           IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA


                                September 2014 Term
                                 _______________                           FILED
                                                                    November 12, 2014
                                                                        released at 3:00 p.m.
                                    No. 14-0143                       RORY L. PERRY II, CLERK
                                                                    SUPREME COURT OF APPEALS
                                  _______________                        OF WEST VIRGINIA



                             NANCY SOSTARIC and

                               STJEPAN SOSTARIC,

                            Defendants Below, Petitioners


                                          v.

                                SALLY MARSHALL,

                             Plaintiff Below, Respondent


       ____________________________________________________________

                    Appeal from the Circuit Court of Morgan County

                      The Honorable Michael D. Lorensen, Judge

                              Civil Action No. 12-C-160


                           REVERSED AND REMANDED


       ____________________________________________________________

                             Submitted: October 14, 2014

                              Filed: November 12, 2014


Nancy Sostaric                                 Sally Marshall

Stjepan Sostaric                               Pro Se

Pro Se                                         Berkeley Springs, West Virginia

Falls Church, Virginia





JUSTICE KETCHUM delivered the Opinion of the Court.

CHIEF JUSTICE DAVIS dissents and reserves the right to file a dissenting Opinion.

                              SYLLABUS BY THE COURT



              1.     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. In view of this holding, Syllabus Point 4 of

Fayette County National Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997) is

overruled.



              2.     A fair market value determination in a lawsuit seeking a deficiency

judgment following a trust deed foreclosure sale must be asserted by the deficiency

defendant.    Unless the deficiency defendant requests such a determination, the

foreclosure sale price, rather than the property’s fair market value, will be used to

compute the deficiency.



              3.     If a circuit court in a lawsuit seeking a deficiency judgment

following a trust deed foreclosure sale determines that the fair market value of the

foreclosed property is greater than the foreclosure sale price, the deficiency defendant is

entitled to an offset against the deficiency in the amount by which the fair market value,

less the amount of any liens on the real estate that were not extinguished by the

foreclosure, exceeds the sale price.
Justice Ketchum:


              Petitioners, Nancy Sostaric and Stjepan Sostaric (“Mr. and Mrs. Sostaric”),1

who are appearing pro se, appeal from an order entered January 16, 2014, by the Circuit

Court of Morgan County. The circuit court granted summary judgment to respondent,

Sally Marshall (“Ms. Marshall”), who is also appearing pro se, awarding her a deficiency

judgment against Mr. and Mrs. Sostaric and attorney’s fees.2

              On appeal, Mr. and Mrs. Sostaric contend that summary judgment was

improper because there exist genuine issues of material fact. They contend that the

amount of the deficiency judgment awarded was too high and that it should have been

adjusted to reflect the fair market value of their property when it was sold at the trust

deed sale. They argue the property was sold for less than its fair market value at the

trustee’s foreclosure sale.

              Upon review, we find that Mr. and Mrs. Sostaric may assert, as a defense in

the lawsuit seeking a deficiency judgment, that the property was sold for less than its fair

market value at the trust deed foreclosure sale. In so finding, we overrule Syllabus Point

4 of Fayette County National Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997). We


       1
        At the time of the underlying proceedings, it appears that Mr. and Mrs. Sostaric
were in the midst of divorce proceedings. Nevertheless, to maintain consistency with the
record in this case, we will continue to refer to them as “Mr. and Mrs. Sostaric.”
       2
       Ms. Marshall initially was represented by counsel when she filed the lawsuit
seeking the deficiency judgment against Mr. and Mrs. Sostaric.



                                             1

therefore reverse the circuit court’s summary judgment order and remand this matter for

further proceedings consistent with this Opinion.



                                            I.

                 FACTUAL AND PROCEDURAL BACKGROUND

             Mr. and Mrs. Sostaric signed a “Secured Balloon Promissory Note” on

December 26, 2006, whereby Ms. Marshall lent them $200,000.00.            The loan was

“secured by a first deed of trust on real property owned by Borrowers [Mr. and Mrs.

Sostaric]” in Berkeley Springs, West Virginia.3 The note’s payment terms required that

             [t]he full amount of the note is due and payable December 30,
             2013. Interest only payments will be made on a monthly
             basis. The first interest only payment of $1208.00 will be due
             on January 30, 2007 and will continue to be paid monthly
             thereafter. The full payment of Two Hundred Thousand
             Dollars ($200,000.00) will be due on December 31, 2013.

             Additionally, the note included a “DEFAULT AND ACCELERATION

CLAUSE,” which provided:

             If Borrowers [Mr. and Mrs. Sostaric] default in the payment
             of this Note or in the performance of any obligation, and the
             default is not cured within fifteen days after Lender [Ms.
             Marshall] has given to Borrowers written notice of the default
             and time to cure, then Lender may declare the unpaid



      3
       It appears from the record that the property securing the promissory note was the
primary residence of Mr. and Mrs. Sostaric, which they had purchased in March 2006 for
$155,900.



                                            2

                   principal balance and earned interest on this Note
                   immediately due. Borrowers and each surety, endorser, and
                   guarantor waive all demands for payment, presentation for
                   payment, notices of intentions to accelerate maturity, protests
                   and notices of protest, to the extent permitted by law.

                   Finally, the note allowed for the recovery of attorney’s fees incurred in the

collection or enforcement of the note:

                   If this Note is given to an attorney for collection or
                   enforcement, or if suit is brought for cancellation or
                   enforcement, or if it is collected or enforced through probate,
                   bankruptcy or other judicial proceeding, then Borrowers [Mr.
                   and Mrs. Sostaric] shall pay to Lender [Ms. Marshall] all
                   costs of collection and enforcement, including reasonable
                   attorneys fees and court costs in addition to other amounts
                   due.

                   While Mr. and Mrs. Sostaric made the required monthly interest payments

for a period of time after signing the promissory note, they stopped making their monthly

payments in October 2010 and subsequently defaulted on their obligation. On July 17,

2012, Ms. Marshall sent Mrs. Sostaric5 a “NOTICE OF RIGHT TO CURE DEFAULT,”

which “serve[d] as formal notice that the default outline[d] below must be satisfied

within thirty (30) days. Failure to cure the default by the date indicated shall result in the

acceleration of the balance owing on the deed of trust and sale of collateral involved.”




          5
              It is unclear why Mr. Sostaric’s name was not also included on the right to cure
notice.



                                                 3

The property sought to be sold was the residence of Mr. and Mrs. Sostaric that had served

as collateral for the promissory note. The notice further provided:

              YOU HAVE THE RIGHT                      TO     CURE       THE
              FOLLOWING DEFAULT:

              Total amount of payments in default (including all charges):
              $25,911.00 and any other payments or fees that may become
              due prior to the curing of the default.

              Other Required Performance Which is in Default: Show proof
              that 2011 real estate taxes have been paid. ($1,050.73 if paid
              by July 31, 2012)

              Date by which payment must be made or other required
              performance accomplished in order to cure the default:
              August 17th, 2012.

(Emphasis in original.)

              Despite this notice, Mr. and Mrs. Sostaric did not cure their default.

Therefore, on September 21, 2012, counsel for Ms. Marshall sent Mrs. Sostaric6 notice of

a trustee’s sale of the property securing their promissory note. The notice served to

                     1. Accelerate and declare all sums secured by said
              Deed of Trust to be immediately due and payable without
              further demand, subject to the terms of said deed of trust and
              applicable law; and

                   2. Invoke the power given by said Deed of Trust to sell
              the above-described real estate at public auction on
              Wednesday, October 17, 2012, at 11:36 AM, at the front door



       6
       It also is unclear why Mr. Sostaric’s name was not included on the
correspondence providing notice of the trustee’s sale.



                                             4

              of the Morgan County Courthouse, Berkeley Springs, West
              Virginia.

(Emphasis in original.)

              On October 17, 2012, Ms. Marshall purchased the subject property at the

trustee’s sale for $60,000.00. Of this amount, $58,260.757 was distributed to “Sally

Marshall, the holder and owner of the note secured by said deed of trust to apply on

principal and interest of said note[8] and obligations set forth in said deed of trust,” while

the remaining sum of $1,739.25 was applied to the costs of the sale. (Footnote added.)

              Thereafter, on December 13, 2012, Ms. Marshall, by counsel, filed the

instant lawsuit against Mr. and Mrs. Sostaric seeking a deficiency judgment for the

unpaid balance of their promissory note. By order entered January 16, 2014, the circuit

court awarded summary judgment to Ms. Marshall, ruling as follows:

                     The Plaintiff [Ms. Marshall] has set forth evidence, by
              way of a sworn affidavit, of an outstanding debt in the
              amount of $175,407.45, the collection of which is supported
              by an exhibit to the Complaint, the Secured Balloon
              Promissory Note. Further, the Plaintiff has set forth evidence,
              by way of a sworn affidavit, of attorneys’ fees in the amount
              of $1,749.25, the collection of which is supported by an
              exhibit to the Complaint, the Secured Balloon Promissory
              Note.


       7
        The “TRUSTEE’S REPORT OF SALE UNDER DEED OF TRUST” indicates
that $58,250.75 of the sales proceeds was applied to reduce the indebtedness under the
promissory note.
       8
       The “Disclosure Form Trustee Report of Sale” indicated that the “Total Secured
Indebtedness at Foreclosure [was] 231,660.68.”



                                              5

The court also awarded Ms. Marshall post-judgment interest on this award. From this

adverse ruling, Mr. and Mrs. Sostaric now appeal to this Court.9



                                           II.


                              STANDARD OF REVIEW


             Mr. and Mrs. Sostaric appeal from the circuit court’s order granting

summary judgment. We previously have held that “[a] motion for summary judgment

should be granted only when it is clear that there is no genuine issue of fact to be tried

and inquiry concerning the facts is not desirable to clarify the application of the law.”

Syl. pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins. Co. of New York, 148 W. Va. 160, 133

S.E.2d 770 (1963). We afford a plenary review to a lower court’s order awarding

summary judgment: “[a] circuit court’s entry of summary judgment is reviewed de

novo.” Syl. pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).




      9
       There is no contention that the trust deed sale was invalid or defective. Our
review of the record reveals that the foreclosure procedure and trustee’s sale complied
with our law and that title to the foreclosed property was legally conveyed to Ms.
Marshall.



                                            6

                                           III.


                                       ANALYSIS


              This case involves a deficiency judgment. 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.” Lawrence R. Ahern, III, The Law of Debtors and Creditors, § 8:20

(2014).10

              In this appeal, Mr. and Mrs. Sostaric contend that the circuit court’s award

of summary judgment to Ms. Marshall was improper because the deficiency judgment

award was not adjusted to reflect the fair market value of the property securing the debt.

In addressing whether a defendant may challenge the sale price of foreclosed property in

a deficiency judgment lawsuit and assert that the property was sold for less than its fair

market value, we will examine and consider: (1) the majority view of other jurisdictions

that permit the sale price of foreclosed property to be challenged in a deficiency judgment

lawsuit; and (2) West Virginia’s statutory law on trust deed foreclosure sales, as well as




       10
        We use the terms deed of trust (trust deed) and mortgage interchangeably. A
deed of trust is, in effect, a mortgage. Both instruments secure payment of a debt. The
primary difference 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. For a more detailed explanation see Arnold v. Palmer, 224 W.Va.
495, 503 fn. 10, 686 S.E.2d 725, 733 fn.10 (2009).



                                            7

this Court’s ruling in Fayette County. National Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d

232 (1997).

                                   A. The Majority Rule

              Our Court has recognized that “a majority of jurisdictions permit the sale

price of foreclosed property to be challenged in a deficiency judgment proceeding[.]”

Fayette Cnty. Nat’l Bank v. Lilly, 199 W.Va. at 356, 484 S.E.2d at 239. Whether by

judicial decision or by statute,11 the majority view “afford[s] the deficiency defendant the

right to insist that the greater of the fair market value of the real estate or the foreclosure




       11
          Statutes that define the deficiency as the difference between the mortgage
obligation and the “fair value” of the foreclosed real estate include the following: Ariz.
Rev. Stat. § 33-814 (“fair market value” as of the date of sale); West’s Ann. Cal. Code
Civ. Proc. §§ 580a (“fair market value” as of date of sale in power of sale foreclosure),
726(b) (“fair value” as of sale date in judicial foreclosure); Colo. Rev. Stat. Ann. § 38-38­
106 (“fair market value”); Conn. Gen. Stat. Ann. § 49-14(a) (“actual value” as of date
title vested in mortgagee in strict foreclosure); Ga. Code Ann. § 44-14-161 (“true market
value” as of sale date); Idaho Code § 6-108 (“reasonable value”); Kan. Stat. Ann. § 60­
2415 (“fair value”); Me. Rev. Stat. Ann. tit. 14, § 6324 (“fair market value” at time of
sale); Mich. Comp. Laws Ann. § 600.3280 (“true value” at time of sale); Minn. Stat. Ann.
§ 582.30, subd. 5(a) (“fair market value”); Neb. Rev. Stat. § 76-1013 (“fair market value”
as of sale date); Nev. Rev. Stat. §§ 40.455-40.457 (“fair market value” as of sale date);
N.J. Rev. Stat. § 2A:50-3 (“fair market value”); N.Y. Real Prop. Acts. § 1371 (“fair and
reasonable market value” as of sale date); N.C. Gen. Stat. § 45-21.36 (“true value” as of
sale date); N.D. Cent. Code §§ 32-19-06, 32-19-06.1 (“fair value”); Okla. Stat. Ann. tit.
12, § 686 (“fair and reasonable market value” as of sale date); Pa. Stat. Ann. tit. 42, §
8103 (“fair market value”); S.C. Code Ann. § 29-3-700 et seq. (“true value”); S.D.
Codified Laws Ann. § 21-47-16 (“fair and reasonable value”); Tex. Prop. Code Ann. §
51.003 (“fair market value” as of sale date); Utah Code Ann. § 57-1-32 (“fair market
value”); Wash. Rev. Code Ann. § 61.12.060 (“fair value”); Wis. Stat. Ann. § 846.165
(“fair value”).



                                              8

sale price be used in calculating the deficiency.” Restatement (Third) of Property:

Mortgages, § 8.4 cmt. a (1997).

              In one such judicial decision, the Montana Supreme Court determined that

its real property foreclosure statute was silent on whether the fair market value of the

property could be raised in a deficiency judgment proceeding. Because the statute was

silent, the court used its inherent equitable powers to require that the fair market value of

the foreclosed property be determined and form the basis of any deficiency judgment

award. See Trustees of the Wash.-Idaho-Mont.-Carpenters-Emp’r Ret. Trust Fund v.

Galleria P’ship, 239 Mont. 250, 265, 780 P.2d 608, 617 (1989) (“Courts sitting in equity

are empowered to determine all the questions involved in the case and to do complete

justice; this includes the power to fashion an equitable remedy. . . . In the exercise of our

equity jurisdiction, therefore, we deem it proper to remand to the District Court to

determine the fair market value of the property[.]”).

              A number of other states have also adopted the majority rule through

judicial decision. See, e.g., First Union Nat’l Bank of Fla. v. Goodwin Beach P’ship, 644

So. 2d 1361 (Fla.Dist.Ct.App. 1994) (In Florida, a party seeking deficiency judgment

must present competent evidence that the mortgage indebtedness exceeds the fair market

value of the property.); Shutze v. Credithrift of Am., 607 So. 2d 55, 65 (Miss. 1992) (In

Mississippi, in a deficiency proceeding, the mortgagee “must give the debtor fair credit

for the commercially reasonable value of the collateral.”); and Licursi v. Sweeney, 594




                                             9

A.2d 396, 398 (Vt. 1991) (Vermont requires that the value of the foreclosed real estate be

applied to the mortgage obligation.).

              The Restatement (Third) of Property: Mortgages, § 8.4 cmt. a (1997),

agrees with the majority rule and has adopted the

              widely held view that when the foreclosure process does not
              fully satisfy the mortgage obligation, the mortgagee may
              obtain a deficiency judgment against any person who is
              personally liable on that obligation. Thus, this section rejects
              the approach of those states that prohibit a deficiency
              judgment after foreclosure of a purchase money mortgage, or
              that prohibit deficiency judgments after a foreclosure by
              power of sale. On the other hand, it also rejects the traditional
              view that the amount realized at the foreclosure sale is
              automatically applied to the mortgage obligation and that the
              mortgagee is entitled to a judgment for the balance. Instead, it
              adopts the position of the substantial number of states
              that, by legislation or judicial decision, afford the
              deficiency defendant the right to insist that the greater of
              the fair market value of the real estate or the foreclosure
              sale price be used in calculating the deficiency. This
              approach enables the mortgagee to be made whole where the
              mortgaged real estate is insufficient to satisfy the mortgage
              obligation, but at the same time protects against the
              mortgagee purchasing the property at a deflated price,
              obtaining a deficiency judgment and, by reselling the real
              estate at a profit, achieving a recovery that exceeds the
              obligation. Thus, it is aimed primarily at preventing the unjust
              enrichment of the mortgagee. This section also protects the
              mortgagor from the harsh consequences of suffering both the
              loss of the real estate and the burden of a deficiency judgment
              that does not fairly recognize the value of that real estate.

(Emphasis added.) Based on its view that a deficiency defendant has the right to insist

that the fair market value of the real estate be used in calculating the deficiency, section

8.4 of the Restatement provides:


                                             10

             (a) If the foreclosure sale price is less than the unpaid balance
             of the mortgage obligation, an action may be brought to
             recover a deficiency judgment against any person who is
             personally liable on the mortgage obligation in accordance
             with the provisions of this section.

             (b) Subject to Subsections (c) and (d) of this section, the
             deficiency judgment is for the amount by which the mortgage
             obligation exceeds the foreclosure sale price.

             (c) Any person against whom such a recovery is sought
             may request in the proceeding in which the action for a
             deficiency is pending a determination of the fair market
             value of the real estate as of the date of the foreclosure
             sale.

             (d) If it is determined that the fair market value is greater than
             the foreclosure sale price, the persons against whom recovery
             of the deficiency is sought are entitled to an offset against the
             deficiency in the amount by which the fair market value, less
             the amount of any liens on the real estate that were not
             extinguished by the foreclosure, exceeds the sale price.

(Emphasis added.)

             One final note on section 8.4 of the Restatement—it requires a defendant in

a deficiency proceeding to request that a fair market value determination be made: “The

fair market value determination of this section is not self-executing.            Unless the

deficiency defendant affirmatively requests such a determination, the foreclosure sale




                                            11

price, rather than the property’s fair market value, will be used to compute the

deficiency.” supra at § 8.4 cmt. b.12

                                  B. West Virginia Rule

              In West Virginia, the Legislature has provided for two types of real

property foreclosure sales: judicial sales13 and trustee sales. The present issue concerns a

trustee foreclosure sale, which is set forth in W.Va. Code § 38-1-3 [1923]. It provides:

              The trustee in any trust deed given as security shall, whenever
              required by any creditor secured or any surety indemnified by
              the deed, or the assignee or personal representative of any
              such creditor or surety, after the debt due to such creditor or
              for which such surety may be liable shall have become
              payable and default shall have been made in the payment
              thereof, or any part thereof, by the grantor or other person
              owing such debt, and if all other conditions precedent to sale
              by the trustee, as expressed in the trust deed, shall have
              happened, sell the property conveyed by the deed, or so much
              thereof as may be necessary, at public auction, having first
              given notice of such sale as prescribed in the following
              section.




       12
         In many jurisdictions, the court must conduct a hearing as to value and apply the
“fair value” amount in computing a deficiency even though the deficiency defendant fails
to request it. See, e.g., Idaho Code Ann. § 6-108; Neb. Rev. Stat. § 76-1013; Nev. Rev.
Stat. § 40.457; Okla. Stat. Ann. tit. 12, § 686; Pa. Stat. Ann. tit. 42, § 8103. Other states
place the burden on the deficiency defendant to raise the “fair value” defense. See, e.g.,
Kan. Stat. Ann. § 60-2415; Me. Rev. Stat. Ann. tit. 14, § 6324; Mich. Comp. Laws Ann.
§ 600.3280; N.C. Gen. Stat. § 45-21.36; N.J. Rev. Stat. § 2A:50-3; and Tex. Prop. Code
Ann. § 51.003.
       13
         The statutory provisions for judicial sales are found in W.Va. Code § 55-12-1 et
seq. [1994].



                                             12

The issue of whether the value of foreclosed real property may be challenged in a

deficiency judgment lawsuit is not addressed by our trustee foreclosure sale statutes—

W.Va. Code § 38-1-3 neither permits nor forbids such a challenge.14

              This Court has previously considered whether the value of foreclosed real

property may be challenged in a deficiency judgment lawsuit. In Lilly, supra, a divorcing

couple defaulted on a promissory note that was secured by a deed of trust. The holder of

the note, a bank, purchased the property at a trustee’s sale and then sued the grantors of

the note to recover a deficiency judgment for the balance of the amount due under the

note. The grantors contended, however, that the deficiency judgment sought should be

offset by the fair market value of the property securing the loan, which, they claimed, had

been sold for less than its true value. The Court rejected this argument, concluding that

the subject sale had complied with W.Va. Code § 38-1-3, and reasoned that

              [u]nder the current real property foreclosure scheme there is a
              conclusive presumption that, at the point of a deficiency
              judgment proceeding, the property sold was sold for a fair
              market value. The Lillys [grantors] now seek to have this
              Court redefine that presumption so that it becomes rebuttable.
              This we refuse to do.

Lilly, 199 W. Va. at 357, 484 S.E.2d at 240.




       14
         In Syllabus Point 2 of Dennison v. Jack, 172 W.Va. 147, 304 S.E.2d 300 (1983),
this Court held, “[t]he provisions of W.Va. Code, ch. 38, art. 1, which permit, pursuant to
the terms of a trust deed, a public sale of property by a trustee upon the default of the
grantor of the trust deed, do not violate the public policy of this State.”



                                            13

              The Court in Lilly acknowledged that a “majority of jurisdictions permit the

sale price of foreclosed property to be challenged in a deficiency judgment proceeding,”

and that “our cases have applied common law principles of equity to permit an action to

set aside a foreclosure sale.” 199 W.Va. at 356-57, 484 S.E.2d at 239-40. Despite its

recognition that this Court had previously applied common law principles of equity in

cases involving trustee foreclosure sales, the Court in Lilly refused to allow the deficiency

defendant to assert that the foreclosed real property was sold for less than its fair market

value.

              Lilly offered two main reasons for declining to follow the majority of

jurisdictions that permit the sale price of foreclosed real property to be challenged: (1)

West Virginia’s “trustee foreclosure laws would be unsettled were we to allow grantors

to challenge the value of real property at a deficiency judgment proceeding,” 199 W.Va.

at 357, 484 S.E.2d at 240; and (2) the Legislature has addressed the issue in the area of

consumer goods, therefore, it is up to the Legislature to address the issue in the context of

a trustee’s foreclosure sale of real property. 199 W.Va. at 357-58, 484 S.E.2d at 240-41.

Based on this reasoning, the Court held, “A grantor 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.” Syllabus Point 4, Lilly.

              The issue raised in the present case requires us to revisit our holding in

Lilly. In Syllabus Point 2 of Dailey v. Bechtel Corp., 157 W.Va. 1023, 207 S.E.2d 169

(1974), we held that “[a]n appellate court should not overrule a previous decision recently


                                              14

rendered without evidence of changing conditions or serious judicial error in

interpretation sufficient to compel deviation from the basic policy of the doctrine of stare

decisis, which is to promote certainty, stability, and uniformity in the law.” This Court

has also observed that “uniformity and predictability are important in the formulation and

application of our rules of property. Under the doctrine of stare decisis, a rule of property

long acquiesced in should not be overthrown except for compelling reasons of public

policy or the imperative demands of justice.” Faith United Methodist Church and

Cemetery of Terra Alta v. Morgan, 231 W.Va. 423, 437, 745 S.E.2d 461, 475 (2013)

(internal citation and quotation omitted). Similarly, this Court has stated:

              No prior decision is to be reversed without good and
              sufficient cause; yet the rule is not in any sense ironclad, and
              the future and permanent good to the public is to be
              considered, rather than any particular case or interest. Even if
              the decision affects real-estate interests and titles, there may
              be cases where it is plainly the duty of the court to interfere
              and overrule a bad decision. Precedent should not have an
              overwhelming or despotic influence in shaping legal
              decisions. No elementary or well-settled principle of law can
              be violated by any decision or any length of time. The benefit
              to the public in the future is of greater moment than any
              incorrect decision in the past. Where vital and important
              public and private rights are concerned, and the decisions
              regarding them are to have a direct and permanent influence
              in all future time, it becomes the duty as well as the right of
              the court to consider them carefully, and to allow no previous
              error to continue, if it can be corrected. The reason that the
              rule of stare decisis was promulgated was on the ground of
              public policy, and it would be an egregious mistake to allow
              more harm than good to accrue from it. Much, not only of
              legislation, but of judicial decision, is based upon the broad
              ground of public policy, and this latter must not be lost sight
              of.


                                             15

Adkins v. St. Francis Hosp., 149 W.Va. 705, 719, 143 S.E.2d 154, 163 (1965) (internal

citation and quotation omitted).

              With these considerations in mind, we find “good and sufficient cause” to

depart from the Court’s holding in Syllabus Point 4 of Lilly, which denies a grantor the

right to 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. We conclude that

the better and more legally sound approach is to follow section 8.4 of the Restatement, as

well as the majority of other states, and allow a defendant to 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. We arrive at this conclusion for the following

reasons.

              First, our trustee foreclosure statutes, including W.Va. Code § 38-1-3,

neither permit nor forbid a trust deed grantor from challenging the value of real property

at a deficiency judgment proceeding. While the statute is silent on this issue, this Court

has previously applied common law principles of equity to permit an action to set aside a

trustee’s foreclosure sale. As the Court noted in Lilly,

              merely because the legislature has failed to provide by statute
              a mechanism for challenging the value of real property
              obtained from a foreclosure sale, does not necessarily mean
              that this Court may not resolve the matter. Our trustee sale
              statutes do not address the issue of setting aside a foreclosure
              sale. But, our cases have applied common law principles of
              equity to permit an action to set aside a foreclosure sale.




                                             16

199 W.Va. at 357, 484 S.E.2d at 240. (Emphasis added.)15 We agree with the reasoning

of the Montana Supreme Court who, also faced with a statute that neither permitted nor

forbade such a challenge, used its inherent equitable powers to require that the fair

market value of the foreclosed property be determined and form the basis of any

deficiency judgment award. See Trustees of the Wash.-Idaho-Mont.-Carpenters-Emp’r

Ret. Trust Fund v. Galleria P’ship, supra.

              Further, we find that the Court’s ruling in Lilly creates the potential for a

creditor to receive a windfall at the expense of an already financially distressed trust deed

grantor. Under Syllabus Point 4 of Lilly, the holder of the promissory note may purchase

the foreclosed property at a deflated price, receive a deed to the property, and thereafter,

obtain a deficiency judgment which is not subject to a fair market value challenge. Then,

by reselling the real estate at its fair market value, the holder of the promissory note will

achieve a double recovery that far exceeds the amount owed by the trust deed grantor.

This scenario results in the unjust enrichment of the holder of the promissory note and




       15
         See Syllabus Point 2, Corrothers v. Harris, 23 W.Va. 177 (1883) (“A sale under
a trust-deed will not be set aside unless for weighty reasons.”). See also Syllabus Point
12, Atkinson v. Washington and Jefferson College, 54 W.Va. 32, 46 S.E. 253 (1903) (In
part: “Such sale will not be set aside, on the ground of inadequacy of price . . . [where]
the evidence as to the value of the land does not clearly show that the price for which it
sold is so inadequate as to shock the conscience[.]”).



                                             17

forces the trust deed grantor to suffer both the loss of their real estate and the burden of a

deficiency judgment that does not fairly recognize the value of that real estate.16

              Next, we find no authority or data demonstrating that our trustee

foreclosure laws would be unsettled were we to allow a trust deed grantor to challenge

the value of real property at a deficiency judgment proceeding. A majority of states


       16
        The Missouri Supreme Court considered this issue and, like Lilly, followed the
minority rule that does not permit a deficiency defendant to assert a fair market value
challenge following a foreclosure sale. Missouri Chief Justice Richard B. Teitelman
dissented to the court’s ruling and discussed why denying a deficiency defendant the
opportunity to present a fair market value challenge is inconsistent with the general
purpose underlying a damage award:

                     The purpose of a damage award is to make the injured
              party whole without creating a windfall. Accordingly, in
              nearly every context in which a party sustains damage to or
              the loss of a property or business interest, Missouri law
              measures damages by reference to fair market value. Yet in
              the foreclosure context, Missouri law ignores the fair market
              value of the foreclosed property and, instead, measures the
              lender’s damages with reference to the foreclosure sale price.
              Rather than making the injured party whole, this anomaly in
              the law of damages, in many cases, will require the defaulting
              party to subsidize a substantial windfall to the lender. Aside
              from the fact that this anomaly long has been a part of
              Missouri law, there is no other compelling reason for
              continued adherence to a measure of damages that too often
              enriches one party at the expense of another. Consequently, I
              would hold that damages in a deficiency action should be
              measured by reference to the fair market value of the
              foreclosed property.

First Bank v. Fischer & Frichtel, Inc., 364 S.W.3d 216, 224-25 (Mo., 2012) (C.J.
Teitelman, dissenting).



                                             18

allow grantors to challenge the value of real property at a deficiency judgment

proceeding.    We have found no authority suggesting that the states that follow the

majority rule suffer from unsettled foreclosure laws, nor have we found any data

demonstrating that the banking institutions in those states have been negatively affected

as a result of their jurisdictions adhering to the majority rule.17

              Additionally, Lilly noted that the Legislature has addressed a debtor’s right

to challenge the sale price of consumer goods in a deficiency judgment proceeding. In


       17
        In response to a bank’s argument that allowing a defendant to present a fair
market value challenge in a deficiency judgment proceeding could negatively affect
banking institutions, one court noted:

                      First Bank argues that changing to the fair market
              value approach will place all the risk in the foreclosure
              process onto the lender. This argument is not persuasive. By
              focusing only on the foreclosure process, First Bank deflects
              consideration of the risk management techniques available to
              lenders when the loan is made. A lender compensates for risk
              by charging an interest rate that is set both by the financial
              markets and by the lender’s assessment of the borrower’s
              creditworthiness. The lender also manages risk by appraising
              the fair market value of the property to ensure that the loan is
              adequately secured. Changing to a fair market value approach
              certainly would lessen the lender’s chance of a large windfall
              and would mean only that First Bank, like the borrower, is
              losing or gaining money based on fair market value of
              property. The risk of loss is part of the risk of lending. That
              risk of loss should not be borne solely by the borrower and
              then amplified by measuring the deficiency by reference to
              the foreclosure sale price.

First Bank, 364 S.W.3d at 228 fn. 5 (C.J. Teitelman, dissenting).



                                              19

Syllabus Point 4 of Bank of Chapmanville v. Workman, 185 W.Va. 161, 406 S.E.2d 58

(1991), the Court held:

                     When a secured creditor is found to have sold
              collateral in a commercially unreasonable manner, the fair
              market value of the collateral is rebuttably presumed to be
              equal to the amount of the remaining debt; to recover a
              deficiency, the secured creditor must prove that the debt
              exceeded the fair market value of the collateral.

The Court in Lilly stated that “[o]ur holding in syllabus point 4 of Bank of Chapmanville

was premised upon the statutory right of a debtor to challenge the sale price of goods at a

deficiency judgment proceeding.” 199 W.Va. at 358, 484 S.E.2d at 241. The Court then

concluded in Lilly that because the Legislature addressed the issue in the area of

consumer goods, it is up to the Legislature, and not the Court, to address whether a trust

deed grantor may challenge the sale price of real property in a deficiency judgment

proceeding following a trustee’s foreclosure sale. We disagree.

              The fact that the Legislature has addressed (and permitted) a debtor to

challenge the sale price of consumer goods in a deficiency judgment proceeding does not

vest the Legislature with the sole authority to permit a trust deed grantor to undertake a

similar challenge following a trustee’s foreclosure sale of real property. The Legislature’s

silence on the issue does not foreclose this Court from applying our common law

principles of equity and fairness to allow a grantor to challenge the sale price of real

property following a trustee’s foreclosure sale. Indeed, this Court recognized in Lilly that

“our cases have applied common law principles of equity to permit an action to set aside

a foreclosure sale[.]” 199 W.Va. at 357, 484 S.E.2d at 240. The Restatement also

                                            20

concludes that a court may apply common law principles of equity to allow a defendant

to assert a fair market value challenge in a deficiency judgment proceeding. See

Restatement, supra § 8.4 cmt. a.

              Further, under the Court’s holding in Lilly, a defendant may not assert a fair

market value challenge following a trustee’s foreclosure sale of real property. However,

under the Court’s ruling in Bank of Chapmanville, a defendant may assert a fair market

value challenge in a deficiency judgment proceeding following a foreclosure sale

involving a mobile home.18 We find no justification for this result and find that it

produces an absurdity: a mobile home owning defendant may present a fair market value

challenge in a deficiency proceeding, but a real property owning defendant may not. This

peculiar juxtaposition illustrates why we feel compelled to depart from the Court’s

holding in Syllabus Point 4 of Lilly.

              Based on all of the foregoing, we now hold 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. In view of

this holding, Syllabus Point 4 of Fayette County National Bank v. Lilly, 199 W.Va. 349,

484 S.E.2d 232 (1997) is overruled. Additionally, we hold that a fair market value

determination in a lawsuit seeking a deficiency judgment following a trust deed


       18
        “A mobile home that a person uses as a private residence is a ‘consumer good.’”
Bank of Chapmanville, 185 W.Va. at 168, 406 S.E.2d at 65.



                                            21

foreclosure sale must be asserted by the deficiency defendant. Unless the deficiency

defendant requests such a determination, the foreclosure sale price, rather than the

property’s fair market value, will be used to compute the deficiency. Finally, we hold

that if a circuit court in a lawsuit seeking a deficiency judgment following a trust deed

foreclosure sale determines that the fair market value of the foreclosed property is greater

than the foreclosure sale price, the deficiency defendant is entitled to an offset against the

deficiency in the amount by which the fair market value, less the amount of any liens on

the real estate that were not extinguished by the foreclosure, exceeds the sale price.

              Our ruling herein is consistent with the majority view of other jurisdictions,

with section 8.4 of the Restatement, 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. In

sum, we are on solid legal ground revisiting and overruling Syllabus Point 4 of Lilly.19

              Applying this holding to the present case, we find that Mr. and Mrs.

Sostaric may assert, as a defense, that the amount of the deficiency judgment awarded

was too high and that it should be adjusted to reflect the fair market value of the subject




       19
        The Court in Lilly also held that “a circuit court’s order granting summary
judgment must set out factual findings sufficient to permit meaningful appellate review.”
Syllabus Point 3, in part. This holding remains good law.



                                             22

property. If the circuit court determines that the fair market value of the property is

greater than the foreclosure sale price, Mr. and Mrs. Sostaric are entitled to an offset

against the deficiency in the amount by which the fair market value, less the amount of

any liens on the real estate that were not extinguished by the foreclosure, exceeds the sale

price.20



                                            IV.


                                     CONCLUSION


              The circuit court’s January 16, 2014, summary judgment order is reversed

and this case is remanded for further proceedings consistent with this Opinion.



                                                                 Reversed and Remanded.




       20
         Upon remand, the circuit court’s order must set forth a detailed calculation
describing how it arrives at any deficiency judgment award. See Syllabus Point 3, Lilly,
supra.



                                            23

