Schroeder v. Clackamas Cnty. Bank
419 P.3d 726
Or. Ct. App.2018Background
- Donald and Janet Schroeder obtained two mortgage loans from Clackamas County Bank (CCB) and defaulted when the loans matured in October 2011.
- CCB initiated nonjudicial foreclosure under the Oregon Trust Deed Act (OTDA) on the first deed of trust in November 2011; a first nonjudicial sale was held in January 2014 and the property was sold back to CCB.
- After the first sale, CCB foreclosed under the second deed of trust; a second nonjudicial sale occurred in May 2014, and the property was sold to a third party (JVV Investments, LLC).
- Plaintiffs filed a declaratory judgment action challenging the foreclosures; the trial court denied CCB’s earlier motion to dismiss and later granted defendants’ motion for summary judgment after the second sale.
- The trial court held the second sale valid, concluded plaintiffs’ claims were entirely devoid of legal or factual support, dismissed plaintiffs’ claims, and awarded attorney fees to CCB under ORS 20.105.
- The court of appeals affirmed summary judgment and the fee award but vacated the dismissal-with-prejudice of the declaratory judgment claim and remanded for an express declaratory judgment that the second sale was valid and plaintiffs’ rights were extinguished.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of second nonjudicial foreclosure sale | The second sale was invalid (various challenges); first sale also invalid | The second sale was valid; at least one valid sale extinguished plaintiffs’ interest | Second sale valid; plaintiffs’ interest extinguished (summary judgment affirmed) |
| Whether plaintiffs’ continuing litigation after the second sale was objectively reasonable for ORS 20.105 fee award | Denial of CCB’s earlier motion to dismiss shows claims had merit; declaratory relief cannot be meritless | Plaintiffs’ positions were internally inconsistent and untenable after the second sale, so continued litigation was objectively unreasonable | Fee award to CCB under ORS 20.105 upheld; plaintiffs’ claims were devoid of reasonable legal/factual basis |
| Whether a declaratory judgment action is immune from fee-shifting under ORS 20.105 | Declaratory claims are not subject to ORS 20.105 fee findings | All claims (including declaratory) can be assessed for objective reasonableness under ORS 20.105 | Rejected plaintiff’s contention; declaratory claims can support fees if objectively unreasonable |
| Effect of prior denial of motion to dismiss on later fee award | Denial of motion to dismiss meant claims were meritorious at summary judgment too | Denial occurred before material change (second sale); merits can change and be reassessed | Denial of motion to dismiss did not preclude later finding claims objectively unreasonable |
Key Cases Cited
- Bell v. City of Hood River, 283 Or. App. 13 (discussing declaratory relief principles)
- Williams v. Salem Women’s Clinic, 245 Or. App. 476 (standard for when a claim lacks an objectively reasonable basis under ORS 20.105)
- Brandrup v. ReconTrust Co., 353 Or. 668 (explaining availability and scope of the Oregon Trust Deed Act)
- Staffordshire Investments, Inc. v. Cal-Western, 209 Or. App. 528 (describing nonjudicial trustee sale authority under OTDA)
- Doe v. Medford Dist. 549C, 232 Or. App. 38 (limits on using ORCP 21 A(8) motion to dismiss in declaratory judgment actions)