Udall v. T.D. Escrow Services, Inc.

• Decision Date: 28 March 2006
• Docket Number: No. 32963-8-II.,32963-8-II.
• Parties: William UDALL, an individual, Clete Bremner, and individual, and Gregory D. Sargent, an individual, Respondents, v. T.D. ESCROW SERVICES, INC. d/b/a T.D. Service Company, a Washington Corporation, U.S. Bancorp f/k/a Firstar Bank, NA, a Washington Corporation, and T.D. Service Financial Corporation, a California Corporation, Appellants.
• Court: Washington Court of Appeals

130 P.3d 908

132 Wn. App. 290

William UDALL, an individual, Clete Bremner, and individual, and Gregory D. Sargent, an individual, Respondents, v. T.D. ESCROW SERVICES, INC. d/b/a T.D. Service Company, a Washington Corporation, U.S. Bancorp f/k/a Firstar Bank, NA, a Washington Corporation, and T.D. Service Financial Corporation, a California Corporation, Appellants.

No. 32963-8-II.

Court of Appeals of Washington, Division 2.

March 28, 2006.

David A. Leen, Leen & O'Sullivan PLLC, Seattle, WA, for Appellants.

Yvonne Marie Mattson, Attorney at Law, Tacoma, WA, for Respondents.

HUNT, J.

¶ 1 T.D. Escrow (TD) appeals the trial court's grant of summary judgment to William Udall in a quiet title action arising from a statutory non-judicial foreclosure sale of property for which TD was the trustee. Udall offered the winning bid at a price the auctioneer had mistakenly set $100,000 lower than TD had authorized. TD refused to deliver the deed to Udall and to record it. TD argues that the trial court erred in denying its motion for summary judgment and in granting summary judgment to Udall, because the deed was neither delivered nor recorded as required to complete the purely statutory sale under RCW 61.24.050. Udall counters that summary judgment was proper under common law breach-of-contract principles and, therefore, TD could not rescind the sale based on a unilateral mistake in the auction price.

¶ 2 We hold that (1) RCW 61.24.050, not the common law, applies to this statutory non-judicial foreclosure sale; (2) the sale was not completed under the strict terms of the statute; and (3) therefore, Udall was not entitled to the property. Accordingly, we reverse the trial court's grant of summary judgment to Udall and grant summary judgment to TD.

FACTS

¶ 3 The parties do not dispute the material facts. When William Brown failed to make home mortgage payments to his lender, U.S. Bank, U.S. Bank's trustee, T.D. Escrow (TD), instituted foreclosure proceedings. TD hired ABC Messenger Service to sell the property at a public auction. On September 19, 2003, TD filed a notice of trustee sale. The notice stated that Brown was in arrears for $137,197.06 in loan obligations and $10,834.18 for other charges and fees.

¶ 4 On April 16, 2004, TD directed ABC to start the auction bidding at $159,422.20. But ABC started bidding at $59,421.20, and William Udall bid $59,422.20. ABC accepted Udall's bid and gave him a receipt for his purchase, which included the words "VESTING CANNOT BE ALTERED ONCE THE AUCTIONEER COMPLETES THIS RECEIPT!" Clerk's Papers (CP) at 35.

¶ 5 Consistent with its general practice after an auction sale and before issuing a deed, TD took time to verify the validity of the bid and the receipt of funds for the sale, to check for intervening bankruptcy filings, and to check other circumstances. This process led TD to discover the auctioneer's bidding-price mistake and, subsequently, to void the sale. Five days after the auction, on April 21, 2004, TD sent Udall a refund, explaining that the auctioneer had not been authorized to open the bidding at $59,421.20. Udall rejected the refund.

¶ 6 On June 3, 2003, Udall sued TD and U.S. Bank to quiet title; Udall also filed a lis pendens on the property. TD moved for summary judgment, to quash the lis pendens, and for attorney fees. Udall filed a cross motion for summary judgment. The trial court denied TD's motions and granted Udall's cross motion for summary judgment.

¶ 7 TD appeals.

ANALYSIS

I. STANDARD OF REVIEW

¶ 8 When reviewing an order of summary judgment, we engage in the same inquiry as the trial court. Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate only if the pleadings, affidavits, depositions, and admissions on file demonstrate the absence of any genuine issue of material fact. CR 56(c). The court must consider all facts submitted and all reasonable inferences from them in the light most favorable to the nonmoving party. Wilson, 98 Wash.2d at 437, 656 P.2d 1030.

II. NON-JUDICIAL FORECLOSURE SALES

¶ 9 Udall argues that (1) RCW 61.24.050, the Deeds of Trust Act, is ambiguous; and (2) accordingly, courts must use the common law of contract to supplement the Deeds of Trust Act. He contends TD was obligated to deliver the deed to him because he had a valid contract with TD, which TD could not rescind based on its unilateral mistake.

¶ 10 Washington courts have yet to address whether the common law of contracts applies to nonjudicial foreclosure sales. Addressing this issue of first impression, we reject Udall's arguments and hold that Washington's Deeds of Trust Act, RCW 61.24.050, not the common law of contracts, controls non-judicial foreclosure sales pursued under this statute.

A. Deeds of Trust Act

¶ 11 Our Legislature enacted Washington's Deeds of Trust Act (Act) to supplement the time-consuming judicial foreclosure process. John A. Gose, The Trust Deed Act in Washington, 41 WASH. L.REV. 94, 95-96 (1966). The Act prescribes detailed procedures that the parties must follow in order for a trustee to sell property in a nonjudicial foreclosure sale at a public auction. See, e.g., RCW 61.24.010 and .040. Once these presale requirements are met, the property can be sold.

¶ 12 RCW 61.24.050 provides:

When delivered to the purchaser, the trustee's deed shall convey all of the right, title, and interest in the real and personal property sold at the trustee's sale which the grantor had or had the power to convey at the time of the execution of the deed of trust, and such as the grantor may have thereafter acquired. If the trustee accepts a bid, then the trustee's sale is final as of the date and time of such acceptance if the trustee's deed is recorded within fifteen days thereafter. After a trustee's sale, no person shall have any right, by statute or otherwise, to redeem the property sold at the trustee's sale.

(Emphasis added.) The Act does not explain the meaning of "final" in the context of a "trustee's sale," whether the trustee has an obligation to deliver a deed, and, if so, when the delivery must occur. Therefore, we endeavor to interpret the Legislature's intent for these gaps.

B. Statutory Construction

¶ 13 When interpreting a statute, our primary objective is to ascertain and to carry out the Legislature's intent and purpose. Fraternal Order of Eagles, Tenino Aerie No. 564 v. Grand Aerie of Fraternal Order of Eagles, 148 Wash.2d 224, 239, 59 P.3d 655 (2002). To determine legislative intent, we look first to the plain language of the statute. Fraternal Order, 148 Wash.2d at 239, 59 P.3d 655. If a statute is ambiguous, we use principles of statutory construction, legislative history, and relevant case law to provide guidance in construing a statute's meaning. State v. Roggenkamp, 153 Wash.2d 614, 621, 106 P.3d 196 (2005).

¶ 14 In addition, we must construe the Act to further three objectives. First, the statutory non-judicial foreclosure process should remain efficient and inexpensive. Second, it should provide an adequate opportunity for interested parties to prevent wrongful foreclosure. Third, it should promote the stability of land titles. Cox v. Helenius, 103 Wash.2d 383, 387, 693 P.2d 683 (1985). In addition, because nonjudicial foreclosures lack the judicial oversight inherent in judicial foreclosures, we strictly apply and interpret the Act in favor of the borrower. Koegel v. Prudential Mut. Sav. Bank, 51 Wash.App. 108, 111, 752 P.2d 385, review denied, 111 Wash.2d 1004 (1988).

C. "Final" Sale — Recording and Delivery

¶ 15 TD argues that a RCW 61.24.050 foreclosure sale is valid only if the deed is recorded and delivered. We agree that the deed must be delivered in order to convey real property rights under Washington's Deeds of Trust Act.

1. History

¶ 16 The pre-1998 version of RCW 61.24.050 provided:

The deed of the trustee, executed to the purchaser, shall convey the interest in the property which the grantor had or had the power to convey at the time of the execution by him of the deed of trust, and such as he may have thereafter acquired. After sale, as in this chapter provided, no person shall have any right by statute or otherwise to redeem from the deed of trust or from the sale.

RCW 61.24.050 (1996) (emphasis added). This pre-1998 version contained a number of ambiguities. For example, the term "executed" could mean "signed, done, given, performed, and delivered," or a combination of these acts. See BLACK'S LAW DICTIONARY 609 (8th ed. 1999). Similar to the current version, this version of the Act did not establish when a foreclosure sale under the Act is completed, even though it uses the phrase "after sale."

¶ 17 Recognizing that nonjudicial foreclosure practice under the Act departed from strict statutory requirements, the Legislature sought to clarify the Act's ambiguities and requirements, including when a trustee's sale is final. S.B. REP. on Engrossed Substitute S.B. (ESSB) 6191, 55th Leg., Reg. Sess. (Wash. 1998).¹ Accordingly, in 1998, the Legislature amended the Act to reflect then current practices. S.B. REP. on ESSB 6191. The amended Act read, in pertinent part, as follows:

When delivered to the purchaser, the trustee's deed shall convey all of the right, title.... If the trustee accepts a bid, then the trustee's sale is final as of the date and time of such acceptance if the trustee's deed is recorded within fifteen days thereafter....

RCW 61.24.050 (emphasis added).

¶ 18 In this amended version, the Legislature separated delivery of the deed and finality of the sale into two distinct parts. The Legislature first changed the word "executed" to "delivery," which more narrowly defined when property rights are conveyed: "When delivered to the purchaser, the trustee's deed shall convey all of the right, title...." RCW 61.24.050 (emphasis added). According to the plain meaning of this sentence, a person acquires no rights to the property sold by non-judicial...