289 P.3d 645
Wash. Ct. App.2012Background
- Roughley purchased a condo in Summerhill Village in 2006 with a deed of trust in favor of MERS; MERS later assigned to Deutsche Bank and a successor trustee was appointed.
- Roughley became delinquent on association assessments; Summerhill foreclosed its statutory lien and recorded lis pendens, serving MERS, which forwarded papers to GMAC.
- GMAC, as loan servicer, did not respond to Summerhill's foreclosure action; Summerhill obtained a default judgment and foreclosed; a sheriff's sale occurred in December 2009 where Plumbline bought the unit for $10,302.
- MERS assigned its interest to Deutsche Bank; GMAC learned of the Summerhill action in July 2010 and sought to intervene for either vacatur/priority or redemption rights.
- GMAC was allowed to intervene but the trial court ruled it was not a qualified redemptioner under RCW 6.23.010; GMAC appeals.
- The Washington Court of Appeals held that the association's super priority lien prevails over the 2006 deed of trust, and GMAC/Deutsche Bank was not a proper redemptioner; the sale extinguished the deed of trust and redemption was not available to the lender.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the association’s super priority lien has priority over preexisting mortgages. | Roughley/Association argued super priority lien applies to common expenses and forecloses ahead of prior deeds of trust. | GMAC/Deutsche Bank argued redemption should be allowed under statute notwithstanding priority. | Association lien has priority to the extent of common expenses; mortgage lien extinguished by foreclosure; redemption not available to lender. |
| Whether GMAC/Deutsche Bank qualifies as a redemptioner under RCW 6.23.010. | GMAC/Deutsche Bank should be a proper redemptioner because its lien is asserted against property foreclosed. | Lien was not subsequent in time to Summerhill’s lien, so not a redemptioner. | GMAC/Deutsche Bank not a proper redemptioner because its lien was not subsequent in time to the super priority lien. |
| Whether the statute should be read literally or in light of legislative intent to avoid absurd results. | GMAC contends literal reading yields absurd windfalls for junior lenders. | Court should interpret to reflect intent that lenders pay assessments to protect liens. | Statutory language plain; legislative intent consistent; no adopting of absurd results; not rewriting statute. |
Key Cases Cited
- Homann v. Huber, 38 Wash.2d 190 (1951) (priority rules for liens in absence of contrary statute)
- Seattle Mortg. Co., Inc. v. Unknown Heirs of Gray, 133 Wash.App. 479 (2006) (affirms first-in-time priority with exceptions for statutory schemes)
- DeYoung v. Cenex Ltd., 100 Wash.App. 885 (2000) (limitations on redemption rights after foreclosure of prior liens)
- City of Tacoma v. Perkins, 42 Wash.2d 80 (1953) (general principles of statutory interpretation in property disputes)
- Whatcom County v. Bellingham, 128 Wash.2d 537 (1996) (interpretation of agency and statutory schemes in land title matters)
- Stadium Apts., Inc. v. United States, 425 F.2d 358 (9th Cir. 1970) (reforms and redemption concepts in foreclosure contexts)