Okanogan Cnty. v. Various Parcels of Real Prop.
| Decision Date | 02 April 2020 |
| Docket Number | No. 36611-1-III,36611-1-III |
| Citation | 13 Wash.App.2d 341,466 P.3d 1114 |
| Court | Washington Court of Appeals |
| Parties | OKANOGAN COUNTY, Respondent, v. VARIOUS PARCELS OF REAL PROPERTY, et al., Appellants. |
Joseph Ward McIntosh, McCarthy & Holthus, LLP, 108 1st Ave. S Ste. 300, Seattle, WA, 98104-2104, for Appellants.
David Y. Gecas, Okanogan County Prosecutor's Office, Po Box 1130, Okanogan, WA, 98840-1130, Alexander Harris Sol Thomason, Valor Law Group, PS, Po Box 637, Pateros, WA, 98846-0637, for Respondent
Siddoway, J. ¶1 Wilmington Trust, National Association, as trustee for Newcastle Investment Trust 2014-MH1, appeals the denial of its motion for an order vacating Okanogan County's (the County) judgment of tax foreclosure insofar as it affects the investment trust's interest in a property in Brewster. We reverse the trial court's denial of the motion and remand for further proceedings.
FACTS AND PROCEDURAL BACKGROUND
¶2 In 1997, Washington Mutual loaned several members of the Covarrubias family $43,400 to purchase a mobile home. The loan was secured by a deed of trust (Deed of Trust) against the mobile home and the real property in Brewster on which the mobile home would be affixed (the Property). The Deed of Trust was recorded in Okanogan County.
¶3 Twenty years later, the County initiated the tax foreclosure proceeding below against a number of properties, including the Property. RCW 84.64.050(4) requires the following notice in such proceedings:
Notice and summons must be served or notice given in a manner reasonably calculated to inform the owner or owners, and any person having a recorded interest in or lien of record upon the property, of the foreclosure action to appear within thirty days after service of such notice and defend such action or pay the amount due.
The statute goes on to identify two examples of sufficient notice:
¶4 In its effort to satisfy the notice requirement, the County published a notice of the foreclosure proceeding in the Okanogan Valley Gazette-Tribune on September 14, 2017. It obtained a litigation guarantee from Fidelity National Title that disclosed Washington Mutual's recorded Deed of Trust and sent a copy of its notice and summons, certified mail, to Washington Mutual at the address provided in the litigation guarantee.
¶5 On September 21, 2017, the certified letter addressed to Washington Mutual was returned to the County marked "RETURN TO SENDER NO SUCH NUMBER UNABLE TO FORWARD." Clerk's Papers (CP) at 69. Two weeks later, on October 5, the County physically posted notice of the tax sale at the Property.
¶6 The Property was sold at auction on December 8, 2017, for $21,000 to Christina and Edilberto Valdovinos.
¶7 Seven months later, on July 25, 2018, the County was contacted by a lawyer for Wilmington Trust who stated the County had sent Washington Mutual's notice of the tax foreclosure sale to the wrong address. The lawyer pointed out that Washington Mutual's address identified in the Deed of Trust was 1201 Third Avenue in Seattle, whereas the County's declaration of mailing said notice had been mailed to 201 Third Avenue, an address that did not exist.
¶8 After its lawyers confirmed that the County had no corrective declaration of mailing, Wilmington Trust promptly moved in the tax foreclosure proceeding for a show cause order. Claiming to be the successor to Washington Mutual's interest in the Deed of Trust, it sought an order to show cause why the County's judgment of foreclosure should not be declared void as to its Deed of Trust. It contended the County failed to give notice reasonably calculated to inform when it mailed the notice and summons to a nonexistent address and, when the mailing was returned, failed to follow up.
¶9 The superior court entered an order to show cause as requested. The County's response argued Wilmington Trust was not entitled to notice because its interest was not recorded. It argued that as to Washington Mutual, its posting was sufficient notice. It allowed as how "Wilmington Trust is the successor to Chase/[Washington Mutual]’s interest in the Deed of Trust" and "probably has standing to seek redress for insufficient notice to Washington Mutual." CP at 19. It pointed out that Wilmington Trust's suggested remedy of declaring the sale void only as to the Deed of Trust had been rejected by Washington and federal courts, in favor of finding the sale of the property entirely void. CP at 21 (citing Homeowners Sols., LLC v. Nguyen , 148 Wash. App. 545, 551, 200 P.3d 743 (2009) ; Rosholt v. Snohomish County , 19 Wash. App. 300, 305, 575 P.2d 726 (1978) ).
¶10 The Valdovinoses’ response to the order to show cause argued in part that the court should dismiss Wilmington Trust's motion as a matter of law because it failed to demonstrate that Wilmington Trust had standing, which they equated with a failure to prove that Wilmington Trust was, in fact, the successor to Washington Mutual.
¶11 A court commissioner continued the matter to allow Wilmington Trust time to produce documents supporting its assertion that it had succeeded to Washington Mutual's interest in the Deed of Trust. The County then retreated from its earlier concession that Wilmington Trust apparently had standing and joined the Valdovinoses’ argument that it did not.
¶12 To demonstrate its interest, Wilmington Trust submitted a declaration from Richard Franklin, who identified himself as an Assistant Vice President for Ditech Financial LLC, whom he represented services the loan secured by the Deed of Trust for Wilmington Trust. He declared that Wilmington Trust held the original note secured by the Deed of Trust (Note). He declared he was "familiar with" Ditech's record keeping practices and procedures, Ditech's records were made from information transmitted by a person with knowledge about the events described in the records at or near the time of the event described, and the records were kept and relied on in the ordinary course of business. CP at 60. He attached what he asserted was a copy of the Note.
¶13 The court commissioner concluded that Mr. Franklin's declaration did not authenticate its attachment as a copy of the Note or establish that Wilmington Trust was the Note's current holder, and that the County satisfied the statutory notice requirements. Wilmington Trust moved for revision of the commissioner's order. The trial court affirmed the commissioner's findings of fact and conclusions with the exception of some of the language from one of the commissioner's findings.
¶14 Wilmington Trust appeals.
ANALYSIS
¶15 "[A] county's failure to comply with the statutory provisions prescribing the content and manner of notice in proceedings to collect delinquent property taxes deprives the court of jurisdiction over the tax foreclosure proceeding and renders void any foreclosure sale and tax deed issued." In re King County for Foreclosure of Liens for Delinquent Real Prop. Taxes for Years 1985 Through 1988 , 117 Wash.2d 77, 84, 811 P.2d 945 (1991) (citing Pierce County v. Evans , 17 Wash. App. 201, 204, 563 P.2d 1263 (1977) ). Among situations in which jurisdiction has been found lacking is the " ‘failure to give notice in compliance with the letter and spirit of statutory requirements.’ " Id. (quoting Evans , 17 Wash. App. at 204, 563 P.2d 1263 ).
¶16 Wilmington Trust argues that the trial court erred in misconceived rulings on standing and the adequacy of the County's notice. We begin with its ruling that Wilmington Trust lacked standing.
¶17 "Lenders ... have long been free to sell ... secured debt, typically by selling the promissory note signed by the homeowner." Bain v. Metro. Mortg. Grp., Inc. , 175 Wash.2d 83, 88, 285 P.3d 34 (2012). Under the Uniform Commercial Code, a person who is in possession of a promissory note endorsed in blank, i.e. one that does not specify the person to whom it is payable, is a "holder" of the note and is entitled to enforce it. Terhune v. N. Cascade Tr. Servs., Inc. , 9 Wash. App. 2d 708, 723, 446 P.3d 683 (2019) (citing RCW 62A.3-205(b) ), review denied , 195 Wash.2d 1004, 458 P.3d 782 (2020). "Washington courts have long recognized that the security instrument follows the note that it secures." Deutsche Bank Nat. Tr. Co. v. Slotke , 192 Wash. App. 166, 177, 367 P.3d 600 (2016). Since it was readily determinable that Washington Mutual had financially failed and been merged into JPMorgan Chase in 2008, as alleged by Wilmington Trust's motion,1 it was unsurprising that some other entity would be the holder of the Note.
¶18 In its motion seeking relief from the County's judgment of foreclosure, Wilmington Trust asserted that "[Washington Mutual Bank] merged with JPMorgan Chase Bank, N.A. ... in 2008" and "Wilmington is the successor to Chase / [Washington Mutual]’s interest in the Deed of Trust." CP at 1-2. These allegations are sufficient to assert standing in an action foreclosing property in which Washington Mutual had a recorded deed of trust interest. E.g. , Burnett v. Dep't of Corr. , 187 Wash. App. 159, 173, 349 P.3d 42 (2015) ().
¶19 This court has observed that it is the responsibility of a complainant "clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial...
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