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

• Decision Date: 29 March 2007
• Docket Number: No. 78668-2.,78668-2.
• Citation: 154 P.3d 882,159 Wn.2d 903
• Court: Washington Supreme Court
• Parties: William UDALL, an individual, Clete Bremner, an individual, and Gregory D. Sargent, an individual, Petitioners, v. T.D. ESCROW SERVICES, INC., d/b/a T.D. Service Company, a Washington corporation, and T.D. Service Financial Corporation, a California corporation, Respondents, U.S. Bancorp f/k/a Firstar Bank, NA, a Washington corporation, Defendant.

154 P.3d 882

159 Wn.2d 903

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

No. 78668-2.

Supreme Court of Washington, En Banc.

Argued January 11, 2007.

Decided March 29, 2007.

Bradley Alan Maxa, Dale Louis Carlisle, Gordon Thomas Honeywell, Yvonne Marie Mattson, Tacoma, WA, for Petitioners.

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

FAIRHURST, J.

¶ 1 William Udall purchased real property in a nonjudicial foreclosure sale. The auctioneer gave Udall a receipt, but not the deed of trust for the property. When trustee T.D. Escrow Services, Inc. (hereinafter T.D.) discovered that the auctioneer had opened the bidding $100,000 lower than T.D. had authorized, T.D. refused to deliver the deed to Udall.

¶ 2 Udall challenges a Court of Appeals decision holding that the sale was not completed under the strict terms of RCW 61.24.050 of Washington's deeds of trust act, chapter 61.24 RCW (hereinafter the Act), and granting summary judgment to T.D. We hold that RCW 61.24.050 mandates that a trustee deliver the deed of trust to the purchaser following a nonjudicial foreclosure sale, absent a procedural irregularity that voids the sale. We reverse the Court of Appeals and reinstate the trial court's summary judgment ruling quieting title in Udall.

I. FACTUAL AND PROCEDURAL HISTORY

¶ 3 The material facts are undisputed. After the borrowers defaulted on their home mortgage payments, lender U.S. Bancorp directed T.D. to commence nonjudicial foreclosure proceedings on the property. T.D. properly recorded a notice of trustee's sale announcing that it would "sell [the property] at public auction to the highest and best bidder" "as provided by statute" to satisfy the "obligation secured by the Deed of Trust." Clerk's Papers (CP) at 15-16.

¶ 4 T.D. employs ABC Legal Services (hereinafter ABC) to conduct Washington-based nonjudicial foreclosure sales. On the morning of April 16, 2004, T.D. communicated to ABC by telephone the opening bids for that day's sales, identifying the opening bid for the property as $159,421.20. At the auction, ABC auctioneer Donna Hayes distributed to attendees an information sheet listing properties being sold that day and opening bids. The opening bid listed for the property was $59,421.20.

¶ 5 Udall, Clete Bremner, and Gregory D. Sargent agreed that Udall would bid for the property on behalf of the group. Hayes read the standardized nonjudicial foreclosure sale script and announced the opening bid of $59,421.20. Udall bid one dollar more. There being no other bidders, Hayes closed the sale. Udall tendered full payment and Hayes gave Udall a receipt for the property. Consistent with T.D.'s policy, the deed of trust for the property was not issued to Udall at the sale.¹

¶ 6 T.D. discovered the discrepancy in the opening bid when Udall's funds were transmitted to its main office. In a letter dated April 21, 2004, T.D. returned to Udall a check for the amount he had paid for the property and explained that ABC had not been authorized to open bidding at $59,421.20. Udall rejected the refund. T.D. refused to issue the deed of trust to Udall.²

¶ 7 Udall brought an action to quiet title, naming T.D. and lender U.S. Bancorp as defendants. The trial court granted summary judgment quieting title in Udall. The Court of Appeals Division Two reversed the ruling and entered summary judgment in favor of T.D. Udall v. T.D. Escrow Servs., Inc., 132 Wash.App. 290, 293-94, 130 P.3d 908 (2006). The court held that (1) the Act, not common law, governs statutory nonjudicial foreclosure sales; (2) under the strict terms of RCW 61.24.050, the sale of the property had not been completed; and (3) therefore, Udall was not entitled to the property.³ Udall, 132 Wash.App. at 293, 130 P.3d 908. We granted Udall's petition for review. Udall v. T.D. Escrow Servs., Inc., 157 Wash.2d 1017, 2006 WL 3008155, 2006 Wash. LEXIS 630.

II. ISSUE

¶ 8 Does RCW 61.24.050 mandate that the trustee deliver the deed of trust to the purchaser following a nonjudicial foreclosure sale, absent a procedural irregularity that voids the sale?

III. ANALYSIS

A. Standard of review

¶ 9 The trial court granted summary judgment quieting title in Udall. This court is asked to interpret RCW 61.24.050. We review rulings on summary judgment and issues of statutory interpretation de novo. Berrocal v. Fernandez, 155 Wash.2d 585, 590, 121 P.3d 82 (2005).

B. RCW 61.24.050 mandates that a trustee deliver the deed of trust to the purchaser following a nonjudicial foreclosure sale, absent a procedural irregularity that voids the sale

¶ 10 The parties dispute what timing RCW 61.24.050 establishes for conveying property rights to the purchaser via delivery of the deed of trust. The core of their dispute is whether RCW 61.24.050 mandates that a trustee deliver the deed of trust to the purchaser following a nonjudicial foreclosure sale, absent a procedural irregularity that voids the sale. To determine the answer we examine (1) the plain meaning of RCW 61.24.050, (2) whether auctioneer ABC had authority to accept Udall's bid on T.D.'s behalf, (3) whether deficiency in price provides a ground to set aside a nonjudicial foreclosure sale, and (4) whether a trustee's fiduciary duty provides a ground to repudiate a nonjudicial foreclosure sale.

1. Plain meaning of RCW 61.24.050

¶ 11 "A court's objective in construing a statute is to determine the legislature's intent." Tingey v. Haisch, No. 77689-0, ___ Wash. ___, ___, 152 P.3d 1020, 1023 (2007). "`[I]f the statute's meaning is plain on its face, then the court must give effect to that plain meaning as an expression of legislative intent.'" Id. (alteration in original) (internal quotation marks omitted) (quoting State v. Jacobs, 154 Wash.2d 596, 600, 115 P.3d 281 (2005)). Plain meaning is "discerned from the ordinary meaning of the language at issue, the context of the statute in which that provision is found, related provisions, and the statutory scheme as a whole." Id. at 1023. If the statutory language remains susceptible to more than one reasonable interpretation, the statute is considered ambiguous, and the court may then employ statutory construction tools, including legislative history, for assistance in discerning legislative intent. Id.

¶ 12 RCW 61.24.050 provides, in relevant part:

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.

The first sentence of RCW 61.24.050 identifies that a sale through nonjudicial foreclosure conveys to the purchaser the rights, title, and interests possessed by the grantor (hereinafter borrower) when the borrower originally executed the deed of trust to the grantee (hereinafter lender), as well as all rights, title, and interests acquired by the borrower subsequently (e.g., accrued rents). See 27 Marjorie Dick Rombauer, Washington Practice: Creditors' Remedies—Debtors' Relief § 3.68 (1998 & Supp.2007). The second sentence establishes that the effective date for recording a deed of trust relates back to the date and time of the nonjudicial foreclosure sale if the deed is recorded within 15 days. Id.

(a) Delivery of the deed of trust

¶ 13 The Court of Appeals found that the introductory clause to the first sentence of RCW 61.24.050, "[w]hen delivered to the purchaser," conditioned the purchaser's acquisition of title and the sale's finality on delivery of the deed of trust. The court explained:

According to the plain meaning of this sentence, a person acquires no rights to the property sold by nonjudicial foreclosure until the deed is delivered. Thus, a foreclosure sale itself, including the acceptance of an auction bid, without delivery of the trustee's deed, conveys no property rights under the Act.

Udall, 132 Wash.App. at 298, 130 P.3d 908. However, this interpretation is not plausible when RCW 61.24.050 is read in conjunction with the rest of the Act.

¶ 14 RCW 61.24.040 sets out the nonjudicial foreclosure procedure. RCW 61.24.040(4) and (7) detail a sequence of events in that procedure. First "the trustee or its authorized agent shall sell the property at public auction to the highest bidder." RCW 61.24.040(4) (emphasis added). Then the purchaser. "shall forthwith pay the price bid and on payment the trustee shall execute" the deed of trust to the purchaser. RCW 61.24.040(7) (emphasis added). As the Court of Appeals itself stated, "this statutory language imposes on the trustee, or its authorized agent, an obligation to sell the property to the highest bidder and to execute the deed to the highest bidder." Udall, 132 Wash.App. at 300, 130 P.3d 908.

¶ 15 Considered in conjunction with the directives of RCW 61.24.040(4) and (7), RCW 61.24.050 does not permit the trustee to withhold the deed at its discretion. In RCW 61.24.050, "when" in "[w]hen delivered to the purchaser," means "at which time: and then: whereupon." Webster's Third New International Dictionary 2602 (2002). Thus, the trustee sells the property at auction, the purchaser pays the price bid, and the trustee executes the deed to the purchaser at which time "all of the right, title, and interest" in the property is conveyed. RCW 61.24.050.

¶ 16 The trustee's delivery of the deed to the purchaser is a ministerial act, symbolizing conveyance of property...