20|iiSEP-2 AHII'-Oi

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TOWNE OWNERS ASSOCIATION,

Plaintiff,

v.

BRIAN D. BECKMANN and JANE DOE

BECKMANN, husband and wife, and

their marital community; and

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.,

a Delaware corporation,

Defendants.

DCR SERVICES, LLC, a Washington

limited liability company,

Appellant,

v.

THE CONDO GROUP, LLC, a

Washington limited liability company,

Respondent,

BANK OF AMERICA, N.A., a national

banking association, NORTHWEST

TRUSTEE SERVICES, INC., a

Washington corporation,

Third-Party

Defendants.

BANK OF AMERICA, N.A., a national

banking association,

Fourth-Party

Plaintiff,

No. 70604-7-1

DIVISION ONE

UNPUBLISHED OPINION

FILED: September 2, 2014
No. 70604-7-1/2

TOWNE OWNERS ASSOCIATION,

Fourth-Party

Defendant.

Becker, J. — This appeal arose from an attempt to gain a windfall by use

of an erroneous interpretation of Washington's redemption statute, former RCW

6.23.010 (1987). Appellant DCR Services LLC was not a proper redemptioner.

We affirm the order of dismissal granted on summary judgment.

The real estate in question is unit 38 in a Bellevue condominium managed

by Towne Owner's Association. Brian Beckmann purchased unit 38 with lender

financing. He signed a promissory note for $357,100 on February 15, 2007,

secured by a deed of trust on unit 38.

Beckmann became delinquent in his dues for common area expense

assessments owed to Towne. Towne, the condominium association, had a lien

for these unpaid assessments under the Condominium Act, RCW 64.34.364. In

March 2011, Towne foreclosed on the lien and obtained a default judgment

against Beckmann. As a result of the filing of the lawsuit, the lender's deed of

trust was "reprioritized" under the act, and at that instant, the lender "became a

subordinate junior lienholder whose lien interests were extinguished," thus

bringing into play the provisions of the redemption statute. BAC Home Loans

Servicing. LP v. Fulbriqht. Wn.2d , 328 P.3d 895, 900 (2014).

The trial court entered an order of sale commanding the sheriff to seize

and sell the property. The Condo Group LLC, respondent herein, purchased unit

2
No. 70604-7-1/3

38 at the sheriff's sale on August 5, 2011, for $6,200. At this point, both

Beckmann and the lender had redemption rights. The court order allowed for a

one year redemption period.

In April 2012, appellant DCR Services LLC—an entity with no previous

connection to unit 38—entered into a transaction with Beckmann. The

transaction was designed to make DCR a statutory redemptioner with the right to

redeem unit 38 from The Condo Group. DCR loaned Beckmann $2,500. As

security for the loan, Beckmann gave DCR a deed of trust on unit 38 and signed

a promissory note. For an additional $2,500, Beckmann quitclaimed to DCR all

of his rights in the property, including redemption rights created by the sheriffs

sale. The promissory note relieved Beckmann of any personal liability in the

event he defaulted on the loan. It also limited DCR's remedy to foreclosing on

the property interest secured by the note.

DCR delivered a letter to the sheriff asserting its intent to redeem unit 38.

The redemption statute, before its amendment in 2013, provided that

property sold subject to redemption could be redeemed by a creditor with a lien

that is "subsequent in time" to that on which the property was sold:

(1) Real property sold subject to redemption, as provided in RCW

6.21.080, or any part thereof separately sold, may be redeemed by

the following persons, or their successors in interest:

(a) The judgment debtor, in the whole or any part of the

property sold.

(b) A creditor having a lien by judgment, decree, deed of

trust, or mortgage, on any portion of the property, or any portion of

any part thereof, separately sold, subsequent in time to that on

which the property was sold. The persons mentioned in this

subsection are termed redemptioners.
No. 70604-7-1/4

(2) As used in this chapter, the terms "judgment debtor,"

"redemptioner," and "purchaser," refer also to their respective

successors in interest.

Former RCW 6.23.010 (emphasis added).

As changed by the amendment in 2013, the statute now reads that a

redemptioner includes any claimant having a lien "subsequent in priority" instead

of "subsequent in time" to the foreclosing lien. RCW 6.23.010(1 )(b). The

amendment is not at issue in this appeal.

DCR did not claim to be a successor of the judgment debtor, Beckmann.

DCR claimed to be a redemptioner under former RCW 6.23.010(1 )(b) as a

creditor having a lien on unit 38 "subsequent in time" to the lien on which the

property was sold, i.e., subsequent to the Towne lien for the unpaid

assessments.

The Condo Group objected to giving DCR status as a redemptioner. This

litigation ensued between DCR and The Condo Group. Both parties moved for

summary judgment. The Condo Group argued that a lien creditor is eligible to be

a redemptioner only ifthe lien held by the creditor is one that was extinguished in

the sheriff's sale. The trial court granted The Condo Group's motion, finding that

DCR was not a proper redemptioner.

DCR appeals. Appellate courts review appeals of summary judgment de

novo, performing the same inquiry as the superior court. Hisle v. Todd Pac.

Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004).

At the time DCR filed this appeal, it had a viable theory with roots in

Summerhill Vill. Homeowners Ass'n v. Rouqhlev. 166 Wn. App. 625, 289 P.3d
No. 70604-7-1/5

645 (2012). We held in Summerhill that the phrase "subsequent in time" in

former RCW 6.23.010(1 )(b) was to be taken literally. Summerhill, 166 Wn. App.

at 632-33. We followed SummerhiN's interpretation in BAC Home Loans

Servicing, LP v. Fulbriqht. 174 Wn. App. 352, 298 P.3d 779 (2013), reversed,

Wn.2d , 328 P.3d 895 (2014). Relying on Summerhill, DCR argued that

the plain language of the statute extended redemption rights on a foreclosed

property to the holder of any valid lien created after the lien on which the property

was sold in foreclosure. DCR's brief summarized its theory as follows:

DCR is a redemptioner under the statute. DCR is a creditor,

because it loaned money to Beckmann. DCR has a lien by the Deed

of Trust it obtained from Beckmann. The lien is on the Property. And

the lien is subsequent in time to that on which the sheriffs sale was

conducted. DCR is a redemptioner.

The Supreme Court's recent decision in Fulbriqht makes DCR's theory no

longer viable. The court held that under the former redemption statute, "it is not

relevant which lien arises first, but which lien has statutory priority and can

subordinate, under certain circumstances, other liens. Every interest

extinguished in this manner comes under the redemption statute by operation of

law." Fulbriqht, 328 P.3d at 900. The only reasonable way to interpret the

phrase "subsequent in time" is to mean "when lien priority is established."

Fulbriqht, 328 P.3d at 900. This interpretation gives effect to the policy

underlying the right of redemption, which is to give junior lienholders an

opportunity to salvage something from their investment after their title or lien has

been extinguished by a foreclosure sale. Fulbriqht, 328 P.3d at 898.
No. 70604-7-1/6

DCR's interest was created nearly eight months after the foreclosure sale.

Its interest was not affected in any way by Towne's foreclosure action. Following

Fulbriqht, we conclude that DCR is not a proper redemptioner under former RCW

6.23.010 because DCR did not have a lien extinguished by the foreclosure sale.

DCR conceded this result at oral argument. DCR was asked whether

"subsequent in time" applied only to those interests extinguished in a foreclosure

sale. DCR responded that this court's holding in Summerhill allowed for

redemption of nonextinguished liens. Asked how future attempts to create

redemption rights after a foreclosure sale might be prevented, DCR responded

that the easiest way would be to make the right of redemption contingent on

having an interest extinguished by the foreclosure. The Fulbriqht decision did

just that in its interpretation of the former redemption statute.

The trial court correctly granted summary judgment in favor of The Condo

Group.

Affirmed.

Bedfete,

WE CONCUR: