A Successful Bidder at a Sheriff’s Sale has no Action in Tort Against Another Bidder Whose Act was not the Cause-in-fact of the Successful Bidder’s Purchase at Whatever Price he Bid

The Third Circuit Court of Appeals of Louisiana in Aymond v. Rabalais, 657 So. 2d 165 (1995), held that a bidder in a Sheriff’s sale owed a duty, if any, only to the Sheriff, to comply with the Sheriff’s ground rules for bidding.  The bidder did not owe any such duty to another bidder.  The Court in this case held that the successful bidder has failed to state cause of action under the facts plead and dismissed the suit.  

This case involved a sheriff’s sale in Louisiana, to auction off seized property.  The sale involved four tracts of land.  The terms of sale required payment in cash at the time of the sale or payment by check if accompanied by a supporting letter of credit from a bank.  These requirements were shared with the prospective bidders prior to and at the time of sale by officials of the sheriff’s office.  Plaintiff, Carol Aymond  (“Plaintiff”) attended the sale with a letter of credit attesting that he could issue checks in an aggregate amount of $ 500,000 and he was the highest bidder on tract 1.  Defendant, Stephan J. Rabalais (“Defendant”) was the successful bidder on tract 2 who issued letter of credit stating he could purchase up to $ 228,000.

After the sale, the successful bidder of Tract 1 (Plaintiff) filed suit against another bidder (Defendant) for damages caused by the other bidder's allegedly unauthorized bids at a sheriff's sale. The Plaintiff alleged that the Defendant bid above and beyond the $ 228,000 limit allowed by his letter of credit on tract I.  Plaintiff also alleged that he was compelled to bid against a nonqualified bidder.  And although bidding was voluntary, he was compelled to bid higher against unauthorized bids by Defendant.  He suffered expenses, damages, and financial injuries as a result of the Defendant’s acts.  Defendant filed a peremptory exception of no cause of action. Trial court granted in favor of Defendant holding that a successful bidder at a sheriff’s sale has no action in tort against another bidder. This appeal followed.  

The Court of Appeals found that judgment of the trial court was correct in finding that Plaintiff has failed to state a cause of action. Aymond, 657 So. 2d.at 166.  The Court stated that the peremptory exception of no cause of action attacks the legal sufficiency of the petition. All well-pleaded allegations of fact are accepted as true and correct for purposes of its determination. All doubts are resolved in favor of sufficiency of the petition. Id. (Internal citations omitted) The court stated that for purposes of ruling on an exception of no cause of action, the court must sustain the exception only if the law affords no remedy under any evidence admissible under the pleadings. Id.

After analyzing the facts of the case, the Court found that the Defendant was a good faith bidder and pursuant to La.CodeCiv.P. art. 2339, the law does not restrict any person from bidding at a judicial sale. The section allows a judgment debtor and the seizing creditor to bid for the property. Id. at 167. 

Further, the Court also noted that the Plaintiff did not allege that the Defendant puffed up the price bid on the tracts.  The Plaintiff only alleged that he was unauthorized to bid and unqualified according to the sheriffs ground rules for bidding. Id.  Also, the Plaintiff did not allege that the Defendant would not have paid if he was the highest bidder on tract 1.  The Court noted that the Defendant was the high bidder on tract 2, and he paid for that.
The Court stated that the Defendant owed duty (to have security in the form of a letter of credit to back up his bid), if any, to the sheriff and not to the Plaintiff. Id.  The Court concluded that the absence of a letter of credit with Defendant was not the cause-in-fact of Plaintiff’s purchase at whatever price he bid.  It was because the Plaintiff was willing to pay, he paid more than what he needed to. Id.  The Defendant did not have to pay for the property that he did not buy.  And he paid for the tract where he was the successful bidder. Id. The court observed that the Plaintiff cannot plead a cause of action without changing completely the substantive facts as presently pleaded. Id. In the light of above, the court affirmed the decision of trial court and granted Defendant’s exception of no cause of action.