Deutsche Bank National Trust Co., V. John E. Erickson & Shelley A. Erickson ( 2023 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee for Long Beach No. 85006-7-I
Mortgage Loan Trust 2006-4,
DIVISION ONE
Respondent,
v.
UNPUBLISHED OPINION
JOHN E. ERICKSON AND SHELLEY A.
ERICKSON, individuals residing in
Washington,
Appellants,
BOEING EMPLOYEES' CREDIT UNION, a
Washington corporation; AMERICAN
GENERAL FINANCIAL SERVICES, INC., a
Delaware corporation; TBF FINANCIAL,
LLC, an Illinois limited-liability corporation;
JUSTIN. PARK & ROMERO PARK &
WIGGINS, PS, a Washington professional
services corporation; RANDAL
EBBERSON, an individual residing in
Washington; THE LAW FIRM OF KEATING
BUCKLIN & MCCORMICK, INC, PS, a
Washington professional services
corporation; CITY OF AUBURN,
WASHINGTON, a Washington municipality;
CHARLES JOINER, an individual residing
in Washington; PAUL KRAUSS, an
individual residing in Washington; DAN
HEID, an individual residing in Washington;
SHELLEY COLEMAN, an individual
residing in Washington; BRENDA
HEINEMAN, an individual residing in
Washington; and THE WASHINGTON
CITIES INSURANCE AUTHORITY, a
municipal organization of Washington
public entities,
Defendants.
No. 85006-7-I/2
JPMORGAN CHASE BANK, N.A., a
national banking association; LONG
BEACH MORTGAGE LOAN TRUST, 2006-
4; and JOHN DOES 1-99,
Third Party Defendants.
SMITH, C.J. — This is the fourth appeal before this court arising from John
and Shelley Erickson’s 2009 default on their mortgage. Deutsche Bank National
Trust Company (Deutsche Bank), via its corporate assignee, executed on the
foreclosure judgment and purchased the property at a sheriff’s sale. The
Ericksons appeal the trial court’s orders confirming the sheriff’s sale and denying
reconsideration. They argue that Deutsche Bank’s corporate assignee is a
“nonparty” that lacked authority to enforce the judgment or purchase the property
as a judgment creditor. They also argue that an error in the judgment amount
upon which the sale was based requires reversal. We conclude that the
Deutsche Bank was authorized to act via its corporate assignee. But because
the sheriff’s sale was confirmed based on a substantial miscalculation of the
judgment amount, we remand to the trial court for a determination as to whether
this irregularity requires a new sale.
FACTS1
John and Shelley Erickson used their home in Auburn to secure a
$476,000 loan from Long Beach Mortgage Company. Long Beach was part of
1We adopt the facts as set out in the opinion from the direct appeal in this
matter. Deutsche Bank Nat. Tr. Co. for Long Beach Mort. Loan Tr. 2006-4 v.
Erickson, No. 73833-0-I (Wash. Ct. App. Feb. 13, 2017) (unpublished), http://
www.courts.wa.gov/opinions/pdf/738330.pdf (Erickson II).
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Washington Mutual, Inc., until it failed. Deutsche Bank Nat. Tr. Co. for Long
Beach Mort. Loan Tr. 2006-4 v. Erickson, No. 73833-0-I, slip op. at 2 (Wash. Ct.
App. Feb. 13, 2017) (unpublished), http://www.courts.wa.gov/opinions/pdf/
738330.pdf (Erickson II). JP Morgan Chase purchased Washington Mutual’s
assets. Erickson II, slip op. at 2. Shortly after executing the loan, Long Beach
sold it into Long Beach Mortgage Loan Trust 2006-4. Id. at 2-3. Deutsche Bank
was the trustee of the Long Beach Mortgage Loan Trust. Id. at 3. J.P. Morgan
Chase later assigned its beneficial interest under the deed of trust to Deutsche
Bank. Id.
The Ericksons defaulted on their payments in 2009. Id. The Ericksons
filed suit against Deutsche Bank in 2010, arguing the bank lacked standing to
enforce the note because it was not the original creditor and could not produce
the original note. Id. The lawsuit was removed to federal court, which held that
the defendants provided sufficient evidence to prove their ownership of the note
and dismissed the lawsuit on summary judgment. Erickson v. Long Beach
Mortg. Co., No. 10-1423 MJP, 2011 WL 830727 (W.D. Wash. Mar. 2, 2011)
(court order) (Erickson I), aff’d., 473 F. App’x. 746 (9th Cir. 2012).
In January 2014, Deutsche Bank filed a foreclosure action in King County
Superior Court to foreclose on the Ericksons’ property. The trial court granted
Deutsche Bank’s motion for summary judgment and on August 27, 2015, entered
a judgment and decree of foreclosure against the Ericksons. This court affirmed,
concluding that Deutsche Bank held the note and that collateral estoppel
prevented the Ericksons from relitigating the issue. Erickson II, slip op. at 2.
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In 2019, the Ericksons filed a CR 60 motion in superior court to vacate the
2015 judgment on the ground that Deutsche Bank did not hold the note and
therefore could not foreclose. Erickson v. Deutsche Bank Nat'l Tr. Co. for Long
Beach Mort. Loan Tr. 2006-4, No. 81648-9-I, slip op. at 2-3 (Wash. Ct. App. Nov.
29, 2021), http://www.courts.wa.gov/opinions/pdf/816489.pdf (Erickson III). The
trial court granted summary judgment in favor of Deutsche Bank and this court
affirmed. Erickson III, slip op. at 1.
In 2020, the Ericksons filed suit against attorneys who represented
Deutsche Bank in Erickson II and Erickson III, arguing that they perpetrated fraud
upon the court because Deutsche Bank did not properly hold the note. Erickson
v. Power, No. 82755-3-I, slip. op. at 4 (Wash. Ct. App. April 25, 2022), http://
www.courts.wa.gov/opinions/pdf/827553.pdf (Erickson IV). The trial court
granted summary judgment for the defendants and this court affirmed. Erickson
IV, slip op. at 1.
A sheriff’s sale of the property was held on October 14, 2022. Deutsche
Bank, via its corporate assignee, purchased the property under a credit bid in the
amount of $1,146,435.80. A sheriff’s return on sale of real property issued on
October 19, 2022 noted that the sale resulted in a deficiency of $410,423.45.
Deutsche Bank moved for confirmation of sale. The Ericksons objected. On
December 12, 2022, the trial court found that there were no substantial
irregularities in the proceedings and confirmed the sale. The Ericksons
unsuccessfully moved for reconsideration.
The Ericksons now appeal.
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ANALYSIS
Standard of Review
Confirmation of a purchase at a judicial sale is governed by RCW
6.21.110. A sheriff's sale must be confirmed unless “there were substantial
irregularities in the proceedings concerning the sale, to the probable loss or injury
of the party objecting.” RCW 6.21.110(3). “ ‘[C]onfirmation of judicial sales rests
largely within the discretion of the trial court’ and so is reviewed for manifest
abuse of such discretion.” Sixty-01 Ass'n of Apartment Owners v. Parsons, 181
Wn.2d 316, 322, 335 P.3d 933 (2014) (quoting Braman v. Kuper, 51 Wn.2d 676,
681, 321 P.2d 275 (1958)). “A trial court abuses its discretion when its decision
is based on untenable grounds or is made for untenable reasons.” Shandola v.
Henry, 198 Wn. App. 889, 896, 396 P.3d 395 (2017). We generally defer to a
sale “absent substantial irregularities or great inadequacies.” Sixty-01 Ass’n, 181
Wn.2d at 327.
Corporate Assignee
The Ericksons do not challenge the validity of the August 27, 2015
judgment and decree of foreclosure entered in favor of Deutsche Bank as the
judgment creditor. Rather, they argue that the trial court erred in confirming the
sheriff’s sale because it was based on a credit bid submitted in the name of a
nonparty entity without assignment of the judgment. The Ericksons are incorrect.
Under RCW 6.17.030, a judgment may be executed upon in the name of
an assignee. The statute provides in relevant part:
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When a judgment recovered in any court of this state has
been assigned, execution may issue in the name of the assignee
after the assignment has been recorded in the execution docket by
the clerk of the court in which the judgment was recovered.
RCW 6.17.030.
This process was properly followed. On November 8, 2018, a Corporate
Assignment of Deed of Trust was recorded in King County. The assignment
identified the assignor as “Deutsche Bank National Trust Company, as Trustee
for Long Beach Mortgage Loan Trust 2006-4” and the assignee as “Deutsche
Bank National Trust Company, as Trustee, in Trust for Registered Holders of
Long Beach Mortgage Loan Trust 2006-4, Asset-Backed Certificates, Series
2006-4.” Based on this recorded assignment, Deutsche Bank’s corporate
assignee was authorized to execute on the foreclosure judgment and purchase
the property as a judgment creditor at the sheriff’s sale. Contrary to the
Ericksons’ claim, there is no doubt as to the identity of the purchaser and no
need to substitute parties.2 The trial court did not abuse its discretion in
confirming the sheriff’s sale or in denying reconsideration as to this issue.
Redemption Amount
The Ericksons also assign error to the trial court's confirmation of the
sheriff’s sale based on “an erroneously calculated value of the underlying
2 Deutsche Bank acknowledges that the sheriff’s return on sale of real
property appears to have left out the phrase, “In Trust for Registered Holders” in
identifying its corporate assignee as the credit bidder that purchased the
property. We agree with Deutsche Bank that this omission does not put the
identity of the purchaser in question or prejudice the Ericksons in any way.
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judgment and which created the wrong amount for redemption.”3 They contend
that the error amounts to a substantial irregularity that warrants overturning the
sale. For the first time on appeal, Deutsche Bank acknowledges that there was
an apparent error in the amount of prejudgment interest calculated under the
accepted bid, and that as a result, the Ericksons were notified that the amount
required to redeem the property was $141,712.13 higher than it should have
been. On August 30, 2023, in an effort to correct the error, Deutsche Bank filed
an amended “Notice of Expiration of Redemption Period” in superior court that
reflects a reduced redemption amount. Deutsche Bank asserts that this
correction maintained the rights of all parties and that no further action is
necessary. In reply, the Ericksons argue that the miscalculation amounts to a
substantial irregularity that created an excessive deficiency and reduced the time
for them to exercise their redemption rights. They assert that the error requires
reversal and remand to the superior court with instructions to set aside the order
confirming sale.
Chapter 6.23 RCW governs the statutory redemption of real property sold
at a sheriff's sale. The judgment debtor or their successor may redeem the
property from the purchaser within one year after the date of the sale. RCW
6.23.020(1)(b); Performance Constr. v. Glenn, 195 Wn. App. 406, 409, 380 P.3d
618 (2016). If no redemption is made within the one-year redemption period, the
3 Although not entirely clear, it appears that the Ericksons raised this
issue for the first time in their motion for reconsideration.
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purchaser is entitled to a sheriff's deed. RCW 6.23.060; Performance, 195 Wn.
App. at 418.
Here, the one-year statutory redemption period commenced when the
property was sold on October 14, 2022. As Deutsche Bank now acknowledges,
the Notice of Expiration of Redemption Period affirmatively misinformed the
Ericksons that the amount required to redeem the property was $141,712.13
higher than it should have been.4 Deutsche Bank asserts that the amended
notice cured the error but, as the Ericksons point out, it was filed only six weeks
before the one-year redemption period expired on October 14, 2023.
Based on the record before us, it is unclear if the trial court considered
whether the miscalculation amounted to a “substantial irregularit[y]” that resulted
in “probable loss or injury” to the Ericksons. See RCW 6.21.110(3). Although
the matter was raised in the motion to reconsider, and the court indicated that
there was no basis for reconsideration, it failed to specifically address this new
issue raised. Nor has the trial court had an opportunity to address whether the
amended Notice of Expiration of Redemption Period cured the error.
We therefore remand to the trial court to enter findings of fact, conclusions
of law, and an order addressing these matters. Specifically, the court should
consider (1) the basis and amount of the miscalculation, (2) whether the
amended notice cured the error, and (3) whether a new sale is required on the
ground that the miscalculation amounted to a “substantial irregularit[y] in the
4 We also note that neither the original nor the amended Notice of
Expiration of Redemption Period includes the sheriff’s address, as
RCW 6.23.030(3) requires.
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proceedings concerning the sale, to the probable loss or injury of the party
objecting.” RCW 6.21.110(3).
Remanded.
WE CONCUR:
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