OneWest Bank, FSB v. Erickson
185 Wash. 2d 43
Wash.2016Background
- Bill McKee owned a Spokane, WA house; he later was placed in an Idaho conservatorship and Idaho appointed Shelley Bruna conservator.
- An Idaho court order (signed October 22, 2007) directed the conservator to facilitate a reverse mortgage on the Spokane property; the deed of trust was executed Oct. 25, 2007 and recorded Oct. 30, 2007.
- McKee purportedly quitclaimed the property to his daughter Maureen Erickson in June 2007, but Erickson did not record that deed until December 8, 2011.
- After McKee died (March 2011) the reverse mortgage accelerated; OneWest (holder via assignments) began foreclosure when Erickson failed to repay.
- Trial court granted summary judgment to OneWest (finding it a bona fide mortgagee and that Idaho orders supported the mortgage). Court of Appeals reversed, holding Idaho courts lacked authority to encumber Washington real property and declining to give full faith and credit. Washington Supreme Court reversed the Court of Appeals and upheld OneWest’s right to foreclose.
Issues
| Issue | Plaintiff's Argument (Erickson) | Defendant's Argument (OneWest) | Held |
|---|---|---|---|
| Whether Idaho conservatorship orders are entitled to full faith and credit in WA | Idaho court lacked jurisdiction to affect WA property; orders not binding here | Idaho had personal and subject-matter power to order a conservator to encumber interests; full faith and credit applies absent jurisdictional defect | Idaho orders entitled to full faith and credit; WA must respect them (no jurisdictional defect shown) |
| Whether Idaho court had jurisdiction over McKee (personal) | McKee domiciled in WA in 2007, so Idaho lacked personal jurisdiction | Idaho record shows challenge was litigated and Idaho court retained jurisdiction; res judicata applies | Idaho had personal jurisdiction; Washington courts cannot collaterally attack that determination |
| Whether a foreign court may affect out-of-state real property | Foreign court cannot directly transfer title to WA land; thus its order encumbering WA property is invalid | Distinguish direct transfer of title from adjudication of personal interests; courts can indirectly affect out-of-state property through in personam power | Court can adjudicate personal interests (in personam) and indirectly affect out-of-state property; Idaho order directed a mortgage (lien theory) not a title transfer, so valid |
| Whether OneWest is a bona fide mortgagee under WA recording act | OneWest had (actual or constructive) notice of Erickson’s unrecorded deed or of her possession; therefore not protected | OneWest (via predecessor) recorded the deed of trust before Erickson recorded quitclaim; had no record notice and no inquiry notice given record owner McKee occupied the property and Idaho court order appeared to authorize the transaction | OneWest is a bona fide mortgagee: predecessor paid value, recorded first, lacked actual/constructive notice; Erickson failed to prove inquiry/actual notice |
Key Cases Cited
- Kowalewski v. Kowalewski, 163 Wn.2d 542 (Wash. 2008) (distinguishes in personam adjudication of personal interests in out-of-state property from in rem actions affecting title)
- Milliken v. Meyer, 311 U.S. 457 (U.S. 1940) (full faith and credit precludes inquiry into merits of foreign judgment absent jurisdictional/constitutional defect)
- Fall v. Eastin, 215 U.S. 1 (U.S. 1909) (court in equity may indirectly affect real property in another state through its power over persons)
- Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (U.S. 1982) (party submitting to jurisdiction as to challenge is bound by court’s determination of jurisdiction)
- Brown v. Brown, 46 Wn.2d 370 (Wash. 1955) (foreign court cannot directly transfer title to land in another state, but may enforce decree via in personam power)
- Miebach v. Colasurdo, 102 Wn.2d 170 (Wash. 1984) (recording act and bona fide purchaser principles; inquiry/constructive notice standards)
- Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83 (Wash. 2012) (deed of trust as security device; lien theory of mortgages)