Albice v. Premier Mortg. Servs. of Wash., Inc.

• Decision Date: 24 May 2012
• Docket Number: No. 85260–0.,85260–0.
• Court: Washington Supreme Court
• Parties: Christa L. ALBICE, a married woman, and Bart A. Tecca and Karen L. Tecca, husband and wife, Respondents, v. PREMIER MORTGAGE SERVICES OF WASHINGTON, INC., a Washington corporation; Option One Mortgage Corporation, a California corporation, Defendants, Ron Dickinson and “Jane Doe” Dickinson, husband and wife, Petitioners.

174 Wash.2d 560

276 P.3d 1277

Christa L. ALBICE, a married woman, and Bart A. Tecca and Karen L. Tecca, husband and wife, Respondents,

v. PREMIER MORTGAGE SERVICES OF WASHINGTON, INC., a Washington corporation; Option One Mortgage Corporation, a California corporation, Defendants,Ron Dickinson and “Jane Doe” Dickinson, husband and wife, Petitioners.

No. 85260–0.

Supreme Court of Washington,

En Banc.

May 24, 2012.

Emmelyn Hart, Philip Albert Talmadge, Talmadge/Fitzpatrick, Tukwila, WA, Richard L. Ditlevson, Dixon Rodgers Kee & Pearson PS, Olympia, WA, for Petitioners.

Douglas N. Kiger, Jonathan W. Blado, Blado Kiger Bolan, PS, Tacoma, WA, for Respondents.

C. JOHNSON, J.

[174 Wash.2d 563]¶ 1 This case involves interpretation of the deeds of trust act, chapter 61.24 RCW, and the statutory procedural requirements for nonjudicially foreclosing on an owner's interest. This case also involves whether, under the facts here, the property owner waived the right to challenge the sale and whether the purchaser of the nonjudicial foreclosure sale statutorily qualifies as a bona fide purchaser (BFP).

¶ 2 The trial court ruled that despite procedural noncompliance, the purchaser was a BFP under the statute and quieted title in the purchaser. The Court of Appeals reversed, holding that failure to comply with the statutory requirements was reason to set the sale aside and that factually, the purchaser did not qualify as a BFP. We affirm the Court of Appeals.

FACTS

¶ 3 Christa Albice and Karen Tecca (hereinafter Tecca) inherited the property at issue here. In 2003, Tecca borrowed $115,500 against the property. Clerk's Papers (CP) at 305. The property was appraised at $607,000 in 2003 (CP at 1038) and at $950,000 in 2007. CP at 394. The loan was serviced by Option One Mortgage Corporation (Option One), and Premier Mortgage Services of Washington (Premier) acted as the trustee. Option One and Premier shared databases, having access to the same loan information, and everyone who worked for Premier was an employee of Option One.

¶ 4 In 2006, Tecca defaulted on the loan and received a notice of trustee's sale, setting the foreclosure sale for September 8, 2006. CP at 460. Tecca then, in July 2006, negotiated and entered into a forbearance agreement to cure the default. The total reinstatement amount was for $5,126.97, which included $1,733.79 for estimated foreclosure fees and costs. CP at 471. Under the agreement, payments were due the 16th of each month, ending January 16, 2007. CP at 472. Although Tecca tendered each payment late, Option One accepted each payment, except for the last. The last payment was sent on February 2, 2007, but was rejected by Option One. During a deposition, Premier's representative, an Option One employee, testified that the last late payment was the only breach of the Forbearance Agreement. CP at 259. Tecca learned the final payment was rejected on February 10, 2007, and the payment was refunded on February 16, 2007. Although the Forbearance Agreement provided that upon breach, a 10–day written notice would be sent, Tecca never received this notice. CP at 468, 454.

¶ 5 The trustee's sale originally set for September 8, 2006 was continued six times. Each continuance was tied to the payments Tecca made under the Forbearance Agreement. The foreclosure sale took place on February 16, 2007. CP at 352–59. Through an agent, the petitioner, Ron Dickinson, successfully bid $130,000 for the property.¹

¶ 6 Dickinson has purchased about 9 of his 13 properties at nonjudicial foreclosure sales. CP at 418–19. Dickinson buys and sells houses as a business. He has familiarized himself with foreclosure law to some extent to keep himself out of “trouble.” CP at 428. When Dickinson learned that the Tecca property was for sale, he researched the property and obtained a copy of the notice of trustee's sale, which listed the amount in arrears as $1,228.03. CP at 526, 530. About a week before the originally scheduled sale, Dickinson visited Karen Tecca's home and offered to buy the property. She refused and told him the sale would not happen. CP at 421. Dickinson attended the first scheduled sale, kept track of postponements, and phoned Premier to determine the next sale date. He was surprised when the property did finally come up for sale.

¶ 7 Tecca first learned the property was sold when Dickinson told Tecca they no longer owned it and needed to leave. Dickinson then filed an unlawful detainer action and sought to quiet title. Tecca countersued, seeking to quiet title in an action to set aside the nonjudicial sale. Tecca also brought suit against Option One and Premier, but the trial court dismissed the action based on an arbitration clause. Tecca's and Dickinson's actions were consolidated. Dickinson cross-claimed against Option One and Premier, but he voluntarily dismissed those claims.

¶ 8 Dickinson moved for summary judgment to establish that he was a BFP and entitled to quiet title. Tecca also moved for summary judgment, arguing the foreclosure sale should be set aside because the sale occurred after the statutory deadline and Premier was not a qualified trustee with authority to conduct the sale. The trial court granted Dickinson's motion, ruling that Dickinson was a BFP and despite procedural noncompliance by the trustee, the recitations in the trustee's deed were conclusive evidence of statutory compliance in favor of BFPs. The issue of whether Premier was a qualified trustee was left for trial. Following trial, the court concluded Premier was authorized to act as the trustee,² quieted title in Dickinson, and awarded Dickinson damages.

¶ 9 Tecca appealed. The Court of Appeals reversed, setting the sale aside. It reversed the trial court's award of damages and instead awarded Tecca costs and fees as the prevailing party under RCW 4.84.010. Albice v. Premier Mortg. Servs. of Wash., Inc., 157 Wash.App. 912, 923–25, 928, 935, 239 P.3d 1148 (2010).

¶ 10 Dickinson petitioned for review. We granted review. Albice v. Premier Mortg. Servs. of Wash., Inc., 170 Wash.2d 1029, 249 P.3d 623 (2011).

ISSUES

1. Whether a trustee's sale taking place beyond the 120 days permitted by RCW 61.24.040(6) warrants invalidating the sale.

2. Whether, under the circumstances of this case, a borrower waives the right to bring a postsale challenge for failing to utilize the presale remedies under RCW 61.24.130.

3. Whether a bona fide purchaser can prevail despite an otherwise invalid sale.

ANALYSIS

¶ 11 This case raises questions of law and statutory interpretation on appeal from summary judgment. Our review is de novo. Lamtec Corp. v. Dep't of Revenue, 170 Wash.2d 838, 842, 246 P.3d 788 (2011) (citing Dreiling v. Jain, 151 Wash.2d 900, 908, 93 P.3d 861 (2004)).

[174 Wash.2d 567] ¶ 12 The deeds of trust act, chapter 61.24 RCW, ³ creates a three-party mortgage system allowing lenders, when payment default occurs, to nonjudicially foreclose by trustee's sale. The act furthers three goals: (1) that the nonjudicial foreclosure process should be efficient and inexpensive, (2) that the process should result in interested parties having an adequate opportunity to prevent wrongful foreclosure, and (3) that the process should promote stability of land titles. Cox v. Helenius, 103 Wash.2d 383, 387, 693 P.2d 683 (1985). Because the act dispenses with many protections commonly enjoyed by borrowers under judicial foreclosures, lenders must strictly comply with the statutes and courts must strictly construe the statutes in the borrower's favor. Udall v. T.D. Escrow Servs., Inc., 159 Wash.2d 903, 915–16, 154 P.3d 882 (2007); Koegel v. Prudential Mut. Sav. Bank, 51 Wash.App. 108, 111–12, 752 P.2d 385 (1988). The procedural requirements for conducting a trustee sale are extensively spelled out in RCW 61.24.030 and RCW 61.24.040. Procedural irregularities, such as those divesting a trustee of its statutory authority to sell the property, can invalidate the sale. Udall, 159 Wash.2d at 911, 154 P.3d 882.

1. Procedural Irregularities

¶ 13 Throughout the proceedings, Tecca has argued that the trustee's failure to comply with certain statutory requirements renders the sale invalid. These procedural irregularities or defects include that Premier had no authority to conduct the sale 161 days after the original sale date under RCW 61.24.040(6), that Premier violated RCW 61.24.090(1) by failing to discontinue the sale after they cured default more than 11 days before the actual sale date, and that the recitals contained in the trustee's deed were inadequate under RCW 61.24.040(7). Regarding the recitals, the Court of Appeals agreed with Tecca, concluding that because the deed of trust failed to recite any facts triggering the protections of RCW 61.24.040(7), Dickinson was not protected from the undisputed defects in the sale. The Court of Appeals then set the sale aside based on its conclusion that Premier had no statutory authority to sell the property when it continued the sale past the 120 days permitted by the act. We agree with the Court of Appeals' holding that Premier lost statutory authority after it continued the sale past 120 days from the original sale date and that the sale was invalid. We need not address or resolve any further issues regarding other procedural irregularities.

¶ 14 RCW 61.24.040(1)(f), (2) provides the requirements for a deed of trust foreclosure, including the notice requirements for the trustee's sale and foreclosure. Under RCW 61.24.040(6), a trustee may continue a sale “for any cause the trustee deems advantageous ... for a period or periods not exceeding a total of one hundred twenty days ” (emphasis added). A plain reading of this provision permits a trustee to continue a sale once or more than once but unambiguously limits the trustee from continuing the sale past 120 days.

¶ 15 When a party's authority to act is prescribed by a statute and the statute includes time limits, as under RCW 61.24.040(6), failure to act...