William Wayne Cutshaw et al v. Kenton D. Hensley et al.

In 2009, William Wayne Cutshaw and Tincy Faye Cutshaw sold a piece of commercial real property (the property) to Kenton D. Hensley and Pamela F. Hensley. The property was improved with a retail business whose trade name was Glendale Market & Deli. The total purchase price of the property, including its contents, was $215,000. The Hensleys executed two notes, one of which was for $175,000. It was secured by a deed of trust on the property. After the Hensleys defaulted in 2011, the Cutshaws bid in the property at a foreclosure sale for $20,000. The Cutshaws then brought this action seeking a deficiency judgment for the balance owed by the Hensleys. The trial court, applying the governing statute, Tenn. Code Ann. § 35-5-118 (Supp. 2014), found that the property had sold at the foreclosure sale for an amount materially less than its fair market value, which latter amount the court found to be $215,000 as of the time of the foreclosure sale. The trial court relied upon the formula prescribed by Tenn. Code Ann. § 35-5-118(c), which code section provides that ―the deficiency shall be [(1)] the total amount of the indebtedness prior to the sale plus the costs of the foreclosure and sale, less [(2)] the fair market value of the property at the time of the sale.‖ The trial court found concept number one to be $173,620.30 and the second concept to be $215,000. Since the difference is a negative figure, the trial court declined to award the Cutshaws a deficiency judgment in any amount. The Cutshaws appeal. We hold that the evidence preponderates in favor of the conclusion that the fair market value of the property at the time of the foreclosure sale was $89,000. We agree with the trial court‘s determination that the foreclosure sale price – $20,000 – was materially less than fair market value.