Walker v. Transamerica Title Ins. Co., Inc., 12919-1-II

• Decision Date: 27 April 1992
• Docket Number: No. 12919-1-II,12919-1-II
• Citation: 828 P.2d 621,65 Wn.App. 399
• Parties: Dorothy Marie WALKER, Appellant, v. TRANSAMERICA TITLE INSURANCE CO., INC., Respondent.
• Court: Washington Court of Appeals

Page 399

65 Wn.App. 399

828 P.2d 621

Dorothy Marie WALKER, Appellant, v. TRANSAMERICA TITLE INSURANCE CO., INC., Respondent.

No. 12919-1-II.

Court of Appeals of Washington Division 2.

April 27, 1992.

Douglas O. Whitlock, Whitlock Potter & Saunders, Vancouver, for appellant.

Charles E. Gallup, Schwabe Williamson & Wyatt, Vancouver, for respondent.

MORGAN, Judge.

Dorothy Walker appeals a summary judgment dismissing her two causes of action against Transamerica Title Insurance Co. We reverse and remand.

In December, 1981, Walker loaned $40,000 to Duane and Pamela Kirk. ¹ To secure repayment by the Kirks, she was to receive a second deed of trust on the property in which they resided. The first deed of trust was held by Washington Mutual Savings Bank, to whom the Kirks owed about $85,000 at the time of their transaction with Walker.

When Walker's second deed of trust was prepared, it recited that a legal description was attached. However, none was, and the deed was recorded without a legal description.

The original preparer of the deed was Mortgage Connections, Inc., an entity that had arranged the loan transaction between Walker and the Kirks. ² Mortgage Connections forwarded the deed to an escrow agent, and the escrow agent forwarded it to Transamerica, from whom Walker had purchased title insurance. Transamerica recorded the deed, an act that it labels a "courtesy filing."

Kirks defaulted on their obligation to Walker, and she commenced non-judicial proceedings to foreclose her interest. Shortly before those proceedings were complete, however, Kirks filed for bankruptcy, which had the effect of staying Walker's foreclosure proceedings. During the pendency of the bankruptcy, the involved parties realized, apparently for the first time, that Walker's deed lacked a legal description. Ultimately, the bankruptcy court apparently ruled that Walker's deed was void and that she had no lien to foreclose against Kirks' property. ³

Kirks also defaulted on their obligation to Washington Mutual, and for a time Walker stepped in to keep the first deed of trust current. She stopped paying on the first lien when the bankruptcy court ruled, apparently in October, 1984, that her own lien was invalid. By that time according to her allegation, she had paid $18,760 to Washington Mutual.

When Walker stopped paying, Washington Mutual commenced non-judicial proceedings to foreclose its interest. Those proceedings culminated in an auction at which Walker did not bid, and the property was sold to a third party for $95,760. The sale price exceeded the total owed Washington Mutual by about $100.

Walker then filed this suit against Transamerica. In her first cause of action, she alleged that Transamerica had a duty to insure that all documents necessary to protect her interest were recorded properly; that Transamerica acted negligently when it recorded her deed without a legal description; and that Transamerica's negligence proximately caused damage to her in the sum of $60,000 plus interest, costs and attorneys fees. In her second cause of action, she alleged that Transamerica had contracted to insure her title; that her title had been defeated or impaired; and that she was proximately damaged in the amount of $60,000, plus interest, costs and attorneys fees.

A few days before trial, Transamerica moved for summary judgment dismissing both causes of action. It asked the trial court to assume that Walker could prove the elements of her causes of action other than proximate cause. It then argued that she could not prove proximate cause, because her loss, if any, was caused not by lack of a legal description in her second deed of trust, but by "her failure to pay the first deed of trust and/or bid in the foreclosure process to protect her interest." It presented no evidence tending to show whether she could have paid Washington Mutual had she chosen to. Walker orally responded that because she lacked a valid second lien from and after the date on which her deed was recorded without a legal description, she had no duty to pay the first deed of trust by bidding at the foreclosure sale or otherwise. The trial court granted Transamerica's motion.

For purposes of this appeal, the parties assume that Walker can prove duty, breach and damages. Thus, they focus on proximate cause.

Proximate cause has two components: legal cause and cause in fact. Hartley v. State, 103 Wash.2d 768, 777-78, 698 P.2d 77 (1985). Cause in fact is established if plaintiff's injury would not have occurred but for defendant's breach of duty. Harbeson v. Parke-Davis, Inc., 98 Wash.2d 460, 476, 656 P.2d 483 (1983); Prosser and Keeton on Torts 266 (5th ed. 1984). Cause in fact is not established if plaintiff's injury would have occurred without defendant's breach of duty. Davis v. Globe Machine Manufacturing Co., Inc., 102 Wash.2d 68, 74, 684 P.2d 692 (1984); Prosser and Keeton on Torts 265 (5th ed. 1984).

The component in issue is cause in fact. In general terms, Transamerica is arguing that Walker cannot prove that she would not have lost her security "but for" Transamerica's assumed breach. In more specific terms, it is arguing that Walker would have lost her security regardless of Transamerica's assumed breach of duty, because Washington Mutual foreclosed its superior lien when Walker failed to pay at or before its foreclosure sale, and foreclosure of a superior lien extinguishes inferior ones. RCW 61.24.050; Glidden v. Municipal Authority of the City of Tacoma, 111 Wash.2d 341, 347, n. 3, 758 P.2d 487 (1988).

To prove cause-in-fact, Walker must prove that she could have paid Washington Mutual's lien at the time of its foreclosure sale, and that she would have done so if at that time she had had a valid lien of her own. Even if her lien had been validly perfected when her deed of trust was recorded, she would still have lost it had she been unable or unwilling to pay Washington Mutual's lien at the time of its foreclosure sale. RCW 61.24.050; Glidden, 111 Wash.2d at 347, n. 3, 758 P.2d 487. Therefore, proof that she could have and would have paid Washington Mutual's lien had her own lien been valid is necessary if a trier of fact is to have evidence from which to reasonably infer that she would not have lost her lien but for Transamerica's negligence.

It does not follow, however, that Walker must prove that she actually paid Washington Mutual, or that she bid at its foreclosure sale. Proximate cause can be an element of the plaintiff's case in chief, Davis v. Globe Machine, 102 Wash.2d at 73, 684 P.2d 692; Harbeson, 98 Wash.2d at 468, 656 P.2d 483; WPI 21.02, an element of the defense of contributory negligence, RCW 4.22.015 ("[l]egal requirements of causal relation apply ... to contributory fault"), Young v. Caravan Corp., 99 Wash.2d 655, 662, 663 P.2d 834 (1983); WPI 11.01, or an element of the defense of mitigation of damages. RCW 4.22.015 ("fault" includes unreasonable failure to mitigate damages; legal requirements of causation apply to fault); WPI 33.01-.03. Used in either of the first two ways, it relates to conduct occurring before a defendant's actionable wrong. Used in the last way, it relates to a plaintiff's conduct occurring after a defendant's actionable wrong. Southport Transit Co. v. Avondale Marine Ways, 234 F.2d 947, 952 (5th Cir.1956); 5 Dobbs, Remedies § 3.7 at 187; Prosser and Keeton, Torts 458 (5th ed. 1984); Stein, Damages and Recovery, § 127 at 222.

Here, Transamerica's actionable wrongs, if any, occurred in December, 1981. ⁴ Washington Mutual's foreclosure sale occurred after October, 1984. ⁵ Thus, Walker's failure to pay Washington Mutual's lien was conduct occurring after the defendant's actionable wrongs, and Transamerica's true argument is as follows: (a) Walker had a duty to mitigate her damages at the time of Washington Mutual's foreclosure sale; (b) she failed to do so; and (c) her failure was the sole proximate cause of the loss of her lien.

Transamerica's argument fails because Walker had no duty to mitigate her damages at the time of Washington Mutual's foreclosure sale. The doctrine of mitigation of damages, also called the doctrine of avoidable consequences, Young, 96 Wash.2d at 731-32, 663 P.2d 834; WPI 33.01, provides that a plaintiff is not entitled to recover damages for any harm that he or she could have avoided by the use of reasonable effort or expenditure after the commission of the wrong. ⁶ Snowflake Laundry Co. v. MacDowell, 52 Wash.2d 662, 674, 328 P.2d 684 (1958); Hoff v. Lester, 25 Wash.2d 86, 94, 168 P.2d 409 (1946); Sutton v. Shufelberger, 31 Wash.App. 579, 581-82, 643 P.2d 920 (1982); Tennant v. Lawton, 26 Wash.App. 701, 703-04, 615 P.2d 1305 (1980); Kubista v. Romaine, 87 Wash.2d 62, 67, 549 P.2d 491 (1976). However, a plaintiff has no "duty" ⁷ to mitigate when the defendant has equal opportunity to do so. ⁸ Wartzman v. Hightower Productions, Ltd., 53 Md.App. 656, 456 A.2d 82, 88 (1983); Shea-S & M Ball v. Massman-Kiewit-Early, 606 F.2d 1245, 1249 (D.C.Cir.1979); quoting S.J. Groves & Sons Co. v. Warner Co., 576 F.2d 524, 530 (3d Cir.1978); Unverzagt v. Young Builders, Inc., 252 La. 1091, 215 So.2d 823, 828 (1968); Parker v. Harris Pine Mills, 206 Or. 187, 291 P.2d 709, 717 (1955); Hiss v. Friedberg, 201 Va. 572, 112 S.E.2d 871, 875 (1960); Alexander v. Brown, 646 P.2d 692, 695 (Utah 1982); Schneidt v. Absey Motors, Inc., 248 N.W.2d 792, 796-97 (N.D.1976); 22 Am.Jur.2d Damages § 37 (1965).

Where both the plaintiff and the defendant have equal opportunity to reduce the damages by the same act or expenditure, and it is equally reasonable to expect the defendant to minimize damages, the defendant will not be heard to say that the plaintiff should have minimized ...

D. Dobbs, Remedies § 3.7 at 186 (1973).

We have found one case, concededly ancient, that applies the principle of equal opportunity to facts like those at bar. In Security Abstract of Title Co. v. Longacre, 56 Neb. 469, 76...