Opinion ID: 2626405
Heading Depth: 3
Heading Rank: 2

Heading: A Junior Lienholder is Protected by the Cure Provision of AS 34.20.070(b).

Text: The parties vigorously dispute the meaning of AS 34.20.070(b), which provides for cure of a defaulted deed of trust before foreclosure by the obligee. [34] That statute states, in relevant part: At any time before the sale, if the default has arisen by failure to make payments required by the trust deed, the default may be cured by payment of the sum in default other than the principal that would not then be due if no default had occurred, plus attorney fees or court costs actually incurred by the trustee due to the default. If, under the same trust deed, notice of default under this subsection has been recorded two or more times previously and the default has been cured under this subsection, the trustee may elect to refuse payment and continue the sale. Embley argues that the statute must be read as granting a right of cure only to obligors because the statute makes no mention of other persons. Young argues that the statute should be read more broadly because it uses the passive voice rather than designating the beneficiary of the right of de-acceleration. Young proposes that we interpret AS 34.20.070(b) to protect the same classes of persons who are entitled to notice of foreclosure under AS 34.20.070(c). That subsection requires the trustee to notify: (1) the grantor in the trust deed; (2) the successor in interest to the grantor whose interest appears of record or of whose interest the trustee or the beneficiary has actual notice, or who is in possession of the property; (3) any other person in possession of or occupying the property; (4) any person having a lien or interest subsequent to the interest of the trustee in the trust deed, where the lien or interest appears of record or where the trustee or the beneficiary has actual notice of the lien or interest. Young thus claims a right to cure Dang's default either as a possessor or occupant of the property or as a holder of a subsequent interest in the property. In matters of statutory interpretation, we must give effect to the intent of the legislature, with due regard to the meaning that the statutory language conveys to others. [35] If a statute is unambiguous and expresses the legislature's intent, we will not modify or extend it by judicial construction. [36] However, in cases where the plain language of the statute permits more than one plausible interpretation, we apply a sliding scale: [T]he plainer the language, the more convincing contrary legislative history must be. [37] Thus, the inquiry begins with the text of the statute, buttressing the text with legislative history if necessary. The language at issue here was adopted in 1976. [38] As the parties have argued, the language admits of two possible interpretations. The legislature may have omitted express mention of obligors because it assumed that the reference would apply only to obligors; alternatively, it may have omitted express mention because it wished to include other interested persons such as those listed in AS 34.20.070(c). From the plain text either interpretation is plausible. [39] Because the statute is written in the passive voiceit states that the default may be curedits meaning is ambiguous. In Exxon Corp. v. State, [40] we considered the terms of a contract which stated that the Prudhoe Bay oil and gas unit may be enlarged from time to time. [41] In determining whether Exxon or the state was entitled to enlarge the unit, we held that the language is ambiguous. The passive voice can be ambiguous. [42] Since, however, subsequent sections of the contract in that case laid out procedures by which the state could decide on unit expansion, we held that only the state was entitled to expand the unit. [43] Likewise, AS 34.20.070(b) is ambiguous because it uses the passive voice. And, as was the case with the contract in Exxon, the statutory context provides some guidance: AS 34.20.070(c), in establishing a broad group of persons entitled to notice of foreclosure, suggests that the right of cure extends beyond the obligor.
At the first hearing on the bill, its sponsor Rep. Sullivan noted that the then-current law permitted foreclosure if a mortgagor was only one day late in payment. [44] At a subsequent hearing Rep. Sullivan stated that the legislation gives the buyer a chance to get caught up to date. [45] A further committee statement indicated that the bill would prevent an unscrupulous seller from vulturing in wait of a missed payment. [46] These statements certainly indicate a legislative assumption that the right of de-acceleration would extend to the obligor. While the legislature concerned itself chiefly with the substance of the right rather than the persons to whom it would extend, there is no hint in the statements that an expansive interpretation of the statute would conflict with legislative intent. [47]
Especially when statutory language and legislative history are ambiguous, we look to the common law [48] as a useful tool to discern legislative intent and to interpret statutes. The common law . . . furnishes one of the most reliable backgrounds upon which analysis of the objects and purposes of a statute can be determined. [49] By statute dating back to territorial days, Alaska has adopted the common law (where not inconsistent with federal or state constitutions or with state statutes) as the rule of decision in this state. [50] We presume that the legislature is aware of the common law when enacting statutes. [51] Moreover, the common law is an especially important tool when a statute attempts to restate the common law. [52] We have stated that [s]tatutes which establish rights that are in derogation of common law are to be construed in a manner that effects the least change possible in common law. [53] The equity of redemption, as we have discussed, is analogous to the right of cure granted by AS 34.20.070(b). If a lienholder is able to redeem the property, then that person should also be able to cure a default. As Young argues in her brief, cure is a more liberal right than the right of redemption, indicating that anyone entitled to redeem should also have the right to cure. We have characterized cure as a type of redemption: If the party who executes the deed of trust defaults the obligation, the party nonetheless has a right of redemption. In other words, the party has the opportunity to cure the default at any time before a nonjudicial sale. [54] Therefore, just as the junior lienholder has the right to redeem a mortgage, we determine that the junior lienholder also possesses the right to cure default on a deed of trust before the foreclosure sale. Our conclusion is further buttressed by the twin principles that redemption statutes should be construed liberally [55] and that equity abhors a forfeiture. [56] As noted above, [57] we share the view expressed by the Oregon Supreme Court that the right of equitable redemption on a deed of trust extends beyond the obligor to every other person who has an interest in, or legal or equitable lien upon, the mortgaged premises. [58] Thus the right of cure granted by AS 34.20.070(b) should extend to those persons. However, this equitable right would not extend to mere occupants or possessors lacking any claim to the property. [59] Thus, if Young wishes to invoke AS 34.20.070(b) she must do so on her claim of interest in the property rather than her occupancy of it.