Petix v. Gillingham ( 2023 )

157
Argued and submitted February 15, 2022; as to plaintiff’s claim for declaratory
relief, vacated and remanded for entry of judgment declaring the rights of the
parties, otherwise affirmed April 5, petition for review denied
September 14, 2023 (371 Or 333)
Jeanette A. PETIX,
Plaintiff-Appellant,
v.
Aaron L. GILLINGHAM;
James B. Shikany; and
Aries Holdings 1, LLC,
Defendants-Respondents,
and
PERKINS COIE, LLP et al.,
Defendants.
Washington County Circuit Court
19CV49445; A175438
528 P3d 1152
Plaintiff appeals from a limited judgment of dismissal in a dispute about the
rights of the parties in real property following foreclosure. She assigns error to
the trial court’s: (1) dismissal of her claim for declaratory relief and (2) dismissal
of her claim for fraudulent transfer. The key question underlying each assign-
ment is whether defendant, who purchased redemption rights from the foreclosed
mortgagor and then purchased the certificate of sale from the certificate holder,
redeemed the property. Held: The trial court’s dismissal of the declaratory judg-
ment claim as nonjusticiable was in error, but that dismissal was necessarily
based on a determination of the underlying controversy. The Court of Appeals
followed its practice under similar circumstances to review the trial court’s mer-
its determination and concluded that the trial court did not err. There was no
redemption, and therefore, plaintiff’s lien rights were not restored. Finally, the
trial court did not err in dismissing the fraudulent transfer claim for failure to
state a claim for relief.
As to plaintiff’s claim for declaratory relief, vacated and remanded for entry
of judgment declaring the rights of the parties; otherwise affirmed.
Oscar Garcia, Judge.
Stanley D. Gish argued the cause and filed the briefs for
appellant.
J. Aaron Landau argued the cause for respondents. On
the briefs were Harrang Long Gary Rudnick P.C., Graham
158 Petix v. Gillingham
M. Sweitzer, McEwen Gisvold LLP, J. Kurt Kraemer, and
Jonathan M. Radmacher.
Before Shorr, Presiding Judge, and Mooney, Judge, and
Pagán, Judge.
MOONEY, J.
As to plaintiff’s claim for declaratory relief, vacated and
remanded for entry of judgment declaring the rights of the
parties; otherwise affirmed.
Cite as 325 Or App 157 (2023) 159
MOONEY, J.
This is an appeal from a limited judgment of dis-
missal in a dispute about the rights of the parties in real
property following foreclosure where the key question pre-
sented is whether defendant Aries Holdings 1, LLC (Aries),1
purchaser of both the certificate of sale and redemption
rights, redeemed the property. Plaintiff raises two assign-
ments of error, asserting that the trial court erred by (1) dis-
missing her claim for declaratory relief and (2) dismissing
her claim for fraudulent transfer.
Defendants sought dismissal of both claims under
ORCP 21 A(8).2 They requested dismissal of the first claim
due to the failure to allege facts sufficient to state a declar-
atory judgment claim “which requires the presence of a jus-
ticiable controversy.” Defendants argued in substance that,
even assuming the truth of the facts alleged, redemption
cannot be found to have occurred, leaving plaintiff without
an interest in the property, a pleading deficiency fatal to
both claims. Plaintiff responded, essentially, that dismissal
at the pleading stage was premature because the allegations
were sufficient to establish a property right or interest by
way of “the substance of a redemption” that was sufficient to
create a “justiciable claim for declaratory relief.” She argued
further, as she does now, that the allegations were sufficient
to support a declaration “that [her] judgment lien contin-
ues as a lien based on [a] redemption” and that “[t]he same
redemption issue applies with respect to the Fraudulent
Transfer Claim.”
The trial court granted the ORCP 21 A(8) motions,
dismissing the declaratory judgment claim because there
was “no justiciable controversy” and the fraudulent transfer
claim because “plaintiff’s factual allegations cannot support
a finding of fraudulent transfer.”
1
Plaintiff filed her complaint against Aries, its principal, and its attorney.
For ease of reference, we generally refer to Aries as the defendant in this opinion.
We use the plural “defendants” where the context requires it.
2
Former ORCP 21 A(8) was renumbered as ORCP 21 A(1)(h), effective
January 1, 2022. We cite the former version, which was in effect at the relevant
time, in this opinion. It allows motions to dismiss to be brought for “failure to
state ultimate facts sufficient to constitute a claim.”
160 Petix v. Gillingham
As we will explain, the trial court’s dismissal of
the declaratory judgment claim was necessarily based on a
determination of the underlying controversy: whether Aries
redeemed the property, restoring plaintiff’s lien rights.
As has been our practice under similar circumstances,
we review the trial court’s determination for legal error
and remand for the issuance of a judgment that declares
the rights of the parties as outlined in our opinion. Doe v.
Medford School Dist. 549C, 232 Or App 38, 46, 221 P3d 787
(2009). In the end, we conclude that the court did not err
in determining that under the facts alleged, there was no
redemption—statutory, equitable, or otherwise. Plaintiff’s
lien rights were, thus, not restored. We also conclude, for
reasons that follow, that the trial court did not err in dis-
missing the fraudulent transfer claim.
I. STANDARD OF REVIEW
We review the grant of a motion to dismiss for legal
error, assuming “the truth of all well-pleaded facts alleged
in the complaint.” Hale v. State of Oregon, 259 Or App 379,
382, 314 P3d 345 (2013), rev den, 354 Or 840 (2014). We state
the facts in accordance with that standard.
II. FACTUAL & PROCEDURAL
BACKGROUND
We draw the following chronology of pertinent events
from the operative complaint, assuming the truth of the
facts alleged:
• Plaintiff is a judgment creditor, with an unpaid judg-
ment against Lucas, which was secured by a lien
against property that Lucas owned in Sherwood.3
3
ORS 18.150(2) provides:
“Except as provided in this section, if the court administrator notes in
the register that a judgment creates a judgment lien, the judgment has the
following effect in the county in which the judgment is entered:
“(a) When the judgment is entered, the judgment lien attaches to all real
property of the judgment debtor in the county at that time; and
“(b) The judgment lien attaches to all real property that the judgment
debtor acquires in the county at any time after the judgment is entered and
before the judgment lien expires.”
Cite as 325 Or App 157 (2023) 161
• February 2016 - Lucas transferred his interest in
the property to his wife, Rachel Lucas, by bargain
and sale deed for $0 in consideration.
• July 26, 2016 - a judgment of foreclosure was entered
in favor of U.S. Bank, the senior lienholder, foreclos-
ing the interests of Lucas and all junior lienholders
in the property, including plaintiff, subject to statu-
tory rights of redemption.
• January 23, 2017 - Rachel Lucas transferred her
interest in the property to Cypress Oregon
Investments, LLC (Cypress), a company she was
a member of, by bargain and sale deed for $0 in
consideration.
• January 25, 2017 - a foreclosure sale was held, and
the property was sold to Vardon Properties, LLC
(Vardon) for $353,000, subject to statutory rights
of redemption. Vardon received a certificate of sale
from the sheriff and became the certificate holder.
• February - March 2017 - defendants worked with
John and Rachel Lucas on a plan by which Aries
or one of the other defendants would provide fund-
ing to Lucas that would allow him to redeem the
property under the statutory procedure and remain
in possession of the property. By mid-March, defen-
dants received an updated title report that provided
information revealing to them, for the first time, a
number of significant liens against the property,
including plaintiff’s judgment lien. At that point,
defendants rejected the statutory redemption plan.
• March 2017 - John Lucas, Rachel Lucas, and
Cypress transferred any and all interests they had
in the property to Aries, by bargain and sale deeds,
including all rights of redemption.4 The deeds were
not recorded.
4
The bargain and sale deeds were attached to the operative complaint. They
designated the “true and actual consideration” given by Aries in exchange for the
conveyances to it of the interests in the property as “$200 and other valuable con-
sideration, including any and all rights of redemption arising from the Sheriff’s
Sale on January 25, 2017, and all rights under ORS Chapter 18.” Plainly read,
the deeds reflect that Aries gave cash plus redemption rights for the interests it
162 Petix v. Gillingham
• March 31, 2017 - Aries purchased the sheriff’s cer-
tificate of sale from Vardon for $400,000, an amount
that would be consistent with a redemption amount
payable under ORS 18.966 (amount paid at sheriff’s
sale plus interest and costs). The assignment of the
Sheriff’s Certificate of Sale was recorded.
• March 31, 2017 - John and Rachel Lucas paid
Aries $45,000 and entered into a Lease Option
Agreement with Aries that provided that John and
Rachel Lucas would remain in possession of the
property, with an option to purchase the property
in the future. The Lease Option Agreement was not
recorded.
• January 30, 2018 - Aries received the sheriff’s deed
for the property and presently holds legal title to it.
III. DECLARATORY JUDGMENT CLAIM
A. Justiciability
Plaintiff sought a declaration that her judgment
lien “continues as a lien against” the property based on two
different, but overlapping, theories of redemption. Plaintiff’s
first theory is that Aries purchased the interest of the fore-
closure sale purchaser (Vardon) during the statutory period
of redemption, and that, at that moment, that interest auto-
matically merged with the redemption rights Aries had
already purchased from the foreclosed mortgagor (Lucas),
“resulting in a redemption.”
Plaintiff’s second theory is that a redemption should
be “deemed” to have occurred because Aries “disguised
itself” as if it held only the certificate of sale when, in fact,
Aries also held the Lucases’ potential redemption rights.
According to plaintiff, by concealing its identity as a suc-
cessor in interest to the mortgagor (having purchased his
redemption rights), Aries improperly sidestepped the effect
received in the property. That is not consistent with the allegations in the com-
plaint that allege that John Lucas, Rachel Lucas, and Cypress each transferred
redemption rights to Aries. That apparent mistake in each deed goes to consid-
eration, a key term in each. But no party raised that as an issue, and we do not
address it further.
Cite as 325 Or App 157 (2023) 163
of statutory redemption under ORS 18.952(1)5 and was then
able to obtain a sheriff’s deed to the property free and clear
of all encumbrances, including plaintiff’s lien. In plaintiff’s
view, given that alleged scheme, the trial court should have
deemed an “equitable redemption” of the type described in
McKinnon v. Bradley, 178 Or 45, 165 P2d 286 (1946), to have
occurred, resulting in the restoration of her lien against the
property.
Before turning to the merits, we must first address
the posture in which the parties have presented this matter
to us. Defendants filed ORCP 21 A(8) motions to dismiss for
failure to state a claim and not ORCP 21 A(1) motions to dis-
miss for lack of subject matter jurisdiction. Defendants argue
that, “[a]lthough the parties and the court used the term
‘justiciable,’ ” the question that was argued was not whether
plaintiff had sufficiently alleged a justiciable controversy,
but instead concerned whether an equitable redemption as
alleged by plaintiff was possible under Oregon law and, thus,
whether a redemption occurred, giving plaintiff an inter-
est in the property at issue. That, according to defendants,
goes to the merits of plaintiff’s claim and not to justicia-
bility. Plaintiff briefly mentioned justiciability below when
she concluded her argument in opposition to the motions
by stating that the complaint supports “the substance of a
redemption” that was sufficient to create a “justiciable claim
for declaratory relief.” Plaintiff does not specifically address
justiciability on appeal.
The issue of justiciability is a question of law.
Requirements of justiciability are imposed by Article VII
(Amended), section 1, of the Oregon Constitution, but the
legislature may impose its own such requirements. Beck v.
City of Portland, 202 Or App 360, 363, 122 P3d 131 (2005).
5
ORS 18.952, which is titled “Effect of sale on judgment debtor’s or mortgag-
or’s title; effect of redemption by judgment debtor or mortgagor” provides:
“(1) The title of a judgment debtor or mortgagor to real property that
is subject to redemption under ORS 18.960 to 18.985 is not transferred by
the sale of the property at an execution sale. If a judgment debtor or mort-
gagor, or a successor in interest to a judgment debtor or mortgagor, redeems
property sold at an execution sale, the right to possession of the property is
restored subject to all liens of record, whether arising before, on or after the
sale, as though the sale had never occurred.”
164 Petix v. Gillingham
We begin with the statutory scheme governing declaratory
judgment actions. See Board of Cty. Comm. of Columbia Cty.
v. Rosenblum, 324 Or App 221, 231, 526 P3d 798 (2023) (fol-
lowing that approach in the context of validation proceed-
ings). ORS 28.020 provides, as relevant here:
“Any person interested under a deed * * * or whose rights
* * * are affected by a * * * statute, * * * may have determined
any question of construction or validity arising under such
instrument, * * * [or] statute, * * * and obtain a declaration
of rights, status, or other legal relations thereunder.”
The Supreme Court has interpreted that provision to
impose statutory justiciability requirements. US West
Communications v. City of Eugene, 336 Or 181, 191 n 12, 81
P3d 702 (2003); see also Beck, 202 Or App at 364 (explain-
ing same). The court reasoned that the use of the phrase
“affected by” reflects a legislative intent to require that the
dispute be based on present, rather than hypothetical, facts.
US West Communications, 336 Or at 191. In our view, the
legislature’s use of the phrase “interested under”—also in
the present tense and in the very same sentence—leads to
the same conclusion by the same logic. ORS 28.020 imposes
a justiciability requirement in declaratory judgment actions.
The purpose of the Uniform Declaratory Judgments
Act (UDJA), ORS 28.010 to 28.160, “is to settle and to afford
relief from uncertainty and insecurity with respect to
rights, status, and other legal relations, and is to be liber-
ally construed and administered.” ORS 28.120. The UDJA
is, thus, designed to prevent injustice by authorizing trial
courts to settle uncertainty with respect to legal rights and
relationships, but it also, by its own terms, prohibits courts
from giving purely advisory opinions. The test for whether
a claim for declaratory relief is justiciable is whether an
“existing state of facts” threatens a plaintiff’s legal rights.
Cummings Constr. v. School Dist. No. 9, 242 Or 106, 110, 408
P2d 80 (1965).
The Supreme Court described the elements of a jus-
ticiable controversy as follows:
“A controversy is justiciable, as opposed to abstract, where
there is an actual and substantial controversy between
parties having adverse legal interests. The controversy
Cite as 325 Or App 157 (2023) 165
must involve present facts as opposed to a dispute which is
based on future events of a hypothetical issue.”
Brown v. Oregon State Bar, 293 Or 446, 449, 648 P2d 1289(1982) (citations omitted). Justiciability, thus, requires
that the dispute “involve present facts” and that it be one
“in which a prevailing plaintiff can receive meaningful
relief from a losing defendant.” Hale, 259 Or App at 384.
“Justiciability is a vague standard but entails several defi-
nite considerations.” Brown, 293 Or at 449. There must be “an
actual and substantial controversy between parties having
adverse legal interests” and the declaratory judgment action
must result in “specific relief through a binding decree as
opposed to an advisory opinion which is binding on no one.”
Id.The justiciability of a claim for declaratory relief
presents a jurisdictional question regardless of whether it
is raised in the context of a motion to dismiss for failure to
state a claim, a motion to dismiss for lack of subject matter
jurisdiction, or on the court’s own motion pursuant to an
independent obligation to determine the justiciability of the
issues before it. Beck, 202 Or App at 366-68. Declaratory
judgment actions are generally not the proper subject of
a motion to dismiss, unless there is “want of a justiciable
controversy.” Doe, 232 Or App at 45. When the “complaint
presents a justiciable controversy, a motion to dismiss under
ORCP 21 A(8) should be denied.” Clark v. City of Albany, 142
Or App 207, 212, 921 P2d 406 (1996). In fact, when the basis
for the ORCP 21 A(8) motion is that the complaint does not
state a justiciable controversy, the issue presented is really
one directed to jurisdiction and better presented under
ORCP 21 A(1). Beck, 202 Or App at 367-68.
We acknowledge the conundrum of deciding whether
to file an ORCP 21 A(8) motion for failure to state a UDJA
claim where an actual controversy based on present facts is
not alleged versus an ORCP 21 A(1) motion to dismiss for
lack of subject matter jurisdiction. The underlying basis for
each motion is the same here. Both ask the court to dismiss
the claim because there was no redemption and, therefore,
plaintiff has no interest in the property. And, clearly, the
trial court had to reach the merits of that argument before it
166 Petix v. Gillingham
could find that there was “no justiciable controversy.” As we
have explained, “[t]he proper procedure” would be for defen-
dants “to [file an] answer” and then “submit the matter to
the court for a declaration as to the merits of the claim.” Doe,
232 Or App at 46. It appears that the functional equivalent
of that happened here.
This is not a case like Waremart, Inc. v. Mathias,
168 Or App 272, 7 P3d 538 (2000), where we affirmed dis-
missal of a claim for declaratory relief because, in that
case, the controversy was alleged in wholly hypothetical
terms: If a citizen sought signatures on initiative petitions
on Waremart property, and if the state requires Waremart
to permit that activity, then Waremart would suffer a con-
stitutional violation. We agreed that the claim was nonjus-
ticiable and subject to dismissal as such. Mathias, 168 Or
App at 277. Here, plaintiff alleged that she had a valid judg-
ment against Lucas secured by a lien against property he
once owned, that there was a foreclosure sale, followed by
transfers and assignments of certificates and redemption
rights, and that those transfers and assignments resulted
in a redemption that restored her lien rights in the prop-
erty. Whether or not plaintiff is legally correct, she alleged
facts that are current, real, and disputed. Given the purpose
of the UDJA and our obligation to construe and adminis-
ter its terms liberally, we will follow our practice of moving
directly to a review of the trial court’s decision on the merits
in anticipation of remanding for entry of a judgment declar-
ing the parties’ rights with respect to plaintiff’s lien claim.
B. Redemption Rights
The legal concept that a lien will reattach to prop-
erty when a judgment debtor or his grantee redeems the
property is well-settled in our case law. As the Oregon
Supreme Court explained long ago:
“The lien is a quality in the judgment, inseparably con-
nected with it, which determines the extent of the right to
take the land in execution under the judgment as against
adverse claims. The lien binds the title of the judgment
debtor, and, until there has been a legal transmutation of
that title, the lien should, apparently, continue. There is no
sale in a legal sense until the title has passed.
Cite as 325 Or App 157 (2023) 167
“The execution comes as a power to seize the debtor’s
title and pass it to the purchaser. The lien binds the title—
the ownership in the land—and having attached to the
title, prevents its transfer by the debtor so as to affect the
lien. It is not sufficient, to divest the lien, that the power
should be partly executed by an inchoate sale. The sale is
but one of the steps in the exercise of the power. The power
must be fully executed, to make that change in the status
of the property necessary to divest the lien. This is done
by the seizure on execution and transfer of the seizin by a
legal sale.
“The purchaser at the sale holds a defeasible equitable
right to a conveyance of the legal title. The lien is a legal
right relative to the legal title, and the purchaser’s equity
can only affect it as it affects that title. But the lien is sus-
pended, because the title bound by the lien is in the grasp
of the law; free the title from that grasp and the lien binds
as before. Now when the grantee of the judgment debtor
redeems, the process of transfer is arrested. The equitable
title of the purchaser falls into the legal title in the hands
of such grantee and is instantly merged. No notice can now
be taken of that title. It is as if it had never existed.”
Settlemire v. Newsome, 10 Or 446, 446-47 (1882). “During
the interim between the [execution] sale and [issuance of]
the [sheriff’s] deed, the rights of the parties interested are
measured by the statute. The sale is inchoate, and does not
transfer title until consummated by the execution and deliv-
ery of the [sheriff’s] deed in due course of law.” Flanders v.
Aumack, 32 Or 19, 25-26, 51 P 447 (1897). Once a sheriff’s
deed issues to the certificate holder, that “deed puts an end
to the lien of the judgment or decree under which the sale
was made, and all other liens subsequently acquired.” Id. at
26. The “sheriff’s deed cuts them off altogether.” Id. at 25.
The legal implications of foreclosure on ownership
of the encumbered property thus change as the process pro-
ceeds. Those changes flow from the process itself and depend,
in particular, on whether redemption rights are exercised.
When they are, title to the property remains encumbered
by any unsatisfied portion of the lien foreclosed as well as
any junior liens. When redemption rights are not exercised,
title to the property is conveyed free and clear of all such
liens. The logic of those divergent outcomes flows from the
168 Petix v. Gillingham
fact that a judgment lien secures a personal obligation and
thus “attaches” to real property owned by “the judgment
debtor.” ORS 18.150(2). Once property is sold at the sheriff’s
sale and the redemption period expires without redemption
rights having been exercised, the property conveyed to the
purchaser by the sheriff’s deed is no longer property owned
by the judgment debtor and, thus, cannot be used to secure
the personal obligations of the judgment debtor.
There are two types of redemption: equitable and
statutory. Kerr v. Miller, 159 Or App 613, 634, 977 P2d
438, rev den, 329 Or 287 (1999). Equitable redemption is a
common law doctrine, now “codified at ORS 88.100, [that]
exists only until the foreclosure sale[ ]” occurs. Id. Statutory
redemption, on the other hand, is available for a six-month
period following the foreclosure sale. It permits the default-
ing debtor, the mortgagor whose interest in the property was
sold at the sale, any junior lienholder, or the successor in
interest of any such persons, to redeem the property within
that timeframe. ORS 18.942; ORS 18.963(1)(a) - (d); ORS
18.964. The distinguishing feature between the two types
of redemption is that “equitable redemption only exists until
the interest is foreclosed, while statutory redemption only
begins after the interest is foreclosed.” Land Associates v.
Becker, 294 Or 308, 313, 656 P2d 927 (1982).
Plaintiff did not allege below and does not argue on
appeal that the property was redeemed before the foreclo-
sure sale occurred. Plaintiff, in fact, emphasized in her reply
brief that she “does not contend that Aries [ ] exercised its
redemption rights prior to the January 25, 2017, foreclosure
auction sale; that is a non-issue.” Plaintiff also did not allege
or argue that any party affirmatively used the statutory
redemption process to redeem the property after the foreclo-
sure sale occurred.6 Plaintiff does allege that Aries initially
6
The statutory redemption process permits a person holding redemption
rights to redeem the property from the purchaser by paying to the sheriff the
entire amount paid by the purchaser at the execution sale, plus interest, and
some additional expenses. ORS 18.966. But the statutory process involves a num-
ber of steps that the redemptioner must take including, among others, providing
notice to the certificate holder, ORS 18.970, and allowing an opportunity for the
certificate holder to object to the notice and to initiate court proceedings, ORS
18.971 - 18.978. There are also a number of requirements concerning such things
as the specific contents of the notice, ORS 18.970, when and how a redemptioner
Cite as 325 Or App 157 (2023) 169
planned to be a funding source for Lucas so that Lucas could
redeem the property, but she also alleges that defendants
abandoned that plan. As it turned out, Lucas did not redeem
the property. Plaintiff makes a public policy argument that,
given the facts alleged, “an equitable redemption” in “the
sense” that that phrase was used in McKinnon should be
“deemed” to have occurred.
In plaintiff’s view, redemption occurred at the
moment Aries held both the certificate of sale and the
redemption rights because that moment occurred within
the statutory six-month redemption period and because the
text and context of the redemption statutes support both the
automatic merger of those interests and a redemption of the
property at that point in time. In addition to her public policy
argument under McKinnon, and although plaintiff acknowl-
edges that no party utilized the statutory redemption pro-
cess, plaintiff relies on ORS 18.952(1), which is within the
statutory redemption provisions, to support her position.
That statute provides:
“The title of a judgment debtor or mortgagor to real property
that is subject to redemption under ORS 18.960 to 18.985 is
not transferred by the sale of the property at an execution
sale. If a judgment debtor or mortgagor, or a successor in
interest to a judgment debtor or mortgagor, redeems prop-
erty sold at an execution sale, the right to possession of the
property is restored subject to all liens of record, whether
arising before, on or after the sale, as though the sale had
never occurred.”
ORS 18.952(1).
Defendants, for their part, do not dispute that, if
there was a redemption, the property would be subject to
all remaining liens of record, including plaintiff’s lien.
Defendants’ position is that there was no redemption. They
point to the allegations in the complaint that Aries acquired
both the rights of redemption and the certificate of sale, and
they argue that Aries, as holder of both, would have been
entitled to a sheriff’s deed even before the redemption period
expired under ORS 18.985. That statute provides:
advises the sheriff of certain transfers, ORS 18.982, and what happens when the
property is not redeemed, ORS 18.985(1).
170 Petix v. Gillingham
“(1) Unless the property is redeemed by the judgment
debtor, upon request of the certificate holder and payment
of the fee required by ORS 21.300 (1)(c), the sheriff shall
execute and deliver a deed for real property sold at an exe-
cution sale. The deed shall convey the property to the cer-
tificate holder. The deed shall be delivered to the certificate
holder as soon as possible.
“(2) Notwithstanding subsection (1) of this section, the
court may direct the sheriff to execute a deed to a certif-
icate holder before the expiration of the time allowed for
redemption if the certificate holder establishes that the cer-
tificate holder has acquired the rights of all persons enti-
tled to redeem.”
ORS 18.985.
The parties thus seem to frame the issue as whether
the complaint supports a determination that (1) there was a
redemption of the property with restoration of liens of record
under ORS 18.952(1) or (2) there was an acquisition of all
rights of redemption by the certificate holder, who was thus
entitled to a sheriff’s deed under ORS 18.985. And yet as
we have already mentioned, plaintiff’s argument is that a
different type of “equitable redemption” occurred here—a
redemption of the sort described in McKinnon.
Defendants did not address McKinnon in their briefs,
but, because plaintiff relies on that case to support her “equi-
table redemption” theory, we turn to it now. McKinnon is a
mortgage foreclosure case filed against the mortgagor.7 178
Or at 47-50. There, the plaintiff alleged, among other things,
that the county had foreclosed various tax liens on the
defendant-mortgagor’s property pursuant to statute, and
that it had “procured a sheriff’s deed conveying the property
to [the county]” as a part of that process. Id. at 48. The plain-
tiff further alleged that the defendant-mortgagor’s mother
“entered into a written agreement with the county for the
purchase” of the property, that she received a sheriff’s deed
for the property, free of all liens, and that she then assigned
that agreement to defendant-mortgagor (her daughter) and
7
The defendant-mortgagor in McKinnon was not the original mortgagor.
Her interest was nevertheless such “that she might have redeemed it from
the tax sale.” McKinnon, 178 Or at 56. For ease of reference, we refer to her as
“defendant-mortgagor” or “the mortgagor” in discussing McKinnon.
Cite as 325 Or App 157 (2023) 171
son-in-law and also “quitclaimed the premises” to them. Id. at
48-49. The plaintiff alleged that the defendant-mortgagor’s
mother acted according to a “concerted scheme for the benefit
of [her daughter and son-in-law], to procure title to the mort-
gaged premises free of the lien of the mortgage, in defraud of
plaintiffs’ rights thereunder.” Id. at 49. The court concluded
that, “irrespective of whether or not [the defendant’s mother]
was a bona fide purchaser, the subsequent revesting of the
title in a grantee of the original mortgagor worked an equi-
table redemption of the property for the benefit of the mort-
gagee, and the mortgage lien was restored.” Id. It is in that
sense that plaintiff argues we should deem an “equitable
redemption” to have occurred here. But McKinnon is distin-
guishable from this case.
The defendant-mortgagor in McKinnon remained
in possession of the property and resumed ownership of it
when her mother deeded the property back to her. Indeed, it
was that “revesting of the title” in the defendant-mortgagor
that “worked an equitable redemption of the property.” Id.
John and Rachel Lucas remained in possession of the prop-
erty in this case, but they did so under lease, not title. There
was no revesting of title to the Lucases. At most, they had
an option to repurchase the property in the future—which
is not the same thing.
The court also noted that it was the defendant-
mortgagor’s mother in McKinnon who purchased the prop-
erty at the foreclosure sale when it stated that, “[d]espite
the intrusion of [defendant’s mother] into the chain of title,”
defendant remained in possession of the property. 178 Or
at 56. Whatever weight the court gave to the familial rela-
tionship between the defendant-mortgagor and the pur-
chaser in the context of the reconveyance, the presence of
that relationship did not go unnoticed, and it distinguishes
McKinnon from the case before us. The complaint in this
case alleges only that Aries is a holding company, that it
had considered providing funding to Lucas to allow Lucas
to redeem, and that it purchased Vardon’s certificate of sale
and John and Rachel Lucas’s redemption rights. There is no
information about the existence or nature of the relation-
ship between Aries and Lucas. Certainly, there is nothing
to suggest a family relationship.
172 Petix v. Gillingham
We do not perceive the court’s use of the phrase
“equitable redemption” in McKinnon to have altered the his-
torically defined limits of equitable redemption. The extent
to which the family relationship played a role in “work[ing]
an equitable redemption” in McKinnon is not clear, but we
think it important to note that the court later reaffirmed
that equitable redemption can only occur before a foreclosure
sale takes place. Land Associates, 294 Or at 313. McKinnon
does not support equitable redemption in this case.
We also reject plaintiff’s argument that redemp-
tion automatically occurred when Aries, as assignee of the
Lucases’ existing redemption rights, acquired the certificate
of sale, because that argument is in direct conflict with ORS
18.985, which permits a certificate holder who has obtained
all rights of redemption to obtain a sheriff’s deed before the
statutory redemption period expires. And we reject plain-
tiff’s argument that Aries cannot be a certificate holder
under ORS 18.960(1) simply because it was not the origi-
nal purchaser at the foreclosure sale. “Certificate holder” is
defined in ORS 18.960(1) as “a person who holds a certificate
of sale issued under ORS 18.942 or who holds a certificate
of redemption issued under ORS 18.975.” The statute does
not say, and there is no requirement, that the holder be the
original certificate holder. Sheriff’s certificates of sale are
certainly transferable. See ORS 93.530 (requires all sher-
iffs’ certificates of sale to be executed, acknowledged, and
recorded in the same manner as deeds of real property);
National Surety Corp. v. Smith, 168 Or 265, 268, 114 P2d
118 (1941), aff’d on reh’g, 168 Or 265 (1942) (assignee of sher-
iff’s certificate of sale received sheriff’s deed).
Plaintiff asserts that the legislature intended the
statutory redemption process to prevent the kind of conduct
alleged here. The crux of that argument is that Aries wrong-
fully obtained clear title to the property through “identity
concealment”—a result it could not have obtained “through
an open and honest statutory redemption of the property.”
Plaintiff relies on Newman v. American National Bank, 780
P2d 336 (Wyo 1989), but that reliance is misplaced. We are
not bound by decisions of the Wyoming Supreme Court.
And, in any event, the factual allegations before us are dif-
ferent than the facts that were before the Wyoming court.
Cite as 325 Or App 157 (2023) 173
In Newman, the original mortgagor acquired the certificate
of sale himself after the property liens had been eliminated
by foreclosure. 780 P2d at 340. Here, Lucas did not acquire
the certificate of sale. He has no legal interest in the prop-
erty beyond that of a tenant. That distinction is important
because it was the potential for the mortgagor to eliminate
junior liens by purchasing the certificate of sale that the
Wyoming court concluded provided a “solid basis” for revival
of the junior lien. Id.Aries decided not to redeem the property. Aries was
entitled to make that decision.8 There was no redemption
and, therefore, plaintiff’s lien rights were not restored. She
has no right or interest in the property.
Accordingly, as to plaintiff’s first assignment of
error, we conclude that the court erred in dismissing plain-
tiff’s claim for declaratory judgment, and we vacate and
remand for the court to enter a judgment declaring that
plaintiff has no right or interest in the property.
IV. FRAUDULENT TRANSFER CLAIM
Plaintiff’s second assignment of error challenges
the trial court’s ruling dismissing her second claim for
relief in which she sought damages based on a legal the-
ory of fraudulent transfer. She alleged that the transfers of
Lucas’s redemption rights by Lucas and his wife to Aries
were fraudulently made with the intent to hinder, delay,
or defraud creditors of Lucas, including plaintiff. Plaintiff
argues that the trial court incorrectly concluded that her
“factual allegations cannot support a finding of a fraudulent
transfer.”
Plaintiff argues that the ultimate facts alleged
in her complaint are sufficient to proceed on a fraudulent
transfer theory because they show that Aries “leveraged” its
ownership of Lucas’s redemption rights in order to negotiate
a price for Vardon’s certificate of sale that was less than the
fair market value of the property. Vardon paid $353,000 for
the certificate of sale that it bought at the foreclosure sale
8
Although not raised as an issue by the parties, we note that plaintiff appears
to have had redemption rights as a junior lienholder under ORS 18.963(1)(c) and
that she likewise chose not to exercise those rights.
174 Petix v. Gillingham
and then sold that certificate to Aries for $400,000. Plaintiff
argues that if Aries had approached Vardon after the expira-
tion of the statutory redemption period, the property would
have been sold for more and that Aries received an unfair
amount of equity in the property.
Plaintiff argues that, when Lucas and his grantees,
Rachel Lucas and Cypress, transferred any and all of
their redemption rights to Aries, they did so as part of a
“redemption identity theft scheme” that constitutes a fraud-
ulent transfer under the Uniform Fraudulent Transfer Act
(UFTA), ORS 95.200 to 95.310. The UFTA defines a trans-
fer as “fraudulent” if “the debtor made the transfer * * *
[w]ith actual intent to hinder, delay, or defraud any creditor
of the debtor * * *.” ORS 95.230(1)(a). ORS 95.230(2) provides
a nonexclusive list of factors that the court may consider as
it determines whether a transfer was fraudulent.9
The allegedly fraudulent transfers were from John
Lucas to Aries, Rachel Lucas to Aries, and Cypress to Aries.
We have reviewed the operative complaint, and we have
considered the allegations of ultimate fact in light of the
statutory factors. There is no allegation that the transfers
9
ORS 95.230 provides, as relevant:
“(2) In determining actual intent under subsection (1)(a) of this section,
consideration may be given, among other factors, to whether:
“(a) The transfer or obligation was to an insider;
“(b) The debtor had retained possession or control of the property trans-
ferred after the transfer;
“(c) The transfer or obligation was disclosed or concealed;
“(d) Before the transfer was made or obligation was incurred, the debtor
was sued or threatened with suit;
“(e) The transfer was of substantially all the debtor’s assets;
“(f) The debtor had absconded;
“(g) The debtor had removed or concealed assets;
“(h) The value of the consideration received by the debtor was reasonably
equivalent to the value of the asset transferred or the amount of the obliga-
tion incurred;
“(i) The debtor was insolvent or became insolvent shortly after the trans-
fer was made or the obligation was incurred;
“(j) The transfer had occurred shortly before or shortly after a substan-
tial debt was incurred; and
“(k) The debtor had transferred the essential assets of the business to a
lienor who had transferred the assets to an insider of the debtor.”
Cite as 325 Or App 157 (2023) 175
were “to an insider.” As we have already mentioned, Aries
is alleged to be an Oregon limited liability company. But
there are no allegations that there was an “insider” relation-
ship between Lucas and Aries.10 And while it is alleged that
Lucas retained possession of the property, he did so under a
lease agreement as a tenant and not as an owner. See Stach
v. Jackson, 40 Or App 249, 253-54, 594 P2d 1289 (1979) (in
a somewhat different context, in determining whether a
debtor had an intent to hinder, delay, or defraud a creditor
in the conveyance of real property, the fact that the debtor
retained an option to purchase in a lease with the new prop-
erty owner was not regarded as evidence of a fraud). Other
than alleging that the thing that was transferred—Lucas’s
redemption right—was “valuable,” the complaint does not
contain any factual allegations to support what that value
might be. It is alleged that the deeds used to transfer the
redemption rights were not recorded, and that the assign-
ment of the certificate of sale from Vardon to Aries was
recorded, and that those facts resulted in a “collusive fore-
closure sale.” Plaintiff points to no requirement that the
deeds conveying redemption rights be recorded when they
are conveyed. And without any allegation that there was an
insider relationship between Lucas and Aries, it is difficult
to see how the transfers were fraudulent under the UFTA.
The trial court did not err in its determination that the alle-
gations of plaintiff’s second claim for relief do not support a
determination that the transfers were fraudulent.
As to plaintiff’s claim for declaratory relief, vacated
and remanded for entry of judgment declaring the rights of
the parties; otherwise affirmed.
10
ORS 95.200(7)(a) defines an “insider” (if the debtor is an individual) as
follows:
“(A) A relative of the debtor or of a general partner of the debtor;
“(B) A partnership in which the debtor is a general partner;
“(C) A general partner in a partnership described in subparagraph (B) of
this paragraph; or
“(D) A corporation of which the debtor is a director, officer or person in
control.”