Union Bank, NA v. Vanderhoek Associates, LLC, 191 Wash. App. 836

Background

Vanderhoek Associates borrowed $1.93M from Frontier Bank in 2008 (Vanderhoek Note) secured by a deed of trust; multiple parties guaranteed the loan. Pacific Bay, Inc. had a separate $600K note secured by a second-position deed on the same property, with overlapping guarantors.
Borrowers and guarantors defaulted; a receiver sold the property for ~ $1.1M and Union Bank (successor to FDIC/Frontier) sued for deficiencies. Trial court granted partial summary judgment for Union Bank on guarantor liability (Aug 9, 2013).
After the Court of Appeals, Division Two, decided Cornerstone (holding DTA bars deficiency judgments against guarantors after nonjudicial foreclosure), two guarantors moved to revise the judgment; the trial court granted revision and dismissed claims against all remaining defendants (Jan 31, 2014).
Eighteen days later Division One issued Gentry, expressly disagreeing with Cornerstone and allowing deficiency judgments against guarantors; the trial court then granted Union Bank’s CR 60 motion to vacate its January 31 order.
The trial court vacated its revised summary judgment under CR 60(b)(1), (5), and (11), finding an irregular dismissal of borrowers and extraordinary circumstances arising from the divisional split in appellate authority. Appellants (guarantors and Pacific Bay) appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the trial court could vacate its Jan. 31 order under CR 60(b)(1) for irregularity	Union Bank: clerical/interlineation error dismissed borrowers inadvertently, justifying relief	Appellants: no irregularity; court contemplated dismissal; finality prevents vacatur	Court: vacatur for borrowers (Pacific Bay) under CR 60(b)(1) was tenable because dismissal of borrowers was inadvertent
Whether CR 60(b)(11) permits vacatur based on Division One’s Gentry decision	Union Bank: divisional conflict created change in law; extraordinary circumstances justify vacatur	Appellants: finality/res judicata and errors of law bar CR 60 relief; Gentry not basis to reopen judgment	Court: vacatur appropriate—divisional split (Cornerstone vs. Gentry) constituted a change in law and extraordinary circumstances warranting CR 60(b)(11) relief
Whether a change in appellate law during appeal period can justify vacatur	Union Bank: yes—timing and pending appeal made finality less compelling	Appellants: change-of-law cannot cure error of law via CR 60; parties relied on judgment	Court: timing (decision issued within appeal window and trial court signaled possible reversal) supported vacatur; prioritizing correctness over finality was tenable
Whether trial court abused discretion in vacating its summary judgment order	Union Bank: vacatur was within discretion given irregularity and divisional split	Appellants: trial court abused discretion; should have left judgment intact	Court: did not abuse discretion; affirmed vacatur

Key Cases Cited

First-Citizens Bank & Trust Co. v. Cornerstone Homes & Dev., 178 Wn. App. 207 (2013) (held DTA bars deficiency judgments against guarantors after nonjudicial foreclosure)
Washington Federal v. Gentry, 179 Wn. App. 470 (2014) (Division One disagreed with Cornerstone; permitted deficiency judgments against guarantors)
Washington Federal v. Harvey, 182 Wn.2d 335 (2015) (Supreme Court affirmed Gentry s rule allowing deficiency judgments against guarantors)
Estate of Treadwell v. Wright, 115 Wn. App. 238 (2003) (change in law may justify vacatur under CR 60(b))
Shum v. Dep’t of Labor & Indus., 63 Wn. App. 405 (1991) (CR 60 cannot be used to correct pure legal error; scope of extraordinary-circumstances limitation discussed)
In re Detention of Ward, 125 Wn. App. 374 (2005) (CR 60(b)(11) requires extraordinary circumstances extraneous to proceedings)
In re Marriage of Flannagan, 42 Wn. App. 214 (1985) (legislative or Supreme Court developments creating retroactive effect can justify reopening final judgments)