Frontier Federal Sav. and Loan Ass'n v. Douglass

• Decision Date: 23 April 1993
• Docket Number: No. 18748,18748
• Citation: 853 P.2d 553,123 Idaho 808
• Parties: FRONTIER FEDERAL SAVINGS AND LOAN ASSOCIATION, Plaintiff-Respondent, v. Harlan D. DOUGLASS and Maxine H. Douglass, husband and wife; and Steven J. Hassing, a single man, Defendants-Appellants. Boise, October 1992 Term
• Court: Idaho Supreme Court

Page 553

853 P.2d 553

123 Idaho 808

FRONTIER FEDERAL SAVINGS AND LOAN ASSOCIATION, Plaintiff-Respondent, v. Harlan D. DOUGLASS and Maxine H. Douglass, husband and wife; and Steven J. Hassing, a single man, Defendants-Appellants.

No. 18748.

Supreme Court of Idaho,

Boise, October 1992 Term.

April 23, 1993.

Rehearing Denied June 18, 1993.

Cooke, LaManna, Smith & Cogswell, Sandpoint, Delay, Curran, Thompson & Pontarolo, P.S., of Spokane, WA, and Elam, Burke & Boyd, Boise, for defendants-appellants. Joseph P. Delay argued.

Eberle, Berlin, Kading, Turnbow & McKlveen, Chtd., Boise, and Stoel, Rives, Boley, Jones & Grey, Boise, for plaintiff-respondent. Dale G. Higer argued.

McDEVITT, Chief Justice.

BACKGROUND AND PRIOR PROCEEDINGS

On February 3, 1989, respondent, Frontier Federal Savings and Loan Association ("Frontier"), filed a complaint against appellants, Harlan D. Douglass, Maxine H. Douglass, and Steven J. Hassing ("Douglass and Hassing"). Frontier alleged that Douglass and Hassing executed a note and deed of trust upon certain real property in Kootenai County, Idaho, dated October 3, 1985, to secure indebtedness to Frontier in the amount of $1,300,000.00. On July 1, 1988, Frontier alleged that Douglass and Hassing failed to pay the monthly installment due on the note. As a result, Frontier effected a nonjudicial foreclosure of the deed of trust, and held a trustee's sale on February 2, 1989. At the time of sale, Frontier alleged the following amounts due on the note: (1) principal in the amount of $1,293,608.21; (2) interest in the amount of $84,536.49; and (3) late charges in the amount of $3,211.88. In addition, Frontier alleged that it incurred the following expenses: (1) taxes and insurance on the real property in the amount of $4,235.37; (2) trustee fees and costs in the amount of $4,094.30; (3) appraisal fees in the amount of $3,200.00; and (4) attorney fees in the amount of $600.00.

Frontier purchased the real property at the trustee's sale for $869,000.00. Applying this figure and the $20,606.01 in net rents received from the property to the above-listed amounts due and fees and costs incurred, Frontier alleged that Douglass and Hassing still owed $500,680.24 plus interest from February 2, 1989, to Frontier. Frontier also requested $25,000.00 in attorney fees pursuant to the term of the note.

After the complaint was filed, both parties moved for summary judgment. The district court granted Frontier's motion for summary judgment, and entered an order requiring Douglass and Hassing to pay Frontier $241,811.46, interest at $36.65 per day from May 1, 1990, until the date of the judgment, and attorney fees and costs.

ISSUES RAISED ON APPEAL

Douglass and Hassing raise a number of issues on appeal to this Court. First, they argue that Frontier (the beneficiary) was precluded from recovering a statutory deficiency judgment allowed by I.C. § 45-1512 by waiver or estoppel because the notice of trustee's sale stated that "[t]he beneficiary elects to sell or cause the trust property to be sold to satisfy said obligation...." (Emphasis appellant's.) Second, they argue that the sale was invalid, precluding a deficiency judgment, due to multiple violations of the nonjudicial deed of trust foreclosure statute. In this regard, Douglass and Hassing point to the following:

1. Frontier failed to nominate First American Title Insurance Company ("First American") as successor trustee to Pioneer Title Company ("Pioneer") in writing pursuant to I.C. § 45-1504(2), after Pioneer's resignation as trustee on September 7, 1988;

2. Frontier failed to obtain Pioneer's resignation by failing to serve notice of intention to appoint a successor trustee upon Pioneer and Douglass and Hassing, pursuant to I.C. § 45-1504(2);

3. Frontier requested that notice of default be issued by First American when it was not the trustee, rather than by Pioneer;

4. The appointment of First American as trustee was made before the resignation of Pioneer as evidenced by the order in which they were recorded;

5. Frontier failed to deposit the deed of trust and note with the trustee as required under the terms of the deed of trust;

6. The trustee's deed provides that "the beneficiary made demand upon said Trustee to sell said property pursuant to the terms of said deed of trust." Frontier failed to make such demand upon Pioneer, and any such demand made on First American was not made on the then-existing trustee;

7. The trustee's deed certification of acknowledgment was defective because one signator did not sign in the presence of a notary;

8. The trustee's deed was void because it was not executed by the trustee because of improper resignation and appointment; and

9. The trustee breached its fiduciary relationship with Douglass and Hassing under the deed of trust by acting solely for and on behalf of Frontier.

Further, Douglass and Hassing argue that the district court erred in calculating damages, that this Court should reverse the district court based upon I.R.C.P. 54(d), 54(e), and I.C. §§ 12-120 or 12-121, and that if this Court reverses the district court, they are entitled to attorney fees and costs on appeal pursuant to I.A.R. 41. Finally, Frontier requests attorney fees on appeal.

ANALYSIS

A. Argument Regarding Waiver and Estoppel.

The thrust of Douglass and Hassing's argument goes to the language of the notice of trustee's sale and similar language in the notice of default: "[t]he beneficiary elects to sell or cause the trust property to be sold to satisfy said obligation." Essentially, Douglass and Hassing are saying that Frontier has waived or is estopped from asserting its right to a deficiency judgment, as set forth in I.C. § 45-1512, because the relevant language in the notice of trustee's sale and notice of default provides that the sale of the property will satisfy the obligation.

Idaho Code § 45-1505 (1957) ¹ sets forth the conditions under which the trustee may foreclose a trust deed by advertisement and sale. It provides:

45-1505. Foreclosure of trust deed, when.--The trustee may foreclose a trust deed by advertisement and sale under this act if:

(1) The trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in mortgage records in the counties in which the property described in the deed is situated; and

(2) There is a default by the grantor or other person owing an obligation the performance of which is secured by the trust deed or by their successors in interest with respect to any provision in the deed which authorizes sale in the event of default of such provision; and

(3) The trustee or beneficiary shall have filed for record in the office of the recorder in each county wherein the trust property, or some part or parcel, is situated, a notice of default identifying the deed of trust by stating the name or names of the trustor or trustors and giving the book and page where the same is recorded, or a description of the trust property, and containing a statement that a breach of the obligation for which the transfer in trust security has occurred, and setting forth the nature of such breach and his election to sell or cause to be sold such property to satisfy such obligation; and a copy of such notice by registered or certified mail to any person requesting such notice of record as hereinafter provided.

(4) No action, suit or proceeding has been instituted to recover the debt then remaining secured by the trust deed, or any part thereof, or if such action or proceeding has been instituted, the action or proceeding has been dismissed.

(Emphasis added.)

Idaho Code § 45-1512 permits a beneficiary under a deed of trust to seek a deficiency judgment after a trustee's sale under a deed of trust. It provides:

45-1512. Money judgment--Action seeking balance due on obligation.--At any time within 3 months after any sale under a deed of trust, as hereinbefore provided, a money judgment may be sought for the balance due upon the obligation for which such deed of trust was given as security, and in such action the plaintiff shall set forth in his complaint the entire amount of indebtedness which was secured by such deed of trust and the amount for which the same was sold and the fair market value at the date of sale, together with interest from such date of sale, costs of sale and attorney[ ] fees. Before rendering judgment the court shall find the fair market value of the real property sold at the time of sale. The court may not render judgment for more than the amount by which the entire amount of indebtedness due at the time of sale exceeds the fair market value at that time, with interest from date of sale, but in no event may the judgment exceed the difference between the amount for which such property was sold and the entire amount of the indebtedness secured by the deed of trust.

The above-quoted statutes, I.C. § 45-1505 (1957) and I.C. § 45-1512, were both enacted in 1957 as part of an act relating to deeds of trust. An Act Relating To Deeds Of Trust, ch. 181, §§ 5, 12, 1957 Idaho Session Laws 345, 347, 351-52. Thus, these statutes are in pari materia and must be construed together as parts of the act. Curtis v. Canyon Highway Dist. No. 4, 122 Idaho 73, 82, 831 P.2d 541, 550 (1992); Achenbach v. Kincaid, 25 Idaho 768, 775, 140 P. 529, 531 (1914).

Subdivision (3) of I.C. § 45-1505 requires that the trustee or beneficiary file a notice of default identifying the deed of trust and containing, among other things, a statement setting forth his or her "election to sell or cause to be sold such property to satisfy such obligation." (Emphasis added.) Douglass and Hassing argue that the relevant language of the notice of trustee's sale and notice of default, regarding Frontier's election to sell the property to satisfy the obligation, is inconsistent with I.C. § 45-1512, resulting in Frontier waiving or being quasi-estopped...