ALBICE v. PREMIER MORTGAGE Serv. of Wash. INC.

• Citation: 239 P.3d 1148
• Decision Date: 28 September 2010
• Docket Number: No. 39265-8-II.,39265-8-II.
• Parties: Christa L. ALBICE, a married woman, and Bart A. Tecca and Karen L. Tecca, husband and wife, Appellants, 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, Respondents. Ron Dickinson, Respondent, v. Christa L. Albice f/k/a Christa L. DeYoung; Bart A. Tecca and Karen L. Tecca, husband and wife; Any Subtenants, and All Others Acting By or Through Them, Appellants.
• Court: Washington Court of Appeals

239 P.3d 1148

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

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, Respondents.

Ron Dickinson, Respondent,

v.Christa L. Albice f/k/a Christa L. DeYoung; Bart A. Tecca and Karen L. Tecca, husband and wife; Any Subtenants, and All Others Acting By or Through Them, Appellants.

No. 39265-8-II.

Court of Appeals of Washington,Division 2.

Sept. 28, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

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

Richard L. Ditlevson, Ditlevson Rodgers Dixon PS, Olympia, WA, for Respondents.

ARMSTRONG, J.

¶ 1 Christa Albice and Karen and Bart Tecca (Albice/Teccas) appeal the trial court's refusal to set aside a nonjudicial deed of trust foreclosure sale of their property. They argue that (1) the successful bidder at the foreclosure sale was not a bona fide purchaser; (2) even if he was, the trustee's deed failed to report procedural facts that would statutorily protect a buyer; (3) the sale was void for taking place beyond the statutorily limited timeframe; (4) the Teccas timely tendered funds sufficient to cure the loan default and require the trustee to discontinue the sale; and (5) the trustee lacked authority to conduct the sale because it had no corporate officer residing in Washington at the time of the sale. We hold that the sale did not comply with statutory requirements, that the purchaser was not a bona fide purchaser for value, that the trustee's deed failed to state facts that would protect a buyer, that the sale price was inadequate, and that the sale was surrounded by other unfair circumstances. Accordingly, we reverse.

FACTS

A. Background

¶ 2 Christa Albice and Karen and Bart Tecca owned improved real property on Hartstine Island in Mason County. Sisters Albice and Tecca inherited the 10-acre property from their parents free of any liens or encumbrances.

¶ 3 In 2003, the Teccas borrowed $115,500 against the property secured by a deed of trust. The loan was serviced through a subsidiary of H & R Block known as Option One Mortgage Corporation (Option One). Premier Mortgage Services of Washington (Premier), also a subsidiary of H & R Block, was the trustee of the deed of trust. ¹

¶ 4 The Teccas fell delinquent on their loan payments to Option One in April 2006. Premier issued a Notice of Foreclosure and a Notice of Trustee Sale, informing the Teccas that it would hold a foreclosure sale on September 8, 2006. The Teccas contacted Option One to find out how to cure the delinquent payments and avoid foreclosure.

¶ 5 In July 2006, the Teccas and Option One entered into a forbearance agreement. The agreement stated that the Teccas owed $5,126.97 to bring the loan current. The Teccas agreed to a down payment of $3,000.00 and increased monthly payments, to be paid by the 16th of every month, through January 2007. On September 8, 2006, the crier of the sale announced that Premier was postponing the foreclosure sale. ²

¶ 6 The Teccas made the down payment and, although late, made each of the subsequent monthly payments. The Teccas tendered the final payment, which was due on January 16, on February 2, 2007. On February 10, 2007, they received notice from Western Union that Option One had refused to accept their final payment. Western Union refunded the final payment on February 16, 2007. ³ ¶ 7 On February 16, 2007, Premier conducted a foreclosure sale of the property, 161 days after the original sale date set in the Notice of Trustee Sale. Through an agent, Ron Dickinson successfully bid $130,000 for the property.

B. Procedural History

¶ 8 Albice/Teccas sued Premier, Option One, and the Dickinsons, seeking to set aside the foreclosure sale. They alleged that Option One breached the forbearance agreement with the Teccas and that Premier breached its fiduciary duty owed to the Teccas and conducted an improper foreclosure sale. Against the Dickinsons, Albice/Teccas sought to quiet title to the property. The Dickinsons counterclaimed to quiet title and filed cross-claims against Option One and Premier. ⁴

¶ 9 The Dickinsons moved for summary judgment to establish that Ron Dickinson was a bona fide purchaser of the property and therefore entitled to quiet title. Albice/Teccas also moved for summary judgment, arguing that the foreclosure sale should be set aside as void because (1) Premier was not a qualified trustee with authority to conduct the sale and (2) the sale occurred after the statutory deadline. The trial court granted the Dickinsons' motion, ruling that Ron Dickinson was a bona fide purchaser for value. The court held that even though the sale was continued for more than 120 days in violation of RCW 61.24.040(6), Ron Dickinson's bona fide purchaser status rendered the deed's recitals of compliance with the statute conclusive evidence that the sale was proper.

¶ 10 After two rulings on Premier's qualification to act as a trustee in Washington State and subsequent motions for reconsideration, the parties tried the issue. Following a bench trial, the court ruled that Premier was eligible to serve as a trustee under Washington law. Accordingly, the court quieted title in favor of the Dickinsons and awarded them damages and costs.

ANALYSIS

I. Washington Deed of Trust Act

¶ 11 The Deeds of Trust Act (Act) sets out the procedures that must be followed to properly foreclose a debt secured by a deed of trust. Chapter 61.24 RCW. A proper foreclosure action extinguishes the debt and transfers title to the property to the beneficiary of the deed of trust or to the successful bidder at a public foreclosure sale. In re Marriage of Kaseburg, 126 Wash.App. 546, 558, 108 P.3d 1278 (2005).

¶ 12 We construe the Act to further three objectives: (1) the nonjudicial foreclosure process should remain efficient and inexpensive; (2) the process should provide an adequate opportunity for interested parties to prevent wrongful foreclosure; and (3) the process should promote the stability of land titles. Cox v. Helenius, 103 Wash.2d 383, 387, 693 P.2d 683 (1985). In addition, because nonjudicial foreclosures lack the oversight inherent in judicial foreclosures, we strictly apply and interpret the Act in the borrower's favor. CHD, Inc. v. Boyles, 138 Wash.App. 131, 137, 157 P.3d 415 (2007).

¶ 13 A lawful foreclosure sale must comply with the timing and notice obligations of RCW 61.24.040. For example, a trustee may, for any cause the trustee deems advantageous, continue the sale for not more than a total of 120 days. RCW 61.24.040(6). And at any time prior to the 11th day before the sale, the borrower is entitled to cure the default set forth in the notice. RCW 61.24.090(1). Upon receipt of such payment, the trustee must discontinue the sale and reinstate the deed of trust. RCW 61.24.090(3).

¶ 14 To balance the procedural safeguards with the interests of a purchaser, the Act requires a foreclosing trustee to issue a deed that recites facts showing that the sale was conducted in compliance with statutory requirements. RCW 61.24.040(7). A bona fide purchaser is entitled to rely on these recitals as to the correctness of foreclosure sale procedures. RCW 61.24.040(7); Glidden v. Mun. Auth. of Tacoma, 111 Wash.2d 341, 347, 758 P.2d 487 (1988).

II. Statutory Defects in the Sale

¶ 15 Albice/Teccas argue that the trustee's failure to comply with certain statutory requirements renders the sale void. First, they claim that Premier had no authority to conduct the sale 161 days after the original sale date under RCW 61.24.040(6). Next, they claim that because they tendered funds sufficient to cure the default, the trustee should have discontinued the sale under RCW 61.24.090(3). ⁵ In addition, they assert that the recitals contained in the trustee's deed are “inadequate to demonstrate compliance with the statute.” Br. of Appellant at 15, 18.

¶ 16 The Dickinsons counter that as bona fide purchasers for value, they are protected by the recitals in the deed of trust, which serve as conclusive evidence of a procedurally correct sale under RCW 61.24.040(7). ⁶

¶ 17 We hold that the conclusional recitals in the deed of trust do not protect the Dickinsons from undisputed defects in the sale because they do not meet the statutory requirement of “facts showing” compliance with chapter 61.24 RCW. In addition, regardless of the sufficiency of the recitals, we hold that Dickinson was not a bona fide purchaser entitled to protection under RCW 61.24.040(7).

A. Standard of Review

¶ 18 On summary judgment, the trial court ruled that even though the sale was continued for more than 120 days in violation of RCW 61.24.040(6), Dickinson's bona fide purchaser status rendered the deed's recitals conclusive evidence that the sale was proper. We review a summary judgment de novo. Hisle v. Todd Pacific Shipyards Corp., 151 Wash.2d 853, 860, 93 P.3d 108 (2004). Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). We consider all facts and reasonable inferences from them in the light most favorable to the nonmoving party. City of Lakewood v. Pierce County, 144 Wash.2d 118, 125, 30 P.3d 446 (2001). The trial court can grant the motion only if, from all the evidence, reasonable persons could reach but one conclusion. Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982).

B. Sufficiency of Recitals

¶ 19 The trustee's deed recites information about the underlying debt obligation, the failure to cure the default, the lender's request to sell the property, and the fulfillment of notice requirements prior to the sale. The deed also recites that “[a]ll legal requirements and all provisions of said Deed of Trust have been...