Guardado v. Taylor

• Decision Date: 18 May 2021
• Docket Number: No. 53643-9-II,53643-9-II
• Court: Washington Court of Appeals
• Parties: Otto GUARDADO, an individual, Respondent, v. Mark and Michelle TAYLOR, husband and wife, and their marital community, Petitioners, Diana Guardado, an individual, and James Kimball d/b/a Realty Pro, Inc., Defendants.

17 Wash.App.2d 676

490 P.3d 274

Otto GUARDADO, an individual, Respondent,

v.Mark and Michelle TAYLOR, husband and wife, and their marital community, Petitioners,Diana Guardado, an individual, and James Kimball d/b/a Realty Pro, Inc., Defendants.

No. 53643-9-II

Court of Appeals of Washington, Division 2.

Filed May 18, 2021

Ordered Published Date June 29, 2021

Shellie McGaughey, Michael Jeffrey Kyllo, McGaughey Bridges Dunlap PLLC, 3131 Western Ave. Ste. 410, Seattle, WA, 98121-1036, Brian H. Wolfe, Attorney at Law, C Street Plaza, Ste. 103, 303 E 16th St., Vancouver, WA, 98663, for Petitioners.

Thomas John Foley, Attorney at Law, Po Box 609, 1111 Broadway, Vancouver, WA, 98666-0609, Brian C. Hickman, Gordon & Polscer, LLC, 9020 Sw Washington Square Rd. Ste. 560, Tigard, OR, 97223-4518, for Defendants.

Otto Guardado (Appearing Pro Se), 6135 Ne 14th Ct., Vancouver, WA, 98665, for Respondent.

Glasgow, A.C.J. ¶1 Mark and Michelle Taylor purchased Otto Guardado's property in 2016, after a trial court ordered Guardado to sell the property. After the Taylors purchased the property, we reversed and vacated the trial court's order on appeal. Guardado sued the Taylors for specific restitution, meaning conveyance of the property back to him, and unjust enrichment.

¶2 The Taylors assert that they were good faith purchasers under RAP 12.8, so the reversal does not affect their interest in the property. They admit to knowing of Guardado's pending appeal, but they argue that this does not defeat their status as good faith purchasers because Guardado failed to stay enforcement of the trial court's order. They further argue that a recorded lis pendens on the property was released the day before the sale, so the property was free of encumbrances when they purchased it.

¶3 We hold that the Taylors’ actual knowledge of Guardado's pending appeal did not defeat their status as good faith purchasers because they purchased the property pursuant to a court order that was effective at the time. However, the record shows a lis pendens was still recorded at the time of the sale's closing. A recorded lis pendens precludes subsequent purchasers from taking the property in good faith. Therefore, the Taylors are not entitled to the protections afforded by RAP 12.8.

¶4 We conclude that the trial court was correct to deny the Taylors’ motion for partial summary judgment. However, because we conclude there is no genuine dispute of material fact and judgment should be entered in favor of Guardado as a matter of law, we reverse in part, remand, and direct the trial court to enter judgment in favor of Guardado. We leave it to the trial court to exercise its discretion to determine the appropriate remedy.

FACTS

I. SKAMANIA COUNTY PROCEEDINGS AND THE SALE OF GUARDADO'S PROPERTY

¶5 Otto and Diana Guardado¹ dissolved their marriage by agreed order in 2008 in Skamania County. In the dissolution decree, Guardado was awarded the couple's Vancouver home, and he agreed to pay the mortgage on the residence.

¶6 In 2012, Diana executed a quitclaim deed, releasing her interest in the property, which she claims was in response to an oral agreement with Guardado whereby he would remove her name from the mortgage. However, Guardado failed to remove Diana's name from the mortgage, and his failure to make consistent, timely payments adversely affected Diana's credit. In 2014, she brought suit in Skamania County for breach of contract, and in 2016, the trial court ruled in her favor. On May 6, 2016, before the trial court had reduced its oral ruling to writing, Guardado filed a notice of appeal. Guardado also asked this court for a stay.

¶7 On May 26, 2016, the trial court issued its findings of fact and conclusions of law resolving the contract action. It determined that Guardado violated the dissolution decree's hold harmless provision and concluded, "The sale of the [p]roperty is the elegant solution to this manifest injustice." Clerk's Papers (CP) at 107. The trial court decided to modify the original dissolution decree pursuant to CR 60(b)(11), which permits modification of a dissolution decree in extraordinary circumstances to prevent manifest injustice. The trial court ordered that a special administrator be appointed to list the property with a realtor of their choice and advised, "The remedy for a failure to cooperate with the special master or realtor shall be a drastic reduction in the sale price of the [p]roperty." CP at 109. The trial court explained, "The primary purpose of the listing of the [p]roperty shall be getting it sold; the secondary purpose shall be to realize as much equity as possible." Id.

¶8 In the meantime, we denied Guardado's request for a stay. We advised that Guardado could stay enforcement of the judgment by filing a supersedeas bond or cash in the amount of $10,000.

¶9 On June 2, 2016, the trial court formally ordered the dissolution decree modified to require a sale of the property. It further ordered that Guardado would need to post a $40,000 supersedeas bond if he wished to stay enforcement of the judgment.

¶10 Guardado paid $10,000 toward superseding the judgment, and several weeks later, Kim Bailey, an acquaintance of Guardado's, attempted to post a bond pursuant to RAP 8.4 to supersede the judgment. Guardado also filed an emergency motion for a stay with this court. We denied Guardado's emergency motion, and we also ruled that Bailey's supersedeas bond failed to meet the requirements of RAP 8.1, so it did not stay the trial court's enforcement of its June 2, 2016 order. Thus, no stay or supersedeas bond prevented sale of the property.

¶11 On October 10, 2016, Guardado recorded a lis pendens in Clark County. The court-appointed special administrator also suggested that all potential buyers be provided with copies of Guardado's court filings so that they could go "into [the purchase] with eyes wide open after full disclosure" of Guardado's appeal of the order requiring sale. CP at 181.

¶12 Mark and Michelle Taylor were interested in purchasing Guardado's property. Mark Taylor stated, "I requested information from [Guardado] about his appeal, which he promptly e[-]mailed to me that day." CP at 183. Guardado e-mailed Mark Taylor on November 15, 2016 and advised, "The next purchaser (if any) will be subject to the decision of the appeals court. I am, of course, asking for my property rights to be restored. You can find out more info, and my arguments, from the brief." CP at 185. Guardado attached multiple documents to this e-mail, including the amended complaint, his appellate brief, and the lis pendens.

¶13 In addition, the title insurance report prepared for the Taylors by Clark County Title noted Guardado's pending action and the lis pendens recorded on the property. The Taylors initialed next to this notice. They also signed an acknowledgment that the title company had "strongly suggested seeking legal advice" but they had declined. CP at 194.

¶14 Diana responded to the lis pendens on the property by filing a motion to hold Guardado in contempt. On the night of November 16, 2016, Guardado sent an e-mail to Bailey that shows he thought he could go to jail as a consequence. He signed a release of the lis pendens that same day. At the contempt hearing on November 17, 2016, Diana's counsel admitted that he had filed the motion to hold Guardado in contempt "in order to convince Mr. Guardado to release [the lis pendens]." Verbatim Report of Proceedings (Nov. 17, 2016) at 15. The trial court declined to hold Guardado in contempt for continuing to interfere with the sale, but it ordered him not to have any contact with potential buyers until after the closing.²

¶15 That same day, November 17, 2016, the statutory warranty deed conveying the property to the Taylors was signed. The court-appointed special administrator signed on Guardado's behalf.

¶16 The deed was recorded on November 18, 2016 at 9:55 a.m. and issued recording number 5348564. The release of the lis pendens was recorded at the same time and issued the next recording number, 5348565.

¶17 The Taylors paid $240,000.00 for the property. After paying off the mortgage and various fees, the remaining $15,579.55 was paid to Guardado. The Taylors paid Guardado an additional $7,000.00 to move out. Guardado filed a second lis pendens on the property on December 28, 2016.

¶18 We granted review of the trial court's order modifying the dissolution decree to require a sale of the property. On August 22, 2017, we issued an opinion in which we held that "the trial court erred in granting Diana's CR 60 (b)(11) motion because it did not have authority under CR 60(e)(1) to modify the dissolution decree in the separate breach of contract action." Guardado v. Guardado , 200 Wash. App. 237, 239, 402 P.3d 357 (2017). We reversed and vacated the trial court's modification of the dissolution decree, and we remanded for further proceedings. Id.

¶19 On February 1, 2018, the trial court entered two orders vacating its prior judgments under CR 60 and RAP 12.8. One order was entered under the cause number for the breach of contract action, and the other order was entered under the cause number for the dissolution proceedings. Both orders stated, "The [c]ourt shall afford further relief necessary to place the parties in the position they occupied prior to trial." CP at 23, 25.

II. CLARK COUNTY PROCEEDINGS AND GUARDADO'S ATTEMPT TO REGAIN HIS PROPERTY

¶20 Guardado then filed a separate complaint in Clark County Superior Court for specific restitution of real estate and unjust enrichment against the Taylors.³ The Taylors asserted as an affirmative defense that they "were good-faith purchasers, the property had no recorded lis pendens at the time of the sale, and Plaintiff Guardado failed to post a supersedeas bond to stay enforcement of the underlying [c]ourt [o]rder directing sale of the property." CP at 35. They also claimed that they "justifiably relied on representations made by [the realtor] and the fact that the...