Court Opinion

ID: 6330465
Source: CourtListenerOpinion
Date Created: 2022-04-13 01:15:01.917071+00
Date Added: 2024-06-11T09:22:53.782895
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                    DIVISION ONE
COPPER CREEK (MARYSVILLE)
HOMEOWNERS ASSOCIATION, a                       No. 82083-4-I
Washington nonprofit corporation,

                     Respondent,                ORDER GRANTING MOTION
                                                FOR RECONSIDERATION
              v.                                AND WITHDRAWING AND
                                                SUBSTITUTING OPINION
SHAWN A. KURTZ and STEPHANIE A.
KURTZ, husband and wife and the
marital or quasi-marital community
composed thereof; QUALITY LOAN
SERVICE CORPORATION OF
WASHINGTON, a Washington
corporation,

                     Defendants,

WILMINGTON SAVINGS FUND
SOCIETY, FSB, d/b/a CHRISTIANA
TRUST, not individually but as trustee
from Pretium Mortgage Acquisition
Trust, Selene Finance LP,
                    Appellants.

       The respondent, Copper Creek (Marysville) Homeowners Association,

has filed a motion for reconsideration.       The Appellants, Selene finance

LP and Wilmington Savings Fund Society FSB, d/b/a Christiana Trust, has filed

an answer to the motion. The court has considered the motion, and a majority

of the panel has determined that the motion should be granted and the opinion

filed on January 18, 2022 but the opinion should be withdrawn and a substitute

opinion filed; now, therefore, it is hereby
No. 82083-4-I/2

          ORDERED that the motion for reconsideration is granted; and it is further

          ORDERED that the opinion filed on January 18, 2022 is withdrawn; and it is

further

          ORDERED that a substitute opinion shall be filed and published in

Washington Appellate Reports.

                                            2
 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
 COPPER CREEK (MARYSVILLE)
 HOMEOWNERS ASSOCIATION, a                           No. 82083-4-I
 Washington nonprofit corporation,
                                                     DIVISION ONE
                        Respondent,
                                                     PUBLISHED OPINION
                 v.

 SHAWN A. KURTZ and STEPHANIE
 A. KURTZ, husband and wife and the
 marital or quasi-marital community
 composed thereof; QUALITY LOAN
 SERVICE CORPORATION OF
 WASHINGTON, a Washington
 corporation,

                        Defendants,

 WILMINGTON SAVINGS FUND
 SOCIETY, FSB, d/b/a CHRISTIANA
 TRUST, not individually but as trustee
 from Pretium Mortgage Acquisition
 Trust, Selene Finance LP,
                     Appellants.

         APPELWICK, J. — Selene/Wilmington seeks reversal of summary judgment

quieting title in favor of Copper Creek. Relying on Edmundson v. Bank of America,

194 Wn. App. 920, 378 P.3d 272 (2016), the trial court determined the statute of

limitations rendered the Selene/Wilmington deed of trust unenforceable. This was

error.

         The statute of limitations ran against the deed of trust only to the extent it

ran against the underlying debt. The underlying debt was an installment debt. The

statute of limitations accrued on each individual installment as it came due.
No. 82083-4-I/2

Bankruptcy discharge of the debtor did not extinguish the debt, modify the

schedule of payments, or accelerate the maturity date. And, the lender did not

accelerate the maturity date of the loan. The statute of limitations on each of the

missed installments began running from the date they came due. Bankruptcy did

not toll the statute of limitations. The discharge left intact the lender’s option to

enforce the debt against the property in rem.

       However, the Servicemembers Credit Relief Act (SCRA), 50 U.S.C. §

3936(a), tolled the period for any action to enforce the debt until the debtor, an

active duty servicemember, was relieved of personal liability on the debt by the

discharge in bankruptcy. At that time, the statute of limitations began to run on any

unpaid installments. Selene/Wilmington may enforce the deed of trust, except to

the extent the statute of limitations has rendered any unpaid installments

uncollectable.

       We reverse and remand for further proceedings.

                                      FACTS

       In 2007, Shawn and Stephanie Kurtz purchased real property with a note

for $303,472.00 secured by a deed of trust (DOT).1 Shawn was active duty in the

United States military at the time and continued to be an active duty serviceman

until at least September 2020.      The property was within the Copper Creek

       1CTX Mortgage Company, LLC was the original beneficiary of the DOT.
CTX assigned the DOT to J.P. Morgan Mortgage Acquisition Corporation in
December 2013. In December 2018, J.P. Morgan Mortgage Acquisition assigned
the DOT to JPMorgan Chase Bank who immediately assigned it to Citibank N.A.
as trustee for CMLTI Asset Trust. Citibank assigned the DOT to Wilmington
Savings Fund Society as trustee for Pretium Mortgage Acquisition Trust in April
2019.

                                         2
No. 82083-4-I/3

(Marysville) Homeowners Association and the Kurtzes were obligated to pay

annual assessments of $400.

      In January 2008, Shawn and Stephanie separated and Stephanie moved

out of the property. The Kurtzes stopped paying on the note in 2008 or 2009.

Stephanie filed for Chapter 7 bankruptcy protection in February 2010. Stephanie

included the property secured by the DOT on the bankruptcy schedule of creditors

holding secured claims. On the debtor’s statement of intention, Stephanie noted

the mortgage and her intention to surrender the property. Stephanie did not claim

the property as exempt. Stephanie received a bankruptcy discharge in June 2010.

The note was among the claims discharged without payment.             Stephanie’s

bankruptcy case was closed on June 18, 2010.

      The Kurtzes ceased payment of their annual assessment to Copper Creek

in July 2010.

      Shawn filed a separate Chapter 7 bankruptcy in March 2011. He identified

the property secured by the DOT and his intention to surrender it. Shawn did not

claim the property as exempt. Shawn also included Copper Creek as a creditor

holding a secured claim for homeowners’ dues in the amount of $1,826.50. His

bankruptcy was discharged on July 13, 2011 and his case closed on July 18,

2011.2 The note was among the claims discharged without payment.

      The property sat vacant and fell into disrepair. In November 2018, Copper

Creek recorded a notice of claim of lien against the property for the $15,278.68 in

      2  Because the record does not include whether the secured property was
abandoned by the bankruptcy court prior to closure, we assume the protective
injunction ended upon closure of the bankruptcy case. See 11 U.S.C. § 362(c)(1).

                                        3
No. 82083-4-I/4

assessments, fees, interest, and attorney fees and costs that had accrued on the

property. Copper Creek filed for judicial foreclosure to recoup the delinquent

assessments.3 Copper Creek acknowledges that it named only the Kurtzes as

defendants in the judicial foreclosure, omitting the lenders because its assessment

lien was junior to the lender and it was not seeking to foreclose the lender’s

interest. Copper Creek requested appointment of a receiver to “obtain possession

of the Lot, refurbish it to a reasonable standard for rental units, and rent the Lot or

permit its rental to others.” In April 2019, Copper Creek and the Kurtzes entered

an agreed order with the court for appointment of a custodial receiver. Copper

Creek recorded the order appointing the receiver with Snohomish County Superior

Court. The receiver spent $22,470.24 rehabilitating the property and began renting

it at fair market value.

       Shortly after completion of the repairs to the property, Quality Loan Service

Corporation of Washington (QLS) as Trustee commenced nonjudicial foreclosure

on the property on behalf of successor beneficiary Wilmington Savings Fund

Society FAB and loan servicer Selene Finance LP (together “Selene/Wilmington”).

On October 30, 2019, QLS provided a notice of trustee sale of the property to

Copper Creek. In February 2020, Copper Creek notified QLS that enforcement of

the DOT was barred by the statute of limitations and demanded discontinuation of

the sale. QLS refused and Copper Creek filed a motion to restrain the sale.

       3  Shawn was still an active servicemember when Copper Creek filed for
judicial foreclosure. He does not appear to have challenged the suit, instead he
agreed to receivership. The validity of Copper Creek’s judicial foreclosure action
is not before us.

                                          4
No. 82083-4-I/5

       Copper     Creek    also   filed   a   complaint     against   the    Kurtzes,

Selene/Wilmington, and QLS for lien foreclosure, restraint of the trustee sale,

wrongful foreclosure, and quiet title.4 In April 2020, Selene/Wilmington filed a CR

12(b)(6) motion to dismiss the action to quiet title for lack of standing. Prior to a

ruling on that motion, Copper Creek received a deed in lieu of foreclosure from the

Kurtzes that was recorded with the county on June 10, 2020.

       In May 2020, Selene/Wilmington contacted Shawn and Stephanie and

asked if they would execute a waiver of the statute of limitations on the underlying

loan: “Given that you both seem to have moved on from the Property now,

executing such a document likely wouldn’t impact you much, if at all, but i[t] could

help my client in the underlying litigation, and we’d be willing to give you something

in exchange for your trouble.” Shawn refused and notified Copper Creek of the

request.

       In June 2020, Copper Creek moved to continue the sale and the motion to

dismiss. The trial court granted Copper Creek’s motion, continuing both the trustee

sale and the motion to dismiss to allow the parties time to conduct discovery. The

court entered an order compelling discovery with a deadline of July 7, 2020, and

awarded attorney fees to Copper Creek. QLS then cancelled the sale.

       Copper Creek requested and received leave to amend its complaint to

reflect its standing through the deed in lieu of foreclosure. Selene/Wilmington did

       4 Shawn was still an active duty servicemember at the time of this lawsuit.
Arguably, the SCRA barred this action as against him. The issue of the SCRA’s
application to these claims is not before us. Moreover, the issue became moot
when Copper Creek received the deed in lieu of foreclosure and the Kurtzes were
no longer party to the suit.

                                          5
No. 82083-4-I/6

not comply with discovery requests by the deadline. On July 10, 2020, QLS

provided notice of trustee sale on the property to be conducted in October 2020.

Copper Creek moved to enjoin the sale, and the trial court granted the motion.

      Copper Creek requested an additional continuance on the motion to dismiss

and moved for default judgment due to Selene/Wilmington’s failure to provide

discovery or file an answer to the amended complaint. In support of its motion to

dismiss, Selene/Wilmington argued that because the property formerly belonged

to a member of the United States military, the SCRA applied to toll the statute of

limitations on the DOT. After oral argument on several competing motions, the

trial court denied Selene/Wilmington’s motion to dismiss and awarded Copper

Creek attorney fees. The court expressed concern about Selene/Wilmington’s

“bad faith compliance with the rules in terms of discovery.” In an attempt to force

Selene/Wilmington to complete discovery, the court entered an order of default

against Selene/Wilmington that would “enter on August 14, 2020 unless an order

striking this default is entered by this court before said date.” Selene/Wilmington

answered the complaint and the parties stipulated to strike the order of default.

      Copper      Creek   then    filed   a   motion   for   summary     judgment.

Selene/Wilmington opposed the summary judgment and filed a CR 12(c) motion

for judgment on the pleadings. After oral arguments, the trial court granted the

summary judgment and quieted title in Copper Creek.              The court struck

Selene/Wilmington’s motion for judgment on the pleadings as a CR 11 sanction.

The trial court also awarded reasonable attorney fees to Copper Creek under RCW

4.84.185, the contractual attorney fee provision in the DOT, and also “as a matter

                                          6
No. 82083-4-I/7

of equity because [of Selene/Wilmington’s] bad faith and misconduct shown

repeatedly throughout this case.” The court subsequently entered a judgment

against Selene/Wilmington for $96,779.09 in attorney fees.

       Selene/Wilmington appeals the court’s orders on summary judgment,

motion to dismiss, motion for judgment on the pleadings, and the judgment for

attorney fees.

                                  DISCUSSION

       The trial court granted summary judgment quieting title as to Copper Creek,

because the statute of limitations had run on enforcement of the DOT. We review

orders on summary judgment de novo. Kim v. Lakeside Adult Family Home, 185

Wn.2d 532, 547, 374 P.3d 121 (2016). Summary judgment is appropriate when

there is no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. Folsom v. Burger King, 135 Wn.2d 658, 663, 958

P.2d 301 (1998) (citing CR 56(c)). When the underlying facts are undisputed, we

review de novo whether the statute of limitations bars an action. Edmundson, 194

Wn. App. at 927-28. The six year statute of limitations for an agreement in writing

applies to enforcement of a DOT. Id. at 927; RCW 4.16.040(1).

  I.   Enforcement of the Deed of Trust

       A DOT creates a security interest in real property.      Brown v. Dep’t of

Commerce, 184 Wn.2d 509, 515, 359 P.3d 771 (2015). A note is a separate

obligation from the deed of trust. Boeing Emps.’ Credit Union v. Burns, 167 Wn.

App. 265, 272, 272 P.3d 908 (2012). The note represents the debt, whereas the

deed of trust is the security for payment of the debt.       See id. The security

                                        7
No. 82083-4-I/8

instrument follows the note that it secures. Deutsche Bank Nat‘l Trust Co. v.

Slotke, 192 Wn. App. 166, 177, 367 P.3d 600 (2016).              “The holder of the

promissory note has the authority to enforce the deed of trust because the deed of

trust follows the note by operation of law.” Winters v. Quality Loan Serv. Corp. of

Wash., Inc., 11 Wn. App. 2d 628, 643-44, 454 P.3d 896 (2019).

       A. The SCRA Tolled the Statute of Limitations on Enforcement of the Debt

       Selene/Wilmington tried to enforce the terms of the note as secured by the

DOT through nonjudicial foreclosure which prompted Copper Creek to bring the

action to quiet title. The trial court concluded that the SCRA tolling provision did

not apply to the foreclosure action, which allowed the statute of limitations to run

on the DOT.       The SCRA tolls statutes of limitations in lawsuits involving

servicemembers.5

               The period of a servicemember’s military service may not be
       included in computing any period limited by law, regulation, or order
       for the bringing of any action or proceeding in a court or in any board,
       bureau, commission, department, or other agency of a State (or
       political subdivision of a State) or the United States by or against the
       servicemember or the servicemember’s heirs, executors,
       administrators, or assigns.

50 U.S.C. § 3936(a).

       Shawn appears to have defaulted on the note in 2008 or 2009. The parties

do not dispute that Shawn was an active duty servicemember until at least

September 2020. As a result, the SCRA tolled any court action involving Shawn

       5  Washington has an equivalent statute that provides, “The period of a
service member’s military service may not be included in computing any period
limited by law, rule, or order, for the bringing of any action or proceeding in a court
. . . by or against the service member or the service member’s dependents, heirs,
executors, administrators, or assigns.” RCW 38.42.090(1).

                                          8
No. 82083-4-I/9

during his service. 50 U.S.C. § 3936(a). Bankruptcy discharge extinguished

Shawn’s personal liability on July 13, 2011. See Johnson v. Home State Bank,

501 U.S. 78, 82-83, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991). Without Shawn’s

personal liability, the debt, as evidenced by the note, was no longer enforceable

against a servicemember. Without a servicemember’s involvement, the SCRA

ceased to toll the statute of limitations. As of July 14, 2011, the six year statute of

limitations began running on enforcement of the unpaid installment.6 See id. at 84.

       B. Bankruptcy did Not Extinguish the Secured Debt

       The Kurtzes both filed for Chapter 7 bankruptcy. “A defaulting debtor can

protect himself from personal liability by obtaining a discharge in a Chapter 7

liquidation.” Id. at 82-83. Discharge of debts in bankruptcy extinguishes the

“‘personal liability of the debtor.’” Id. at 83 (quoting 11 U.S.C. § 524(a)(1)). So,

the Kurtzes no longer had liability for the monthly installment payments on the note,

past due or future, as of their respective discharge dates. But, the discharge

extinguishes only the right of action against the debtor in personam, leaving intact

       6   The statute of limitations was tolled only because of the SCRA.
Bankruptcy does not toll the statute of limitations. Hazel v. Van Beek, 135 Wn.2d
45, 64-66, 954 P.2d 1301 (1998); Merceri v. Deutsche Bank AG, 2 Wn. App. 2d
143, 148, 408 P.3d 1140 (2018). A bankruptcy petition triggers an automatic stay
on “proceedings to obtain possession or exercise control of property in the
bankruptcy estate.” Merceri, 2 Wn. App. 2d at 148 (citing 11 U.S.C. 362(a)(3)).
This stays all creditor actions to enforce liens against the debtor’s property,
including commencement of a foreclosure action. Id. at 148-51. Actions against
the debtor are stayed until the earliest of case closure, dismissal, or discharge. 11
U.S.C. § 362(c)(2). The stay remains in effect against actions on the property of
the estate until the property leaves the estate. 11 U.S.C. § 362(c)(1). If the statute
of limitations to enforce a claim expires during the bankruptcy stay, 11 U.S.C. §
108(c)(2) provides a 30 day window after lifting of the bankruptcy stay in which to
file the claim. Id. at 148-49.

                                          9
No. 82083-4-I/10

the option to enforce a claim against a debtor in rem. Id. at 84. The Bankruptcy

Code provides that a creditor’s right to foreclose on secured property survives the

bankruptcy. Id. at 83; 11 U.S.C. § 522(c)(2). A lien on real property passes

through bankruptcy unaffected. Dewsnup v. Timm, 502 U.S. 410, 418, 112 S. Ct.

773, 116 L. Ed. 2d 903 (1992). However, a stay remains in effect against actions

on the property of the estate until the property leaves the estate. 11 U.S.C. §

362(c)(1).

       C. The Staute of Limitations Application to Promissory Notes

       The ability to enforce a breach of a promissory note depends on whether it

is a demand or installment note. A demand promissory note is mature at its

inception and is enforceable at any time. Cedar W. Owners Ass’n v. Nationstar

Mortg., LLC, 7 Wn. App. 2d 473, 483, 434 P.3d 554 (2019). Therefore, the statute

of limitations on a demand note runs from date of execution. 4518 S. 256th, LLC

v. Karen L. Gibbon, PS, 195 Wn. App. 423, 434, 382 P.3d 1 (2016). By contrast,

an installment note is payable in installments and matures on a future date.

Merceri v. Bank of New York Mellon, 4 Wn. App. 2d 755, 759, 434 P.3d 84 (2018).

“[T]he statute of limitations runs against each installment from the time it becomes

due; that is, from the time when an action might be brought to recover it.” Herzog

v. Herzog, 23 Wn.2d 382, 388, 161 P.2d 142 (1945). A separate statute of

limitation accrues and runs for each individual installment. Edmundson, 194 Wn.

App. at 931. The note holder has six years from default on an installment to

enforce payment of that installment. See Merceri, 4 Wn. App. 2d at 759-60. The

                                        10
No. 82083-4-I/11

final six year period to take action related to the debt begins to run at the date of

full maturity. Id. at 760.

       An installment note or the DOT securing it may include an option to

accelerate the maturation date in case of breach of the contract. See 4518 S.

256th, 195 Wn. App. at 441. Upon acceleration, the entire balance becomes due

and triggers the statute of limitations for all remaining installments. Id. at 434-35.

Acceleration of the maturity date of a promissory note requires an affirmative action

that is clear, unequivocal, and effectively notifies the borrower of the acceleration.

Id. at 435. Default alone does not accelerate the note. Id. “[E]ven if the provision

in an installment note provides for the automatic acceleration of the due date upon

default, mere default alone will not accelerate the note.” A.A.C. Corp. v. Reed, 73

Wn.2d 612, 615, 440 P.2d 465 (1968).

       Deed of trust remedies are subject to RCW 4.16.040, the six year statute of

limitations. Merceri, 4 Wn. App. 2d at 759. A debtor facing foreclosure can raise

the statute of limitations as a defense to the sale.         Walcker v. Benson &

McLaughlin, PS, 79 Wn. App. 739, 746, 904 P.2d 1176 (1995); RCW 7.28.300.

Applying the statute of limitations defense to nonjudicial foreclosure of a deed of

trust based upon past due installments, we held that recovery was allowed for the

actionable installments but not for those made unenforceable by the six year

statute of limitations. Cedar W., 7 Wn. App. 2d at 489-90. To the extent that the

statute of limitations runs on the underlying note, it also runs to the same extent

on the enforcement of a deed of trust. See Walcker, 79 Wn. App. at 740-1.

                                         11
No. 82083-4-I/12

         D. Bankruptcy Discharge of Personal Liability on an Installment Note Does

             Not Modify the Payment Schedule or Accelerate the Maturity Date of the

             Note

         The trial court concluded that Selene/Wilmington was precluded from

enforcing its deed of trust by the statute of limitations. It reached this conclusion

by relying on Edmundson for the proposition that the statute of limitations runs

against enforcement of a deed of trust from the date of the last payment due prior

to the debtor’s discharge in bankruptcy.7 This was error. Edmundson did not

establish such a rule. No Washington Supreme Court case has established such

a rule. It is not the law in Washington. The federal cases, which are the source of

that interpretation of Edmundson, are in error.8 To the extent that unpublished

state appellate cases have repeated the federal interpretation, they are also in

error.

         The Edmundsons signed an installment note secured by a DOT in July

2007. Edmundson, 194 Wn. App. at 923. They failed to pay the November 1,

         7The trial court referenced Hernandez v. Franklin Credit Management
Corporation, which relied on Edmundson as discussed below. No. BR 18-01159-
TWD, 2019 WL 3804138 (W.D. Wash. Aug. 13, 2019), aff’d sub nom. In re
Hernandez, 820 F. App’x 593 (9th Cir. 2020).
        8 These cases were also questioned in an article published by the Creditor

Debtor Rights Section of the Washington State Bar Association. Jason Wilson-
Aguilar, Does A Bankruptcy Discharge Trigger the Running of the Statute of
Limitations on Actions to Enforce a Deed of Trust?, 37 CREDITOR DEBTOR RTS.
NEWS LETTER, no. 1, Summer 2019, at 3-6, https://wsba.org/docs/default-
source/legal-community/sections/cd/resources/creditor-debtor-rights-section-
summer-2019-
newsletter.pdf?sfvrsn=af5e0cf1_4#:~:text=In%20contrast%20to%20Edmundson
%20and,limitations%20under%20an%20installment%20note
[https://perma.cc/7MPA-GE24].

                                         12
No. 82083-4-I/13

2008 installment, and never made another payment. Id. The Edmundsons filed

for Chapter 13 bankruptcy in June 2009. Id. Their bankruptcy plan was confirmed,

and they were discharged on December 31, 2013. Id. The lender filed a notice of

default on October 23, 2014 and a trustee sale was scheduled to satisfy the unpaid

monthly obligations under the note and DOT. Id.

       The Emundsons sought to restrain the trustee’s sale and quiet title to the

property. Id. at 924. They argued the bankruptcy discharge of their personal

liability on the note rendered the deed of trust unenforceable. Id. This court

rejected the premise that the lien was discharged, stating, “In sum, nothing in this

record and nothing under either federal or state law supports the conclusion that

the discharge of personal liability on the note also discharges the lien of the deed

of trust securing the note. The deed of trust is enforceable.” Id. at 927.

       The Edmundsons also argued under the Walcker case that the statute of

limitations had begun to run on the deed of trust as of their first missed payment

on the note on November 1, 2008. Id. at 929. And, since the statute of limitations

had run before the lender attempted to enforce the note, the DOT was no longer

enforceable. Id. However, we rejected the Edmundsons’ and the trial court’s

reliance on Walcker for the proposition that the statute of limitations had run. Id.

at 928. The Walcker case concerned failure to pay on a demand note. 79 Wn.

App. at 741. We noted that Walcker applied the six year statute of limitations,

running from the date of execution of the note, and found the lender’s efforts to

foreclose on the deed of trust were barred as untimely. Edmundson, 194 Wn. App.

                                        13
No. 82083-4-I/14

at 928-9. But, because the Edmundsons’ debt was an installment note, Walcker

was inapplicable. Id. at 929.

       We also rejected the Edmundsons’ argument that no resort to remedies

under the deeds of trust act, ch. 61.24 RCW, had occurred before the statute of

limitations had run. Id. at 930. We concluded that the October 23, 2014 written

notice of default was evidence of resort to remedies under the act. Id. Under the

Edmundsons’ theory, the statute of limitations began running November 1, 2008

and would have expired on October 31, 2014. Id. Thus, even under their timeline,

the action on the deed of trust was not untimely. Id. at 931.

       And, we rejected the Edmundsons’ premise that the statute of limitations

began to run on the full amount of the note from the first missed payment. Id. at

931-32. That argument contradicted settled law from the Washington Supreme

Court: “‘[W]hen recovery is sought on an obligation payable by installments, the

statute of limitations runs against each installment from the time it becomes due;

that is, from the time when an action might be brought to recover it.’” Id. at 930

(quoting Herzog, 23 Wn.2d at 388). Missing a payment in an installment note does

not trigger the running of the statute of limitations on the portions of the debt that

are not yet due or mature.

       We then applied this rule to the individual payments the Edmundsons

missed beginning with the November 1, 2008 payment and every successive

payment due prior to the bankruptcy discharge that ended their personal liability

on the note. Id. at 931. Because the nonjudicial foreclosure commenced October

23, 2013, “each of these missed payments accrued within six years of the resort

                                         14
No. 82083-4-I/15

to the remedies under the deeds of trust act. The statute of limitations did not bar

enforcement of the deed of trust for these missed payments.”            Id. at 931.

Therefore, in the pending in rem nonjudicial foreclosure action, no portion of the

debt was rendered unenforceable by the statute of limitations.

       The trial court apparently believed that either the lender or the Edmundsons’

bankruptcy had accelerated the note and triggered the statute of limitations on the

entire debt. Id. But, “[d]efault in payment alone does not work an acceleration.”

Id. at 932. While acceleration of the maturity of the note was an option for the

creditor under the Edmundsons’ DOT, we determined “there was no evidence that

the lender had accelerated the maturity date of the note,” and “to the extent that

the trial court ruled that some event during the bankruptcy proceeding triggered

[the acceleration] provision, the court is wrong.” Id. at 931-32. “Accordingly . . .

the statute of limitations for each monthly payment accrued as the payment

became due.” Id.

       The Edmundson opinion addressed the various issues through application

of settled law.     But, subsequent courts have interpreted Edmundson as

announcing a new rule. The first manifestation of a new rule of law attributed to

Edmundson came in Jarvis v. Federal National Mortgage Association, No. C16-

5194-RBL, 2017 WL 1438040 (W.D. Wash. Apr. 24, 2017), aff’d, 726 F. App’x 666

(9th Cir. 2018). It observed,

       The last payment owed commences the final six-year period to
       enforce a deed of trust securing a loan. This situation occurs when
       the final payment becomes due, such as when the note matures or
       a lender unequivocally accelerates the note’s maturation.

                                        15
No. 82083-4-I/16

Id. at 2. This much is settled Washington law. The decision goes on to say,

      It also occurs at the payment owed immediately prior to the discharge
      of a borrower’s personal liability in bankruptcy, because after
      discharge, a borrower no longer has forthcoming installments that he
      must pay.[9] See Edmundson, 194 Wn. App. at 931; see also Silvers
      v. U.S. Bank Nat[’l] Ass’n, [No. 15-5480 RJB], 2015 WL 5024173, at
      *4.

             ....

             Because the Edmundsons owed no future payments after the
      discharge of their liability, the date of their last-owed payment
      kickstarted the deed of trust’s final limitations period. . . .

             ....

             The Court agrees with Silvers’[s] and Edmundson’s holdings.
      The discharge of a borrower’s personal liability on his loan—the
      cessation of his installment obligations—is the analog to a note’s
      maturation. In both cases, no more payments could become due
      that could trigger RCW 4.16.040’s limitations period. . . .

             ....

9 The mistaken idea that bankruptcy starts the clock on enforcement of the DOT
appears to have originated with a lender’s argument to the court in Silvers. No.
15-5480 RJB, 2015 WL 5024173, at *4. In its motion to dismiss, U.S. Bank
acknowledged “there can be no doubt that the Deed of Trust lien survived the
Chapter 7 bankruptcy.” Without citation to supporting law, U.S. Bank made the
assertion that the statute of limitations “began running the last time any payment
on the Note was due,” which was the payment immediately prior to discharge in
bankruptcy. The court accepted U.S. Bank’s argument and concluded,
        The statute of limitations on the right to enforce the Deed of Trust
        began running the last time any payment on the Note was due. The
        Plaintiffs remained personally liable on the Note (and successive
        payments continued to be due) until January 1, 2010, when they
        missed that payment; they received their Chapter 7 discharge on
        January 25, 2010. Accordingly, the statute of limitations to enforce
        the Deed of Trust lien began to run on January 1, 2010.
Silvers, No. 15-5480 RJB, 2015 WL 5024173, at *4. Silvers was cited to in briefing
in the Edmundson case, but not mentioned, let alone adopted in Edmundson. And,
Silvers could not have established new law as federal courts have no authority to
decide Washington law. In re Estate of Stoddard, 60 Wn.2d 263, 270, 373 P.2d
116 (1962).

                                       16
No. 82083-4-I/17

              . . . The court’s conclusion was not dicta [because] it was
       necessary to deciding whether the creditor could foreclose on the
       Edmundsons’ home, or whether they could sustain an action for quiet
       title.

Id. at 2-3 (some internal citations omitted).

       However, we did not purport to announce such a rule in Edmundson. We

merely applied Herzog to the facts of the case. The Edmundsons missed monthly

payments from November 1, 2008 through December 31, 2013 when their

personal liability to make the payments ceased. Edmundson, 194 Wn. App. at

931. Our decision focused on whether any of those payments was no longer

enforceable in the foreclosure action. The Edmundsons had not asserted that the

bankruptcy discharge triggered the running of the statute of limitations on the entire

debt. It would have done them no good. The foreclosure was commenced less

than a year after the discharge in bankruptcy. It simply was not an issue before the

court. And, we did not decide the issue expressly nor in dicta.10 Such a rule only

exists in the inferences drawn and stated in the federal decisions.

       10 Nor did we discuss the policy implications of such a rule in Edmundson.
Such a rule implicates a number of policies that do not arise from nonpayment in
a nonbankruptcy setting. The debtor may benefit by a shorter window in which the
lien may be extinguished, or by living in the property for free while the lender
foregoes foreclosure. As title holder, the debtor may be able to take advantage of
market changes to sell the property for more than the lien amount if the lender is
not forced for foreclose rapidly. The stability of land title records may be a concern.
The debtor remains on the title pending foreclosure. The debtor can execute a
deed in lieu of foreclosure to remove themselves from title. The sanctity of contract
is raised by determining that discharge of personal liability on the installment note
eliminates the lender’s contraction option, it is a choice to accelerate or not to
accelerate the maturity of the debt. The lender may find changing economic
conditions make it more favorable to ultimate recovery to delay enforcement,
though some portion of the debt may become uncollectable. This is not exhaustive
of potential policy concerns. The important point is that we undertook no such
policy analysis in Edmundson as would have been expected when announcing a
new rule.

                                          17
No. 82083-4-I/18

       Such a rule would attribute to a bankruptcy discharge of the debtor more

than relief from personal liability.   It would mean the option of the lender to

accelerate or not to accelerate the maturity date of the note was eliminated. It

would mean that the payment schedule no longer applied and the maturity was

accelerated. Affecting the lender’s rights in a negative manner is not necessary to

effect the purposes of the bankruptcy discharge.          The federal district court

decisions do not rely on any provision in the bankruptcy code as requiring such a

result. We can find no bankruptcy provision that would do so.

       Moreover, Jarvis’s explanation of the rule is totally at odds with our rejection

of the notion that the maturity of the loan was accelerated by the lender or by

bankruptcy discharge. Edmundson, 194 Wn. App. at 932. Our opinion did not

announce an “analog” rule. Rather, the federal district court arrived at this result

through its misinterpretation of Edmundson.11

       In 2019 another federal district court case added to the error. Hernandez

v. Franklin Credit Mgmt. Corp., No. BR 18-01159-TWD, 2019 WL 3804138 (W.D.

Wash. Aug. 13, 2019), aff’d sub nom. In re Hernandez, 820 F. App’x 593 (9th Cir.

2020). It observed,

              In Edmundson, the Washington State Court of Appeals ruled
       that the six-year statute of limitations for enforcing a deed of trust
       payable in installments begins to accrue on each month that a

       11 The next case chronologically, cites to Jarvis and Edmundson for the rule,
but does not comment on it. Taylor v. PNC Bank, Nat’l Ass’n, No. C19-1142-JCC,
2019 WL 4688804, at *2 (W.D. Wash. Sept. 26, 2019) (“the six-year statute of
limitations period for enforcing a deed of trust payable in installments begins to
accrue on each date that a borrower defaults on a payment until the borrowers’
personal liability is discharged in a bankruptcy proceeding, as after that point no
future installment payments will be due.”).

                                          18
No. 82083-4-I/19

       borrower defaulted on a payment, until the borrowers’ personal
       liability is discharged in a bankruptcy proceeding. The court of
       appeals reasoned that the statute of limitations does not continue to
       accrue after discharge because, at that point, installment payments
       are no longer due and owing under either the note or deed of trust.
       Several courts have adopted this legal rule from Edmundson. See
       U.S. Bank NA v. Kendall, [No. 77620-7-I] slip. op. at 4 (Wash. Ct.
       App. [July 1,] 2019) [(unpublished), http://www.courts.wa.gov
       /opinions/pdf/776207 .pdf] (noting that although a deed of trust’s lien
       is not discharged in bankruptcy, the limitations period for an
       enforcement action “accrues and begins to run when the last
       payment was due” prior to discharge); Jarvis v. Fed. Nat’l Mortg.
       Ass’n, []No. C16-5194-RBL, []at 6 (W.D. Wash. 2017), aff’d mem.,
       726 Fed. App’x. 666 (9th Cir. 2018) (“The final six-year period to
       foreclose runs from the time the final installment becomes due . . .
       [which] may occur upon the last installment due before discharge of
       the borrower’s personal liability on the associated note”).

Id. at *3 (emphasis added) (some internal citations omitted). Hernandez’s source

for the rule is clearly Jarvis, but the emphasized language is its own addition to the

error.12 No such statement is found in the Edmundson opinion.

       In Edmundson, this court did not say that bankruptcy discharge of liability

on an installment note accelerates the maturity of the note. We did not say that

       12 Notably, two unpublished Court of Appeals cases have picked up on the
interpretation given to Edmundson by the federal district court. The first in time
cited to Jarvis for the rule. U.S. Bank v. Kendall, No. 77620-7-I, slip. op. at 9
(Wash. Ct. App. July 1, 2019) (unpublished), http://www.courts.wa.gov
/opinions/pdf/776207.pdf (noting that a deed of trust’s lien is not discharged in
bankruptcy but the limitations period for an enforcement action “accrues and
begins to run when the last payment was due” prior to discharge), review denied,
194 Wn.2d 1024, 456 P.3d 394 (2020). The parties accepted that Edmundson
stated the appropriate statute of limitations rule. Ultimately, the decision in the case
did not turn on the issue.
        The second cited to Jarvis and Hernandez and incorporated language from
those cases purporting to explain the rule. Luv v. W. Coast Servicing, Inc., No.
81991-7-I, slip. op at 4-5 (Wash. Ct. App. 2d August 2, 2021) (unpublished)
https://www.courts.wa.gov/opinions/pdf/819917.pdf (“the six-year statute of
limitations on the note was triggered on March 1, 2009, the date that Luv’s last
payment was due prior to his bankruptcy discharge”). The outcome of that opinion
is contrary to the outcome here.

                                          19
No. 82083-4-I/20

the discharge kickstarts the running of the deed of trust’s final statute of limitations

period. We did not say that discharge is an analog to acceleration and triggers the

statute of limitations on the entire obligation. We did not say we were announcing

any new rule. Rather, we simply applied settled law from Herzog, that the statute

of limitations runs on each installment of a promissory note from the date it is due.

Edmundson, 194 Wn. App. at 931.

       The federal district court cases rely solely on the Edmundson decision as

the basis for the state law they apply.        Their interpretation of Edmundson is

erroneous.

       Edmundson does not stand for the proposition that bankruptcy discharge of

personal liability of the debtor accelerates the obligation on an installment note or

commences the statute of limitations on both the outstanding balance of the note

and on enforcement of the DOT. The trial court erred in relying on Edmundson for

such a proposition.

       E. The Statute of Limitation in this Case

       Under Herzog and Edmundson, the statute of limitation on Kurtz’s

installment debt would have begun to run on each payment individually from its

due date. Bankruptcy would not toll the statute of limitations. Hazel v. Van Beek,

135 Wn.2d 45, 64-66, 954 P.2d 1301 (1998); Merceri, 2 Wn. App. 2d at 148. Here,

the SCRA applied and tolled the statute of limitations until Shawn no longer had

personal liability on the note. That occurred on July 13, 2011, the date of the

discharge of his personal liability on the debt. The statute of limitation began to

run on all of the past due installments from that date.

                                          20
No. 82083-4-I/21

       There is no evidence the lender exercised an option and accelerated the

installment note. The trial court erroneously relied on Edmundson to conclude that

Shawn’s bankruptcy accelerated the note or triggered the statute of limitations on

enforcing the DOT. The bankruptcy eliminated only Shawn’s personal liability on

the note. The debt, the note, and the payment schedule remain unchanged. The

notice of nonjudicial foreclosure was given on October 20, 2019 prior to the

November payment coming due. Any outstanding installments prior to November

2013, are not enforceable in the foreclosure action due to the six year statute of

limitations. But, enforcement of the DOT was not barred as to the remainder due

under the note.

       The trial court erred by quieting title in Copper Creek.

 II.   Attorney Fees

       The trial court awarded Copper Creek attorney fees and costs for the

summary judgment and quieting title under multiple rules: RCW 4.84.185 for

frivolous defenses advanced without reasonable cause, the contractual attorney

fee provision in the DOT (RCW 4.84.330 and RCW 4.28.328 for prevailing in a

defense of a lis pendens), and equity based on Selene/Wilmington’s “bad faith and

misconduct shown repeatedly and throughout this case.”            Selene/Wilmington

argues the trial court erred by awarding attorney fees and costs to Copper Creek

for its defense of the case and for responding to the motions to dismiss.

       “Under Washington law, a trial court may grant attorney fees only if the

request is based on a statute, a contract, or a recognized ground in equity.”

Gander v. Yeager, 167 Wn. App. 638, 645, 282 P.3d 1100 (2012). The question

                                         21
No. 82083-4-I/22

of whether there is a legal basis for award of attorney fees is an issue of law we

review de novo. Id. at 646.

       The DOT contains a mandatory attorney fee provision, “Lender shall be

entitled to recover its reasonable attorneys’ fees and costs in any action or

proceeding to construe or enforce any term of this Security instrument.” RCW

4.84.330 makes this provision reciprocal: “[T]he prevailing party, whether he or she

is the party specified in the contract or lease or not, shall be entitled to reasonable

attorneys’ fees in addition to costs and necessary disbursements.”

       As a result of our decision, Copper Creek is no longer the prevailing party

and cannot recoup attorney fees under the terms of the DOT.               The court’s

additional reasons for the attorney fee award—RCW 4.84.185 and 4.28.328—also

fail based on our decision in favor of Selene/Wilmington. Copper Creek acquired

its interest from Kurtz through the deed in lieu of foreclosure and is subject to the

terms of the DOT. Selene/Wilmington is entitled to attorney fees at trial as the

prevailing party under the DOT.

       However, we do not set aside the award of attorney fees made by the trial

court. The record is clear that the trial court strongly believed that an independent

basis in equity justified the award of attorney fees. We agree. The change of

prevailing party does not require vacating that equitable award.

       An appellate court reviews the amount of attorney fees awarded for abuse

of discretion. Ethridge v. Hwang, 105 Wn. App. 447, 460, 20 P.3d 958 (2001). “A

trial judge is given broad discretion in determining the reasonableness of an award,

and in order to reverse that award, it must be shown that the trial court manifestly

                                          22
No. 82083-4-I/23

abused its discretion.” Id. Selene/Wilmington strongly opposed Copper Creek’s

motion for attorney fee, and specifically called attention to several billing entries it

considered to be related only to the Kurtzes or QLS. The trial court reduced the

amount of fees recoverable from the requested $113,430.80 to $96,779.09. It

reviewed the billing and awarded attorney fees broken down by month. This was

a proper exercise of the court’s discretion.

       Selene/Wilmington is the prevailing party on appeal.           The contractual

provision for an award of attorney fees in the DOT supports an award of attorney

fees on appeal. Edmundson, 194 Wn. App. at 920. Therefore, we award attorney

fees on appeal to Selene/Wilmington.

       We reverse and remand for further proceedings.

WE CONCUR:

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