May 15, 2012 – Charter Bank v. Margret Francoeur, No. 30,551

1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.

OCR transcription for search; preserved printed pages are authoritative

Correction cover page-added page 2, lines 5-8, Charter Bank v. Francoeur, #30,551, (W/Cc-V7z), filed 5/15/2012
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:

Filing Date: _May 15, 2012

NO. 30,551

CHARTER BANK,
Plaintiff-A ppellee,

V.

MARGRET FRANCOEUR,
Defendant-A ppellant,

and

DARR ANGEL, TRUSTEE OF
THE DARR ANGEL LIVING TRUST,

Intervenor-A ppellee.
APPEAL FROM THE DISTRICT COURT OF LEA COUNTY
William G.W. Shoobridge, District Judge
Little & Dranttel, P.C.
Peggy Whitmore
Albuquerque, NM

for Appellee

United South Broadway Corp.
Angelica Anaya Allen
Albuquerque, NM
for Appellant
Heidel, Samberson, Newel, Cox & McMahon
Michael T. Newell
Lovington, NM
for Intervenor-Appellee

OPINION
WECHSLER, Judge.
{1} 	In this foreclosure case, Plaintiff Charter Bank obtained a default judgment after
Defendant Margret Francoeur failed to answer its complaint. After a special master
sold Defendant’s property at a public auction, Defendant moved to set aside the
default judgment and to vacate the foreclosure sale. Defendant appeals two orders of
the district court: (1) an order denying Defendant’s motion to set aside the default
judgment and to vacate the foreclosure sale and (2) an order setting supersedeas bond
at $150,000 during the pendency of the appeal. We hold that the district court did not
err in (1) denying Defendant’s motion to set aside the default judgment because
Defendant did not have a meritorious defense, (2) denying Defendant’s motion to
vacate the foreclosure sale because the sale’s price-value ratio did not shock the
conscience of the court and there were no additional circumstances impeaching the
fairness of the sale, and (3) setting the supersedeas bond at $150,000. Accordingly,
we affirm.
BACKGROUND
{2} 	Defendant and Plaintiff entered into a loan agreement (the loan) on March 26,
2007, secured by a mortgage on her residential property (the property) in Hobbs, New
Mexico. On April 9, 2009, Defendant received a letter from Plaintiff that she was in

2
default of the loan. Defendant contacted the Law Offices of T.W. Dvorak (the firm),
a Florida-based law firm specializing in foreclosure defense that Defendant found on
the internet. Defendant retained the firm to represent her and paid a $1500 retainer
on June 23, 2009.
{3} 	On July 27, 2009, Plaintiff filed a complaint in foreclosure seeking an in rem
judgment against the property and in personam judgment against Defendant. Plaintiff
sought a judgment for the unpaid principal balance, interest, late charges, and
reasonable attorney fees and costs associated with the unpaid loan secured by the
mortgage on Defendant’s property. 	After Plaintiff filed its complaint and served
Defendant, Defendant provided the firm with the complaint. The firm failed to file
an answer on Defendant’s behalf, and the district court entered a default judgment in
favor of Plaintiff on September 30, 2009. 	The district court awarded Plaintiff
$90,467.68 as a judgment for the unpaid loan and ordered the property sold at a public
auction.
{4} 	Following the default judgment, Defendant learned that the firm’s principal
attorney, Thomas Dvorak, was arrested for driving under the influence and driving
with a suspended license in June 2009 after his involvement in a fatal car accident.
Sometime during the summer or fall of 2009, a Florida court sentenced Dvorak to
eight weeks imprisonment, and Dvorak served his sentence from November 5, 2009

3
to December 27, 2009. Defendant ultimately learned about Dvorak’s incarceration on
February 23, 2010 after the Florida State Bar sent her a letter informing her that
Dvorak was in alcohol abuse rehabilitation and counseling and that he was
withdrawing from the practice of law.
{5} 	On January 8, 2010, Plaintiff informed Defendant that it transferred the
servicing of the loan to U.S. Bank Home Mortgage (U.S. Bank). 	U.S. Bank is a
participant in the federal Making Homes Affordable Program (HAMP). HAMP is a
program established by the United States Department of Treasury (the treasury),
pursuant to the Emergency Economic Stabilization Act of 2008, 12 U.S.C. §§ 5201
to -5261 (2008, as amended through 2009). HAMP allows the treasury to work with
loan service providers to “use loan guarantees and credit enhancements to facilitate
loan modifications to prevent avoidable foreclosures.” 12 U.S.C. § 5219(a)(1). In
order to participate in HAMP, service providers must execute a servicer participation
agreement with Fannie Mae. 	Treasury Supplemental Directive 09-01. 	U.S. Bank
entered into a servicer participation agreement with Fannie Mae on August 20, 2009.
In the servicer participation agreement, U.S. Bank agreed to comply with the
guidelines and procedures issued by the treasury.
{6} 	Meanwhile, on October 7, 2009, the special master filed the first notice of sale
on the property and scheduled the sale for November 24, 2009. Plaintiff advertised

4
the property for sale in the Hobbs News-Sun from October 13, 2009 through
November 3, 2009. The special master postponed the sale until January 12, 2010,
although Plaintiff did not file notice of the postponement with the district court until
April 21, 2010. The special master postponed the re-scheduled January 12, 2010 sale
until February 16, 2010, and Plaintiff again filed notice of the postponement on April
21, 2010. The special master again postponed the re-scheduled February 16, 2010
sale and rescheduled the sale for April 20, 2010. 	On April 20, 2010, the special
master sold the property at auction for $100,000 to Darr Angell, trustee of Darr Angell
Living Trust (Angell). 	The special master filed the report of sale with the district
court on May 6, 2010. On the same day, the district court issued an order approving
the sale and the special master’s report. The order provided Defendant a one-month
redemption period, expiring on June 7, 2010.
{7} 	On May 27, 2010, Defendant filed a motion pursuant to Rule 1-060(B) NMRA
to set aside the September 30, 2009 default judgment and to vacate the judicial sale
of the property. Defendant argued that the representation by the firm, which included
the failure to answer Plaintiff’s complaint, was negligent and therefore excusable
neglect. Further, Defendant argued that she had meritorious defenses to set aside the
default judgment because (1) Plaintiff engaged in fraud, misrepresentation, estoppel,
or other misconduct during the foreclosure sale by assuring Defendant that a loan

5
modification was “imminent,” Defendant never received notice of the judicial sale,
and Defendant therefore did not explore other avenues to avoid foreclosure of the
property; and (2) Plaintiff did not comply with treasury directives required by HAMP
and the service agreements because Defendant’s application for a loan modification
was not evaluated within thirty days, she was not notified whether the application was
accepted or rejected, and Plaintiff proceeded with the foreclosure sale despite
Defendant’s pending application for a loan modification. Further, Defendant argued
that the $100,000 sales price was “grossly disproportionate to the value of the home”
and therefore was another ground for vacating the sale.
{8} 	Angell, as an intervenor, filed a response on June 10, 2010, and Plaintiff filed
its response on June 14, 2010. 	The district court issued an order on July 9, 2010,
denying the motion to set aside the default judgment and to vacate the sale. 	The
district court determined that the default judgment resulted from excusable neglect
based on the negligent representation of the firm but that Defendant did not have a
meritorious 	defense. 	Regarding 	Defendant’s 	defenses 	alleging 	fraud, 	other
misconduct, or estoppel, the district court determined that Plaintiff and Defendant did
not reach an agreement that foreclosure would be halted while various loan
modification alternatives were being evaluated. Further, the district court determined
that the $100,000 sales price was inadequate, but it did not “shock the [conscience]

6
of the court” to justify setting the sale aside because there were no additional
circumstances impeaching the fairness of the sale. Defendant filed a timely notice of
appeal.
{9} 	On appeal, Defendant argues that the district court erred by (1) denying the
motion to set aside the default judgment because Defendant had meritorious defenses
because Plaintiff (a) failed to fulfill its contractual obligations under HAMP, (b)
misrepresented to Defendant that she would receive a loan modification and was
therefore estopped from proceeding with the foreclosure sale, and (c) engaged in bad
faith by proceeding with the foreclosure sale even though Defendant’s loan
modification application was pending; (2) determining that the sale should not be
vacated because the sales price did not “shock the court’s conscience;” and (3) setting
the supersedeas bond at $150,000 instead of the property’s fair rental value.
MOTION TO SET ASIDE DEFAULT JUDGMENT
{10} 	In order to set aside a default judgment under Rule 1-060(B)(1), a court must
determine that (1) the default judgment resulted from mistake, inadvertence, surprise
or excusable neglect, and (2) the party seeking to set the default judgment aside had
a meritorious defense. N.M. Educators Fed. Credit Union v. Woods, 102 N.M. 16, 17,
690 P.2d 1010, 1011 (1984). 	“If these two elements are found and there are no
intervening equities in favor of the other party, a court should set aside the judgment.”

7
Id. Generally, “default judgments are not favored and a case should be heard on its
merits whenever possible[.]” Id.
Standard of Review
{11} 	A grant or denial of a motion to set aside a default judgment rests within the
sound discretion of the district court. Gandara v. Gandara, 2003-NMCA-036, ¶ 9,
133 N.M. 329, 62 P.3d 1211. We will only reverse the district court’s grant or denial
of a motion to set aside a default judgment for an abuse of that discretion. 	N.M.
Educators Fed. Credit Union, 102 N.M. at 17, 690 P.2d at 1011. 	“An abuse of
discretion occurs when a ruling is clearly contrary to the logical conclusions
demanded by the facts and circumstances of the case.” Sims v. Sims, 1996-NMSC-
078, ¶ 65, 122 N.M. 618, 930 P.2d 153. “However, because default judgments are
generally disfavored, any doubts about whether relief should be granted are resolved
in favor of the defaulting defendant and, in the absence of a showing of prejudice to
the plaintiff, causes should be tried upon the merits.” 	Gandara, 2003-NMCA-036,
¶ 9 (alteration, internal quotation marks, and citation omitted). When an argument
that a district court has abused its discretion is premised on a misapprehension of the
law, our review is de novo. See id.
HAMP
{12} 	Defendant argues that the district court erred in determining that Defendant did

8
not state a meritorious defense based on Plaintiff’s alleged failure to follow HAMP
guidelines that Plaintiff is contractually required to follow. Particularly, Defendant
argues that U.S. Bank violated treasury directives that require servicers to (1) suspend
foreclosure sales when a borrower may be eligible for a loan modification under
HAMP, (2) notify borrowers evaluated for but ultimately determined ineligible for a
HAMP modification, and (3) extend the foreclosure time to allow the borrower to
contest a denial of a HAMP loan modification.
{13} 	Defendant premises her argument on her assertion that she is an intended third
party beneficiary of the servicer participation agreement between U.S. Bank and
Fannie Mae and that U.S. Bank breached its contractual obligations contained in the
servicer participation agreement and treasury directives as the servicer of the loan.
See Fleet Mortg. Corp. v. Schuster, 112 N.M. 48, 49-50, 811 P.2d 81, 82-83 (1991)
(stating that a third party may have an enforceable right against an actual party to a
contract if the third party is an intended beneficiary of the contract). 	Whether
Defendant is a third party beneficiary is a question of whether the actual parties
intended the borrower to be a third party beneficiary. See id. (stating that a third party
is a beneficiary if the actual parties to the contract intended to benefit the third party).
“A prospective third[]party beneficiary may prove the intent of the parties to an
agreement by relying on the unambiguous language of the agreement itself, or, in the

9
absence 	of 	such 	language, 	on 	extrinsic 	evidence 	such 	as 	the 	circumstances
surrounding the execution of the agreement[.]” Hansen v. Ford Motor Co., 120 N.M.
203, 205, 900 P.2d 952, 954 (1995) (citation omitted). As a general rule, a member
of the public is not an intended third party beneficiary and cannot enforce a
government contract unless the contract’s terms provide for liability. 	Restatement
(Second) of Contracts § 313(2)(a) (2011).
{14} 	Defendant cites Huxtable v. Geithner, No. 09cv1846, 2009 WL 5199333 (S.D.
Cal. Dec. 23, 2009), and Reyes v. Saxon Mortgage Services., No. 09cv1366, 2009 WL
3738177 (S.D. Cal. Nov. 5, 2009), for the proposition that a borrower is an intended
third party beneficiary to a HAMP servicer participation agreement. 	However,
Huxtable dealt with an inapposite issue. 	In Huxtable, the court addressed the sole
issue of whether a servicer is a state actor and therefore subject to a due process claim.
2009 WL 5199333, at *1. 	Huxtable does not address whether a borrower is a third
party beneficiary to a HAMP servicer participation agreement. 	See Fernandez v.
Farmers Ins. Co. of Ariz., 115 N.M. 622, 627, 857 P.2d 22, 27 (1993) (“[C]ases are
not authority for propositions not considered.” (internal quotation marks and citation
omitted)). 	We acknowledge that Reyes, 2009 WL 3738177, at *2, held that a
borrower’s breach of contract claim against a servicer survived a motion to dismiss
because “[a]rguably, one of the purposes of [a servicer participation agreement] is to

10
assist homeowners, like [borrower.]” However, as Defendant concedes, this is the rule
in only a minority of jurisdictions that have considered the issue.
{15} 	The vast majority of jurisdictions have rejected the arguments that a borrower
has a direct cause of action under a HAMP servicer participation agreement or that a
borrower can maintain a breach of contract under a third party beneficiary theory. For
example, in Parks v. BAC Home Loan Servicing, L.P., No. 3:11cv541, 2011 WL
5239240, at *2 (E.D. Va. Nov. 1, 2011), the court held that borrowers do not have a
private cause of action to enforce HAMP regulations because borrowers are incidental
beneficiaries, not third party beneficiaries under HAMP. Further, the court held that
a borrower cannot maintain a breach of contract claim under state law to enforce
contractual obligations based on a loan modification unless the cause of action relates
to facts separate from a violation of HAMP requirements. Id. at *2-3; see Sherman
v. Litton Loan Servicing, L.P., 796 F. Supp. 2d 753, 765 (E.D. Va. 2011) (“[D]istrict
courts have uniformly rejected the proposition that plaintiffs have standing to sue
under HAMP, under a third[]party beneficiary theory or otherwise.”); see also In re
Salvador, 456 B.R. 610, 622 (Bankr. M.D. Ga. 2011) (“The courts have unanimously
held that borrowers are not intended beneficiaries, but merely incidental beneficiaries
to the contract between loan servicers and the government under the HAMP
program.”). We find the majority view persuasive.

11
{16} 	The courts that have held that borrowers are not intended third party
beneficiaries to servicer participation agreements under HAMP and which, therefore,
do not have a private cause of action, have relied on a variety of rationales. Several
courts have determined that the terms of the servicer participation agreement between
the servicer and Fannie Mae are dispositive. 	See Edwards v. Aurora Loan Servs.,
LLC, 791 F. Supp. 2d 144, 151-52 (D.D.C. 2011) (reasoning that, although the
servicer participation agreement is a means of helping distressed homeowners, it does
not evidence an intent to allow borrowers to enforce the agreement); see also Speleos
v. BAC Home Loans Servicing, L.P., 755 F. Supp. 2d 304, 310 (D. Mass. 2010)
(same). 	Other courts have noted that allowing borrowers to enforce a servicer
participation agreement potentially opens the door to “3-4 million homeowners filing
individual claims.” 	Thomas v. JP Morgan Chase & Co., 811 F. Supp. 2d 781, 797
(S.D.N.Y. 2011) (internal quotation marks and citation omitted). Another rationale
has been that HAMP does not obligate a servicer to modify loans in that it only
requires the servicer to consider eligible loans for modification, and therefore the
agreements are unenforceable. See Lucia v. Wells Fargo Bank, N.A., 798 F. Supp. 2d
1059, 1068-69 (N.D. Cal. 2011). 	In this case, Defendant does not point to any
language of the specific servicer participation agreement applicable to this case to the
effect that the agreement intended to provide borrowers with a right to enforce the

12
agreement.
{17} 	Instead, Defendant argues that the “language of the federal legislation [enacting
the HAMP programs] clearly shows that homeowners were intended beneficiaries of
the HAMP program[s] and [servicer participation] agreements.” Defendant argues
that 12 U.S.C. § 5201, 12 U.S.C. § 5219, and 12 U.S.C. § 5220 provide unambiguous
language that borrowers are intended third party beneficiaries of all HAMP servicer
participation agreements. 	12 U.S.C. § 5201(2)(A) and (B) identifies “protect[ing]
home values” and “preserv[ing] homeownership,” as purposes of the Emergency
Economic Stabilization Act of 2008, 12 U.S.C. § 5219 grants authority to the treasury
to use its credit and loan guarantees to prevent foreclosures, and 12 U.S.C. § 5220
provides requirements for programs to assist homeowners. Although these statutes
provide benefits to homeowners facing foreclosure, they do not contain any language
indicating congressional intent to provide homeowners a right to enforce HAMP
servicer agreements. 	See Hart v. Countrywide Home Loans, Inc., 735 F. Supp. 2d
741, 748 (E.D. Mich. 2010) (“[T]hird[]party beneficiaries cannot enforce government
contracts absent a clear intent to the contrary, and . . . HAMP expresses no such
intent[.]” (internal quotation marks and citations omitted)); Waggoner v. Town of
Mesilla, 2011-NMCA-041, ¶ 8, 149 N.M. 596, 252 P.3d 820 (stating that we employ
the plain meaning of the terms of a statute in order to determine legislative intent).

13
{18} 	We therefore hold that Defendant did not have a meritorious defense that
Plaintiff failed to comply with its contractual obligations under HAMP. Defendant
does not have a private cause of action under HAMP and cannot maintain a cause of
action for breach of contract to enforce a HAMP servicer participation agreement, and,
therefore, the failure of U.S. Bank to comply with HAMP does not provide a
meritorious defense to the default judgment for foreclosure.
Estoppel
{19} 	Defendant next argues that the district court erred by determining that equitable
estoppel was not a meritorious defense to the default judgment. 	Particularly,
Defendant argues that Plaintiff should have been equitably estopped from proceeding
with the foreclosure action and judicial sale while Plaintiff negotiated a loan
modification with Defendant and, further, that Plaintiff told Defendant her application
for a loan modification was likely to be approved, Plaintiff did not notify Defendant
when her loan modification was rejected, and Defendant reasonably relied on
Plaintiff’s misrepresentations regarding approval of the loan modification and
therefore did not pursue other options to prevent the sale of her property.
{20} 	“[T]he doctrine of equitable estoppel . . . is aimed at preventing a party from
benefitting from deception or misleading conduct.” 	Mannick v. Wakeland, 2005-
NMCA-098, ¶ 28, 138 N.M. 113, 117 P.3d 919, aff’d by Coppler & Mannick, P.C. v.

14
Wakeland, 2005-NMSC-022, 138 N.M. 108, 117 P.3d 914. “The conduct of the party
to be estopped must be something which amounts either to a representation or a
concealment of the existence of facts; and these facts must be material to the rights or
interests of the party affected by the representation or concealment.” Mannick, 2005-
NMCA-098, ¶ 28 (internal quotation marks and citation omitted). In order for a party
to raise equitable estoppel, the following facts must be shown as to the party to be
estopped: “(1) [c]onduct which amounts to a false representation or concealment of
material facts, or, at least, which is calculated to convey the impression that the facts
are otherwise than, and inconsistent with, those which the party subsequently attempts
to assert; (2) intention, or at least expectation, that such conduct shall be acted upon
by the other party; (3) knowledge, actual or constructive, of the real facts.” 	Mem’l
Med. Ctr., Inc. v. Tatsch Constr., Inc., 2000-NMSC-030, ¶ 9, 129 N.M. 677, 12 P.3d
431 (internal quotation marks and citation omitted). 	Further, “[t]he following
elements must be shown as to the party claiming estoppel: (1) [l]ack of knowledge
and of the means of knowledge of the truth as to the facts in question; (2) reliance
upon the conduct of the party estopped; and (3) action based thereon of such a
character as to change his position prejudicially.” Id. (internal quotation marks and
citation omitted).
{21} 	Defendant provides four factual assertions in arguing that Plaintiff falsely

15
represented that Defendant’s loan modification “was likely to be approved[.]” First,
Defendant’s affidavit accompanying the motion to set aside the default judgment
reveals that the firm “repeatedly advised [her] that they were in constant contact with
[Plaintiff] about [her] delinquency, and that a loan modification was imminent.”
However, Defendant’s affidavit fails to identify how this representation by the firm,
even if false, can be attributed to Plaintiff. 	Second, Defendant further relies on a
series of email-communications she had with an employee of the firm to support the
argument that Plaintiff represented that a loan modification was “imminent.”
However, the email-communications only reveal that an employee of Plaintiff told the
firm that she had been in constant contact with Freddie Mac, that the process was
“moving along smoothly” and would be quick, that a decision on whether the loan
modification would be approved would not be made for at least ten days, and that
Plaintiff would “push off [the] sales date” until a decision on the loan modification.
When the firm informed Defendant of this exchange, Defendant asked an employee
of the firm whether Plaintiff is “going to do the loan mod[ification,]” to which the
firm’s employee responded that Plaintiff’s employee “felt confident that everything
would be fine.” 	These email-communications make clear that, although Plaintiff
represented that it believed Defendant’s application for a loan modification would be
approved, the decision had not been made; there was no false representation that

16
Defendant would receive a loan modification. Third, Defendant states that the same
employee of Plaintiff who had communicated with the firm personally told her that
a loan modification was “imminent.” However, based on the content of the email-
communications, Defendant was aware that a decision had not been made as to
whether she would receive a loan modification. As a result, this statement did not rise
to the level of a misrepresentation that Defendant would receive a loan modification.
Fourth, Defendant further argues that she received “regular letters . . . which provided
every 	indication 	that 	[her] 	mortgage 	relationship 	with 	[Plaintiff] 	would 	be
continuing.” 	The first letter, from Plaintiff and dated January 8, 2010, notified
Defendant that U.S. Bank would be the new servicer of the loan. The second and third
letters, dated February 18, 2010 and March 3, 2010, respectively, appear to be form
letters U.S. Bank sent to its existing customers encouraging existing mortgagors to
apply for a HAMP loan modification. 	The fourth letter, dated April 13, 2010,
informed Defendant of a shortage in her escrow account. None of these letters can be
construed to contain a false representation that Defendant’s application for a loan
modification would be approved. 	The district court therefore did not err in
determining that estoppel was not a meritorious defense because Plaintiff did not
make 	a 	false 	representation 	or 	conceal 	material 	facts 	regarding 	Defendant’s
application for a loan modification.

17
{22} 	We note that Defendant argues that this case is factually similar to Aceves v.
U.S. Bank, N.A., 120 Cal. Rptr. 3d 507 (Ct. App. 2011), and thus compels a similar
result. 	In Aceves, the court held that the plaintiff adequately pled a claim for
promissory estoppel based on the defendant’s clear and unambiguous promise not to
proceed on the foreclosure of the plaintiff’s home without first negotiating a loan
modification. Id. at 513-14. The plaintiff relied on the promise in deciding to forego
chapter 13 bankruptcy proceedings, which would have allowed the plaintiff to
discharge her mortgage debt. Id. at 515-16. However, as we have determined in this
case, Plaintiff did not promise or make a false representation to Defendant, and,
therefore, this case is distinguishable from Aceves.
Bad Faith
{23} 	Defendant next argues that Plaintiff failed to meaningfully engage in the loan
modification process and that Plaintiff’s actions constitute bad faith. See Sanders v.
FedEx Ground Package Sys., 2008-NMSC-040, ¶ 7, 144 N.M. 449, 188 P.3d 1200
(“New Mexico courts have held that every contract imposes a duty of good faith and
fair dealing on the parties with respect to the performance and enforcement of the
terms of the contract.”). In making this argument, Defendant relies on the assertions
stated in the previous sections that Plaintiff misrepresented that Defendant would
receive a loan modification, failed to notify Defendant that her application for a loan

18
modification was denied, and therefore induced Defendant to not pursue other options
to avoid foreclosure. 	Additionally, Defendant argues that Plaintiff scheduled and
intended to conduct the judicial sale while Defendant’s application for a loan
modification was pending.
{24} 	However, Defendant did not preserve the issue in the district court. 	“To
preserve a question for review[,] it must appear that a ruling or decision by the district
court was fairly invoked[.]” Rule 12-216(A) NMRA. In order “[t]o preserve error for
review, a party must fairly invoke a ruling of the district court on the same grounds
argued in this Court.” 	Roark v. Farmers Group, Inc., 2007-NMCA-074, ¶ 38, 142
N.M. 59, 162 P.3d 896 (internal quotation marks and citation omitted).
{25} 	In her motion to set aside the default judgment and vacate judicial sale,
Defendant argued that she had meritorious defenses of Plaintiff’s failure to adhere to
the requirements of HAMP, estoppel, fraud, misrepresentation, “or other misconduct.”
Defendant did not specifically raise a bad-faith defense and therefore did not fairly
invoke a ruling by the district court. Defendant’s assertion is not specific enough to
satisfy the preservation requirements for a defense of bad faith. See Kilgore v. Fuji
Heavy Indus. Ltd., 2010-NMSC-040, ¶ 26, 148 N.M. 561, 240 P.3d 648 (“A ruling or
decision is fairly invoked if a party’s objection or motion is made with sufficient
specificity to alert the mind of the [district] court to the claimed error.” (internal

19
quotation marks and citation omitted)). We therefore decline to address the merits of
Defendant’s unpreserved argument. See Diversey Corp. v. Chem-Source Corp., 1998-
NMCA-112, ¶ 14, 125 N.M. 748, 965 P.2d 332 (stating that this Court will not
address issues not preserved for review).
SALES PRICE
{26} 	Defendant additionally argues that the district court erred in determining that
the $100,000 did not “shock the conscience” of the court, based on our Supreme
Court’s decision in Armstrong v. Csurilla, 112 N.M. 579, 583, 817 P.2d 1221, 1225
(1991), because the sales price was 48.7% of the $206,000 appraised value of the
home. The district court determined that the sales price was “inadequate” but that
there were no additional circumstances that would impeach the fairness of the sale and
that, therefore, the sales price did not shock the conscience of the court. Determining
whether a price-value ratio is so great as to shock the conscience resides in the sound
discretion of the district court. See id. at 592, 817 P.2d at 1234. We therefore review
under an abuse of discretion standard.
{27} 	In Armstrong, our Supreme Court held that a court may set aside a foreclosure
sale based on a grossly inadequate sales price or an inadequate sales price combined
with “other circumstances” leading to unfairness. 	Id. at 593, 817 P.2d at 1235.
Although, our Supreme Court “decline[d] to adopt any fixed numerical percentage as

20
establishing a price-value disparity that in every case will be so great as to shock the
court’s conscience[,]” the Court provided guidance on the issue. Id. at 592, 817 P.2d
at 1234. The Court held that when a sales price falls within the range of 10-40% of
the appraised value of a property, the court must apply “special scrutiny . . . to be sure
that . . . additional circumstances do not produce an inequitable result.” 	Id. at 593,
817 P.2d at 1235. The Court further held that a sales price may still be inadequate if
it falls within the range of 40-66% of the appraised value and there are additional
circumstances regarding the sale leading to unfairness. Id. In this case, because the
sales price was 48.7% of the properties appraised value, we do not apply special
scrutiny in determining whether the circumstances of the sale caused an unfair result.
{28} 	Defendant points to several circumstances in arguing that, when combined with
the inadequate sales price, the judicial sale led to an unfair result: 	(1) the firm’s
negligent representation resulting in the default judgment, (2) Plaintiff’s and U.S.
Bank’s representations that a loan modification was “imminent,” (3) Plaintiff’s
scheduling and conducting the foreclosure sale while Defendant’s application for a
loan modification was still pending, and (4) the special master’s postponing the
original sale and publishing and filing after the sale occurred. 	As discussed in
addressing 	Defendant’s 	estoppel, 	we 	disagree 	that 	Plaintiff 	and 	U.S. 	Bank
misrepresented that Defendant would receive a loan modification. 	Further, we

21
disagree that the record supports Defendant’s argument that the foreclosure sale
occurred while Defendant had a pending application for a loan modification. 	The
foreclosure sale did not occur until April 20, 2010, after the denial of Defendant’s
application for a HAMP modification on March 24, 2010, and the denial of all loan
modifications on April 5, 2010. 	We therefore only address whether the firm’s
negligent representation and whether the unpublished and unfiled notices of
postponement rose to the level of circumstances leading to unfairness invalidating the
judicial sale.
{29} 	We do not give any weight to the firm’s negligent representation leading to the
default judgment as a circumstance leading to an unfair result in the judicial sale.
Although the firm’s representation led to the default judgment leading to the judicial
sale, the firm no longer represented Defendant in the months proceeding the sale and
had no involvement in the judicial sale. The firm’s representation therefore did not
impact the result of the sale.
{30} 	We further determine that the failure to publish or file the notices of
postponement are not circumstances that led to an unfair result in the judicial sale.
Defendant characterizes the failure to publish the notices of postponement as
depriving potential buyers of the opportunity to learn of the sale and submit bids. See
Las Vegas Ry. & Power Co. v. Trust Co. of St. Louis Cnty., 15 N.M. 634, 648, 110 P.

22
856, 861 (1910) (invalidating a judicial sale where circumstances prevented “two
parties vitally interested in the sale” from bidding on the property). 	However, the
special master published the original sale date, time, and place for four weeks in the
Hobbs News-Sun. Each subsequent notice of postponement assured that the parties
present at the postponed sale would be notified and the new date and time would be
confirmed as acceptable to all parties present. Defendant does not address how this
procedure kept potential buyers from bidding on the property nor does she actually
identify any potential buyers precluded from bidding on the property.
{31} 	We further note that the sales price of $100,000 was greater than the amount
Defendant owed on the loan including costs and fees, and the sale therefore did not
result in a deficiency judgment against Defendant. 	We consider the lack of a
deficiency judgment a factor weighing in favor of finding that the foreclosure sale was
fair. 	See Armstrong, 112 N.M. at 581, 817 P.2d at 1223 (stating that legislative or
judicial attempts to invalidate foreclosure sales as unfair to the debtor are aimed to
prevent situations where both the debtor loses the property and the sales price is so
low as to result in a deficiency judgment). 	Because the circumstances of the
foreclosure sale did not lead to an unfair result to Defendant, the district court did not
abuse its discretion in determining that the sales price did not shock the court’s
conscience.

23
SUPERSEDEAS BOND
{32} 	Defendant lastly argues that the district court erred in setting the supersedeas
bond at $150,000 instead of the fair rental value of the property. 	Specifically,
Defendant argues that NMSA 1978, Section 39-3-9 (1933), mandates that “where title
to real estate is involved, the rental value is an appropriate measure of damage for
purposes of the supersedeas bond.” It therefore appears that Defendant is essentially
arguing that a district court abuses its discretion if it sets the supersedeas bond above
the rental value of the property. Our review is governed by Rule 12-207(D) NMRA,
which states that “[t]he decision of the district court shall be set aside only if it is
shown that the decision (1) is arbitrary, capricious or reflects an abuse of discretion;
(2) is not supported by substantial evidence; or (3) is otherwise not in accordance with
law.”
{33} 	The relevant portions of Section 39-3-9 state that “[w]here an appeal is taken
. . . from a judgment . . . of any district court involving the title to or possession of real
or personal property, the [district] court shall fix the amount of supersedeas bond . .
. for such sum as will indemnify the appellee for all damages that may result from
such supersedeas[.]” Further, Section 39-3-9 provides that “the rental value, and all
damages to improvements and waste, shall be considered elements of damages.” By
its plain language, Section 39-3-9 does not limit the supersedeas bond in this case to

24
the rental value of the property. 	See T-N-T Taxi, Ltd. v. N.M. Pub. Regulation
Comm’n, 2006-NMSC-016, ¶ 5, 139 N.M 550, 135 P.3d 814 (“We begin the search
for legislative intent by looking first to the words chosen by the Legislature and the
plain meaning of the Legislature’s language[.]”). 	Section 39-3-9 directs a district
court to set the supersedeas bond at an amount that indemnifies the appellee for “all
damages” and states that the “rental value” of the property shall be considered an
element of damages, not the sole measure. The district court therefore did not abuse
its discretion under Section 39-3-9 by considering potential damages to Plaintiff
outside of the rental value of the property.
{34} 	In addition, to the extent that Defendant argues that the $150,000 supersedeas
bond is too high because it is three times the amount that Defendant informed the
district court she would be able to post, we disagree. In setting the supersedeas bond,
the district court correctly acknowledged that Section 39-3-9 requires the district court
to indemnify an appellee for all damages that may occur as a result of the stay and that
the amount is not dependent on the amount the appellant can pay. The district court
therefore considered the lost rental value, interest Angell paid to Plaintiff for the
property, damages to improvements and waste on the property, and Angell’s potential
lost profit if the property was to be purchased for resale. The district court noted that
Defendant had the property appraised at $206,000 and that Angell purchased the

25
property at auction for $100,000 for a potential profit of $106,000 if he were to resell
the property. 	Considering the $106,000 in potential lost profit in addition to lost
rental value, interest on money paid, and the potential for damage and waste to the
property while this appeal was pending, the district court did not abuse its discretion
in setting the supersedeas bond at $150,000, regardless of whether Defendant could
only pay $50,000.
CONCLUSION
{35} 	The district court did not err in (1) denying Defendant’s motion to set aside the
default judgment because Defendant did not have a meritorious defense, (2) denying
Defendant’s motion to vacate the foreclosure sale because the sale’s price-value ratio
did not shock the conscience of the court and there were no additional circumstances
impeaching the fairness of the sale, and (3) setting the supersedeas bond at $150,000.
Accordingly, we affirm.
{36} 	IT IS SO ORDERED.
_________________________________
JAMES J. WECHSLER, Judge

WE CONCUR:

CELIA FOY CASTILLO, Chief Judge

LINDA M. VANZI, Judge

26