Where a plaintiff has challenged a judicial sale of trust assets to satisfy a judgment, the judicial sale must be set aside because the district court conducted an unfair auction.
“In 2022, we concluded our ninth opinion on the decades-long litigation between Alter Domus and Larry J. Winget and his trust with the ‘hope this marks the final chapter’ in ‘the story that never ends.’ JPMorgan Chase Bank, N.A. v. Winget, No. 21-1568, 2022 WL 2389287, at *11 (6th Cir. July 1, 2022). It did not.
“Four years and a few opinions later, we’re faced with another three appeals about the execution of a $750 million judgment against Winget and his trust after his companies defaulted on a loan. Winget argues that Alter Domus lacked standing to secure the judgment and contests an order holding him in civil contempt. Alter Domus, in turn, challenges the judicial sale of trust assets to satisfy the judgment, arguing that the sale allowed Winget, the sole bidder, to purchase the assets for mere pennies on the dollar.
“Once again, we find that Winget must pay up. We thus affirm the district court’s denial of Winget’s motion to set aside the judgment, affirm its grant of Alter Domus’s motion to renew the judgment, affirm the contempt order, and reverse its confirmation of the judicial sale. …
“On appeal, Alter Domus argues that the judicial sale must be set aside because the district court conducted an unfair auction. We agree. …
“Here, the district court abused its discretion by structuring an auction that didn’t maximize sale price by providing for free competition. …
“It’s not surprising that the auction resulted in such a low price. The district court’s conditions created a noncompetitive auction, which ensured that Winget’s lowball bid went uncontested. …
“… Simply put, either Winget’s winning bid was shockingly low, or the Agent’s bidding floor was shockingly high. Or both could be true. In any case, the auction’s circumstances are shocking enough that the sale must be set aside. …
“Judicial auctions must be fair, open, and competitive to ensure that the sale assets are sold for the highest possible price. But the district court structured an auction that effectively prevented any bidders except Winget from participating. The district court’s bid restrictions enabled Winget to win the assets with a single lowball offer. These circumstances warrant a do-over. …
“In sum, we affirm the district court’s denial of Winget’s motion to set aside the 2021 judgment and its grant of Alter Domus’s motion to renew the 2015 judgment. We likewise affirm the district court’s order holding Winget in civil contempt for failing to pay the Agent $20 million. But we reverse the district court’s denial of the Agent’s motion to set aside the judicial auction of the Trust’s corporate assets. And we remand for the district court to conduct another judicial sale with conditions that maximize price and facilitate competition.
“We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.”