                            STATE OF WEST VIRGINIA

                          SUPREME COURT OF APPEALS


Stjepan Sostaric,
                                                        FILED
Defendant Below, Petitioner                                           November 2, 2017

                                                                           released at 3:00 p.m.
                                                                       EDYTHE NASH GAISER, CLERK
vs)   No. 16-0685 (Morgan County 12-C-160)                             SUPREME COURT OF APPEALS
                                                                            OF WEST VIRGINIA

Sally Marshall,

Plaintiff Below, Respondent


                            MEMORANDUM DECISION

       Petitioner Stjepan Sostaric appeals the June 21, 2016 order of the Circuit Court of
Morgan County granting Respondent Sally Marshall’s renewed motion for summary
judgment and awarding Ms. Marshall a deficiency judgment in the amount of $175,407.45,
attorneys’ fees, court costs, and pre- and post-judgment interest. Both Mr. Sostaric and
Ms. Marshall appear pro se on appeal.

       Upon consideration of the parties’ briefs, oral argument,1 and the record presented,
the Court finds no substantial question of law and no prejudicial error. For these reasons,
in these limited circumstances, a memorandum decision affirming the circuit court’s order
is appropriate under Rule 21 of the Rules of Appellate Procedure.

       For purposes of the issues before us, we summarize the facts.2 Mr. Sostaric and his
former wife (collectively, “the Sostarics”) 3 owned real property located at 99 Garden
Drive, Berkeley Springs, West Virginia. The Sostarics used the property as collateral to


      1
        This Court filed a memorandum decision in this case on March 24, 2017, which
was withdrawn for further consideration of the matter which included oral argument on
October 3, 2017.
      2
       We provided a full recitation of the underlying facts in Sostaric v. Marshall, 234
W.Va. 449, 450-52, 766 S.E.2d 396, 397-99 (2014) (“Sostaric I”).
      3
       At the time of the underlying proceedings, Mr. Sostaric and his former wife,
Nancy McCoy-Sostaric, were in the midst of divorce proceedings.


                                            1

secure a $200,000 loan from Ms. Marshall.4 The Sostarics executed both a promissory
note and a deed of trust. Subsequently, the Sostarics defaulted and Ms. Marshall directed
the trustee to foreclose on the property. At the foreclosure sale on October 17, 2012, Ms.
Marshall purchased the property for $60,000.5 Of this amount, $58,260.75 was distributed
to Ms. Marshall as the holder of the note that was secured by the deed of trust; the
remainder was applied to the costs of the sale.6

       Thereafter, Ms. Marshall filed an action against the Sostarics for a deficiency
judgment in the amount of $175,407.45 and attorneys’ fees in the amount of $1,749.25.7
Subsequently, Ms. Marshall filed a motion for summary judgment. By order entered on
January 16, 2014, the circuit court awarded summary judgment to Ms. Marshall based
upon sworn affidavits. Accordingly, the circuit court awarded Ms. Marshall $175,407.45
for the deficiency judgment, $1,749.25 for attorneys’ fees, and court costs and pre- and
post-judgment interest.

       The Sostarics appealed the circuit court’s January 16, 2014 order granting summary
judgment resulting in our prior decision in Sostaric I. The Sostarics argued that the
property was sold for less than its fair market value at the foreclosure sale and that,
accordingly, the amount of the deficiency judgment awarded was too high and should have
been adjusted to reflect the property’s fair market value at the time of the sale. Id. at 450,
766 S.E.2d at 398. Following full briefing and argument, we reversed the award of
summary judgment to Ms. Marshall holding that “[a] trust deed grantor may assert, as a
defense in a lawsuit seeking a deficiency judgment, that the fair market value of the
secured real property was not obtained at a trust deed foreclosure sale.” Id. at 450, 766
S.E.2d at 397, syl. pt. 1 (overruling Syl. Pt. 4, Fayette County National Bank v. Lilly, 199
W.Va. 349, 350, 484 S.E.2d 232, 233 (1997)).


       4
        In Sostaric I, we found that the Sostarics used the property, which they purchased
in March 2006 for $155,900, as their primary residence. 234 W.Va. at 451 n.3, 766
S.E.2d at 398 n.3.
       5
          In Sostaric I, we found that the foreclosure sale complied with the law and that the
title to the property was legally conveyed to Ms. Marshall. 234 W.Va. at 452 n.9, 766
S.E.2d at 399 n.9.
       6
        The “Disclosure Form Trustee Report of Sale” indicated that the total secured
indebtedness at the time of the foreclosure “[was] $231,660.68.”
       7
       Ms. Marshall was represented by an attorney at the time she filed her deficiency
judgment action.

                                              2

       Following remand to the circuit court, Ms. Marshall filed a renewed motion for
summary judgment claiming that the Sostarics failed to provide any evidence that the
property’s fair market value was greater than the foreclosure sale price. By order entered
on October 16, 2015, the circuit court held the renewed motion for summary judgment in
abeyance for thirty days to allow the Sostarics to obtain an expert opinion regarding “the
fair market value of the property at the time of the [October 17, 2012] foreclosure sale.”
After the Sostarics filed an appraisal valuing the property at $149,000 as of November 12,
2015, the circuit court denied Ms. Marshall’s renewed motion for summary judgment by
order entered on December 15, 2015.

        On December 28, 2015, Ms. Marshall filed a motion for reconsideration of the
December 15, 2015 order denying her renewed motion for summary judgment. Ms.
Marshall asserted that the appraisal failed to create a genuine issue of material fact because
the appraiser failed to value the property as of the date of the foreclosure, as directed by the
circuit court. By order entered on June 21, 2016, the circuit court granted Ms. Marshall’s
motion for reconsideration and awarded her summary judgment. The circuit court found
that the appraisal setting the property’s fair market value as of November 12, 2015 was
insufficient to show what the fair market value was at the time of the foreclosure sale three
years earlier. The circuit court again awarded Ms. Marshall a deficiency judgment in the
amount of $175,407.45, attorneys’ fees in the amount of $1,749.25, and court costs and
pre- and post-judgment interest.

     Mr. Sostaric8 now appeals the circuit court’s order awarding summary judgment to
Ms. Marshall.9 “A circuit court’s entry of summary judgment is reviewed de novo.” Syl.

        8
         Mr. Sostaric asserts that he is also appealing the circuit court’s June 21, 2016 order
on his former wife’s behalf. We find that Mr. Sostaric may not represent his former wife
in this appeal. See Syl. Pt. 3, Shenandoah Sales & Service, Inc. v. Assessor of Jefferson
County, 228 W.Va. 762, 724 S.E.2d 733 (2012) (holding that non-lawyers may not
represent others in court proceedings). By scheduling order entered on August 5, 2016,
we afforded Ms. McCoy-Sostaric the opportunity to join Mr. Sostaric’s appeal by August
22, 2016. Ms. McCoy-Sostaric did not do so.
        9
         We note Mr. Sostaric’s argument that the circuit court erred in granting Ms.
Marshall’s motion to reconsider its earlier December 15, 2015, order on the ground that
Ms. Marshall presented no new evidence in asking for reconsideration. Ms. Marshall
counters that, because the denial of her renewed summary judgment motion was
interlocutory, the circuit court possessed the inherent procedural power to reconsider its
December 15, 2015, order for any cause seen by it to be sufficient. See Syl. Pt. 4, Hubbard
(Continued . . .)
                                               3

Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). Rule 56(c) of the West
Virginia Rules of Civil Procedure provides that summary judgment shall be granted
provided that “there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.”

            Evolution of the West Virginia Rule Regarding Deficiency Judgments

       “A deficiency judgment is an imposition of personal liability upon a mortgagor for
an unpaid balance of a secured obligation after foreclosure of the mortgage has failed to
yield the full amount of the underlying debt.” Sostaric I, 234 W.Va. at 452, 766 S.E.2d at
399 (quoting Lawrence R. Ahern, III, The Law of Debtors and Creditors, § 8:20 (2014))
(internal quotations omitted). 10 A majority of jurisdictions permit the sale price of a
foreclosed property to be challenged in a deficiency judgment action. Sostaric I, 234
W.Va. at 453, 766 S.E.2d at 400; Lilly, 199 W.Va. at 355, 484 S.E.2d at 238.

        However, in Syllabus Point 4 of Lilly, we declined to adopt the majority rule and
held that “[a] grantor [of a deed of trust] may not assert, as a defense in a deficiency
judgment proceeding, that the fair market value of real property was not obtained at a
trustee foreclosure sale.” 199 W.Va. at 350, 484 S.E.2d at 233. In Sostaric I, we determined
that Mr. Sostaric’s argument required us to revisit our holding in Lilly. 234 W.Va. at 455,
766 S.E.2d at 402. We found “good and sufficient cause” to overrule syllabus point 4 of
Lilly. Id. at 456, 766 S.E.2d at 403. We summarized our reasoning as follows:

       Our ruling herein is consistent with the majority view of other jurisdictions,
       with section 8.4 of the Restatement [(Third) of Property: Mortgages], and
       with prior decisions from this Court that have applied common law
       principles of equity to permit an action to set aside a real property foreclosure
       sale. Our ruling will also prevent a creditor from receiving a windfall and
       being unjustly enriched at the expense of an already financially distressed
       grantor.

Id. at 458, 766 S.E.2d at 405. We found that it was proper to apply common law principles

v. State Farm Indemnity Co., 213 W.Va. 542, 584 S.E.2d 176 (2003). We agree with Ms.
Marshall and find that the circuit court did not err in granting her motion for
reconsideration.
       10
         We explained in Sostaric I that the primary difference between a deed of trust and
a mortgage is that “the holder of a trust deed does not have to apply to a court in order to
foreclose, whereas the holder of a mortgage is required to apply to a court in order to
foreclose.” Sostaric I, 234 W.Va. at 452 n.10, 766 S.E.2d at 399 n.10.

                                              4

of equity to allow a trust deed grantor to raise the defense that the property’s fair market
value was greater than the foreclosure sale price in the absence of any statutory provision to
the contrary. Id. at 456, 766 S.E.2d at 403. In dissent, Justice Davis stated that the
Legislature had the responsibility of changing “requirements and parameters of a trustee
[foreclosure] sale.” Id. at 463, 766 S.E.2d at 410.

      Following our decision in Sostaric I, the Legislature amended West Virginia Code
38-1-7 to add subsection (b) which provides as follows:

       A trust deed grantor, the obligor on the debt secured by the deed of trust,
       including any maker, comaker, guarantor, surety or other accommodation
       party, or other defendant in a civil action seeking a deficiency judgment on
       the debt secured by the deed of trust, may not assert as a defense that the fair
       market value of secured real property was not obtained at a trust deed
       foreclosure sale conducted in accordance with this article.

W.Va. Code § 38-1-7(b) (as enacted by 2015 W.Va. Acts ch. 167). The parties agree that
the Legislature has abrogated Syllabus Point 1 of Sostaric I. We concur and find that
Syllabus Point 1 of Sostaric I—holding that a trust deed grantor may, in a deficiency
judgment action, assert the defense that the property’s fair market value was greater than
the foreclosure sale price—was abrogated by West Virginia Code 38-1-7(b) as of that
statute’s effective date on June 11, 2015. However, as noted by Mr. Sostaric, Syllabus
Point 1 of Sostaric I continues to govern the instant case and cases arising between the
issuance of our opinion in Sostaric I and the date that West Virginia Code 38-1-7(b)
became effective. See Findley v. State Farm Mut. Auto. Ins. Co., 213 W.Va. 80, 93, 576
S.E.2d 807, 820 (2002) (finding that substantive amendments by Legislature that have
effect of abrogating holdings of this Court apply only prospectively absent clear expression
of legislative intent that amendments apply retroactively).

           Circuit court’s application of Syllabus Point 1 of Sostaric I on remand

        In Syllabus Point 1 of Sostaric I, we held that “[a] trust deed grantor may assert, as a
defense in a lawsuit seeking a deficiency judgment, that the fair market value of the
secured real property was not obtained at a trust deed foreclosure sale.” 234 W.Va. at 450,
766 S.E.2d at 397. In Syllabus Point 2, we held that the defendant has the affirmative duty
to raise the defense and that, if the defense is not raised, “the foreclosure sale price, rather
than the property’s fair market value, will be used to compute the deficiency.” Id.; HSBC
Bank USA v. Resh, No. 3:12-cv-00668, 2016 WL 525829, at *4 (S.D. W.Va. February 8,
2016) (same). Given that Mr. Sostaric seeks to benefit from an affirmative defense, he
bears the burden of establishing it. Grim v. Eastern Electric, LLC, 234 W.Va. 557, 567,
767 S.E.2d 267, 277 (2014).
                                               5

        Within the context of summary judgment, if Mr. Sostaric cannot show that a
genuine issue of material fact exists as to whether the property’s fair market value was
greater than the foreclosure sale price, the circuit court properly awarded summary
judgment to Ms. Marshall. As we held in Syllabus Point 4 of Painter, “[s]ummary
judgment is appropriate where the record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, such as where the nonmoving party has failed to make
a sufficient showing on an essential element of the case that it has the burden to prove.” 192
W.Va. at 190, 451 S.E.2d at 756.

        Mr. Sostaric concedes that he must point to evidence in the record tending to show
the property’s fair market value at the time of the foreclosure sale. See Restatement
(Third) of Property: Mortgages § 8.4, cmt. b (stating that fair market value is determined at
time of foreclosure sale). Mr. Sostaric further concedes that the appraisal valued the
property as of November 12, 2015. However, Mr. Sostaric points to general comments
made by the appraiser within the appraisal report regarding the depressed or stagnate state
of the local real estate market “over the past five years.” Mr. Sostaric contends that it can
be inferred from these comments that the property was also worth approximately $149,000
at the time of the October 17, 2012, foreclosure sale at which Ms. Marshall purchased the
property for $60,000. We disagree.

        While we draw permissible inferences from the underlying facts in the light most
favorable to the non-moving party, 11 we find that Mr. Sostaric’s interpretation of the
appraiser’s general comments regarding the local real estate market is not permissible
given his specific statements about the appraisal’s purpose and limitations. As an initial
matter, the appraiser specifically states that the appraisal’s intended use is to aid Mr.
Sostaric in determining the property’s “current” market value and checks the box on the
appraisal form indicting that “current” market value is determined as of the date he
inspected the property (November 12, 2015). Subsequently, regarding the scope of his
report, the appraiser states that “[t]he Opinion of Value that is the conclusion of this report
is credible only within the context of . . . the Intended Use[.]” Thus, we find that Mr.
Sostaric’s appraiser specifically disclaims the use of his report to determine the fair market
value of the property as of October 17, 2012. Given this disclaimer in the appraisal report,
we agree with the circuit court’s finding that Mr. Sostaric “ha[s] failed to bring forth any
evidence of the value of the property at the time of the foreclosure sale.” (emphasis in
original). Therefore, we find that the record taken as a whole could not lead a rational trier
of fact to find for Mr. Sostaric on the issue of an affirmative defense that he has the burden

       11
            See Painter, 192 W.Va. at 192, 451 S.E.2d at 758.

                                              6

of establishing. Accordingly, we conclude that the circuit court did not err in awarding
summary judgment to Ms. Marshall.

        For the foregoing reasons, we affirm the circuit court’s June 21, 2016 order
awarding Ms. Marshall a deficiency judgment in the amount of $175,407.45, attorneys’
fees in the amount of $1,749.25, and court costs and pre- and post-judgment interest.

                                                                             Affirmed.

ISSUED: November 2, 2017

CONCURRED IN BY:

Chief Justice Allen H. Loughry II
Justice Robin Jean Davis
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Elizabeth D. Walker

Justice Ketchum, concurring separately in writing:

       The majority opinion correctly affirmed the summary judgment in favor of Sally
Marshall (the plaintiff). The appraisal expert offered on behalf of Stjepan Sostaric (the
defendant) did not use the foreclosure date to calculate the fair market value of the
property. Rather, the expert determined the property’s value on a date three years after the
date of foreclosure. The expert’s opinion was, therefore, wholly irrelevant and
inadmissible.

        Nevertheless, I believe there was reversible error – error, unfortunately, that the
defendant failed to raise. In West Virginia, “our law has long recognized the admissibility
of a landowner’s opinion concerning the value of his land.”12 The defendant had the right
to give his opinion about his property’s value on the date of the foreclosure. If he’d done
so, he would have been entitled to a jury trial. However, our law requires that a party
resisting a summary judgment must present some evidence there are genuine issues of fact
in dispute.13 The defendant waived this potential error and his right to testify about the
12
  Gomez v. Kanawha County Commission, 237 W.Va. 451, 471, 787 S.E.2d 904, 924
(2016).
13
     Williams v. Precision Coil Inc., 194 W.Va. 52, 459 S.E.2d 329 (1985).


                                              7

property’s value because he neither raised nor mentioned this issue to the judge during the
summary judgment proceedings. He was silent on a landowner’s right to testify as to fair
market value. That silence left the trial judge, and this Court, no alternative. I am
authorized to state that Justice Workman joins me in this concurrence.




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