Lost Mountain Development Co. v. Rufus King v. Matthew B. Kezar, et al.

This case involves a creditor’s entitlement to a deficiency judgment after a foreclosure sale in which the creditor was the only bidder, and in which he paid considerably less for the large tract of mountaintop property than the debtor alleged it was worth. The trial court awarded the creditor’s successor-in-interest a deficiency judgment of over $4 million, holding that in accordance with the rule of Holt v. Citizens Central Bank, 688 S.W.2d 414 (Tenn. 1984), the debtor should not be permitted to challenge the legal presumption that the value of the property at the time of foreclosure was equal to the sale price because there was no evidence of “irregularity, misconduct, fraud or unfairness on the part of the mortgagee.” Since the Holt case did not involve a deficiency judgment, we believe it is inapplicable. After examining both the law of Tennessee and that of other jurisdictions, we conclude that the trial court should have permitted the defendant to challenge the presumption by attempting to prove that the sale price was grossly inadequate. We accordingly reverse.