New England Phoenix Company, Inc. v. Grand Isle Veterinary Hospital, Inc. et al.
Annotate this CaseNew England Phoenix Company, Inc. appealed a trial court order denying its motion for a deficiency judgment following a foreclosure decree and an order confirming its purchase of a mortgaged property at a judicial sale. In 2010, Bank of America lent a veterinary hospital business in Grand Isle money. Paws and Laws, LLC owned the hospital’s real property, and Grand Isle Veterinary Hospital, Inc. owned the business assets. The bank lent Paws and Laws and Grand Isle Veterinary Hospital money separately: Paws and Laws' loan was secured by a mortgage on the real property, Grand Isle Veterinary was secured by the business' personal property and assets. In 2012, Paws and Laws violated the terms of the mortgage by conveying the real property by quit claim deed to Grand Isle Veterinary Hospital. In 2014, Grand Isle Veterinary Hospital gave Bank of America a second mortgage on the real property to secure its finance agreement. Soon thereafter the business defaulted on the loans and guarantor abandoned the property. Guarantor’s attempts to sell the property were unsuccessful. Bank of America did not initiate foreclosure proceedings on the loans, and instead, assigned the loans and mortgages to New England Phoenix. New England Phoenix filed this foreclosure action in April 2019. Guarantor did not participate in the proceedings. In late 2019, the trial court entered a default judgment and issued a foreclosure decree by judicial sale. Neither guarantor nor Grand Isle Veterinary redeemed the property, New England Phoenix submitted the winning bid and the judicial sale. In March 2021, the court issued an order confirming the sale and transferring title to the property to New England Phoenix. In a separate order, the court restated a request that New England Phoenix provide a 2010 appraisal before it would rule on the deficiency judgment. New England Phoenix argued, in effect, that the 2010 appraisal was immaterial to the court’s decision, and that in any case, by the time it took an assignment of the loans and mortgages, the property had long been abandoned and contained no business assets. In appealing the trial court's refusal to reconsider the deficiency issue, it argued to the Vermont Supreme Court that the trial court's reasoning for denying relief was made in error. The Supreme Court concurred with New England Phoenix that the trial court abused its discretion by failing to consider factors relevant to Vermont Rule of Civil Procedure 80.1(j)(2), and by exercising its discretion to deny a deficiency judgment “for clearly untenable reasons.”
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