Braun v. Nevada State Bank (In re Braun)
- Citation:
- Ninth Circuit Bankruptcy Appellate Panel, No. NV-13-1559-PaJuHl (October 20, 2014)
- Tag(s):
-
- Ruling:
- Order affirming decision of the bankruptcy court valuing certain real property in connection with determining the amount of a secured creditor’s deficiency claim.
- Procedural context:
- Appeal from bankruptcy court order determining amount of secured creditor's unsecured deficiency claim after valuation of real property collateral pursuant to section 506(a) and FRBP 3012.
- Facts:
- The Debtor owned a 54-unit motel/apartment complex, which secured a claim of approximately $1,100,000. The Debtor abandoned the property in the chapter 11 and the secured creditor foreclosed. At the foreclosure sale, the secured creditor credit bid $400,000, and then filed an unsecured deficiency claim of $833,000. The Debtor objected to the amount of the deficiency claim, arguing that under Nevada law the deficiency claim had to be reduced by the amount the fair market value exceeded the credit bid. The bankruptcy court agreed and conducted an evidentiary valuation hearing.
The Debtor submitted expert appraisal testimony that the fair market value was $1,000,000, but the court found the testimony was based on an incorrect assumption that the property had achieved stabilized occupancy. The Debtor also submitted appraisals conducted prior to the foreclosure that valued the property at more than $1,000,000, but the court discounted those appraisals because of the timing. The secured creditor submitted expert appraisal testimony that the property was worth $460,000, but the court disagreed with the appraiser's determination concerning the highest and best use of the property. After considering all testimony, including that the property was currently listed for sale at $650,000, the court found the fair market value to be $650,000.
On appeal, the BAP affirmed, holdling no clear error. The BAP held the bankruptcy court had erred in determining the relevant valuation date was the date of abandonment and not foreclosure, but the error was harmless because the court had found the valuation had not changed. The BAP held the court correctly disregarded the appraisals prepared prior to the foreclosure because that was the applicable Nevada state rule. The BAP held no error in the decision not to select one of the expert valuations, because a trial court is not bound by any specific expert testimony as long as its ultimate conclusion is support by the evidence. The BAP held the court did not erroneously "split the difference" between the two competing appraisals, because it exercised independent judgment and selected a value based upon the evidence. And finally, the court held the court did not err by referencing the current listed price for the property, because the reference was not the fundamental basis for the valuation, but supporting data.
- Judge(s):
- Pappas, Jury and Houle
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