Oakwood Holdings, LLC v. Mortg. Invs. Enters. LLC

• Court: Colorado Supreme Court
• Writing for the Court: JUSTICE GABRIEL delivered the Opinion of the Court.
• Citation: Oakwood Holdings, LLC v. Mortg. Invs. Enters. LLC, 410 P.3d 1249 (Colo. 2018)
• Decision Date: 12 February 2018
• Docket Number: 16SC666
• Parties: OAKWOOD HOLDINGS, LLC, Petitioner v. MORTGAGE INVESTMENTS ENTERPRISES LLC, Respondent.

410 P.3d 1249

OAKWOOD HOLDINGS, LLC, Petitioner

v.MORTGAGE INVESTMENTS ENTERPRISES LLC, Respondent.

Supreme Court Case No. 16SC666

Supreme Court of Colorado.

February 12, 2018

Attorneys for Petitioner: Sweetbaum Sands Anderson PC, Geoffrey P. Anderson, Reagan Larkin, Denver, Colorado, Navaro & Associates LLC, Steven Navaro, Castle Rock, Colorado

Attorneys for Respondent: Murr Siler & Accomazzo, P.C., Joseph A. Murr, Daniel R. Delaney, Kara J. Snow, Denver, Colorado

En Banc

JUSTICE GABRIEL delivered the Opinion of the Court.

¶ 1 This case involves the rights of two parties who participated in Colorado's statutory foreclosure and redemption process. Petitioner Oakwood Holdings, LLC and respondent Mortgage Investments Enterprises LLC each claim a right to the deed on a piece of foreclosed property. In 2014, Mortgage Investments purchased the property at a foreclosure sale. On or around the date of the foreclosure sale, Oakwood purchased junior liens on the property and then attempted to redeem pursuant to section 38–38–302, C.R.S. (2017). Mortgage Investments, however, did not provide redemption figures and instead, acting under a limited power of attorney granted by the prior property owner, attempted to pay off the amount due to Oakwood under the junior liens. Oakwood, however, refused the payment.

¶ 2 Mortgage Investments then filed the present declaratory judgment action, seeking a declaration that its payoffs were valid and that Oakwood was not entitled to redeem the property. The parties ultimately filed cross-motions for summary judgment, the district court granted summary judgment for Oakwood, Mortgage Investments appealed, and in a unanimous, published opinion, a division of the court of appeals reversed. Mortg. Inv. Enter. LLC v. Oakwood Holdings, LLC, 2016 COA 111, 414 P.3d 27. Oakwood then sought certiorari, which we granted.¹

¶ 3 We now reverse the division's judgment. We conclude that under the plain language of the applicable redemption statutes, a junior lienor who has complied with its obligations under section 38–38–302 by timely filing its notice of intent to redeem is entitled to redeem, and at that point, it has no duty to accept a tendered lien payoff from a certificate of purchase holder. Although a debtor-owner is sometimes entitled to cure, the statute is clear that he or she must do so before the foreclosure sale is complete, and Mortgage Investments gained no additional rights by obtaining the limited power of attorney from the debtor-prior owner after the sale in this case. Accordingly, once Oakwood complied with the statutory requirements to redeem, it was permitted to do so and had no obligation to accept what amounted to cure funds tendered by Mortgage Investments on behalf of the debtor-prior owner. The district court therefore properly granted summary judgment in Oakwood's favor.

I. Facts and Procedural Background

¶ 4 The prior owners of the home at issue in this case purchased the property in 2006. By 2014, the owners had defaulted on their obligations to several homeowners' associations affiliated with their property. The senior lienor-association initiated foreclosure proceedings, and on September 25, 2014, the Sheriff's Department sold the property to Mortgage Investments at a public auction.

¶ 5 The next day, Mortgage Investments obtained a limited power of attorney from the previous homeowner. This limited power of attorney authorized Mortgage Investments to pay off the outstanding balances on the junior liens.

¶ 6 At about the same time, Oakwood acquired the liens held by the junior lienor-associations, and on October 1, 2014 and October 6, 2014, Oakwood filed notices of intent to redeem those liens pursuant to section 38–38–302. After receiving these notices, Mortgage Investments sent Oakwood cashier's checks, which it asserted were "being tendered on behalf of" the prior owner and as "payment in full" on the junior liens. Oakwood acknowledged receipt of these tenders but informed Mortgage Investments that it was unwilling to accept the payoffs.

¶ 7 Upon Oakwood's refusal of the tendered funds, Mortgage Investments filed the present declaratory judgment action, as well as a motion for a temporary restraining order and preliminary injunction. As pertinent here, Mortgage Investments' complaint sought the "entry of an order declaring that the payoffs in question are valid; [and] that Defendant Oakwood Holdings, LLC is not entitled to redeem the Property." Oakwood filed counterclaims, and subsequently, both parties moved for summary judgment.

¶ 8 The district court granted summary judgment in Oakwood's favor. The court began its analysis by noting that effective January 1, 2008, the pertinent statutes had eliminated a homeowner's formal statutory redemption rights after the foreclosure sale and had combined the pre- and post-sale cure periods into one before-sale cure and payoff period. Because the foreclosure sale had already occurred in this case, the court found that (1) Mortgage Investments, which was standing in the debtor-prior owner's shoes under a power of attorney, could not pay off Oakwood's liens and (2) the pertinent statutes "[did] not compel a party to accept a payment that would satisfy its debts." In support of this determination, the court observed that "the General Assembly has not taken affirmative action to give a certificate of purchase holder the right to purchase recorded debts. Meanwhile, the General Assembly has specifically preserved the right of a junior lienholder to redeem." The court thus concluded that Oakwood had a right to redeem, notwithstanding Mortgage Investments' attempted payoffs.

¶ 9 Mortgage Investments appealed, and in a unanimous, published opinion, a division of the court of appeals reversed. Mortg. Inv., ¶ 1. As pertinent here, the division concluded that contrary to Oakwood's contention, Mortgage Investments had not attempted to make a post-foreclosure redemption. Id. at ¶ 25. Rather, it had attempted "to pay, on behalf of the debtor, outstanding liens encumbering the property it had purchased at the foreclosure sale." Id. The division noted that the redemption statute does not explicitly give a certificate of purchase holder the right to make such a payment. Id. at ¶ 27. Conversely, however, the division observed that the statute also does not explicitly give a junior lienor the right to refuse such a payment prior to the start of the junior lienor's redemption period and before the junior lienor tenders redemption funds. Id. The division thus looked to what it perceived to be the intent of the statutory scheme and concluded that "prior to the start of a junior lienor's redemption period and before a junior lienor tenders redemption funds, a certificate of purchase holder may pay, on behalf of the debtor, existing liens encumbering the foreclosed property." Id. at ¶ 37.

¶ 10 We then granted certiorari.

II. Analysis

¶ 11 We begin by discussing the standard of review and the applicable principles of statutory construction. We then consider the general principles behind the right of redemption and Colorado's statutory scheme governing the right of redemption as part of the foreclosure process.

A. Standard of Review and Principles of Statutory Construction

¶ 12 This case requires us to consider the pertinent redemption statutes, and we review questions of statutory interpretation de novo. UMB Bank, N.A. v. Landmark Towers Ass'n, 2017 CO 107, ¶ 22, 408 P.3d 836. In construing a statute, "we look to the entire statutory scheme in order to give consistent, harmonious, and sensible effect to all of its parts, and we apply words and phrases in accordance with their plain and ordinary meanings." Id. If the statutory language is clear, we must apply it as written and need not resort to other rules of statutory construction. Id. Our ultimate goal is to effectuate the legislature's intent. See St. Vrain Valley Sch. Dist. RE–1J v. Loveland, 2017 CO 54, ¶ 11, 395 P.3d 751, 754. Accordingly, we must respect the legislature's choice of language, and we do not add words to the statute or subtract words from it. Turbyne v. People, 151 P.3d 563, 567–68 (Colo. 2007).

B. The Right of Redemption: General Principles

¶ 13 The redemption laws were developed to help creditors "recover their just demands, nothing more." Plute v. Schick, 101 Colo. 159, 71 P.2d 802, 804 (1937). The goal of redemption is to use the debtor's property to pay "as many debts as possible." Walker v. Wallace, 79 Colo. 380, 246 P. 553, 553 (1926). Redemption statutes therefore seek "to benefit both debtors and creditors by reducing the property owner's debt while satisfying every possible creditor through the continual redemption of the same piece of real property." First Nat'l Bank of Southglenn v. Energy Fuels Corp., 200 Colo. 540, 618 P.2d 1115, 1119 (1980). Thus, when a piece of property is purchased at a foreclosure sale, a junior lienor may redeem and obtain a certificate of redemption. Sant v. Stephens, 753 P.2d 752, 756 (Colo. 1988).

Such a certificate operates as an assignment of the purchaser's interest in the foreclosed property. Id. The assignment, however, is subject to the rights of others who may be entitled to redeem. Id. After all redemption periods have expired, the holder of the certificate of purchase or the lienor who last redeemed receives a deed to the property. Id.

¶ 14 Notably,

[t]he right to redeem from an execution sale is a creature of statute. The right of redemption has long been recognized as a substantive right to be exercised in strict compliance with statutory terms. It is not a right derived from principles of equity, but depends entirely upon the provisions of the statute creating the right.

Johnson v. Smith, 675 P.2d 307, 310 (Colo. 1984) (citations omitted). Accordingly, the right of redemption "is not to be enlarged by judicial interpretation, yet a liberal construction is to be given the statute allowing redemption to the end that all the property of a...