Rare Win for Debtor in Confirmation Case

The Georgia Court of Appeals finally sided with a debtor in a foreclosure confirmation case.  Citizens Bank of Effingham v. Rocky Mountain Enter. LLC, A10A2203 (4/8/11).  At issue in this case was the statutory requirement that a lender report a foreclosure sale to a judge of the superior court of the county in which the land is location within 30 days after the foreclosure sale.  The applicable statute, OCGA § 44-14-161, states as follows: 

no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court of the county in which the land is located for confirmation and approval and shall obtain an order of confirmation and approval thereon.

In this case, the lender foreclosed on a security deed and filed its petition for confirmation within 30 days after the foreclosure.  At the confirmation hearing, the debtor challenged the confirmation on the grounds that the lender had failed to report the foreclosure directly to a judge of the superior court.  The trial court agreed and denied confirmation to the lender.

On appeal, the lender argued that a motion for continuance filed by the debtor with 30 days of the foreclosure, which was signed by a superior court judge, satisfied the requirement of reporting the sale to a superior court judge.  The lender also argued that the clerk of the court was a proper legal authority under OCGA § 44-14-161, and by virtue of filing the confirmation with the clerk of court, the requirement of notifying a superior court judge was satisfied.

The Court of Appeals rejected both arguments.  Referencing Goodman v. Vinson, 142 GA. App. 420, 236 SE.2d 153 (1977) and other past case law, the Court reaffirmed the requirement that a lender must directly notify a superior court judge within 30 days in order to satisfy OCGA § 44-14-161.  The Court noted that a confirmation petition is a "special statutory proceeding and not a complaint which initiations a civil action or suit in the ordinary meaning of those terms."  (citing Vlass v. Security Pacific Nat. Bank, 263 Ga. 296, 297, 430 SE.2d 732 (1993)).  Further, the confirmation statute is in derogation of common law and must be strictly construed.