## Facts

- A deed of trust secured a note held by Montgomery Federal Savings & Loan Association, and a trustee’s foreclosure sale was scheduled for May 1, 1979.
- On April 30, 1979, the borrower made a payment curing the delinquency, but the substitute trustees did not learn of the cure before conducting the sale.
- At the May 1, 1979 auction, George Basiliko was the successful bidder at $28,000 and paid a $1,000 deposit.
- On May 3, 1979, Basiliko contracted to resell the property to Pargo Corporation for $35,100, expressly conditioned on Basiliko obtaining good title from the foreclosure sale.
- Pargo then contracted to sell the property to a third party for $44,000.
- On the scheduled settlement date, Montgomery Federal’s agents refused to convey to Basiliko after determining the sale had been unauthorized because the borrower was not in default, preventing Basiliko from conveying to Pargo.
- Pargo sued Basiliko for failure to convey; Basiliko filed a cross-claim against Montgomery Federal and the trustees seeking damages for breach of the foreclosure sale contract.
- The trial court dismissed both Pargo’s complaint and Basiliko’s cross-claim on the merits; Basiliko appealed only the dismissal of his cross-claim.

## Issues

1. Whether a successful bidder at an unauthorized foreclosure sale may recover benefit-of-the-bargain contract damages when trustees refuse to convey for lack of authority.
2. If so, whether damages are measured by the difference between the contract price and the property’s fair market value at the time conveyance should have occurred.
3. Whether the bidder may recover special or consequential damages based on a lost resale contract, and whether the resale price may be used as evidence of fair market value.

## Decision

- The District of Columbia Court of Appeals reversed the dismissal of Basiliko’s cross-claim and remanded for a damages determination.
- The court held Basiliko is entitled to contract damages measured by the difference between the foreclosure contract price and the property’s fair market value at the time conveyance should have occurred.
- The court held Basiliko is not entitled to special or consequential damages to recoup the value of his later resale contract.
- The court held the resale contract price may be considered as evidence of fair market value on remand.

## Legal Principles

- A trustee’s failure to convey after a foreclosure sale, even where the sale was unauthorized due to absence of default, is treated as a breach of a real property sale contract for damages purposes.
- The ordinary measure of expectation damages for failure to convey real property is the difference between the contract price and the fair market value at the time performance was due.
- Remedies are not limited to restitution of the deposit merely because the seller lacked authority or title; foreclosure sales are not categorically exempt from ordinary contract-damages rules.
- Special or consequential damages based on collateral resale agreements are not recoverable, though resale prices may be relevant evidence in proving fair market value.

## Conclusion

The court held that a foreclosure-sale purchaser may recover benefit-of-the-bargain expectation damages when trustees refuse to convey because the sale was unauthorized, measured by the difference between the sale price and fair market value at the time conveyance was due, while excluding consequential losses from a failed resale transaction.


Basiliko v. Pargo Corp., 532 A.2d 1346 (D.C. 1987)