Court Opinion

ID: 4713736
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:39:55.95103+00
Date Added: 2024-06-11T08:07:19.147265
License: Public Domain

¶22
Sanders, J.
(concurring) — I fully concur in the majority’s well-reasoned opinion. I write separately, however, to note my dissatisfaction with our holding and analysis in Washington Mutual.1 But today’s facts do not give us a chance to explicitly overrule it. There we held a nonfore-closing junior lienor could not seek a deficiency judgment. This holding was contrary to the plain meaning of Washington’s deeds of trust act, chapter 61.24 RCW, as well as our prior case law. More importantly, it frustrates the goals of the deeds of trust act and might dissuade would-be lenders from financing home loans by unnecessarily prohibiting the lenders from seeking a deficiency judgment.
¶23 Washington’s deeds of trust act created a nonjudicial foreclosure option as an alternative to the traditional (and at times cumbersome) judicial mortgage foreclosure. John D. Sullivan, Note, Rights of Washington Junior Lienors in Nonjudicial Foreclosure, 67 Wash. L. Rev. 235, 236 (1992). When a foreclosing lender opts for the nonjudicial option, then the act’s antideficiency provision limits his recovery to the foreclosure sale price. RCW 61.24.100. Washington Mutual though did not involve a foreclosing lienor, but a nonforeclosing junior lienor.2 The United States Court of *552Appeals for the Ninth Circuit certified a question to our court: whether Washington law allows a nonforeclosing junior lienor that purchases property at a nonjudicial foreclosure sale to recover a deficiency. Wash. Mut., 115 Wn.2d at 54.
¶24 Inexplicably, we held the antideficiency provision of the deeds of trust act also applied to nonforeclosing junior lienors. But there was no statutory authority to extend the antideficiency provision beyond the foreclosing lienor. Specifically, RCW 61.24.100(1) provides, in part, “a deficiency judgment shall not be obtained on the obligations secured by a deed of trust against any borrower, grantor, or guarantor after a trustee’s sale under that deed of trust.” The language “under that deed of trust,” id. (emphasis added), refers specifically to Yakima Federal’s deed of trust as it was the foreclosing lienor. Any other deed not foreclosed by the sale is not “under [Yakima’s] deed of trust” and thus is immune to the antideficiency provision. Unless ambiguity appears, we apply a statute’s plain meaning. State v. Wilson, 125 Wn.2d 212, 217, 883 P.2d 320 (1994). There is nothing ambiguous about RCW 61.24.100. Only Yakima Federal was precluded from seeking a deficiency judgment since it was the lienor foreclosing on its obligation while Washington Mutual was no more precluded from seeking a deficiency judgment than the IRS.
¶25 If a foreclosure sale satisfies the entire debt, there is no deficiency. However when this is not the case, a lender may sue for a deficiency. But in the case of a nonjudicial foreclosure sale, the antideficiency provision prevents the foreclosing lienor from seeking a deficiency judgment. This *553helps ensure the foreclosing lienor will set the highest value for the property, or at least cover its liability. But the nonforeclosing junior lienor has no control over setting the price. Preventing the junior lienor from seeking a deficiency thus contradicts the goals of the deeds of trust act by preventing lienors from fully realizing on the obligation.
¶26 Similarly, our reasoning in Washington Mutual contradicts our prior case law. In Fluke Capital, we said a lienor’s deficiency options are limited only because it specifically chooses the option of a nonjudicial foreclosure sale. Fluke Capital & Mgmt. Servs. Co. v. Richmond, 106 Wn.2d 614, 624, 724 P.2d 356 (1986) (“The remedies of a creditor who chooses nonjudicial procedures are limited to foreclosure alone . . . .” (emphasis added)). Likewise, in Donovick, we upheld Seattle-First National Bank’s right to foreclose on a second deed of trust. Donovick v. Seattle-First Nat’l Bank, 111 Wn.2d 413, 416, 757 P.2d 1378 (1988). We said Seattle-First’s foreclosure on a first deed of trust was irrelevant to the status of the second. Any other result would “give an unjustified, unwarranted windfall to the debtor — a windfall completely without merit in logic or equity in principle.” Id. at 416.3
¶27 Although certain benefits inure to a lender’s choice of a nonjudicial foreclosure sale, it nonetheless represents a compromise by limiting that lender’s recovery to the sale itself. But Washington Mutual never had the opportunity to make such a choice — Yakima Federal made it for them. Washington Mutual was then forced to purchase the property to protect its interests. It is unfair to make a junior lienor suffer the choice of a more senior lienor with any antecedent benefits running unjustly to the debtor.
*554¶28 Washington Mutual places junior lienors in the untenable position of losing their security as well as the underlying obligation. This potentially prevents a junior lienor from fully recovering its debt, increases the lender’s risk, and therefore can have a chilling effect on lender financing. Nothing in the deeds of trust act compels such an unsatisfactory result, nor should we create such a result by judicial fiat. Therefore, I would look critically at Washington Mutual until we have an opportunity to explicitly overrule it.
¶29 I concur.

 Wash. Mut. Sav. Bank v. United States, 115 Wn.2d 52, 793 P.2d 969 (1990).

 Washington Mutual’s facts are peculiar. Robert and Christine Shell owned a parcel of real property with a fair market value of $64,000. They had two mortgages. Yakima Federal Savings & Loan held a first deed of trust on the property to secure a $41,000 debt. Washington Mutual Savings Bank held a second deed of trust to secure a $29,800 debt. Finally, the Internal Revenue Service (IRS) filed a third priority tax lien for $150,000. Wash. Mut., 115 Wn.2d at 54-55. After the Shells defaulted on both loans, Yakima Federal began nonjudicial foreclosure proceedings. Washington Mutual, in an attempt to protect its inter*552ests, purchased the property for the amount then owed to Yakima Federal— $42,020.63. Under the Internal Revenue Code, the IRS sought to redeem the property from Washington Mutual. Id. The code explicitly allowed the IRS to redeem real property subject to federal tax liens from purchasers at nonjudicial foreclosure sales. The code states the redemption price is the actual price paid at the foreclosure sale and includes that amount of the purchaser’s secured obligation satisfied by the sale. Id. at 56 (citing 28 U.S.C. § 2410(d)). Therefore, the issue before us was how much of Washington Mutual’s obligation the foreclosure sale satisfied. In other words, the IRS had to pay the purchase price plus any amount for which Washington Mutual could not obtain a deficiency judgment against the Shells.

 Similarly, other courts that have addressed this same issue held contrary to our decision in Washington Mutual. In Walter E. Heller Western, Inc. v. Bloxham, 176 Cal. App. 3d 266, 221 Cal. Rptr. 425 (1985), the California Court of Appeals held a junior lienor has a right to recover a deficiency when the junior lienor purchases at a senior lienor’s nonjudicial foreclosure sale. The Alaska Supreme Court agreed and held junior lienors who purchase at a nonjudicial foreclosure sale may recover a deficiency judgment. Adams v. FedAlaska Fed. Credit Union, 757 P.2d 1040 (Alaska 1988).