OneWest Bank, FSB v. Erickson
| Decision Date | 04 February 2016 |
| Docket Number | No. 91283–1.,91283–1. |
| Citation | 185 Wash.2d 43,367 P.3d 1063 |
| Court | Washington Supreme Court |
| Parties | ONEWEST BANK, FSB, its successor in interest and/or assigns, Petitioner, v. Maureen M. ERICKSON, Respondent, Palisades Collection LLC, Assignee of AT & T; Gonzaga Preparatory School, Inc. ; Society of Jesus Oregon Province; John Traynor And Jane Doe Traynor, individually and marital community if any; Albert Faulkner and Jane Doe Faulkner, individually and marital community, if any; Phil McLean and Jane Doe McLean, husband and wife; Larry Smith and Jane Doe Smith, individually and marital community if any; Kevin R. Malone and Christine Malone, individually and marital community if any; Occupants of the Premises; Qualchan Hills Homeowners' Association; and any persons or parties claiming to have any right, title, estate, lien or interest in the real property described in the complaint, Defendants. |
Fred B. Burnside, Hugh Robert McCullough, Davis Wright Tremaine LLP, Seattle, WA, for Petitioner.
Brian C. Balch, Layman Law Firm PLLP, Spokane, WA, Kenneth Wendell Masters, Masters Law Group PLLC, Bainbridge Island, WA, for Respondent.
¶ 1 At its core, this case concerns the authority of an Idaho court to impact property in Washington and whether we must respect that court's orders. This case arose through OneWest Bank FSB's attempted foreclosure of Washington property based on a reverse mortgage that an Idaho court ordered through Bill McKee's conservatorship proceedings. McKee's daughter, Maureen M. Erickson, challenges the foreclosure, claiming the reverse mortgage is void because she was the actual owner of the property and the Idaho court had no jurisdiction to affect Washington property, among other claims. The trial court granted summary judgment for OneWest, allowing it to proceed with foreclosure, but the Court of Appeals, Division Three, reversed and granted summary judgment for Erickson. We must primarily decide whether the courts below were required to give full faith and credit to the Idaho court orders. We hold that full faith and credit is due and OneWest is entitled to foreclose its reverse mortgage on the Spokane property. We reverse the Court of Appeals.
¶ 2 This case arose as a foreclosure action but is set against the backdrop of a series of family disputes and litigation involving McKee, his property assets, and his conservatorship.
¶ 3 McKee purchased the property at issue, a home in Spokane, in 2001. Erickson and her sons moved into the house, while McKee spent part of his time in the Spokane home and part in Idaho throughout the next few years. McKee began living on the property with Erickson's family around 2007.
¶ 4 Erickson filed suit against McKee in Spokane for concealing her mother's will and failing to transfer her assets due under the will. As a result of the litigation, McKee transferred property to Erickson, including a quitclaim deed to the Spokane property that was executed on June 28, 2007. Erickson did not record the deed for over four years. On August 22, 2007, the Spokane County Superior Court signed an order dismissing Erickson's action against McKee but did not enter formal judgment until early 2008. The court acknowledged that its August 22, 2007 order "was signed without formal judgment entered beforehand" and issued a judgment nunc pro tunc. Clerk's Papers (CP) at 19. The judgment declared that Erickson held all rights to the Spokane property.
¶ 5 Meanwhile, McKee's son initiated conservatorship proceedings for McKee in district court in Idaho in early 2007. The Idaho court appointed Shelley Bruna as McKee's conservator.1
¶ 6 When McKee was faced with financial difficulties, the Idaho court issued an order on October 22, 2007 directing McKee's conservator to "facilitate a reverse mortgage" on the Spokane property. CP at 108–12 (capitalization omitted). The order appears to bear Erickson's signature, indicating that she "read and approved" the order directing the reverse mortgage. CP at 111 (capitalization omitted). Bruna entered into the reverse mortgage on October 25, 2007. The mortgage passed through a series of assignments to OneWest. In 2008, McKee's Idaho conservatorship was terminated and guardianship proceedings continued in the Washington courts.
¶ 7 McKee passed away on March 12, 2011. Pursuant to the terms of the reverse mortgage, the balance was accelerated and declared due in full upon McKee's death. Erickson requested and received an extension on the time to repay the loan until December 12, 2011. On December 8, 2011, she recorded the quitclaim deed that her father had signed in 2007 transferring the Spokane property to her. Erickson requested another payment extension on December 9, 2011, but it was not granted. As a result of the failed payments, OneWest initiated foreclosure proceedings. Erickson's defense to the attempted foreclosure forms the basis for our review.
¶ 8 OneWest filed this foreclosure action in 2012 against multiple parties, including Erickson, claiming an interest in the Spokane property. OneWest moved for summary judgment, asserting that Erickson took title to the Spokane property subject to the recorded reverse mortgage that OneWest now possessed. OneWest claimed that it was a bona fide mortgagee protected by Washington's recording act, chapter 65.08 ROW, because neither OneWest nor its predecessor had notice of Erickson's interest in the property when the deed of trust was recorded on October 30, 2007.
¶ 9 In response, Erickson disputed OneWest's bona fide mortgagee status, claiming OneWest's predecessor should have had inquiry notice that Erickson claimed ownership to the Spokane property because she lived there and possessed a quitclaim deed at the time Bruna executed the deed of trust. Erickson also challenged the conservator's authority, claiming an Idaho court could not direct a conservator to affect Washington property when McKee was not an Idaho resident. Finally, she asserted that OneWest did not hold the promissory note and claimed the deed of trust was not properly acknowledged. Erickson requested summary judgment in her favor.
¶ 10 In its reply, OneWest disputed the claim of inquiry notice, asserting there was no reason to inquire about Erickson's potential property interests when all records showed McKee as the property owner and current resident of the Spokane property at the time his conservator entered into the deed of trust on his behalf. OneWest also responded to Erickson's argument that an Idaho conservator lacks authority over nonresidents' out-of-state property, citing provisions of Idaho's Uniform Probate Code to argue that conservators have broad statutory authority to manage property in all states. Finally, OneWest claimed that it legally possessed the promissory note and that the deed of trust was sufficiently acknowledged.
¶ 11 OneWest then filed a surreply, which included a copy of the Idaho court order directing Bruna to enter into a reverse mortgage on McKee's Washington property. OneWest was initially unable to produce the official order because it was sealed. The order includes Erickson's signature stating that she "read and approved" the order directing the reverse mortgage. CP at 111 (capitalization omitted).
¶ 12 The trial court granted partial summary judgment in favor of OneWest, finding that OneWest was the holder of the promissory note and that the acknowledgment on OneWest's deed of trust was sufficient. The court requested additional briefing from the parties to resolve the remaining issues.
¶ 13 Erickson's supplemental brief reasserted her argument that OneWest was not a bona fide mortgagee; claimed that Erickson asserted title to the property before the mortgage and shared that information with the courts, the conservator, and the lender; and responded to allegations that she may have perpetrated fraud on the initial lender. Erickson attached a declaration providing "background" in order to "understand the events that have led to the current situation affecting [her] property." CP at 124. She explained that she obtained title to the property because she had helped her father with the initial down payment, she remained his primary caregiver for years, and he ultimately transferred title to her when she discovered he had concealed her mother's will from her. She attached letters from her father to the Idaho court, expressing his displeasure with the conservatorship proceedings and claiming he was a Washington resident. Erickson also claimed she "[does] not recall seeing or signing any court order" from the conservatorship proceedings, including the order directing the mortgage that purportedly bore her signature. CP at 131.
¶ 14 OneWest responded with an affidavit including faxes from Erickson stating her intention to pay off the reverse mortgage and requesting extensions of time to pay. OneWest also reasserted that it was a bona fide mortgagee because it had no reason to know of or inquire about the unrecorded quitclaim deed, especially when Erickson appeared to have signed the order directing the reverse mortgage and allegedly provided funds to facilitate the closing of the reverse mortgage. In response to Erickson's challenge to the court order, OneWest reemphasized the conservator's statutory authority to enter the reverse mortgage without a court order,2 but also pointed to the order as additional support. Finally, OneWest claimed that Erickson could not collaterally attack the Idaho court's conservatorship proceedings because "[a]ll such claims were already adjudicated by the Idaho Court in front of the proper parties to the matter." CP at 175.
¶ 15 The parties also raised multiple evidentiary challenges to declarations and documents submitted in the summary judgment proceedings.
¶ 16 The trial court granted summary judgment in favor of OneWest and rejected all evidentiary challenges. First, it found the Idaho court order...
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