Schroeder v. Excelsior Management Group, LLC
297 P.3d 677
Wash.2013Background
- Washington deed of trust act permits nonjudicial foreclosure for some property but requires judicial foreclosure for land used principally for agriculture.
- Agricultural land must be foreclosed judicially under RCW 61.24.030(2).
- In 2009, Haberthur (trustee and lender’s attorney) nonjudicially foreclosed Schroeder’s 200-acre farm.
- Settlement prior to the sale included Schroeder signing a waiver that the property was not agricultural, purportedly waiving the right to judicial foreclosure.
- Schroeder later challenged the agricultural status and sought injunctive relief; the sale proceeded and deed was conveyed to Excelsior.
- The Supreme Court held agricultural land cannot be foreclosed nonjudicially and vacated/ remanded for factual determinations on agricultural status and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agricultural land must be foreclosed judicially under RCW 61.24.030(2). | Schroeder; land was agricultural, so nonjudicial sale void. | Excelsior/Haberthur; waiver negates agricultural status; statute allows nonjudicial sale. | Yes; agricultural land must be judicially foreclosed; waiver invalid. |
| Whether Schroeder could waive the agricultural-status requirement by contract. | Waiver via settlement and deed of trust language. | Statutory requisites cannot be waived by contract. | Waiver not allowed; statute imposes nonwaivable requisites. |
| Whether the trial court abused by permitting a nonjudicial sale without determining agricultural status. | Status issue should have been resolved before sale. | Sale permitted under waiver and procedural posture. | Yes; court abused by not determining agricultural status before sale. |
| Whether Plein v. Lackey and other waiver-based precedents apply to this case. | Plein supports waivers; failure to restrain sale should not moot claims. | Plein does not apply when statute requires judicial process; strict compliance required. | Plein does not authorize waiver of statutory protections. |
| Whether damages claims survived and require remand for further proceedings. | Damages under CPA and other statutes should proceed. | Waiver/ mootness dismiss claims. | Damages claims reinstated and require hearing if agricultural status established. |
Key Cases Cited
- Albice v. Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560 (2012) (strict compliance with statutory requisites in nonjudicial foreclosures)
- Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903 (2007) (borrowers afforded protection due to lack of judicial oversight)
- Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83 (2012) (statutory requirements cannot be waived by contract; lender’s duties)
- Hoffmann (cited as Hoffmann in text), Joseph L. Hoffmann, Comment, Court Actions Contesting the Nonjudicial Foreclosure of Deeds of Trust in Washington, 59 Wash. L. Rev. 323 (1984) (historical/statutory interpretation guidance (law review))
- Plein v. Lackey, 149 Wn.2d 214 (2003) (failure to restrain sale may moot but does not nullify statutory protections)
- Hadley v. Maxwell, 144 Wn.2d 306 (2001) (collateral estoppel considerations for foreclosure)
- Pleadings (Klem v. Wash. Mut. Bank), 176 Wn.2d 771 (2013) (fiduciary duties in foreclosure context; independence of trustee)
- Queen City Sav. & Loan Ass’n v. Mannhalt, 111 Wn.2d 503 (1988) (policy considerations in nonjudicial foreclosures)