Kevin E. Edmundson, Res. v. Carrington Mortgage Services, Llc, App.
378 P.3d 272
Wash. Ct. App.2016Background
- Kevin and Meche Edmundson obtained a $313,381 loan on July 12, 2007 secured by a deed of trust on their King County property; monthly payments began Sept 1, 2007 and matured Aug 1, 2037.
- They defaulted after October 2008 (first missed payment Nov 1, 2008) and filed Chapter 13 bankruptcy in June 2009; their debts were discharged on December 31, 2013 (with the discharge form noting liens may survive).
- Lender/servicer (Bank of America successor, Carrington as servicer) sent a notice of default Oct 23, 2014 and recorded a Notice of Trustee’s Sale Jan 21, 2015; sale postponed to Aug 28, 2015.
- The Edmundsons sued in March 2015 seeking to enjoin the trustee’s sale and quiet title, arguing the deed of trust was unenforceable because their personal obligation was discharged in bankruptcy; trial court granted summary judgment for them and enjoined sale.
- On appeal, Division One reversed: it held (1) bankruptcy discharge of personal liability does not eliminate a valid lien (deed of trust) that was not avoided in bankruptcy, (2) foreclosure was timely under the six-year statute for written agreements, and (3) lender is entitled to contractual attorney fees.
Issues
| Issue | Edmundsons' Argument | Carrington's Argument | Held |
|---|---|---|---|
| Whether bankruptcy discharge of personal liability extinguishes the deed of trust lien | Discharge eliminated personal obligation and therefore deed of trust unenforceable | Discharge only eliminates in personam liability; lien survives unless avoided in bankruptcy | Lien survives; discharge did not eliminate deed of trust lien |
| Whether statute of limitations bars nonjudicial foreclosure | Six-year limitations ran on missed installments (Edmundsons argued November 1, 2008 installment barred by Nov 1, 2014) and lender’s action was time-barred | Installment rule: limitations run on each installment as it becomes due; lender gave notice of default within six years for applicable installments | Foreclosure timely: notice of default (Oct 23, 2014) was resort to remedies within six years for accrued installments; no bar |
| Whether lender accelerated the note (affecting accrual) | Trial court found lender declared entire balance due, implying acceleration | No evidence lender exercised contractual acceleration; default alone does not effect acceleration | No acceleration shown; statute accrues per-installment |
| Entitlement to attorney fees | Edmundsons awarded fees below under deed of trust | Deed of trust entitles lender to fees when pursuing remedies; lender seeks fees on appeal and remand | Carrington entitled to reasonable fees for trial and appeal; prior award to Edmundsons reversed |
Key Cases Cited
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (bankruptcy discharge eliminates personal liability but mortgage lien survives unless avoided)
- Dewsnup v. Timm, 502 U.S. 410 (1992) (mortgage lien survival through bankruptcy reaffirmed)
- Herzog v. Herzog, 23 Wn.2d 382 (1945) (statute of limitations for installment obligations runs against each installment when due)
- American Federal Savings & Loan Ass'n of Tacoma v. McCaffrey, 107 Wn.2d 181 (1986) (foreclosure and enforcement of deed of trust are remedies distinct from action on note)
- Washington Federal Savings v. Harvey, 182 Wn.2d 335 (2015) (standard of review for summary judgment and discussion of lien survival after bankruptcy discharge)