vs Developing, Llc, V. Brmk Priest Point, Llc ( 2024 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
VS DEVELOPING, LLC,
No. 85435-6-I
Appellant,
DIVISION ONE
v.
UNPUBLISHED OPINION
BRMK PRIEST POINT, LLC; HACKER
& WILLIG, INC., P.S.; and JOHN &
JANE DOES 1-10,
Respondents.
HAZELRIGG, A.C.J. — VS Developing LLC held real property that was used
to secure a $1.8 million loan from BRMK Priest Point LLC to VS Investment Assoc
LLC. VS Investment defaulted on the loan and the trustee foreclosed and sold the
property. Nine months later, VS Developing filed a complaint that alleged the sale
was invalid as BRMK Priest Point’s counsel, Hacker & Willig Inc. had acted as
trustee. The trial court dismissed the claims on summary judgment. Because the
relevant statute does not prohibit counsel for the beneficiary from acting as trustee
and VS Developing failed to follow the statutory restraint procedure, VS
Developing waived its claims and summary judgment dismissal of the complaint
was proper. We affirm.
No. 85435-6-I/2
FACTS
Viktoria and Valentin Stelmakh 1 are the principals of VS Investment Assoc
LLC and its affiliate VS Developing LLC. 2 In 2016, VS Investment agreed to
purchase largely undeveloped land located in Seattle, WA (development property)
from BRMK Lending LLC, the parent company of BRMK Priest Point LLC (BRMK
PP). To purchase the land, on April 18, 2016, VS Investment accepted a loan from
BRMK Lending in the amount of $1,880,000. The Stelmakhs personally
guaranteed the loan. The loan was also secured by two deeds of trust, 3 one for
the development property in Seattle and the other for real property located at 4415
Priest Point Drive, NW, Tulalip, WA (subject property) that was owned by VS
Developing.
On multiple occasions over the next couple of years, VS Investment
requested, and BRMK Lending agreed, to increase the loan amount and extend
the maturity date on the loan. Ultimately, the maturity date was extended to
November 1, 2018 and VS Investment and the Stelmakhs defaulted by failing to
pay the balance. As of November 25, 2019, VS Investment and the Stelmakhs
owed BRMK Lending approximately $3,722,105.46 on the loan. Following the
1 This opinion refers to the Stelmakhs by their first names as needed for clarity. No
disrespect is intended.
2 As appellant VS Developing acknowledges in briefing, “VS Investment is not a party to
this action.”
3 A deed of trust is a type of mortgage that involves “‘a three-party transaction in which land
is conveyed by a borrower, the grantor, to a trustee, who holds title in trust for a lender, the
beneficiary, as security for credit or a loan the lender has given the borrower.’” Bain v. Metro.
Mortg. Grp., Inc., 175 Wn.2d 83, 92-93, 285 P.3d 34 (2012) (internal quotation marks omitted)
(quoting 18 W ILLIAM B. STOEBUCK & JOHN W. W EAVER, W ASHINGTON PRACTICE: REAL ESTATE:
TRANSACTIONS § 17.3, at 260 (2d ed. 2004)).
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default, BRMK Lending filed a petition in King County Superior Court pursuant to
RCW 7.08.030 for appointment of a receiver to administer VS Investment’s assets.
On February 28, 2022, BRMK Lending initiated the foreclosure process for
its deed of trust on the subject property. Hacker & Willig (HW), the law firm
representing BRMK Lending, was appointed as the successor trustee to conduct
the sale of the subject property. The trustee’s sale was initially scheduled for June
3, 2022 and statutory notices were sent to all interested parties, including VS
Developing and the Stelmakhs. On June 2, VS Developing filed a petition for
bankruptcy in the United States Bankruptcy Court in the Western District of
Washington. The bankruptcy court dismissed the petition, and on June 27, VS
Developing filed another bankruptcy action, which was also dismissed. 4 As a
result of those proceedings, the trustee’s sale was postponed and ultimately
rescheduled for August 19.
The trustee again sent statutory notices pursuant to RCW 61.24.040 to all
of the parties. VS Developing neither objected nor sought to enjoin the sale. On
August 19, the sale of the subject property occurred on the steps of the Snohomish
County Courthouse. Though representatives for VS Developing, its attorney and
Viktoria, were present at the trustee’s sale, neither objected or otherwise raised
any issue with the sale. The sole bidder was BRMK Lending, which, operating
through its subsidiary, BRMK PP, received the trustee’s deed and became the
owner of the subject property. Pursuant to RCW 61.24.060(1), BRMK PP was
entitled to possession of the property 20 days after the sale, September 8, 2022.
4 Those cases were In re VS Dev., LLC, Case No. 22-10916-MLB (W.D. Wash. June 2,
2022) and In re VS Dev., LLC, Case No. 22-11041-CMA (W.D. Wash. June 17, 2022).
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However, the Stelmakhs refused to vacate the property. On October 5,
BRMK PP filed an unlawful detainer action against them and sought a writ of
restitution. On November 14, the trial court ordered the issuance of a writ of
restitution and directed the Snohomish County Sheriff’s Office (SCSO) to remove
the Stelmakhs from the property. On December 14, SCSO restored the subject
property to BRMK PP. After retaining possession of the property and spending
approximately $300,000 to clean and repair the premises in preparation for sale,
BRMK PP accepted a purchase offer for it on May 16, 2023 and scheduled the
closing of the sale for June 15.
On May 18, 2023, VS Developing filed a complaint against BRMK PP and
HW alleging violations of ch. 61.24 RCW, the foreclosure fairness act, more
commonly referred to as the deeds of trust act or “DTA,” and ch. 19.86 RCW, the
Consumer Protection Act (CPA), seeking injunctive relief to prevent the scheduled
sale and to quiet title to the property. VS Developing claimed that BRMK PP
violated the DTA by assigning its counsel, HW, as the successor trustee for the
subject property and contended that HW “had no authority to foreclose on the
[s]ubject [p]roperty, rendering the sale and the [t]rustee’s [d]eed null and void.”
According to VS Developing, because HW represented BRMK PP as legal
counsel, HW “could not, by definition, fulfill its role of a neutral judicial substitute
and violated the DTA and [CPA] every time it performed any act as the trustee in
this case.” VS Developing also filed a lis pendens5 against the subject property.
5 “A ‘lis pendens’ is an ‘instrument having the effect of clouding the title to real property.’”
Guest v. Lange, 195 Wn. App. 330, 336, 381 P.3d 130 (2016) (quoting RCW 4.28.328(1)(a)).
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On May 22, 2023, BRMK PP and HW sent an e-mail to counsel for VS
Developing to provide notice of its request that it “dismiss its [c]omplaint and
withdraw its [l]is [p]endens immediately.” BRMK PP explained that the claims in
VS Developing’s complaint, which centered on the assertion that it was a violation
of the DTA and CPA for HW to act as the trustee in the sale of the subject property,
“lack[] any basis in fact and [are] not supported by any controlling legal authority.”
Further, BRMK PP noted that, because VS Developing was provided with statutory
notice and did not seek to restrain the sale prior to the foreclosure, VS Developing
had waived any such claims pursuant to RCW 61.24.127(4) because the loan was
secured by a commercial property. BRMK PP concluded that the complaint and
lis pendens were “clearly meritless” and demanded that VS Developing dismiss
them or BRMK PP would file a motion to dismiss and seek sanctions. Two days
later, on May 24, counsel for VS Developing responded and expressly refused to
remove the lis pendens or dismiss the claims.
On May 31, BRMK PP filed a motion for an order to remove the lis pendens
and to dismiss the action to quiet title. First, BRMK PP asserted that an attorney
for the beneficiary may legally act as the trustee pursuant to the DTA as shown in
Cascade Manor Associates v. Witherspoon, Kelley, Davenport & Toole, P.S., 69
Wn. App. 923, 934-35, 850 P.2d 1380 (1993). Second, BRMK PP insisted that VS
Developing’s claims were waived because they were brought after the trustee’s
sale and the failure to raise such claims or attempt to enjoin the sale beforehand
operates as a waiver, as explained in Patrick v. Wells Fargo Bank, N.A., 196 Wn.
App. 398, 405-07, 385 P.3d 165 (2016). Third, BRMK PP stated that “VS
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Developing ha[d] no justification for filing the [l]is [p]endens” and sought its removal
along with an award of attorney fees pursuant to RCW 4.28.328(3).
On June 14, 2023, the trial court ordered the removal of the lis pendens
after finding there was “no legal basis” for it. 6 On June 16, after converting the
motion to dismiss to a summary judgment motion and allowing the parties
additional time for briefing under CR 56, the trial court granted summary judgment
in favor of BRMK PP and entered an order that dismissed all of VS Developing’s
claims. The court stated that “any further attempts to thwart the sale of the Priest
Point [p]roperty may result in further sanctions,” and authorized BRMK PP to bring
a motion for sanctions within 30 days. On July 13, BRMK PP moved for an award
of sanctions against VS Developing and its counsel and requested attorney fees
in the amount of $35,000. On July 21, the trial court granted BRMK PP’s motion
and ordered VS Developing to pay $35,000 in attorney fees within 30 days. VS
Developing failed to pay within the timeframe required by the court and BRMK PP
filed a motion for entry of judgment on the fee award. On September 7, the court
entered a final judgment against VS Developing in the amount of $35,000 and
imposed a postjudgment interest rate of 12 percent.
VS Developing timely appealed. 7
6 VS Developing sought interlocutory review of the trial court’s order to remove the lis
pendens and to dismiss the quiet title claim. VS Developing also filed an emergency motion
objecting to the supersedeas decision under RAP 8.1(h) or for reversal of the order requiring
removal of lis pendens. A commissioner of this court determined that a stay of the trial court’s order
was not warranted and denied the emergency motion. That ruling mooted VS Developing’s petition
for discretionary review.
7 While VS Developing’s opening brief includes only three assignments of error, it
addresses 15 separate issues. As VS Developing did not designate as part of the record on appeal
the relevant orders for its challenges on several issues, those claims are not properly before this
court. In its amended notice of appeal, VS Developing failed to designate (1) the denial of its motion
to stay the order requiring removal of the lis pendens, (2) the denial of its motion to continue
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ANALYSIS
I. Standard of Review
This court reviews summary judgment rulings de novo. Scrivener v. Clark
Coll., 181 Wn.2d 439, 444, 334 P.3d 541 (2014). “Summary judgment is
appropriate only when there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law.” Id. “A material fact is one
on which the outcome of the litigation depends.” Becerra Becerra v. Expert
Janitorial, LLC, 176 Wn. App. 694, 702, 309 P.3d 711 (2013), aff’d, 181 Wn.2d
186, 332 P.3d 415 (2014). This court “places itself in the position of the trial court
and considers the facts in a light most favorable to the nonmoving party.” Young
v. Key Pharms., Inc., 112 Wn.2d 216, 226, 770 P.2d 182 (1989).
On summary judgment, “the moving party bears the initial burden of
showing the absence of an issue of material fact.” Id. at 225. “The burden then
shifts to the nonmoving party to present evidence that an issue of material fact
remains.” Haley v. Amazon.com Servs., LLC, 25 Wn. App. 2d 207, 216, 522 P.3d
80 (2022). At this stage, the “nonmoving party must set forth specific facts showing
a genuine issue.” Baldwin v. Sisters of Providence in Wash., Inc., 112 Wn.2d 127,
132, 769 P.2d 298 (1989). “Mere allegations or conclusory statements of fact
unsupported by evidence are not sufficient.” Patrick, 196 Wn. App. at 405. On
proceedings under CR 56(f), (3) the judgment against the plaintiff, and (4) any orders resulting from
“post-judgment supplemental proceedings.” Accordingly, we decline to consider its arguments as
to those orders.
Further, VS Developing attached over 200 pages of documents as appendices to its
briefing on appeal, in plain contradiction of RAP 10.3(a)(8), without submitting a motion to
supplement the record or otherwise seeking permission of this court as required by RAP 9.11(a).
As such, we do not consider those materials either.
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review, this court may affirm summary judgment “on any ground supported by the
record.” Pac. Marine Ins. Co. v. Dep’t of Revenue, 181 Wn. App. 730, 737, 329
P.3d 101 (2014).
II. Foreclosure and Restraint Requirements of the DTA
BRMK PP contends that VS Developing has waived any objection to the
trustee’s sale by failing to follow the restraint requirements of RCW 61.24.130. VS
Developing avers that waiver is inapplicable and the “trustee’s sale is void because
it was not a three-party transaction.” BRMK PP is correct.
A. Nonjudicial Foreclosure
The DTA “creates a three-party mortgage system allowing lenders, when
payment default occurs, to nonjudicially foreclose by trustee’s sale.” Albice v.
Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560, 567, 276 P.3d 1277 (2012).
There are three fundamental goals of the DTA: “an efficient and inexpensive
process, adequate opportunities for parties to prevent wrongful foreclosure, and
stability of land titles.” Patrick, 196 Wn. App. at 405. When property is secured by
a deed of trust that grants such power to the trustee and the borrower defaults on
the underlying payment obligation, “the trustee may usually foreclose the deed of
trust and sell the property without judicial supervision.” Bain v. Metro. Mortg. Grp.,
Inc., 175 Wn.2d 83, 93, 285 P.3d 34 (2012).
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B. Presale Restraint Procedure and Waiver
“RCW 61.24.130 provides a procedure for stopping a trustee’s sale.”
Patrick, 196 Wn. App. at 405. It allows any person who has an interest in the
property to move to restrain a trustee’s sale on “any proper legal or equitable
ground.” RCW 61.24.130(1). The person must do so before the sale takes place;
courts are prohibited from restraining “a trustee’s sale unless the person seeking
the restraint gives five days[’] notice to the trustee.” RCW 61.24.130(2). The
applicant must also pay the amount “due on the obligation secured by the deed of
trust.” RCW 61.24.130(1).
As our Supreme Court has made clear, the restraint procedure of RCW
61.24.130 is the “only means by which a grantor may preclude a sale once
foreclosure has begun with receipt of the notice of sale and foreclosure.” Cox v.
Helenius, 103 Wn.2d 383, 388, 693 P.2d 683 (1985) (emphasis added). The
failure to comply with RCW 61.23.130 “may result in waiver of the right to object to
the sale.” Plein v. Lackey, 149 Wn.2d 214, 227, 67 P.3d 1061 (2003). Under the
DTA, “waiver of any postsale challenge occurs where a party (1) received notice
of the right to enjoin the sale, (2) had actual or constructive knowledge of a defense
to foreclosure prior to the sale, and (3) failed to bring an action to obtain a court
order enjoining the sale.” Albice, 174 Wn.2d at 569. Further, “we apply waiver
only where it is equitable under the circumstances and where it serves the goals
of the act.” Id. at 570. Our Supreme Court has explained that applying waiver in
the circumstances set out in Albice serves the three goals of the DTA. Plein, 149
Wn.2d at 227-28.
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Here, the application of waiver is equitable and appropriate. On February
28, 2022, HW initiated foreclosure and notified VS Developing that the trustee’s
sale was scheduled for June 3, 2022. VS Developing did not move to enjoin the
sale. Rather, VS Developing waited until June 2 and pursued bankruptcy relief.
VS Developing ultimately filed two petitions for Chapter 11 bankruptcy in federal
court, both of which were dismissed. As a result of those filings, HW rescheduled
the trustee’s sale for August 19 and again provided notice to VS Developing. Still,
VS Developing did not move to restrain the sale. Moreover, then-counsel for VS
Developing attended the trustee’s sale on August 19, as did Viktoria as its
representative, and neither objected to the sale. It was not until nine months later,
on May 18, 2023, that VS Developing filed its complaint against BRMK PP and
HW.
The elements of waiver are plainly established here and VS Developing
does not contest that it (1) received timely notice of its right to restrain the trustee’s
sale, (2) had knowledge of its defense prior to the sale, and (3) failed to pursue the
restraint procedure required by RCW 61.24.130. Notably, VS Developing was
aware that HW was acting as both the successor trustee and counsel for BRMK
PP nearly six months before the sale took place but failed to raise this defense
until nine months after the property had been sold. As the court noted in Plein,
“‘To allow one to delay asserting a defense [until after the sale] would be to defeat
the spirit and intent of the trust deed act.’” 149 Wn.2d at 228 (alteration in original)
(quoting Peoples Nat. Bank of Wash. v. Ostrander, 6 Wn. App. 28, 32, 491 P.2d
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1058 (1971)). Accordingly, VS Developing has waived its claims to the subject
property. 8
C. Alleged Procedural Irregularities
VS Developing contends the sale is void. According to VS Developing, the
“requisites” to this “nonjudicial foreclosure were not satisfied because the trustee
acted as legal counsel for the beneficiary and could not have served as a neutral
third party and judicial substitute.” In circumstances where the trustee fails to
comply with the requirements of the DTA or conducts the foreclosure proceedings
without statutory authority, the trustee’s sale may be invalidated regardless of the
borrower’s failure to seek a presale injunction. See Albice, 174 Wn.2d at 575; Cox,
103 Wn.2d at 388. Neither of those circumstances are present here.
1. Duty of Good Faith
Former versions of the DTA imposed a fiduciary duty on trustees, but in
2008, our legislature expressly eliminated that duty by adding RCW 61.24.010(3).
Bain, 175 Wn.2d at 94 n.4; LAWS OF 2008, ch. 153, § 1. Under the current version
of the statute, in effect at the time of the sale at issue here, the trustee has only a
“duty of good faith to the borrower, beneficiary, and grantor.” RCW 61.24.010(4).
“This duty requires the trustee to remain impartial and protect the interests of all
8 RCW 61.24.127 provides four types of claims that a plaintiff “may not” waive by failing to
follow the DTA’s presale restraint procedures. Patrick, 196 Wn. App. at 406. These include claims
for damages premised on allegations of (1) common law fraud or misrepresentation, (2) a violation
of the CPA, (3) the trustee’s failure to “materially comply” with the DTA, or (4) a violation of RCW
61.24.026. RCW 61.24.127(1).
However, “[t]his section does not apply to the foreclosure of a deed of trust used to secure
a commercial loan.” RCW 61.24.127(4). Because this was a commercial loan to VS Investment
Assoc, secured by property owned by VS Developing, the safe harbor of RCW 61.24.127 is
inapplicable and does not preclude waiver of any claim in VS Developing’s complaint.
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the parties.” Lyons v. U.S. Bank Nat’l Ass’n, 181 Wn.2d 775, 787, 336 P.3d 1142(2014). The trustee must “‘adequately inform’ itself regarding the purported
beneficiary’s right to foreclose, including, at a minimum, a ‘cursory investigation’”
Id. (quoting Walker v. Quality Loan Serv. Corp., 176 Wn. App. 294, 309-10, 308
P.3d 716 (2013)). To comply with its duty of good faith, the “trustee must treat
both sides equally and investigate possible issues using its independent
judgment.” Id. Here, there is no evidence showing that HW, as trustee, failed to
adequately inform itself of BRMK Lending’s right to foreclose on the subject
property, treat BRMK Lending and VS Developing equally, investigate potential
issues using its own judgment, or otherwise act in compliance with its statutory
duty of good faith. When a trustee strictly complies “with their legal obligations
under the act, interested parties will have no claim for postsale relief.” Albice, 172
Wn.2d at 572.
2. Counsel for Beneficiary Serving as Trustee
VS Developing identifies no case law or provision of the DTA that prohibits
counsel for the beneficiary from serving as the trustee in a nonjudicial foreclosure.
“Prior to 1975, the deed of trust act strictly forbade agents, employees, or
subsidiaries of a beneficiary to act as a trustee.” Klem v. Wash. Mut. Bank, 176
Wn.2d 771, 791 n.13, 295 P.3d 1179 (2013) (citing former RCW 61.24.020 (1965)).
Our legislature removed that limitation in 1975. Id.; LAWS OF 1975, 1st Ex. Sess.,
ch. 129, § 2. Thus, while the DTA previously prohibited counsel for the beneficiary
from acting as the trustee, our legislature amended the statute nearly 50 years ago
to expressly “allow an employee, agent or subsidiary of a beneficiary to also be a
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trustee.” Cox, 103 Wn.2d at 390. “The amendment,” our Supreme Court explained
in Cox, “furthers the general intent of the act that nonjudicial foreclosure be efficient
and inexpensive.” Id.BRMK PP cites to Cascade Manor, in which Cascade argued that the
trustee, Currin, violated his fiduciary duties by simultaneously acting as counsel
for Bancorp, the beneficiary of the deed of trust. 69 Wn. App. at 934. On review,
this court determined there was “no basis to conclude that Currin breached his
fiduciary duties as trustee by acting as both the trustee and Bancorp’s attorney.”
Id. at 934-35. In rejecting Cascade’s claim, the court explained:
Contrary to Cascade’s assertion, Cox v. Helenius, 103 Wn.2d 383,
693 P.2d 683 (1985), does not prohibit a trustee from also acting as
the attorney for the beneficiary. Instead, Cox noted that, although the
attorney’s dual role could have “precipitated” a breach of fiduciary
duties if a conflict of interest arose, such a breach could be prevented
if “the person serving as trustee and beneficiary . . . transferr[ed] one
role to another person.” 103 Wn.2d at 390. While a trustee acting as
counsel for one of the involved parties could avoid any risk of conflict
when litigation arises by arranging for a substitute trustee, neither
Cox nor any other authority requires the trustee to do so.
Id. at 935 (alterations in original).
In its reply brief, VS Developing insists that “Cascade is inapposite.” First,
it attempts to distinguish this case on the ground that Cascade was decided before
the legislature amended the DTA to remove both the fiduciary duty that was
previously imposed on trustees and the prohibition on an agent of the beneficiary
acting as the trustee. However, neither of those amendments support VS
Developing’s position that counsel for a beneficiary violates the DTA by
simultaneously acting as the trustee. Quite the opposite; the amendments show
that the legislature, presumably aware of the history of this law, acted within its
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authority to eliminate the express restriction on counsel for a beneficiary acting as
the trustee, and removed the trustee’s previous fiduciary duties and obligations,
imposing only a duty of good faith. See former RCW 61.24.020 (1965); RCW
61.24.010(3), (4).
Second, VS Developing “distinguishes” Cascade on the basis that the issue
here is not whether HW breached its fiduciary duties, but rather it is whether the
trustee’s sale “is void because of an actual and impermissible conflict of interest
on the part of [HW].” In Cox, the court noted that, “[w]here an actual conflict of
interest arises, the person serving as trustee and beneficiary should prevent
breach by transferring one role to another person.” 103 Wn.2d at 390. However,
in its opening brief, VS Developing does not even mention the phrase “conflict of
interest,” let alone provide argument showing an actual conflict of interest in this
case. 9 Because this “conflict of interest” argument is raised for the first time in
reply, we do not consider it. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d
801, 809, 828 P.2d 549 (1992) (“An issue raised and argued for the first time in a
reply brief is too late to warrant consideration.”).
Third, VS Developing claims that, “to the extent Cascade does purport to
allow an attorney to act as trustee and attorney for beneficiary, Cascade was
wrongly decided.” This is so, VS Developing contends, because “the deed of trust
9 In its sole reference to “impermissible conflict” in the context of the facts of this case, VS
Developing does not engage with any controlling authority, but merely presents a factual scenario
not present here and asserts that a reasonable jury could reach a number of factual findings which
could compound and create “an impermissible conflict for H&W so as to render the completed sale
void due to the unlawful actions of the trustee.” However, that assertion is premised upon facts
involving a “non-contested judicial foreclosure while [H&W] simultaneously serv[ed] as legal
counsel to Broadmark.” This case involves a late-contested nonjudicial foreclosure, so we need
not consider such a factually distinct hypothetical.
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would not embody a three-party transaction, which . . . would undermine and be
contrary to the very notion of due process and rule of law.” Notably, VS Developing
does not challenge our Supreme Court’s decision in Cox, on which this court
soundly relied in reaching its decision on this issue in Cascade. As neither
Cascade nor Cox have been overruled or abrogated, we reject VS Developing’s
last-ditch attempt to avoid established case law contrary to its position. As for the
bald constitutional due process aspect of this claim, we need not reach the merits.
“[P]arties raising constitutional issues must present considered arguments to this
court.” City of Tacoma v. Price, 137 Wn. App. 187, 200, 152 P.3d 357 (2007).
“‘[N]aked castings into the constitutional sea are not sufficient to command judicial
consideration and discussion.’” Id. (alteration in original) (quoting State v.
Johnson, 119 Wn.2d 167, 171, 829 P.2d 1082 (1992)). Because VS Developing’s
conclusory “due process” claim is unsupported by relevant authority or adequate
argument, it does not warrant review. Id.; RAP 10.3(a)(6).
D. Summary Judgment Dismissal
On May 31, 2023, two weeks after VS Developing filed its complaint, BRMK
PP and HW moved for an order to dismiss the claim to quiet title and remove the
lis pendens filed against the property, which at that time was scheduled to be sold
on June 15, 2023. The trial court ordered removal of the lis pendens as there was
“no legal basis” supporting it. Regarding the rest of the motion, the court found
that it should be treated as one for summary judgment under CR 56 and allowed
the parties to supplement their briefing and materials accordingly. On June 16,
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after considering the parties’ supplemental briefing on the motion, the trial court
entered an order dismissing all of VS Developing’s claims on summary judgment.
The court’s decision to grant summary judgment in favor of BRMK PP and
HW was proper. Summary judgment is appropriate where, as here, “there is no
genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law.” Scrivener, 181 Wn.2d at 444. The record shows no procedural
irregularity that would preclude application of the waiver doctrine and the elements
of waiver have all been established. Because VS Developing (1) had notice of its
right to seek to enjoin the sale, (2) had knowledge of its defense, and (3) failed to
follow the restraint procedure in RCW 61.24.130, its claims are waived. See
Patrick 196 Wn. App. at 407. As this was a deed of trust used to secure a
commercial loan, the safe harbor of RCW 61.24.127(1) does not protect any of VS
Developing’s claims from waiver. RCW 61.24.127(4). Thus, in the absence of any
genuine issue of material fact, the trial court did not err when it granted summary
judgment in favor of BRMK PP and HW and dismissed all of VS Developing’s
claims. 10
10 VS Developing contends that even if it waived all of its claims relating to the subject
property, waiver does not apply to its breach of contract claim in its amended complaint. We
disagree.
In its breach of contract claim, VS Developing alleged that the initial agreement with BRMK
Lending was for the deed of trust on the subject property to secure no more than $200,000 but
BRMK Lending “inserted language into relevant documents to the purported effect that the [subject
property] was being used as collateral for the entire [p]roject.” On that basis, VS Developing argued
that the deed of trust was fraudulent and BRMK Lending wrongfully foreclosed on the subject
property. This claim is also waived. Again, this was a deed of trust used to secure a commercial
loan, and thus, there is no safe harbor protecting this claim from waiver under the DTA. RCW
61.24.130, .127.
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III. Removal of Lis Pendens
VS Developing also avers the trial court erred when it ordered the removal
of the lis pendens. We disagree.
Pursuant to RCW 4.28.320, “a party in an action affecting title to real
property may file a notice, or lis pendens, with the county auditor regarding the
pendency of the action.” 134th St. Lofts, LLC v. iCap Nw. Opportunity Fund, LLC,
15 Wn. App. 2d 549, 557, 479 P.3d 367 (2020). This filing provides “constructive
notice to third parties that the title may be clouded.” Guest v. Lange, 195 Wn. App.
330, 336, 381 P.3d 130 (2016).
Under RCW 4.28.320, the trial court “may, at its discretion, at any time after
the action shall be settled, discontinued or abated, on application of any person
aggrieved and on good cause shown and on such notice as shall be directed or
approved by the court, order the notice authorized in this section to be canceled.”
Accordingly, three conditions must be met for the trial court to cancel a lis pendens:
“(1) the action must be settled, discontinued, or abated, (2) an aggrieved person
must move to cancel the lis pendens, and (3) the aggrieved person must show
good cause and provide proper notice.” Guest, 195 Wn. App. at 336. So long as
those conditions are satisfied, the trial court has discretion to cancel a lis pendens.
Id. “A court abuses its discretion when a decision is manifestly unreasonable, or
exercised on untenable grounds, or for untenable reasons.” Malvern v. Miller, 24
Wn. App. 2d 173, 179, 520 P.3d 1045 (2022).
Here, VS Developing argues that the first and third conditions were not met.
The record shows otherwise. Because VS Developing waived its claims to the
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subject property by failing to comply with the restraint procedures under the DTA,
the first condition was satisfied. Additionally, as BRMK PP provided notice via e-
mail to VS Developing before moving for an order to remove the lis pendens and
showed good cause to cancel the lis pendens, specifically that VS Developing had
waived its challenges to the foreclosure by failing to follow the restraint procedures
set out in the DTA, the third condition was also met. Thus, the trial court had
discretion to cancel the lis pendens. Because the order to remove the lis pendens
rests on the tenable ground that there was “no legal basis for the filing of a [l]is
[p]endens against the subject property,” the trial court did not abuse its discretion.
See id.IV. Attorney Fees
A. Award at Trial
VS Developing assigns error to the trial court’s award of attorney fees to
BRMK PP under the lis pendens statute. “We review the legal basis for an award
of attorney fees de novo and the reasonableness of the amount of an award for
abuse of discretion.” Hulbert v. Port of Everett, 159 Wn. App. 389, 407, 245 P.3d
779 (2011). “A court abuses its discretion if its decision is manifestly unreasonable
or exercised on untenable grounds or for untenable reasons.” Id.A “party who files a wrongful lis pendens may be liable in damages for doing
so.” Samra v. Singh, 15 Wn. App. 2d 823, 839, 479 P.3d 713 (2020). In relevant
part, the lis pendens statute provides as follows:
Unless the claimant establishes a substantial justification for filing the
lis pendens, a claimant is liable to an aggrieved party who prevails in
defense of the action in which the lis pendens was filed for actual
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damages caused by filing the lis pendens, and in the court’s
discretion, reasonable attorneys’ fees and costs incurred in
defending the action.
RCW 4.28.328(3). “Damages and fees are appropriate where the claimants
provide no evidence of a legal right to the property.” S. Kitsap Fam. Worship Ctr.
v. Weir, 135 Wn. App. 900, 912, 146 P.3d 935 (2006). However, “where the
claimants have a reasonable, good faith basis in fact or law for believing they have
an interest in the property, a lis pendens is substantially justified.” Id.In the order awarding attorney fees to BRMK PP, the trial court found that
“there was no legal basis, justification, or substantial justification per RCW
4.28.328(3) for the filing of the lis pendens.” On this issue, VS Developing recites
the same argument to which it has clung throughout the proceedings in the trial
court and now on appeal, which is that “the statutory requisites to the contested
nonjudicial foreclosure were not satisfied as the trustee acted as legal counsel to
the beneficiary.” This position is baseless. Because VS Developing failed to seek
a presale injunction and no procedural irregularity occurred to preclude waiver,
there was no substantial justification for filing the lis pendens. Accordingly, the trial
court did not err when it awarded attorney fees under RCW 4.28.328. 11
11 VS Developing does not challenge the amount of the award. Rather, it simply notes that
“even if there were no substantial justification, the award of attorney’s fees is still purely
discretionary, and not mandatory.” Because VS Developing offers no argument as to the
reasonableness of the amount awarded, we do not consider whether the trial court abused its
discretion in awarding the sum of $35,000. See Timson v. Pierce County Fire Dist. No. 15, 136
Wn. App. 376, 385, 149 P.3d 427 (2006) (“[W]e will not review an issue that was addressed by an
inadequate argument or that is given only passing treatment.”).
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B. Attorney Fees on Appeal
BRMK PP requests attorney fees and costs on appeal pursuant to RCW
4.84.330 and RAP 18.1. Under RCW 4.84.330, when a contract specifically
provides that attorney fees and costs incurred to enforce the provisions of that
contract shall be awarded to one of the parties, “the prevailing party . . . shall be
entitled to reasonable attorneys’ fees in addition to costs.” The terms of the deed
of trust provide for attorney fees and costs and BRMK PP prevailed in the trial court
and prevails again on appeal. Accordingly, we award BRMK PP attorney fees and
costs incurred on appeal, subject to compliance with RAP 18.1.
Affirmed.
WE CONCUR:
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