entitled to recover all its costs, including attorneys’ fees expended in litigating this
case. JP Morgan will be required to reimburse 1995. If there is a dispute as to that
amount, counsel shall inform me and I will determine an exact amount.

Plaintiff JP Morgan’s motion to set aside the Sheriffs Sale is
GRANTED.

The Sheriff shall refund to 1995 all its payments. JP Morgan shall
reimburse 1995 all its costs and attorneys’ fees incurred in this case.

IT IS SO ORDERED

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