Court Opinion

ID: 1086118
Source: CourtListenerOpinion
Date Created: 2013-10-21 17:53:25.282948+00
Date Added: 2024-06-11T12:35:00.006132
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

SIXTY-01 ASSOCIATION OF
APARTMENT OWNERS, a Washington               No. 69135-0-1
non-profit corporation,                      (consolidated with No. 69136-8-1)

      Respondent/Cross-Appellant,            DIVISION ONE

                                             UNPUBLISHED OPINION

VIRGINIA A. PARSONS and JOHN
DOE PARSONS, wife and husband,
or state registered domestic partners;
JOHN DOE and JANE DOE, Unknown
Occupants of the Subject Real Property;
and also all other persons or parties
unknown claiming any right, title, estate,
lien, or interest in the real estate
described in the Complaint herein,

                     Defendants,

DANIEL PASHNIAK,

       Appellant/Cross-Respondent.
SIXTY-01 ASSOCIATION OF
APARTMENT OWNERS, a Washington
non-profit corporation,

      Respohdent/Cross-Appellant,

                                                                                 C -:
MARIA A. MALLARINO and JOHN
DOE MALLARINO, wife and husband,
or state registered domestic partners;
JOHN DOE and JANE DOE, Unknown
Occupants of the Subject Real Property;
and also all other persons or parties
unknown claiming any right, title, estate,
lien, or interest in the real estate
described in the Complaint herein,

                     Defendants,
                                             FILED: October 21, 2013
DANIEL PASHNIAK,

       Appellant/Cross-Respondent.
No. 61935-0-1/2

      Grosse, J. — A purchaser at a sheriff's sale acquires only the right, title, and

interest that a debtor has at the time of the sale. Here, the two condominiums

purchased at the sheriff's sale were each subject to deeds of trust previously recorded

by Bank of America. Because the purchaser is deemed to have constructive notice of

recorded deeds of trust, we affirm the trial court's decision confirming the sale of one

condominium and reverse the trial court's decision vacating the sale of the other

condominium.

                                          FACTS

      On November 3, 2011, Sixty-01 Association of Apartment Owners was awarded

separate default judgments against Virginia Parsons and Maria Mallarino for failure to

pay their condominium assessments.1 Third party deeds of trust encumbering the
Parsons and Mallarino units were recorded in 2007 and 2006, respectively.2 Separate
orders of sale were issued January 13, 2012. Notice of the sheriff's sale was sent to all

interested parties, including Bank of America (BOA), the beneficiary under the deeds of
trust for both properties. Sixty-01 and BOA entered into separate stipulations and
orders, on March 7, 2012 for the Parsons property, and on March 8, 2012 for the

Mallarino property. Those stipulations declared that the judgment did not affect the
bank's deed of trust interest and that the purchaser at the sheriff's sale took any interest

in the condominiums subject to any valid interest of the bank.

       The two condominium units were auctioned separately on Friday, March 9, 2012.

Daniel Pashniak's bids of $16,200.00 and $35,400.00 for the Parsons and Mallarino

units were accepted as the high bids. The judgment clerk received the returns on the

1 Parsons owned Unit No. 10 and Mallarino owned Unit No. 493 at Sixty-01
Condominiums, 6439 139th Place N.E., Redmond, WA 98052.
2 King County Recording No. 20070723000298 and No. 20060228003678.
No. 61935-0-1/3

sale of property and certificates of purchase of real estate on March 16, 2012.      On the

same day, the judgment clerk mailed the notices of return of the sheriff's sale on real

property.

        On March 22, 2012, Pashniak sent a notice of appearance and an objection to

the confirmation of the sheriff's sale for the Parsons unit, claiming that the order of sale

and complaint for judicial foreclosure was confusing as to whether the sheriff's sale

rendered the property free of all other indebtedness. Sixty-01 moved to confirm the sale

of the Parsons unit on June 6, 2012. The court confirmed the sale of the Parsons unit

on June 20, 2012.       Sixty-01 moved to confirm the Mallarino sale on June 14, 2012.

Notice was sent to Pashniak and interested parties. Pashniak, acting pro se, did not file

an objection to the Mallarino sale until April 9, 2012. Pashniak then hired counsel and

filed a second objection to confirmation and moved to vacate the sheriff's sale on July

12, 2012. Judge Ronald Kessler vacated the sale on July 23, 2012.

        In this consolidated appeal, Pashniak appeals from the confirmation of the sale of

the Parsons unit. Sixty-01 appeals from the order vacating the sale of the Mallarino

unit.

                                         ANALYSIS

        Pashniak argues that he is entitled to withdraw his bid because the default

judgments obtained against both Parsons and Mallarino stated that Sixty-01's lien was

superior to any other lien, thus misleading him about the existence of properly recorded

deeds of trust. He further argues that he was unaware of the last minute filing of the

stipulations between BOA and Sixty-01 and thus was not privy to the knowledge that

Sixty-01's judgments had no effect on the priority of the previously recorded deeds of

trust until after the sheriff's sale.

        The default judgment provided:
No. 61935-0-1/4

       [A]ll right, title, claim, lien, estate or interest of the Foreclosed Defendants,
       each and all of them, and of all persons claiming by, through, or under
       them, in and to the Property or any part thereof is inferior and subordinate
       to Plaintiff's lien and is hereby foreclosed.

BOA was not a named party to the underlying suit resulting in the foreclosure, and

Pashniak does not claim that BOA's lien was extinguished by the statement in the order

that Sixty-01's lien foreclosed all liens. In essence, Pashniak argues that the default

judgment order excuses his failure to exercise due diligence and search the title before

entering a bid at the sheriff's sale.

       RCW 6.21.110 provides:

                (2) The judgment creditor or successful purchaser at the sheriff's
       sale is entitled to an order confirming the sale at any time after twenty
       days have elapsed from the mailing of the notice of the filing of the
       sheriffs return, on motion with notice given to all parties who have entered
       a written notice of appearance in the action and who have not had an
       order of default entered against them, unless the judgment debtor, or in
       case of the judgment debtor's death, the representative, or any
       nondefaulting party to whom notice was sent shall file objections to
       confirmation with the clerk within twenty days after the mailing of the
       notice of the filing of such return.

                (3) If objections to confirmation are filed, the court shall
       nevertheless allow the order confirming the sale, unless on the hearing of
       the motion, it shall satisfactorily appear that there were substantial
       irregularities in the proceedings concerning the sale, to the probable loss
       or injury of the party objecting. In the latter case, the court shall disallow
       the motion and direct that the property be resold, in whole or in part, as
       the case may be, as upon an execution received as of that date.[3]
       Under the statute, it is clear that even when there are objections to the sale,

unless there are irregularities in the proceedings concerning the sale, the trial court is
required to confirm the sale. Pashniak cannot cite to any irregularity in the sheriff's sale.
He was not entitled to withdraw the bid. The trial court correctly affirmed the sale of the

Parsons unit.

  (Emphasis added.)
No. 61935-0-1/5

        The trial court incorrectly exercised its equitable powers to set aside the sale of

the Mallarino unit, on the grounds that the stipulation with BOA, filed in the clerk's office

the day before the sale, would not be viewable in the electronic court record for 24 to 48

hours after filing, and thus Pashniak would not have had inquiry notice regarding BOA's

lien.

        But whether or not Pashniak had notice of the stipulation with BOA is of no

consequence. Had Pashniak exercised due diligence, he would have discovered the

duly recorded liens on both properties. Pashniak relies on Davies v. Davies.4 to support
his position that a purchaser can withdraw his bid any time prior to confirmation. In

Davies, the judgment creditor and purchaser were one and the same. Davies withdrew

his motion for confirmation and thus there was no sale. Statutorily, only a judgment

creditor or successful purchaser has standing to move for confirmation.5 Without
confirmation there is no finality.   Pashniak's argument fails because the statute says

that either the judgment creditor or successful purchaser is "entitled to an order

confirming the sale" where procedural safeguards have been met.6 The statute does
not entitle an investor to renege on a bid because of his failure to exercise due

diligence.

        Pashniak's reliance on Miebach v. Colasurdo7 is equally misplaced. The facts

there are markedly distinguishable. In Miebach, the court overturned a sheriffs sale

because the judgment creditor bid $1,340.02 in full satisfaction of the default judgment.

The property had equity over $77,000.00 and was only subject to a $29,000.00 senior

448 Wn. App. 29, 737 P.2d 721 (1987).
5 Davies, 48 Wn. App. at 31 n.1; former RCW 6.24.100(1) (1987) (recodified as RCW
6.21.110(2)).
6 RCW 6.21.110(2).
7 102 Wn.2d 170, 685 P.2d 1074 (1984).
No. 61935-0-1/6

lien.8 Moreover, the evidence there showed that there was no attempt to collect the

underlying debt. The issue here is not whether a judgment debtor received inadequate

recompense for property, but whether a buyer/investor had constructive notice of the

underlying deeds of trust.

       Here, the facts are more similar to Mann v. Household Finance Corp. III.9

Although Mann involved the purchase of property at a nonjudicial foreclosure sale of a

second deed of trust, its reasoning is instructive. There, like here, purchaser Mann was

unaware of the existence of the first deed of trust.        When the first deed of trust

subsequently foreclosed on the property, Mann contended that the language in the

notice of trustee's sale was misleading. The language used was in the form set forth in

the statute, "The effect of the sale will be to deprive the Grantor and all those who hold

by, through or under the Grantor of all their interest. . . ."10 That language is similar to
the language used here.      Pashniak, as a purchaser at a mortgage foreclosure sale,

should not be relieved of his purchase simply because of his mistaken belief as to the

title that he would receive where he failed to seek the information by examination or

inquiry. A recorded deed constitutes constructive notice of the interest acquired to all

subsequent purchasers.11 RCW 6.21.110(3) provides that even where "objections to
confirmation are filed, the court shall nevertheless allow the order confirming the sale,

unless . . . there were substantial irregularities in the proceedings concerning the sale."

Here, there were no irregularities. The trial court erred in vacating the sale of the

8 Miebach. 102 Wn.2d at 173.
9 109 Wn. App. 387, 35 P.3d 1186 (2001).
10 Mann, 109 Wn. App. at 392 (quoting RCW 61.24.040(1 )(f)(VIII)).
11 Newport Yacht Basin Ass'n of Condo. Owners v. Supreme Nw., Inc., 168 Wn. App.
86, 106, 285 P.3d 70, review denied. 175 Wn.2d 1015 (2012); see also Tomlinson v.
Clarke. 118 Wn.2d 498, 500, 825 P.2d 706 (1992) (recorded deed of trust imparts
constructive notice of such real property interest).
No. 61935-0-1/7

Mallarino unit. There are no equitable considerations that could overturn a procedurally

correct sheriff's sale.

Attorney Fees

       A party may recover attorney fees only when authorized by a private agreement,

statute, or recognized ground of equity.12 Sixty-01 argues that it is entitled to attorney
fees under RCW 64.34.364(14) and the recorded declaration of condominium, which

provides for recovery of attorney fees in foreclosure actions. However, both of those

apply to the condominium owners not a third party investor. Pashniak is not a party to

that contract and thus Sixty-01 is not entitled to attorney fees.

       In sum, because Pashniak had constructive notice of the deeds of trust recorded

on both properties and with due diligence would have discovered the same; we hold

that Sixty-01 was entitled to confirmation of the sheriff's sale for both properties.13
Accordingly, we affirm the trial court's confirmation of sale of the Parson's unit, and

reverse the trial court's vacation of the sale of the Mallarino unit.

                                                                        J
WE CONCUR:

  AAe J
12 Humphrey Indus.. Ltd. v. Clav St. Assocs.. LLC. 176 Wn.2d 662, 676, 295 P.3d 231
(2013).
    Sixty-01 also raises procedural appellate issues with regard to Pashniak's failure to
file a separate appeal on the postjudgment motion even though Pashniak filed an
amended notice of appeal. Because we resolve the substantive issues, we need not
address the procedural issues raised; but note that any irregularity did not result in any
prejudice to Pashniak.