Court Opinion

ID: 4031569
Source: CourtListenerOpinion
Date Created: 2016-09-06 20:23:23.687692+00
Date Added: 2024-06-11T14:35:37.939867
License: Public Domain

20ISSEP -G £i« b-hl

      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

OCWEN LOAN SERVICING, LLC,                       No. 73548-9-1

             Appellant,                          (Consolidated with
                                                 Nos. 73549-7-1, 73648-5-1,
      v.                                         and 73649-3-1)

MICHAEL E. BAUMAN and                            DIVISION ONE
ROCIO BAUMAN, individually
and their marital community;
and CROSS VALLEY WATER                           PUBLISHED OPINION
DISTRICT,

              Respondents.                       FILED: September 6, 2016

       Leach, J. — Ocwen Loan Servicing LLC appeals two related cases that

we consolidated.    In each, the trial court dismissed, on summary judgment,

Ocwen's declaratory judgment action seeking to establish a right to redeem a

property foreclosed on by the Cross Valley Water District.       Michael and Rocio

Bauman bought both at public auction. Based on a legal error in each order of

sale, the trial court decided that equitable grounds existed to grant a redemption

right but also concluded that Ocwen did not have standing to redeem either

property. The Baumans cross appeal, contending that the trial court erred when

it created an equitable right to redeem the properties.
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1/ 2

       Because a statute grants postforeclosure rights to redeem, the trial court

erred when it concluded that Ocwen had a longer equitable right to redeem the

properties. The relevant statute provides only a one-year right to redeem, and

Ocwen did not try to redeem during this time. Thus, for a different reason, the

trial court did not err by dismissing Ocwen's lawsuits on summary judgment.

Because we resolve the case on this basis, we do not reach the other issues

raised by Ocwen. We affirm.

                                      FACTS

       Patricia and Bruno Bonvicini and James L. Turner each borrowed money

to buy property. On June 20, 2008, the Bonvicinis purchased property located at

23030 105th Avenue SE in Woodinville.       They financed their purchase with a

loan from Evergreen Moneysource, secured by a deed of trust in favor of

Mortgage Electronic Registration Systems Inc. (MERS). On November 9, 2009,

Turner purchased property located at 6602 63rd Street SE in Snohomish,

financing his purchase with a loan from Golf Savings Bank, secured by a deed of

trust also in favor of MERS.

       Both the Bonvicinis and Turner failed to pay their water service charges.

Cross Valley Water District filed lawsuits against the Bonvicinis and Turner to

foreclose the water district's statutory lien for delinquent water service charges.
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1/3

The trial court entered a judgment and order of sale for each property. It ordered

each sold "to the highest and best bidder for cash as provided by RCW

84.64.080 and RCW 57.20.135." Each judgment also stated that the property

was subject to a two-year postsale right of redemption under RCW 35.50.270, a

statute that governs foreclosures to collect local improvement assessments.

       On March 13, 2012, the Baumans purchased both properties at public

auction. The water district delivered a quitclaim deed to the Baumans for each

property "subject to the right of redemption within two years from the date of the

sale pursuant to RCW 35.50.270."

       Ocwen claims the right to enforce the deed of trust encumbering each

property. It notified the Baumans of its intent to redeem the Bonvicini property on

March 25, 2013, and of its intent to redeem the Turner property on May 8, 2013.

And on March 11, 2014, Ocwen filed two lawsuits against the Baumans, claiming

a right to redeem the properties under the Bonvicini and Turner deeds oftrust.

       The Baumans moved for summary judgment after discovery.                They

contended that the trial court entering the foreclosure judgment had erroneously

included the postsale redemption right under RCW 35.50.270 and that Ocwen

lacked standing to redeem either property.
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1/4

       The trial court decided that RCW 35.50.270 applied only to foreclosures to

recoup local improvement assessments; it did not apply to these properties. But

it concluded that because the trial court issued an order describing a right to

redemption under the statute, it would be inequitable to deny that right. But the

trial court also concluded that Ocwen lacked standing to exercise any redemption

right for either property because it did not show that it had a qualifying interest by

the relevant date, March 13, 2014. It dismissed both cases.

       Ocwen moved for reconsideration in both cases and supported the

request with new evidence. The Baumans opposed each motion and asked that

the trial court not consider the evidence Ocwen offered because it was available

to Ocwen when it filed its response to the summary judgment motions. The trial

court agreed and denied Ocwen's motions for reconsideration. Ocwen appeals,

and the Baumans cross appeal.

                             STANDARD OF REVIEW

      This court reviews summary judgment rulings de novo, viewing all the

facts and inferences in favor of the nonmoving party and finding summary

judgment proper only if no genuine issue of material fact exists.1 This court

       1 Lyons v. U.S. Bank Nat'l Ass'n, 181 Wash. 2d 775, 783, 336 P.3d 1142
(2014).
                                         -4-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1 / 5

reviews a trial court's order granting equitable relief de novo as a question of

law.2 We review statutory interpretation de novo.3

                                   DISCUSSION

         We first address the Baumans' cross appeal and consider whether the

court erred when it created an equitable right to redeem the properties.

         At oral argument Ocwen, for the first time, contended that we should not

consider this issue because the Baumans' claim is an impermissible collateral

attack on the two foreclosure judgments in the water district foreclosure lawsuits.

Ocwen did not make this argument in the trial court or in its briefing filed with this

court.    It makes no claim that this issue involves a manifest error affecting a

constitutional right. Consistent with the general practice of Washington appellate

courts, we decline to review this contention raised for the first time at oral

argument.4

         The trial court concluded that each order of sale and each deed conveying

a property to the Baumans should not have described a redemption right under

RCW 35.50.270 because that statute does not apply to a foreclosure to collect a

       2 Bank of Am., NA v. Prestance Corp., 160 Wash. 2d 560, 564, 160 P.3d 17
(2007).
       3 P.H.T.S.. LLC v. Vantage Capital. LLC, 186 Wash. App. 281, 287, 345
P.3d20(2015).
      4 See RAP 2.5(a); Anderson v. Dussault, 181 Wash. 2d 360, 373, 333 P.3d
395 (2014) (citing RAP 12.1).
                                         -5-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1/6

water district's service charges. But the trial court also decided that since the

"[property was sold subject to the two year period of redemption," under

principles of equity, "language regarding redemption is binding on the Baumans."

      The Baumans claim that a trial court cannot create an equitable

redemption right when a statute provides a redemption right. The Baumans rely

primarily on Schroeder v. City of Raymond.5 In that case, the Supreme Court

held that when an owner of municipal bonds brought a foreclosure action under a

statute permitting the lawsuit, "the court had no power to grant other than the

statutory relief, hence the language of the decree which goes beyond what the

statute directs is of no force or effect."6     The Schroeder court based its

conclusion on the fact that the foreclosure was "a purely statutory proceeding

brought under the statute and controlled thereby."7 Any language in the court

decree going beyond the statutory relief had no force or effect.8

       More recent cases have applied equitable principles to temper the rule

that a redemption right must be exercised in strict compliance with the statute

creating the right.9 In GESA Federal Credit Union v. Mutual Life Insurance Co.,10

       5 117 Wash. 238, 200 P. 1092 (1921), affd, 117 Wash. 238, 204 P. 180
(1922).
       6 Schroeder, 117 Wash, at 243.
       7 Schroeder, 117 Wash, at 242.
       8 Schroeder, 117 Wash, at 243.
       9 Fid. Mut.Sav. Bank v.Mark, 112 Wash. 2d 47, 54, 767 P.2d 1382 (1989).
       10 105 Wash. 2d 248, 251, 713 P.2d 728 (1986).
                                        -6-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1 / 7

our Supreme Court considered whether a purchaser's failure to file a statement

of paid taxes, as required by a redemption statute, barred the purchaser from

recovering those payments from a subsequent redemptioner.             Because the

redemptioner had received actual notice from the purchaser, the court applied

the equitable principle of substantial compliance to excuse the failure to file. The

court distinguished redemption statute provisions creating a substantive right

from those establishing the procedure to perfect that right.     It found the filing

requirement to be a procedural step subjectto a substantial compliance rule.11

       Fidelity Mutual Savings Bank v. Mark12 illustrates the importance of the

distinction between provisions creating substantive rights and those describing

perfection procedures. The court refused to apply equitable principles to provide

a redemption right to a judgment debtor's assignee whose assignment did not

comply with Washington's real property statutes and thus did not convey the

judgment debtor's title. Without title, the assignee was not "a successor in

interest" granted a statutory right to redeem.13 The court noted the harshness of

its decision to deny equitable relief but characterized the requested relief as the

granting of a substantive right and stated, "The rights established by the

       11 GESA Fed. Credit Union, 105 Wash. 2d at 254-55.
       12112Wn.2d47, 767 P.2d 1382(1989).
       13 Mark, 112 Wash. 2d at 53.
                                         -7-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1
73648-5-1, and 73649-3-1 / 8

Legislature must remain exclusive if they are to remain reliable."14 Thus, the trial

court did not have the authority to create a redemption right.

       Next we consider whether Ocwen hada statutory right to redeem the

properties. We interpret statutes to give effect to the legislative intent, looking

first to the statute's plain meaning and, where statutory language is

unambiguous, giving effect to that plain language.15

       Cross Valley filed its foreclosure lawsuits under RCW 57.08.081 (4).16 This
statute provides that in a water district foreclosure lawsuit the laws "shall control

as in other civil actions."17 This means that we look to the statutes providing for

the sale of real property to satisfy a judgment to decide if Ocwen has redemption

rights. Chapter 6.21 RCW contains the statutory provisions for a real property

       14 Mark, 112 Wash. 2d at 55.
       15 P.H.T.S.. 186 Wash. App. at 290.
       16 The district may, at any time after the connection charges or
          rates and charges for services supplied or available and
          penalties are delinquent for a period of sixty days, bring suit in
          foreclosure by civil action in the superior court of the county in
          which the real property is located. The court may allow, in
          addition to the costs and disbursements provided by statute,
          attorneys' fees, title search and report costs, and expenses as it
          adjudges reasonable. The action shall be in rem, and may be
          brought in the name of the district against an individual or against
          all of those who are delinquent in one action. The laws and rules
          of the court shall control as in other civil actions.
       17 RCW 57.08.081(4).
                                           -8-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-1, and 73649-3-1/9

execution sale. RCW 6.21.080 applies to the sales in this case and provides for

redemption rights as granted in chapter 6.23 RCW:

      A sale of a real property estate of less than a leasehold of two
      years unexpired term and a sale of a vendor's interest in real
      property being sold under a real estate contract shall be absolute.
       In all other cases, real property shall be sold subject to redemption,
      as provided in chapter 6.23 RCW.

(Emphasis added.) And RCW 6.23.010 grants qualifying parties, including

successors in interest, redemption rights:

       (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 separately 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 priority to that on
       which the property was sold. The persons mentioned in this
       subsection are termed redemptioners.
             (2) As used in this chapter, the terms "judgment debtor,"
       "redemptioner," and "purchaser" refer also to their respective
       successors in interest.

Qualifying parties must redeem within one year after the foreclosure sale:

"Unless redemption rights have been precluded pursuant to RCW 61.12.093 et

seq., the judgment debtor or any redemptioner may redeem the property from the
purchaser at any time . . . within one year after the date of the sale."18

       18 RCW 6.23.020(1).
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-I, and 73649-3-1/10

       Thus, Ocwen had one year to redeem each property. Because it took no

step to redeem within this time, its redemption rights expired. The trial court did

not err by dismissing Ocwen's declaratory judgment lawsuits.

       Baumans contend that Ocwen had no redemption rights. They correctly

note that each order of sale authorized the water district's treasurer to sell each

property as provided in RCW 84.64.080 and RCW 57.20.135. They claim that

the water district has two options to foreclose its statutory lien:    (1) the civil

lawsuit authorized by RCW 57.08.081(4) and (2) a sale by its treasurer in the

same manner as a property tax foreclosure sale authorized by chapter 84.64

RCW.

       Baumans begin their analysis with RCW 57.08.005(22).           This statute

authorizes a water district to exercise any powers "granted to cities and counties

with respect to the acquisition, construction, maintenance, operation of, and

fixing rates and charges for waterworks and systems ofsewerage and drainage."
Former RCW 36.94.150 (1997) grants a county a lien for unpaid water service

charges and provides for foreclosure of that lien "in the same manner as the
foreclosure of real property tax liens."       Thus, a water district can use this

alternate tax foreclosure process. In this tax foreclosure process, only minors

                                        •10-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-I, and 73649-3-1/11

and persons adjudicated legally incompetent have redemption rights.19 Thus,

Ocwen had no redemption rights.

       Baumans' argument does not persuade us. RCW 57.08.005(22) does not

expressly grant any lien or foreclosure rights. We see no reason to imply a grant

by this statute of lien and foreclosure rights with different procedures when

another statute, RCW 57.08.081(4), expressly addresses the subject. To do so

would violate the general rule that a specific statute controls over a general

statute.20 Additionally, the exercise of these implied powers could produce harsh

results for which Baumans have shown no legislative intent.

       We conclude that the specific language of RCW 57.08.081(4) authorizing

water districts to "bring suit in foreclosure by civil action" provides Cross Valley's

only statutory authority to foreclose on the properties.

                                   CONCLUSION

       Because a trial court may not provide equitable rights expanding a

statutory grant of the substantive right to redeem property, the trial court erred

when it concluded that Ocwen had an equitable right to redeem the properties

within two years.     Ocwen had only the one-year statutory redemption right

granted by RCW 6.23.020(1). Because Ocwen did not attempt to redeem the

       19 Former RCW 84.64.070 (2002).
       20 Johnson v. Cent. Valley Sch. Dist., 97 Wash. 2d 419, 428, 645 P.2d 1088
(1982).
                                         -11-
No. 73548-9-1 (consol. w/ Nos. 73549-7-1,
73648-5-I, and 73649-3-1/12

properties within one year, the trial court properly dismissed Ocwen's declaratory

judgment lawsuits. While this was not the basis for the trial court's decision, we

may sustain the trial court on any basis the record supports.21 We affirm.

WE CONCUR

       21 Nw. Collectors. Inc. v. Enders. 74 Wash. 2d 585, 595, 446 P.2d 200
(1968).
                                       -12-