# EJJ._I!,

# ~~ IN THE SUPREME COURT OF THE STATE OF WASHINGTON SIXTY-01 ASSOCIATION OF APARTMENT OWNERS, a Washington nonprofit corporation, Respondent,

v. ) ) ) ) ) ) ) ) VIRGINIA A. PARSONS and JOHN ) DOE PARSONS, wife and husband, ) or state registered domestic partners; ) JOHN DOE and JANE DOE, un- ) known occupants ofthe subjectreal ) property; and also all otherpersons or ) parties unknown claiming any right, ) title, estate, lien, or interest in real ) estate described in the complainthere,) Defendants, and DANIEL W. PASHNIAK, Intervenor/Petitioner. ) ) ) ) ) ) ) ) 

### ------------) SIXTY-01 ASSOCIATION OF APARTMENT OWNERS, a Washington nonprofit corporation, Respondent, ) ) ) ) ) ) ) No. 89805-7

ENBANC

Filed 

### AUG 

## 2 12014Sixty-01 v. Parsons, 

### No. 89805-7

v. ) ) 

### MARIA A. MALLARINO and JOHN) DOE MALLARINO, wife and ) husband, or state registered domestic ) partners; JOHN DOE and JANE ) DOE, unknown occupants ofthe ) subjectreal property; and also all ) otherpersons or parties unknown ) claiming any right, title, estate, lien, ) or interest in real estate described in ) the complaint here, ) ) 

### Defendants, ) ) 

### and ) ) 

### DANIEL W. PASHNIAK, ) ) 

### Intervenor/Petitioner. )



### ________________________ 

### ) FAIRHURST, J.-Daniel W. Pashniak, the purchaser oftwo condominiums at a foreclosure sale, now wants to withdraw his bids. Thejudgmentcreditor, Sixty01 Association ofApartment Owners, wants to confirm the sales. RCW 6.21.110 governs the confirmation of sales of real estate. RCW 6.21.110(2) states, "The judgment creditor or successful purchaser at the sheriffs sale is entitled to an order confirming the sale." The issue is whether a successful purchaser has a right to withdraw his or her bid prior to confirmation or ifajudgment creditor is entitled to confirmation ofthe sale absent substantial irregularities, even ifthe purchaser no longer wishes to purchase the property. We hold that a third party purchaser does

2Sixty-01 v. Parsons, No. 89805-7 not have a unilateral right to withdraw a successful bid before confirmation. Either the purchaser or the judgment creditor can move for confirmation, and the sale should be confirmed by the court unless a debtor or a nondefaulting party who received notice proves there were substantial irregularities in the proceedings. Further, while a court may invalidate a sale based on equitable considerations, this situation does notmerit such a remedy. We affirmthe Court ofAppeals and confirm both sales. I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY VirginiaA. Parsons and Maria A. Mallarino each ownedunits inthe Sixty-01 condominiums complex. Each property was encumbered by a mortgage from Bank ofAmerica, evidencedby deeds oftrustrecorded in King County. Sixty-01 operates the complexunder adeclaration ofcondominiumthatwas filed andrecorded in King County. UnderRCW 64.32.200(2) and section 19.1 ofthe declaration, Sixty-01 has

a continuing statutory lien against the units that may be foreclosed on to secure payment ofassessments levied by the Sixty-01 board ofdirectors. The declaration provides that Sixty-01 's lien is subordinate to any recorded deeds oftrust, whenever recorded. 1

1Chapter 64.34 RCW applies to condominiums created after July 1, 1990 and does not invalidate existing, inconsistent provisions in earlier-created declarations ofcondominium. RCW 64.34.010(1). The Sixty-01 condominiumwas createdin 1978, so chapter 64.32 RCW, not chapter 64.34 RCW, applies to this case. 3Sixty-01 v. Parsons, No. 89805-7 Both Parsons and Mallarino failed to pay association assessments for an extended period oftime, and Sixty-01 sought to separately foreclose its liens on the units. The complaints did not name Bank ofAmerica or any deed oftrust holder as defendants, nor didthe complaints seekto extinguish any deeds oftrustencumbering the units. InNovember 2011 thetrial courtentered defaultjudgments and decrees of foreclosure against both Parsons and Mallarino. The judgments stated that Sixty01 'slien was superiorto any other lien or interest described inthe complaint "arising subsequent to the recording of [Sixty-01's] Lis Pendens in this action on May 19th, 2010."Mallarino Clerk'sPapers (M-CP) at 125.2 Itfurther statedthat all "right,title, claim, lien, estate or interest ofthe ForeclosedDefendants, each and all ofthem, and ofall persons claimingby, through, orunderthem, in and to the Property or any part thereofis inferior and subordinate to [Sixty-01's] lien and is hereby foreclosed." MCP at 126. Notice ofthe sheriffs sale was sent to all interested parties, including Bank ofAmerica. After receiving the notice, Bank ofAmerica sought extra assurances that its interest would not be affected by the foreclosure sale, so Bank ofAmerica and Sixty-01 entered into stipulations regarding Bank ofAmerica's rights in each of

2The Court ofAppeals labeled the clerk'spapers in Sixty-01 Ass 'n of Apartment Owners v. Mallarino, No. 10-2-17742-6 (King County Super. Ct., Wash.) as "CP-B." For clarity, I abandon this label and refer to them as "M-CP." 4Sixty-01 v. Parsons, 

### No. 89805-7 the properties for sale. 3 

### The stipulations provided that Bank ofAmerica was not a defendant in the foreclosure action and didnothave anyjudgmentagainst it, thatthe properties were encumbered by Bank ofAmerica's deeds oftrust recorded in 2006 and 2007 and the liens were superior and senior to Sixty-01 's interests, and that the purchasers at the sheriffs sales would take any interest in the properties subject to any valid interest ofBanlc ofAmerica. None ofthese stipulations changed or altered the rights ofthe parties; they simply reiterated Bank ofAmerica's lienholder status in light ofthe condominium association's foreclosure. The stipulations were filed with the court on March 7, 2012 (Parsons) and the afternoon of March 8, 2012 (Mallarino). On March 9, 2012, the two condominium units were auctioned separately. Pashniak bought the units at the sheriffs sales, submitting high bids of about $16,200 for the Parsons property and $35,400 for the Mallarino property. Pashniak did not examine the court files or county records before he submitted his bids. On March 16, 2012, the King County Superior Courtjudgmentclerkmailedthe notices ofreturn ofthe sheriffs sale on real property. On March 19, 2012, after Pashniak learned that the properties were encumbered by Bank of America's interests, he

3It is not surprising that Banlc ofAmerica requested assurances in light ofthe increased number of foreclosures and litigation surrounding the rights and priorities of lienholders in foreclosure. See, e.g., BACHome Loans Servicing, LPv. Fulbright, 180 Wn.2d 754, 328 P.3d 895 (2014); 5'ummerhi!l Vill. Homeowners Ass 'n v. Roughley, 166 Wn. App. 625, 270 P.3cl 639, 289 P.3d 645 (2012). While these cases are inapplicable to this situation, it is understandable that a lienholder would want extra assurances that its rights would not be affected. 5Sixty-01 v. Parsons, No. 89805-7 asked Sixty-01 to allow him to withdraw his bid, stating that ifhe had known the properties were encumbered, he would not have bid on them. On March 22, 2012, Pashniak, acting prose, sent a notice ofappearance and

an objection to the confirmation ofthe sale ofthe Parsons property, stating that he found the order of sale and complaint for foreclosure confusing as to whether the sheriffs sale was free and clear ofother indebtedness. On June 6, 2012, Sixty-01 moved to confirm the Parsons sale. On June 20, 2012, the King County Superior Court confirmed the sale, noting Pashniak's objection to confirmation but finding that he failed to allege any substantial irregularities in the proceedings concerning the sale, which was in all respects legally and fairly conducted. Pashniak also objected to confirmation of the Mallarino sale for the same
reason.4 On June 14, 2012, Sixty-01 moved to confirm the Mallarino sale. On July 12, 2012, Pashniak, then represented by counsel, filed a second objection to this confirmation and moved to vacate the sale. The court noted that while the stipulations that Bank ofAmerica and Sixty-01had filed would have been available

4Ajudgment debtor or nondefaulting party must object to confirmation within the 20 day time period. RCW 6.21.110(2); Hazel v. VanBeek, 135 Wn.2d 45, 52, 954 P.2d 1301 (1998). The notices were sent on March 16, 2012, but the date Pashniak filed his objection to the Mallarino sale is unclear. The document in the clerk's papers indicates the objection was filed on April 9, 2012. But Pashniak has filed a motion to supplement the record with a copy ofthe objection that bears a stamp indicating the document was received on March 22, 2012, the same day as his objection in the Parsons case. This copy was not submittedto the trial courtbecause the timeliness ofthe objection was not raised until the Court ofAppeals. But, we do not need to decide the timeliness issue since we decide this case on the substantive question ofstatutory interpretation, not onwhether Pashniakmissedthe mandatory 20 day deadline. Accordingly, we denyPashniak's motion to supplement the record. 6Sixty-01 v. Parsons, No. 89805-7 to any citizen to review at the clerk's office when it was open, they would not have beenviewable inthe electronic courtrecord for 24 to 48 hours after filing. Exercising its equitable authority, the courtfound that areasonable citizenwho boughtproperty at sheriff's sales would not have had inquiry notice ofBank ofAmerica's lien. The court thus vacated the Mallarino sale and ordered the clerk to refund Pashniak's money. Sixty-01appealed in the Mallarino sale, andPashniak appealed in the Parsons sale. The Court of Appeals consolidated the cases and affirmed the trial court's confirmation ofthe Parsons sale and reversed the vacation ofthe Mallarino sale. Sixty-01 Ass 'n of Apartment Owners v. Parsons, 178 Wn. App. 228, 314 P.3d 1121 (2013). The Court of Appeals held that unless there are irregularities in the proceedings, the trial courtis requiredto confirmthe sale,regardless ofany equitable considerations. Bank ofAmerica's deed oftrust, filed long before the foreclosures, provided notice of Bank of America's priority interest, and thus the late-filed stipulations did not create an irregularity or an inequity. Pashniak petitioned this court, and we accepted review. Sixty-01 Ass 'n of Apartment Owners v. Parsons, 180 Wn.2d 1001, 321 P.3d 1207 (2014). II. ISSUE PRESENTED Does a third party purchaser have a right to withdraw his or her bid at a sheriff's sale before confirmation or is a creditor entitled to confirmation unless

7Sixty-01 v. Parsons, 

### No. 89805-7 substantial irregularities are proved by thejudgment debtor or nondefaulting party who received notice? III. ANALYSIS Confirmation ofa purchase at ajudicial sale is governed by RCW 6.21.110. Statutory interpretation is a question oflaw reviewed de novo. Dep 't of Ecology v. Campbell & Gwinn, LLC, 

### 146 Wn.2d 1, 9, 43 P.3d 4 (2002). But "confirmation of judicial sales rests largely within the discretion ofthe trial court" so is reviewed for manifest abuse ofsuch discretion. Braman v. Kuper, 

### 51 Wn.2d 676,681,321 P.2d 275 (1958) (citing Williams v. Cont'l Sec. Corp., 

### 22 Wn.2d 1, 18, 153 P.2d 847 (1944)). "'Execution sales are not scrutinized by the courts with a view to defeat them. On the contrary, every reasonable intendment will be made in their favor."' Williams, 

### 22 Wn.2d at 17 (quoting 21 AM. JUR. 

### 123 Executions§ 

### 242 (1939)). We interpret RCW 6.21.110 de novo but examine whether the court erred in its application ofthe statute for abuse ofdiscretion. The relevant parts ofRCW 6.21.110 read: (2) Thejudgmentcreditor or successfulpurchaser atthe sheriff's sale is entitled to an order confirming the sale at any time after twenty days have elapsed from the mailing ofthe notice ofthe filing ofthe sheriff'sreturn ...unless thejudgmentdebtor,

... or any nondefaulting partyto whom notice was sent shall file objectionsto confirmationwith the clerkwithin twenty days after the mailing ofthe notice ofthe filing ofsuch return. (3) If objections to confirmation are filed, the court shall nevertheless allow the order confirming the sale, unless

. . . it shall satisfactorily appear that there were substantial irregularities in the 8Sixty-01 v. Parsons, 

### No. 89805-7 proceedings concerning the sale, to the probable loss or injury ofthe party objecting. In the latter case, the court shall disallow the motion and direct that the property be resold. A. A purchaser who is not the judgment creditor does not have a right to withdraw his or her bid before confirmation Pashniak argues that the purchaser has the right to withdraw his or her bid before confirmation, even ifthejudgmentcreditor wants the sale confirmed. Aplain reading ofRCW 6.21.110(2) refutes this argument. RCW 6.21.110(2) reads, "The judgment creditor or successful purchaser at the sheriffs sale is entitled to an order confirming the sale." The plain language of this statute entitles a creditor or a purchaser to confirmation unless there is a timely objection by an appropriate individual and proofofsubstantial irregularities. Nowhere does RCW 6.21.110 give

apurchaserthe right to withdraw. Nor does the statute qualify the creditor's right to confirmation by any reference to the purchaser's option to withdraw his orher bid. Despite this plain statutory language, Pashniak relies on a Court ofAppeals case, Davies v. Davies, 

### 48 Wn. App. 29, 31, 737 P.2d 721 (1987), to support his argument that apurchaser has the rightto withdraw before confirmation ifhe or she

so desires. Davies 

### involved ajudgment creditor who made a very low, successful bid on property at ajudicial sale. Id. 

### at 30. As both the judgment creditor and the successful purchaser, he moved to confirm. Id. 

### Before confirmation was complete, he discoveredthejudgmentdebtor (his ex-wife) was planningto redeemtheproperty and discharge the remaining debtinbankruptcy.Id. Thejudgmentcreditor/purchaser
9Sixty-01 v. Parsons, No. 89805-7 sought to withdraw his bid or to increase it to prevent redemption. 

### Id. The court allowedthewithdrawal and orderedaresale oftheproperty.Jd. Thejudgmentdebtor objected. 

### Id. The Court of Appeals affirmed, holding that "only the judgment creditor or purchaser has standing to move for confirmation ofa bid at a sheriffs sale, andthatbefore confirmation, thehighestbiddermaybepermittedto withdraw." 

### Id. at 31. The factual situation inDavies is significantly distinguishable from this case, and the language "before confirmation the highest bidder may be permitted to withdraw" is unsupported by RCW 6.21.110. Id. In Davies, thejudgment creditor andthepurchaserwerethe same individual. The courtnotedthatperthe statute, only thejudgment creditor or the successful purchaser could move to confirm. 

### !d. The judgment debtor could not move to confirm, and the court could not confirm a sale

sua sponte.Jd. at 31-32. Since the purchaser/judgmentcreditor withdrew his motion to confirm before confirmation, there was no other individual that could move the courtto confirmthe sale and a resale ofthe propertywas the only wayto resolve the situation. Id. at 32. To the extentDavies is read to give a purchaser who is not also thejudgment creditor the unilateral right to withdraw their bid before confirmation,

we reject this reading.5

5Pashniak attempts to strengthenthe holding ofDavies and widen its applicability through this court's reference to it inHazel. The Hazel court wrote: A trial court's confirmation ofa sheriffs sale is not simply ministerial; the court's confirmationis a necessary step to finalize the sale contract withthe purchaser. See 10Sixty-01 v. Parsons, 

### No. 89805-7 No provision in RCW 6.21.110 provides for the withdrawal of a bid by a successful purchaser. A plain reading ofthe statute indicates that a land sale should be confirmed after there is a successful purchaser, barring timely objection by a proper individual and substantial irregularities. Either a purchaser or a judgment creditor can move to confirm, but a purchaser has no right to unilaterally withdraw his or her bid. The statute seeks to relieve creditors and to proceed efficiently with the sale ofland, notto allow a purchaser to unilaterally cancel the sale and force the sale process to start over again. B. No statutorily authorizedperson objectedto the sale RCW 6.21.110(2) provides that ajudgment creditor or successful purchaser is entitled to confirmation absent objections by a debtor or a nondefaulting party who received notice. Pashniak, the successful purchaser, has filed objections to the sale. Pashniak, however, does not have statutory authority to object to the sale because he is not ajudgmentdebtor ornondefaultingpartyto whom notice was sent.

[Davies, 48 Wn. App. at 32] (purchaser at sheriff's sale can withdraw bid prior to confirmation of sale, the bid does not become a contract until confirmed by the court). 135 Wn.2d at 56. Hazel involved the expiration ofajudgment upon which the sheriff's sale was based, prior to confirmation ofthe sale. The issue was whether confirmation was a necessary step to finalize the contract that must have been completed prior to the expiration ofajudgment, not whether the purchaser couldwithdrawhis bid.Jd. Similarly, In re Liquidation of Spokane Savings Bank, 198 Wash. 665, 672, 89 P.2d 802 (1939), which Daviesrelies on, addressedthe fact that the order confirming the sale is a final and conclusivejudgment, necessary for completion ofthe sale. Neither ofthese cases involve the issue ofwithdrawal of a bid by a purchaser; they discuss the general ideathat confirmation is necessary to the sale process. Taken out ofcontext, the language supports Pashniak, butthese cases involve issues separate from whether apurchaser can withdraw a bid. 11Sixty-01 v. Parsons, 

### No. 89805-7 The plain reading ofthe statute clearly articulates the powers ofeach ofthe parties. Only the judgment creditor or purchaser can move to confirm. Similarly, only the debtor or nondefaulting party who received notice may object to the sale. Pashniak is the purchaser and therefore does not have statutory authority to file an objection to the sales. Since we hold that Pashniak may not file objections to the sales under the statute, there is no need to discuss whether there were any substantial irregularities in these proceedings. C. A court may use its equitable power to vacate a sale, but only in limited situations In the Mallarino matter, the trial court "exercise[ed] its equitable authority" and vacated the sheriffs sale. M-CP at 348. The Court ofAppeals reversed the trial court, but Pashniak renews his equity argument, stating that even ifthere were no substantial irregularities in the sales, they should still be vacated for equitable

reasons. To support his argument, Pashniak claims thatMiebach v. Colasurdo, 

### 102 Wn.2d 170, 685 P.2d 1074 (1984), stands for the proposition that a trial court may overturn a sheriffs sale on equitable grounds even when slight circumstances indicate unfairness. This is an oversimplified and incorrect summary ofMiebach. 

### While Miebach 

### overturned a sale on equitable grounds, it clearly involved a situationwhere there were circumstances ofinequity and a grossly inadequateprice. There, parents cosigned their daughter's $1,300 car loan. Id. 

### at 172. After two payments, the daughter defaulted. Id. 

### Notice ofdefaultwas served ontheparents via
12Sixty-01 v. Parsons, No. 89805-7 their 15 year old foster daughter. Id. The parents never received this notice so did not show up for the hearing, and a defaultjudgmentwas entered against them in the amount of$1,150.24. 

### Id. After inadequately attempting to locate personal property from whichto satisfythe debt, the creditorinstituted foreclosure proceedings against theparents' residence. Id. at 1 72-73. Theparents never actedto preventthe sale, and their $106,000 home with $77,000 in equity was purchased at a foreclosure sale for $1,340.02. Id. at 173. The judgment creditor assigned its interest to a third party, who sold their interest to another third party. Id. After the year for redemption expired, the parents received a three day notice to vacate, the first they learned of the sale oftheirhouse.Id. at 173-74. While the legal requirements for a foreclosure sale had been satisfied, the court found the situation grossly inequitable. Id. at 179 ("We will not allow Valera Colasurdo's home to be taken for a pittance when surroundedby the circumstances ofinequity in this case."). Other cases have allowed the court to vacate inequitable sales, but they require an inadequacy of price plus a factor of unconscionable advantage or unfairness. Mellen v. Edwards, 179 Wash. 272, 37 P.2d 203 (1934); N Sav. &Loan Ass 'n v. Taylor, 190 Wash. 535, 69 P.2d 810 (1937). We do nothave a situationhere requiringthe courtto use its equitable authority. Here, athirdpartypurchaserbought two condominiums at a foreclosure sale but did not adequately researchthe property to learn they were encumberedby significant mortgages.

13Sixty-01 v. Parsons, 

### No. 89805-7 While courts havebeen chargedwiththe duty to examine and confirmjudicial sales, they generally are to defer to the sale absent substantial irregularities or great inadequacies. A court should not employ its equitable powers to overturn ajudicial sale unless there is gross inadequacy or unfairness tojustify equitable intervention. "The courts must be extremely careful in exercising these extraordinary equitable powers lest they defeat the rights of the lender in their attempts to protect the borrower." Mellen, 

### 179 Wash. at 284-85. The facts in this case do not support such

an equitable intervention. Thetrial court abused its discretionwhenit overturnedthe Mallarino sale based on equitable considerations. IV. CONCLUSION RCW 6.21.110 allows either a purchaser or judgment creditor to move for confirmation ofa sheriffs sale. It 

### does not give apurchaser the right to unilaterally withdraw a bid. Nor does it give a purchaser the ability to file an objection to the sale, alleging substantial irregularities in the proceedings. We affirm the Court of Appeals and hold that both the Mallarino sale and the Parsons sale should be confirmed.

14Sixty-01 v. Parsons, No. 89805-7

WE CONCUR:

15