Court Upholds Construction Lien Foreclosure Sale Despite Sale Price and Claimed Lack of Notice
Verzura Construction Inc v. Hotel La Petite Muse LLC arises from a dispute between a general contractor and the owner of a hotel. (if this case sounds familiar, we wrote about it last year here) At trial, the general contractor was successful in establishing its lien claim against the owner of the hotel, and obtained a foreclosure judgment in its factor. When the foreclosure date was set, the judgment establishing that date was served on the parties through counsel.
Co-counsel for the hotel owner filed a motion to cancel the sale and vacate the judgment and a motion to stay the sale, both of which referred to the auction date. After a hearing four days before the sale date, the court denied both motions. The co-counsel attended the auction, but did not bid on behalf of the hotel owner.
Shortly after the sale, the hotel owner objected to the sale arguing a lack of notice. At a subsequent evidentiary hearing, the hotel owner testified that she never knew about the sale because the other co-counsel in the case had not told her about the sale and that the property was worth significantly more than what it sold for at auction. The contractor argued that lack of notice to one co-counsel was irrelevant because the other co-counsel had notice and attended the auction. The trial court ultimately set the sale aside, finding that the sale price was grossly inadequate and that the owner was not informed of the sale by her attorneys, resulting in her being deprived of the opportunity to bid. The contractor appealed.
On appeal, the Third DCA first noted that even a grossly inadequate sale price, alone, is not sufficient to set aside an otherwise proper sale. There must be an additional factor, like mistake, accident, surprise, fraud, misconduct, or irregularity that caused the inadequacy.
The court then continued to evaluate the “lack of notice” issue raised by the owner and concluded that as a matter of law the hotel owner had, at a minimum, constructive notice, because her attorneys received notice of the sale. The court also concluded that here, there was more than constructive notice; there was actual notice because one of the hotel owner’s attorneys’ actually attended the sale. Based on this, the 3d DCA reversed the trial court order setting aside the sale.
About the Author:
Jason Lambert is a Florida Board Certified Construction Attorney and Partner in the Construction Industry Practice Group at Hill Ward Henderson, in Tampa, Florida. He is also the founder and chief contributor to the Hammer & Gavel construction law blog. Jason focuses his practice on representing contractors, subcontractors, and materials suppliers throughout the state of Florida. Before law school, Jason spent a decade working in the construction industry, primarily as a project manager and operations director for both new construction and remodeling. He can be reached at jason.lambert@hwhlaw.com or 813-227-8495.
