Foreclosure Confirmations: True Market Value Revisited

Conyers 138, LLC et al. v. ONH1, LLC, A17A0145, June 2, 2017, concerns the unique Georgia proceeding that allows foreclosures to be retroactively confirmed by petition in Superior Court. The purpose of a confirmation is to verify the property sold at foreclosure for the fair market value, thereby permitting the lender to sue the borrower to recover the difference between the loan amount and the amount at foreclosure. If the property sells for less than fair market value at the foreclosure, then the lender can’t pursue a deficiency claim against the borrower.

In Conyers 138, LLC, the lender’s appraiser testified the market value of the property was $2,510,000, but to arrive at the fair market value, he subtracted $765,000 for demolition because he contended the best use of the property was as raw, vacant land. The borrower argued that estimate of the demolition cost was inflated because the demolition company used a faulty methodology. The Court of Appeals rejected this argument, stating disputes such as which methodology to apply are factual disputes best evaluated and decided by the trial judge. “The trial judge is the judge of credibility of the witnesses and of the weights to be given to the evidence.” (citations and punctuation omitted).

Since there was some evidence presented that supported the trial court’s decision, the Court of Appeals refused to disturb the trial court’s ruling. The takeaway is that the trial court has a lot of leeway and that it’s an uphill battle to successfully appeal a trial court’s decision in a foreclosure confirmation proceeding.

Slip and Fall Personal Injuries Part Three

Current Law

In 2009, American Multi-Cinema, Inc. et al. v. Brown et al., the Supreme Court reaffirmed Robinson. Taking note of Robinson’s admonition that “routine” issues of premises liability are not subject to summary adjudication unless plain, palpable, and undisputed evidenced shows otherwise,” the Court affirmed the lower court’s finding that the trial court erred in granting summary judgment to the defendant. 285 Ga. 442, 445, 448.

The decision whether to recognize the [invitees] theory of recovery as valid under Georgia premises liability law is precisely the type of legal policy judgment we instructed in Robinson must be left to a jury to decide in light of all the attendant circumstances. It is one of the ‘routine’ issues of premises liability—’the negligence of the defendant’—that is “generally not susceptible of summary adjudication” unless the “plain, palpable, and undisputed” evidence requires otherwise. (citations omitted). At 446.

A hazard has been defined as “[a] danger or risk lurking in a situation which by chance or fortuity develops into an active agency of harm.” Gresham v. Bell’s Food Mkt, 244 Ga. App. 240, 241 (2000) (quoting Black’s Law Dictionary). Either actual or constructive knowledge of the hazard by a defendant will satisfy the first prong. Robinson, at 748. Here, there is both. Defendant admits traversing the stairway, including on the date in question. Defendant therefore has actual knowledge of the alleged hazard.

In analyzing an injured party’s knowledge of a hazard, “Robinson reminded all courts that the plaintiff’s lack of ordinary care for personal safety is generally not susceptible of summary adjudication and that only when the evidence is plain, palpable, and undisputed is summary judgment authorized.” Mac Intern.-Savannah Hotel, Inc. v. Hallman, 265 Ga. App. 727 (2004) (referencing Robinson at 748).

This quick three-part series on Georgia slip and fall law is just the tip of the iceberg. Please call us to discuss your specific situation.

Slip and Fall Personal Injuries Part Two

Robinson v. Kroger: Surviving Summary Judgment

Following up on our previous blog, the Georgia Supreme Court in 1997 changed the slip and fall landscape. The Court ruled that “an [injured party’s] failure to exercise ordinary care for personal safety is not established as a matter of law by the [injured party’s] admission that she did not look at the site on which she subsequently placed her foot”).

After Robinson, an injured party need only prove (1) that the landowner had actual or constructive knowledge of the hazard, and (2) that the injured party lacked knowledge of the hazard despite the exercise of ordinary care due to actions or conditions within the control of the owner.

Robinson is important because it shifts the focus from the injured party’s conduct to the landowner’s conduct. After Robinson, if the injured party shows the landowner knew about the hazard, then the burden shifts to the landowner to show the injury was caused by the injured party’s negligence (intentional disregard of a known risk or failure to exercise ordinary care for one’s personal safety). This makes it much easier for injured parties to survive summary judgment and get their cases in front of a jury.

Robinson remains good law today.

Slip and Fall Personal Injuries Part One

Previous Georgia Law

Under Georgia law, a landowner has a nondelegable statutory duty to keep its premises and approaches safe for a customer or guest (lawyers refer to such persons as “invitees”). OCGA § 51-3-1. Georgia law states: “Where an owner or occupier of land, by express or implied invitation, induces or leads others to come upon his premises for any lawful purpose, he is liable in damages to such persons for injuries caused by his failure to exercise ordinary care in keeping the premises and approaches safe.”

Analysis of Georgia premises liability law begins with Alterman Foods v. Ligon, 240 Ga. 620 (1980). Alterman Foods established a two-prong test. To recover, injured parties had to show (1) the landowner had actual or constructive knowledge of hazard, and (2) the injured party was without knowledge of the hazard (or for some reason attributable to landowner was prevented from discovering the hazard). After Alterman and for the next 17 years, the conduct of the injured party was the focus. Few slip and fall cases injury cases survived summary judgment. A summary judgment is when a court rules as a matter of law for the landowner; this means the judge and not a jury decides the case.

Recognizing that the pendulum had swung too far in favor of landowners, the Georgia Supreme Court, in Robinson v. Kroger, found that “routine issues of premises liability, i.e., negligence, and the plaintiff’s lack of ordinary care for personal safety[,] are generally not susceptible of summary adjudication.” 268 Ga. 735,748 (1997) (“an invitee’s failure to exercise ordinary care for personal safety is not established as a matter of law by the invitee’s admission that she did not look at the site on which she subsequently placed her foot”).

In part two, we will discuss current current slip and fall law in Georgia.

In Georgia: What To Do When Your Tenant Files for Bankruptcy?

Over the years, we’ve learned that for landlords, time is money. A three-day delay to file an eviction can mean losing a month’s rent. Similarly, when a delinquent tenant files bankruptcy, this can cause a two or three month delay, during which time most tenants pay no rent. For a landlord, dealing with a non-paying tenant, and trying to navigate the rules and laws of bankruptcy court, is a challenge. To make things worse, this is not an easy area of law, even for practicing bankruptcy lawyers.  “Executory contracts” have been described as the most “psychedelic” law in bankruptcy. Jay Lawrence Westbrook, Article: A Functional Analysis of Executory Contracts, 74 Minn. L. Rev. 227, 228 (1989)

While there are many issues you can handle without a lawyer, this is one in which you are most likely best served by getting professional advice. This blog only scratches the surface. Please call us for a free consultation if you find yourself in this situation.

Examples of executory contracts are long-term purchase agreements; service contracts; settlement agreements; insurance contracts; employment contracts; and construction contracts. When a party to an executory contract files a bankruptcy, an “automatic stay” of all collection and enforcement proceedings goes into effect at the time of filing. The automatic stay prevents eviction proceedings or other legal action – either for possession or for money damages. As a general rule, if this happens, approval from the bankruptcy court is required to proceed in the underlying action. This means moving for relief from stay. But sometimes filing a motion for relief from stay is unnecessary.

Section 365 is the place in the bankruptcy code that provides guidance on these issues. The rationale behind section 365 is to give the debtor and/or the trustee ample opportunity to decide which prepetition contracts and unexpired leases are beneficial to the bankruptcy estate and should be assumed and retained or assigned, and which are detrimental and should be rejected. Different executory contracts and unexpired leases receive different treatment and are subject to different requirements under section 365.

1. Unexpired Residential Real Property Leases and Unexpired Personal Property Leases in Chapter 7: Under section 365(d)(1), if the trustee does not assume or reject an executory contract or lease within 60 days after the order for relief (or within such additional time as the court may fix for cause), then the contract or lease is deemed rejected. This can be helpful to a landlord, especially if the 60 days is approaching.

2. Unexpired Residential Real Property Leases and Unexpired Personal Property Leases in Chapter 11 or 13: Under section 365(d)(2), executory contracts and unexpired residential real property and personal property leases can be assumed or rejected prior to, and including, plan confirmation. However, 365(d)(2) provides that the nondebtor party may request the court to order the trustee of debtor-in-possession either accept or reject within a specified time period.

3. Unexpired Non-Residential Real Property Leases Sections 365(d)(3) and (d)(4) provide extensive protection for nondebtor parties to non-residential real property leases: Upon filing the petition (the original bankruptcy filing), the Code requires the debtor or the trustee in Chapter 7 cases to timely perform all obligations of the lease from that date until the lease is assumed or rejected. If the debtor or trustee fails in that duty, the landlord may seek relief from the automatic stay and proceed with its remedies, which include an action for possession of the premises. The trustee or debtor-in-possession cannot retain possession of the nonresidential real property without paying rent or incurring an administrative expense claim for the payment of rent in the amount called for under the lease that accrues after the order for relief. Section 365(d)(4) provides that if a lease of non-residential real property (where the debtor is the lessee) is not assumed by the earlier of (a) 120 days from the order of relief, or (b) the entry of the confirmation order – it is deemed rejected and the property must be immediately surrendered to the lessor.