Lexology reports:
- On Tuesday, April 17, 2012, the Missouri Supreme Court handed down its decision in First Bank v. Fischer & Frichtel, Inc. (Case No. SC91951), a case which we originally discussed in early-October. The Court’s 6-1 decision (with Justice Draper and Justice Price not participating and Justice Teitelman dissenting in a separate opinion) upheld Missouri’s common law approach to calculating the amount of a deficiency judgment resulting from a foreclosure.
- Missouri courts have long held that the measure of a deficiency is the difference between the debt owed and the price paid at a foreclosure sale. The Court stated that any change to that law should be made by statute.
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- The Borrower asked the Missouri Supreme Court to overrule Missouri’s common law approach to measuring deficiency judgments by adopting the Restatement (Third) of Property fair value approach. This approach limits a lender’s deficiency damages to the difference between the fair market value of the property on the date of the sale and the amount due on the note.
- During oral argument, counsel for the Borrower stated that 35 states have incorporated a fair market value approach. However, the Court’s opinion notes that all of the states that follow the fair market value approach have either always done so or have done so in accordance with state statute.
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