Frizzell v. Murray

• Decision Date: 05 December 2013
• Docket Number: No. 87927–3.,87927–3.
• Citation: 313 P.3d 1171
• Parties: Tamara FRIZZELL, Respondent, v. Barbara MURRAY and Gregory Murray, husband and wife, d/b/a Sound Brokers, Petitioners.
• Court: Washington Supreme Court

313 P.3d 1171

Tamara FRIZZELL, Respondent,

v.Barbara MURRAY and Gregory Murray, husband and wife, d/b/a Sound Brokers, Petitioners.

No. 87927–3.

Supreme Court of Washington, En Banc.

Dec. 5, 2013.

Darren Robert Krattli, Eisenhower and Carlson PLLC, Tacoma, WA, for Petitioners.

Dan Robert Young, Attorney at Law, Seattle, WA, for Respondent.

MADSEN, C.J.

¶ 1 Respondent Tamara Frizzell received a $100,000 loan from petitioner Barbara Murray, secured by a deed of trust on Frizzell's home. Frizzell defaulted and a nonjudicial foreclosure sale was set. Before the sale, Frizzell filed an action against Barbara and her husband Gregory Murray, alleging several claims, as well as a motion for an order to enjoin the sale. A judge stayed the sale, conditioned upon Frizzell's payment of $25,000 into the court registry by the following morning. Frizzell failed to do so and the sale took place. The trial court then dismissed Frizzell's claims on summary judgment, stating her failure to enjoin the sale resulted in a waiver of her claims. The Court of Appeals reversed and remanded, determining it would be inequitable to conclude Frizzell waived her claims. We hold that Frizzell waived her claims as to the foreclosure sale and remand her other claims to the trial court for consideration under RCW 61.24.127.

FACTS AND PROCEDURAL HISTORY

¶ 2 In 2008, Tamara Frizzell obtained a $100,000 loan from Barbara Murray that Gregory Murray brokered.¹ At the time of the loan, Gregory Murray maintained a license to operate as a mortgage broker, operating as Sound Brokers.

¶ 3 Prior to obtaining the loan, Frizzell gave her live-in friend, Douglas Baer, power of attorney. He acted on her behalf and contacted the Murrays to obtain the loan after seeing an ad in the Tacoma News Tribune offering loans for real estate. According to Baer, Frizzell originally wanted a loan of $20,000 in order to pay past-due bills, but then increased the amount of the loan due to a better interest rate on a larger loan. Baer claims he told the Murrays that Frizzell was poor when it came to financial matters and was “like a child in that regard.” Clerk's Papers at 146. This is disputed by the Murrays, who note that Frizzell executed the power of attorney that gave Baer the authority to act in real estate and business transactions, among other things. Despite the power of attorney, however, the Murrays insisted that Frizzell sign the loan documents on her own behalf.

¶ 4 The Murrays explained to Baer that the loan could be offered only for business purposes. Baer stated that Frizzell had no business to operate and he suggested, presumably to Frizzell, that he start a wheelchair business because of the 40 to 50 wheelchairs and scooters he had at her house. There were no business plans, projected income, or expense statements, and Baer claims that the Murrays asked few questions about the business. Frizzell signed a declaration concerning the purpose and use of the loan, which states that the loan would not be used for personal or household use, but for a “wheelchair & scooter business.” Id. at 286.

¶ 5 Under the terms of the loan, Frizzell would receive about $88,000, which represents $100,000 minus $12,000 in fees. Monthly payments were set at $1,000, with full repayment due in three years. The loan application shows Frizzell's monthly salary as $1,600. This loan was secured by a deed of trust on her property.

¶ 6 After only three payments, Frizzell defaulted. Barbara Murray initiated the process of foreclosing on Frizzell's home through a nonjudicial sale. Prior to the sale, Frizzell filed a complaint against the Murrays alleging claims of common law and statutory fraud in the course of a residential mortgage loan, civil conspiracy, unconscionability, Consumer Protection Act (CPA) (ch. 19.86 RCW) claims, that the loan was actually a de facto sale, that the loan was for noncommercial use, that Gregory Murray lacked a real estate license, and that the underlying deed of trust was invalid because of her lack of capacity to contract. She supported her capacity claim with a doctor's note stating that she has severe memory defects “suggestive of an incipient dementia.” Id. at 197. In her complaint, she sought damages and an injunction barring enforcement of the deed of trust through the foreclosure sale.

¶ 7 Frizzell also filed a separate motion to enjoin the trustee sale. One day before the sale, a judge granted Frizzell's motion conditioned upon Frizzell's payment into the court registry of $15,000 representing arrearages on the deed of trust and $10,000 representing a bond, both due the next morning. Frizzell did not make the payments and the sale took place. Barbara Murray purchased the home.

¶ 8 The trial court then considered the claims in Frizzell's complaint and granted the Murrays' request for summary judgment as to all claims. The trial court stated that summary judgment was granted “based on the Plaintiff's failure to obtain pre-sale injunctive relief. Accordingly, all of Plaintiff's claims are denied.” Id. at 305. The Court of Appeals reversed, determining Frizzell's failure to obtain presale relief did not waive her claims because it would be inequitable to assume she waived her right in light of the facts of her case. Frizzell v. Murray, 170 Wash.App. 420, 430, 283 P.3d 1139 (2012). The Murrays sought review by this court. Frizzell v. Murray, 176 Wash.2d 1011, 297 P.3d 707 (2013).

ANALYSIS

¶ 9 We must decide whether obtaining an order to enjoin a nonjudicial foreclosure sale conditioned upon remittance of payment to the court and failing to make such payment, results in a waiver of claims under the RCW 61.24.040(1)(f)(IX) waiver provision. If so, we must then determine which claims are affected by the waiver rule and whether any claims are exempted by other statutory provisions. The trial court below granted the Murrays' motion for summary judgment based on Frizzell's failure to obtain presale injunctive relief. We review summary judgment rulings de novo. Schroeder v. Excelsior Mgmt. Grp., LLC, 177 Wash.2d 94, 104, 297 P.3d 677 (2013) (citing Dreiling v. Jain, 151 Wash.2d 900, 908, 93 P.3d 861 (2004)). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. (citing Herring v. Texaco, Inc., 161 Wash.2d 189, 194, 165 P.3d 4 (2007)).

1. Waiver resulting from failure to restrain the sale

¶ 10 In Plein v. Lackey, 149 Wash.2d 214, 229, 67 P.3d 1061 (2003), we held that failure to obtain a preliminary injunction or restraining order barring a nonjudicial foreclosure sale waived defenses to the sale. We stated that under the waiver provision set forth in RCW 61.24.040(1)(f)(IX), a waiver of a postsale contest occurs when “a party (1) received notice of the right to enjoin the sale, (2) had actual or constructive knowledge of a defense to foreclosure prior to the sale, and (3) failed to bring an action to obtain a court order enjoining the sale.” Id. at 227, 67 P.3d 1061 (citing Country Express Stores, Inc. v. Sims, 87 Wash.App. 741, 751, 943 P.2d 374 (1997)). We determined that the plaintiff had waived his right to contest the foreclosure because, although he sought a permanent injunction and disputed whether there was a default, he “failed to obtain a preliminary injunction or other order restraining the foreclosure sale.” Id. at 229, 67 P.3d 1061.

¶ 11 We conclude, as in Plein, that Frizzell waived her right to contest the nonjudicial foreclosure sale. First, she received notice of the right to enjoin the sale and she filed a motion to enjoin the sale. Although she argues that her capacity to contract affects whether she understood the notice, she fails to explain why she sought an injunction barring enforcement of the deed of trust through the foreclosure sale and filed a separate motion to enjoin the sale if she did not have knowledge that a foreclosure would occur. In addition, she also had knowledge of a defense to the foreclosure prior to the sale, demonstrated by the claims made in her original complaint. Finally, Frizzell did not obtain an order restraining the sale, just as the plaintiff in Plein failed to do. Although she brought an action to obtain a court order, the order was conditioned on a payment to the court that she failed to make. Frizzell did not request reconsideration, though she contends the judge issuing the order would be unlikely to change her mind. Frizzell also did not appeal the order, arguing she would have had to post security to supersede the judgment and she did not have sufficient funds. But consciously choosing not to pursue all remedies is not an excuse, and posting security is a clear statutory requirement.

¶ 12 Frizzell argues, though, that Plein is inapplicable here because she actually obtained an order restraining the sale, unlike in Plein and Brown v. Household Realty Corp., 146 Wash.App. 157, 171, 189 P.3d 233 (2008), where the borrowers waived their claims by failing to restrain the sale and filing a lawsuit two years after the sale. The Court of Appeals here concluded that Frizzell had actually obtained a restraining order but simply did not restrain the sale because the order was conditioned upon payment to the court. Frizzell, 170 Wash.App. at 428, 283 P.3d 1139. However, RCW 61.24.130(1) provides that “[t]he court shall require as a condition of granting the restraining order or injunction that the applicant pay to the clerk of the court the sums that would be due on the obligation secured by the deed of trust if the deed of trust was not being foreclosed.” See alsoRCW 7.40.080; CR 65(c).² The statute is clear that the order is conditional upon payment, which Frizzell failed to make. Frizzell received notice and had the opportunity to prevent foreclosure, but through her actions she failed to meet the clear statutory requirements under RCW 61.24.130 and did not actually obtain an order enjoining the sale....