Squirrels Nest Ii LLC v. Fisher Brd. - Seattle Tv

• Court: Washington Court of Appeals
• Writing for the Court: Lau, J. — Entry of a judgment by a superior court serves as constructive notice to purchasers that a judgment lien has attached to a judgment debtor's real property. While a judgment may also be separately filed for record in the county auditor's o
• Decision Date: 18 April 2011
• Docket Number: NO. 65109-9-I,65109-9-I
• Citation: Squirrels Nest II LLC v. Fisher Brd.-Seattle TV, LLC, NO. 65109-9-I (Wash. App. Apr 18, 2011)
• Parties: SQUIRRELS NEST II LLC, a Washington limited liability company, Appellant, v. FISHER BROADCASTING - SEATTLE TV, L.L.C., a Delaware limited liability company, d/b/a KOMO TV, Respondents.

SQUIRRELS NEST II LLC, a Washington limited liability company, Appellant,

v.FISHER BROADCASTING-SEATTLE TV, L.L.C., a Delaware limited liability company, d/b/a KOMO TV, Respondents.

NO. 65109-9-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

FILED: April 18, 2011

UNPUBLISHED OPINION

Lau, J. — Entry of a judgment by a superior court serves as constructive notice to purchasers that a judgment lien has attached to a judgment debtor's real property. While a judgment may also be separately filed for record in the county auditor's office, such recording is unnecessary for the lien to be effective against subsequent purchasers. Fed. Intermediate Credit Bank of Spokane v. O/S Sablefish, 111 Wn.2d 219, 758 P.2d 494 (1988). Because Squirrels Nest had constructive notice of the Fisher judgment lien, we affirm the trial court's grant of summary judgment in Fisher Broadcasting's favor.

FACTS

The material facts are undisputed. Fisher Broadcasting hired Saeed Kaley to remodel a house. Citing defective construction work, Fisher sued Kaley¹ onDecember 11, 2008. Kaley was personally served with the summons and complaint on December 15, 2008, but did not appear or defend the case. On January 26, 2009, Fisher obtained an order of default and default judgment against Kaley for $102,029.51, which was filed the same day. The Fisher judgment was entered into the superior court management and information system (SCOMIS) and included in the court's execution docket on January 30, 2009.

Meanwhile, the Kaleys sold their Kirkland condominium (the property) on January 28, 2009 to the Heathcotes for the purchase price of $175,000.² In addition to the Fisher judgment discussed above, the property was also encumbered by two deeds of trust. Homecomings Financial LLC held the primary mortgage, and Debra Starr held a second note and deed of trust for $20,000.³

The deed from the Kaleys to the Heathcotes was signed by the Kaleys on January 23, 2009, and recorded on January 28, 2009.⁴ The sale closed on January28, 2009.⁵

The Heathcotes purchased title insurance from Old Republic National Title Insurance (ORT) to insure their title against liens and encumbrances, including the risk that "[s]omeone else has a lien on [their] Title, including a... judgment...."⁶ An endorsement to the policy states, "When We Settle Your Claim, We have all the rights You have against any person or property related to the claim. You must transfer these rights to Us when We ask, and You must not do anything to affect these rights. You must let Us use your name in enforcing these rights."

Before issuing the title insurance policy, ORT completed a litigation search. A page from the "datedown results" from this search dated January 15, 2009, shows four pending lawsuits filed against Kaley, including the Fisher lawsuit. Across this page is a handwritten notation, "No j[udgmen]ts." The record discloses no further investigation by ORT to determine the status of the Fisher lawsuit before closing. ORT issued the title

insurance policy to the Heathcotes effective January 28, 2009. In February 2009, Fisher's attorney notified the Heathcotes about Fisher's judgment lien. On the Heathcotes' tender, ORT agreed to defend and indemnify them pursuant to their title policy.

ORT sued Fisher in Squirrels Nest's name to quiet title. The parties crossmoved for summary judgment. The trial court granted Fisher's summary judgment motion and denied Squirrels Nest's summary judgment motion. It ruled:

The Defendant Fisher's Motion for Summary Judgment is GRANTED pursuant to CR 56. The Plaintiff's Complaint is DISMISSED WITH PREJUDICE, and pursuant to RCW 4.56.200, Defendant shall be awarded judgment against Plaintiff that its judgment lien against Plaintiff's real property legally described as Unit 87, Building 8, Laurel Park, a condominium is valid and enforceable. It is further ordered Plaintiff's Motion for Summary Judgment is Denied.

Squirrels Nest appeals.

ANALYSIS

The crux of this dispute is whether Squirrels Nest had constructive notice of Fisher's judgment lien before closing. Squirrels Nest specifically argues that the bona fide purchaser doctrine entitles it to have title to the property quieted in its name. "That doctrine provides that a good faith purchaser for value, who is without actual or constructive notice of another's interest in the property purchased, has the superior interest in the property." Tomlinson v. Clarke, 118 Wn.2d 498, 500, 825 P.2d 706 (1992). It relies principally on Ellingsen v. Franklin Cnty., 117 Wn.2d 24, 810 P.2d 910 (1991) to argue it had no constructive notice of Fisher's judgment lien. Fisher counters that RCW 4.56.190-200, RCW 6.01.020, and Sablefish control the constructive notice question. We agree.

This court reviews a summary judgment order de novo, engaging in the same inquiry as the trial court. Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004). "Statutory interpretation is a question of law, which we review de novo." Lake v. Woodcreek Homeowners Ass'n, 169 Wn.2d 516, 243 P.3d 1283, (2010).

Under RCW 4.56.190, a judgment immediately becomes a lien against a judgment debtor's real property:

Lien of judgment.

The real estate of any judgment debtor, and such as the judgment debtor may acquire, not exempt by law, shall be held and bound to satisfy any judgment of the district court of the United States rendered in this state and any judgment of the supreme court, court of appeals, superior court, or district court of this state, and every such judgment shall be a lien thereupon to commence as provided in RCW 4.56.200 and to run for a period of not to exceed ten years from the day on which such judgment was entered unless the ten-year period is extended in accordance with RCW 6.17.020(3). As used in this chapter, real estate shall not include the vendor's interest under a real estate contract for judgments rendered after August 23, 1983.

(Emphasis added.)

And under RCW 4.56.200, a superior court judgment becomes a lien on the judgment debtor's real property located in the same county as the court that entered the judgment when the judgment is entered:

The lien of judgments upon the real estate of the judgment debtor shall commence as follows:

(1) Judgments of the district court of the United States rendered or filed in the county in which the real estate of the judgment debtor is situated, and judgments of the superior court for the county in which the real estate of the judgment debtor is situated, from the time of the entry or filing thereof.

(Emphasis added.)

And RCW 6.01.020 defines when a judgment is entered:

Entry of judgment-Superior court-District court-Small claims. For purposes of this title and RCW 4.56.190 and 4.56.210, a judgment of a superior court is entered when it is delivered to the clerk's office for filing. A judgment of a district court of this state is entered on the date of the entry of the judgment in the docket of the court. A judgment of a small claims department of a district court of this state is entered on the date of the entry in the docket of that department.

(Emphasis added.)

Squirrels Nest does not dispute the plain meaning of the judgment lien statutes quoted above. Instead, it argues that Ellingsen overruled Sablefish.⁷ But Squirrels Nest ignores a critical distinction between real property conveyances and judgment liens. Ellingsen involved a conveyance, while Sablefish, like the case here, involved a judgment lien.

As Fisher correctly notes, "For over 100 years, the Washington courts have consistently interpreted the judicial lien statutes to give judgment liens priority over later conveyances of real property subject to the lien." Resp't's Br. at 9. In Young v. Davis, 50 Wash. 504, 97 P. 506 (1908), a subsequent purchaser for value contended that he had taken the property without notice of a judicial foreclosure because no lis pendens, judgment, certificate of sale, or sheriff's deed had been recorded with the county auditor. The court held that entry of the judgment was sufficient to impart constructive notice on subsequent purchasers.

Since the act of March 3, 1893..., a judgment of the superior court has been a lien upon the real property of the judgment debtor in the county where the judgment is rendered, from the date of its entry, and this being so, it is of course constructive notice to anyone purchasing such real property.

Young, 97 Pac. at 506.

In Sablefish, real property purchasers argued that a judgment lien was invalid because it was unrecorded and their property insurer did not tell them about it. Our Supreme Court rejected the argument and reaffirmed Young's holding. It applied RCW 4.56.200 to a federal district court judgment.

A judgment lien on real estate is created by RCW 4.56.200 and when entered by a federal district court, commences upon real property in the county where the judgment is entered from the date of entry. Such entry serves as constructive notice to purchasers that a judgment lien has attached to a judgment debtor's property. While a judgment may also be separately filed for record in the county auditor's office, such recording is not necessary for the lien to be effective against purchasers of the property to which a lien has attached.

Sablefish, 111 Wn.2d at 222-23 (emphasis added).

Like the purchasers here, the Sablefish purchasers argued that while the judgment lien was effective against the judgment debtor from the time the judgment was entered, the judgment did not give constructive notice of the lien to subsequent purchasers for value. The purchasers relied on RCW 65.08.070, which makes an unrecorded conveyance void against subsequent purchasers for value. Sablefish specifically rejected that argument, holding that a judgment lien is not a conveyance.

And because the judgment lien statutes make no provision for recording to impart constructive notice within the county, Sablefish declined to read a recording requirement into the statute. Rathe...