Mortgage Investments Enterprises LLC v. Oakwood Holdings, LLC

COLORADO COURT OF APPEALS 2016COA111
Court of Appeals No. 15CA1046
Adams County District Court No. 14CV31889
Honorable Mark D. Warner, Judge
Mortgage Investments Enterprises LLC,
Plaintiff-Appellant,
v.
Oakwood Holdings, LLC,
Defendant-Appellee.
JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division III
Opinion by JUDGE BOORAS
Graham and Richman, JJ., concur
Announced July 14, 2016
Murr Siler & Accomazzo, P.C., Joseph A. Murr, Maris S. Davies, Denver,
Colorado, for Plaintiff-Appellant
Sweetbaum Sands Anderson PC, Geoffrey P. Anderson, Reagan Larkin, Denver,
Colorado; Navaro & Associates LLC, Steven Navaro, Castle Rock, Colorado for
Defendant-Appellee
¶1 Plaintiff, Mortgage Investments Enterprises LLC (Mortgage
Investments), appeals the district court’s order granting
defendant’s, Oakwood Holdings, LLC (Oakwood), motion for
summary judgment. We reverse the district court’s judgment and
remand the case with directions.
I. Background
¶2 This case involves a dispute regarding the foreclosure and
redemption processes in Colorado. Thus, to better understand the
facts of this case, it is helpful to first provide a brief overview of the
foreclosure and redemption procedures.
A. Foreclosure and Redemption
¶3 The foreclosure process protects a creditor’s right to
repayment of debts, including homeowners’ association liens and
monetary judgments. Specifically, section 38-38-101, C.R.S. 2015,
enables a creditor to obtain a judgment and decree of foreclosure
against a debtor and have the subject property auctioned at a
foreclosure sale. The creditor can then use the proceeds of the sale
to satisfy the unpaid debts.
¶4 Foreclosure is not without consequences, however,
particularly for creditors whose liens are subordinate to — i.e.,
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junior to — a lien being foreclosed (junior lienors). Indeed, where
multiple liens are filed against the foreclosed property, foreclosure
of a senior lien generally extinguishes all junior liens. § 38-38-501,
C.R.S. 2015; see also Ferguson Enters., Inc. v. Keybuild Sols., Inc.,
275 P.3d 741, 745 (Colo. App. 2011).
¶5 Accordingly, to protect creditors’ entitlement to payment, the
General Assembly has provided them with the right to redeem
foreclosed property on which they have a junior lien.
See § 38-38-302, C.R.S. 2015. This right to redeem refers to a
process by which title to the previously foreclosed property vests
with the redeeming junior lienor, rather than with the purchaser at
the foreclosure sale (the certificate of purchase holder), if (1) the
junior lienor follows the required statutory procedures, including
filing a notice of intent to redeem; (2) the junior lienor pays, within
its statutory period for redemption, the required redemption
amount; and (3) no other, more junior lienors exercise their
subsequent right of redemption. See id.; see also WYSE Fin. Servs.,
Inc. v. Nat’l Real Estate Inv., LLC, 92 P.3d 918, 921-22 (Colo. 2004).
¶6 With respect to the timing for redemption, the “junior lienor
having the most senior recorded lien” has the first opportunity to
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redeem, which begins “[n]o sooner than fifteen business days” and
ends “nineteen business days” after the foreclosure sale.
§ 38-38-302(4)(a). Each subsequent junior lienor then has five
business days to redeem from the previous lienor’s redemption.
§ 38-38-302(4)(b)(I).
¶7 Prior to 2008, owners of foreclosed property also had the right
to redeem from a foreclosure sale. Ch. 275, sec. 2, § 38-38-302,
1990 Colo. Sess. Laws 1664-65. Effective in 2008, however, the
General Assembly eliminated that right. See Ch. 305, sec. 21,
§ 38-38-302, 2006 Colo. Sess. Laws 1467. Under the current
scheme, only junior lienors have the right to redeem. See
§ 38-38-302.
B. The Facts
¶8 Turning, now, to the facts of this case, the debtors purchased
a home in Adams County (the property) in 2006. That same year,
they defaulted on their obligation to pay monthly fees to the
Kimblewyck Village Owners Association (Kimblewyck). Kimblewyck
filed a lien against the property in December 2006.
¶9 In addition to the Kimblewyck lien, the property was also
encumbered by (1) a lien filed by the Fox Run Owners Association
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and (2) two judgments entered in favor of Community Management
Association, Inc. (CMA).
¶ 10 In May 2014, Kimblewyck obtained a judgment and decree of
foreclosure, and the property was auctioned at a sheriff’s sale on
September 25, 2014. Mortgage Investments was the successful
bidder at the foreclosure sale, so the Adams County Sheriff issued
Mortgage Investments a certificate of purchase.
¶ 11 On the day before the foreclosure sale, Oakwood purchased
the Fox Run lien and the two CMA judgments.1
¶ 12 And, on the day after the foreclosure sale, Mortgage
Investments obtained a valid power of attorney from the debtor,
which authorized Mortgage Investments to pay the Fox Run lien
and the CMA judgments.
¶ 13 On October 1, 2014, within eight business days after the sale,
pursuant to section 38-38-302(1)(d), Oakwood filed a notice of
intent to redeem the Fox Run lien so that it could acquire title to
the property. On October 7, 2014, Mortgage Investments tendered,
on behalf of the debtor, pursuant to the power of attorney, payment
1The parties dispute the exact timing of Oakwood’s purchase.
However, this factual dispute has no effect on our resolution of the
case.
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to Oakwood in satisfaction of the Fox Run lien. Although
Oakwood’s period to redeem had not yet begun, it refused to accept
payment.
¶ 14 On October 6, 2014, Oakwood filed a notice of intent to
redeem one of the CMA judgments. On October 15, 2014, before
Oakwood’s redemption period had commenced, Mortgage
Investments again tendered payment to Oakwood in satisfaction of
the judgment. And, again, Oakwood rejected the payment, despite
the fact that its redemption period had not yet begun.
¶ 15 On October 15, 2014, Mortgage Investments filed a complaint
seeking a declaratory judgment that Oakwood was required to
accept Mortgage Investments’ tenders on behalf of the debtor.
Mortgage Investments also filed a motion for a temporary
restraining order and preliminary injunction to enjoin Oakwood
from redeeming.
¶ 16 The district court granted the request for a temporary
restraining order and later held a hearing on Mortgage Investments’
motion for a preliminary injunction. Ultimately, on November 10,
2014, the court denied Mortgage Investments’ request for a
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preliminary injunction. On November 20, 2014, Oakwood tendered
redemption funds and received a sheriff’s deed to the property.
¶ 17 The parties later filed motions for summary judgment on the
issue of whether Mortgage Investments could pay off, before the
redemption period began, the lien and judgments Oakwood had
purchased.
¶ 18 As relevant here, Mortgage Investments contended that it
tendered payment in satisfaction of the lien and judgments before
Oakwood’s period for redemption had begun and before Oakwood
tendered redemption funds. Thus, Mortgage Investments argued
that under WYSE, 92 P.3d at 921-22, Oakwood had not yet
accomplished redemption. Relying on Osborn Hardware Co. v.
Colorado Corp., 32 Colo. App. 254, 258, 510 P.2d 461, 463 (1973),
Mortgage Investments asserted that Oakwood therefore had a duty
to “accept the tender and to assist in satisfaction of the judgment.”
¶ 19 In relevant part, Oakwood’s response contended that
 Mortgage Investments “knew that sufficient funds were already
being held by the Court Registry to satisfy the liens held by
Oakwood as a result of the overbid proceeds from [the
foreclosure] sale”;
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 Osborn is inapplicable because that case was decided before
the General Assembly eliminated a debtor’s right to post-
foreclosure redemption in 2008;
 Oakwood “had already established its choate right of
redemption prior to [Mortgage Investments’] tender by filing its
Notice of Intent to Redeem”; and
 Oakwood was not required to accept Mortgage Investments’
tender on behalf of the debtors because, under WYSE, a
certificate of purchase holder cannot extinguish a junior
lienor’s right to redeem.
¶ 20 The district court granted summary judgment in favor of
Oakwood, concluding that Oakwood was not required to accept
Mortgage Investments’ tender of payment on behalf of the debtor.
Specifically, the court concluded that
 cases standing for the proposition that a debtor has a right to
pay judgments and to prevent redemption were inapplicable
because they were decided before the General Assembly
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eliminated a debtor’s post-foreclosure right to redeem in
2008;2
 the property was sold at the foreclosure sale on September 25,
2014, and Mortgage Investments “did not seek to satisfy
[Oakwood’s] outstanding judgment and liens until October 14,
2014,” so “to any extent [it] was acting ‘in the shoes of the
debtor’ under power of attorney, it failed to exercise the
debtor’s rights within the statutory redemption period”;3
 “the General Assembly has not taken affirmative action to give
a holder of a [c]ertificate of [p]urchase the right to purchase
recorded debts against the property to frustrate redemption by
the holder or assignee of the debts recorded on the property”;
and
2 The district court did not cite or address Mortgage Investments’
reliance on Osborn Hardware Co. v. Colorado Corp., 32 Colo. App.
254, 258, 510 P.2d 461, 463 (1973).
3 The “statutory redemption period” to which the trial court was
referring is unclear. As the trial court acknowledged, the General
Assembly eliminated property owners’ post-foreclosure redemption
rights effective in 2008. See Ch. 305, sec. 21, § 38-38-302, 2006
Colo. Sess. Laws 1467. Moreover, based on our review of the
record, Mortgage Investments tendered payment in satisfaction of
the liens on October 7, 2014, and October 15, 2014.
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 it could find nothing in the foreclosure scheme that would give
Mortgage Investments the “statutory right” to force Oakwood
“to accept the tender.”
II. Standard of Review and Summary Judgment
¶ 21 We review a district court’s grant of summary judgment de
novo. Armed Forces Bank, N.A. v. Hicks, 2014 COA 74, ¶ 20.
¶ 22 “Summary judgment is appropriate when the pleadings and
supporting documents clearly demonstrate no issue of material fact
exists, and the moving party is entitled to judgment as a matter of
law.” Olson v. State Farm Mut. Auto. Ins. Co., 174 P.3d 849, 852
(Colo. App. 2007).
¶ 23 The facts in this case are undisputed. The appeal turns on
the district court’s legal conclusion that Oakwood had no duty to
accept tender of payment in satisfaction of its liens. We review
such conclusions de novo. See Ferguson, 275 P.3d at 745.
III. Discussion
¶ 24 As discussed above, the district court granted Oakwood’s
motion for summary judgment on the bases that (1) the General
Assembly has preserved junior lienors’ post-foreclosure right to
redeem, while simultaneously eliminating that same right for
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debtors; (2) the General Assembly has “not taken affirmative action
to give a holder of a [c]ertificate of [p]urchase the right to purchase
recorded debts against the property to frustrate redemption”; and
(3) it could find nothing in the foreclosure statutes giving Mortgage
Investments the right to force Oakwood to accept tender of payment
on behalf of the debtor. Mortgage Investments contends that the
district court erred in granting summary judgment on those
grounds. We agree.
¶ 25 The district court’s, and Oakwood’s, reliance on the
elimination of a debtor’s post-foreclosure redemption right is
misplaced. In this case, Mortgage Investments did not attempt to
make a post-foreclosure redemption. Rather, it was attempting to
pay, on behalf of the debtor, outstanding liens encumbering the
property it had purchased at the foreclosure sale.
¶ 26 Nevertheless, we agree that had Oakwood accepted (or been
required to accept) Mortgage Investments’ tender of payment, the
effect would have been to prevent a redemption by Oakwood. The
question, then, is whether, prior to the start of Oakwood’s period to
redeem and before it tendered redemption funds, Oakwood had a
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duty to accept Mortgage Investments’ tender of payment, on behalf
of the debtor, in satisfaction of the lien Oakwood sought to redeem.
¶ 27 The statute provides that the period for redemption begins
“[n]o sooner than fifteen business days” after the foreclosure sale,
but it does not address the rights of debtors, certificate of purchase
holders, or junior lienors during this period. § 38-38-302(4).
Indeed, the statute does not explicitly give a certificate of purchase
holder the right to pay, on behalf of the debtor, liens encumbering
foreclosed property. Nor does it explicitly give a junior lienor the
right to refuse a tender of payment in satisfaction of a lien prior to
the start of the junior lienor’s redemption period and before the
junior lienor tenders redemption funds.
¶ 28 Thus, because the statute is silent as to the issue raised in
this appeal, we interpret it to give effect to the General Assembly’s
objectives. Buckley v. Chilcutt, 968 P.2d 112, 117 (Colo. 1998). But
in doing so, we do not write on a clean slate: the supreme court and
divisions of this court have previously considered the competing
rights of debtors and junior lienors under earlier versions of the
redemption statute.
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¶ 29 We begin by noting that “[t]he redemption laws were enacted
with the beneficent view of helping creditors to recover their just
demands, nothing more.” Plute v. Schick, 101 Colo. 159, 161-62, 71
P.2d 802, 804 (1937); Osborn, 32 Colo. App. at 258, 510 P.2d at
463 (same). And, because the right is “purely a creature of statute
and depends entirely upon the provisions of the statute creating it,”
WYSE, 92 P.3d at 921, the right to redeem must be “exercised in
strict compliance with” the redemption statute’s terms, Sant v.
Stephens, 753 P.2d 752, 756 (Colo. 1988).
¶ 30 Furthermore, the right to redeem is not absolute; it must be
balanced against a debtor’s right to pay a judgment. In Plute, the
supreme court held that a debtor has “a legal right to pay [a]
judgment, and thereby prevent a redemption by [a] defendant.” 101
Colo. at 162, 71 P.2d at 804. Ordinarily, once the debtor tenders
payment, “[t]he creditor’s duty is to accept the tender and to assist
in satisfaction of the judgment.” Osborn, 32 Colo. App. at 258, 510
P.2d at 463-64; see also Davis Mfg. & Supply Co. v. Coonskin Props.,
Inc., 646 P.2d 940, 944 (Colo. App. 1982) (“There is no dispute in
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the instant case about the right of the debtor to pay its own debts
and to obtain a satisfaction thereof.”).4
¶ 31 This is not to say that a debtor has an absolute right to
prevent redemption, either. In WYSE, the supreme court narrowed,
but did not overrule, Plute, holding that once redemption is
accomplished, the right to redeem cannot “be extinguished by any
subsequent satisfaction of the judgment.” 92 P.3d at 920.
¶ 32 Thus, under Plute, Osborn, and WYSE, debtors have a right to
pay liens and monetary judgments, and to have creditors accept
payment and assist in satisfaction thereof, until a junior lienor
“actually makes [a] redemption.” WYSE, 92 P.3d at 922; see also
Plute, 101 Colo. at 161-62, 71 P.2d at 804; Osborn, 32 Colo. App. at
258, 510 P.2d at 463-64.
¶ 33 “[R]edemption by the lienor is actually made or accomplished
by paying to the public trustee or sheriff, within the statutory
4 We acknowledge that Plute and Osborn were decided before the
General Assembly eliminated property owners’ right to redeem after
a foreclosure sale. However, in both cases, the courts followed the
rule that debtors have a legal right to pay a judgment, despite the
fact that the property owners’ statutory periods for redemption had
passed. Plute v. Schick, 101 Colo. 159, 160-63, 71 P.2d 802, 803-
04 (1937); Osborn, 32 Colo. App. at 256-58, 510 P.2d at 462-64.
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redemption period for th[e] lienor, the redemption amount required
by statute.” WYSE, 92 P.3d at 922.
¶ 34 Oakwood does not dispute that Mortgage Investments
tendered, on behalf of the debtor, payment in satisfaction of the
liens Oakwood sought to redeem before Oakwood’s statutory period
for redemption had begun and before Oakwood tendered
redemption funds to the sheriff.
¶ 35 Accordingly, Oakwood had not yet accomplished redemption
by tendering redemption funds within the statutory period, id., so it
had a “duty . . . to accept [Mortgage Investments’] tender and to
assist in satisfaction of the judgment,” Osborn, 32 Colo. App. at
258, 510 P.2d at 463-64; see also Plute, 101 Colo. at 161-62, 71
P.2d at 804.
¶ 36 This result is consistent with the purpose of the redemption
statute. The General Assembly did not provide junior lienors the
right of redemption to give real estate speculators an alternative
means for acquiring foreclosed properties. Rather, as courts have
repeatedly stated, the purpose is to help creditors protect their
interests in repayment of debts. Plute, 101 Colo. at 161-62, 71 P.2d
at 804.
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¶ 37 And, in this case, we hold only that, prior to the start of a
junior lienor’s redemption period and before a junior lienor tenders
redemption funds, a certificate of purchase holder may pay, on
behalf of the debtor, existing liens encumbering a foreclosed
property. In the event that a certificate of purchase holder does so,
the junior lienor will have received his or her just demand: payment
of the judgment underlying the lien. See id. In such cases,
redemption is therefore unnecessary because the junior lienor
would no longer have a need to “protect [a] security interest[], which
would be lost upon transfer of title to the purchaser” of the
foreclosed property. WYSE, 92 P.3d at 921.
¶ 38 Moreover, a contrary holding would, in our view, discourage
participation in foreclosure sales. Indeed, it would make little sense
for a party to compete to purchase property at a foreclosure sale if a
certificate of purchase holder had no ability to pay, on behalf of the
debtor, liens encumbering foreclosed property, despite the fact that
the period for redemption had not started. Instead, the party could
simply (1) acquire the most junior lien; (2) reject tender of payment
in satisfaction of the lien made prior to the start of the redemption
period; and (3) wait at the back of the line to exercise an absolute
15
right to redeem. Consequently, a contrary holding would encourage
a race to acquire the most junior lien, rather than participation in
the foreclosure sale.
¶ 39 As Oakwood acknowledges, the purpose of the foreclosure
statutes is to use a debtor’s property to pay off as many creditors as
possible. See Ameriquest Mortg. Co. v. Land Title Ins. Corp., 216
P.3d 597, 602 (Colo. App. 2007), rev’d on other grounds, 207 P.3d
141 (Colo. 2009). And, presumably, more competition at
foreclosure sales will lead to higher purchase prices. Accordingly,
we cannot conclude that the General Assembly intended parties to
use the right of redemption as a work-around for the usual process
of competing to purchase foreclosed property.
¶ 40 Lastly, we are not persuaded by Oakwood’s reliance on failed
Colorado Senate Bill 10-093, which would have given certificate of
purchase holders the right to compel junior lienholders to accept a
post-foreclosure tender of payment in lieu of redemption. See S.B.
10-093, 67th Gen. Assemb., 2nd Reg. Sess. (Colo. 2010). Because
a particular item of legislation may fail for many reasons, we do not
infer legislative intent from the General Assembly’s failure to enact
16
proposed legislation. Ritter v. Jones, 207 P.3d 954, 962 (Colo. App.
2009).
IV. Conclusion
¶ 41 Mortgage Investments tendered payment on behalf of the
debtor in satisfaction of the judgments and lien Oakwood had
purchased. And it did so before the period for redemption had
begun and before Oakwood tendered redemption funds.
Accordingly, Oakwood had not yet made or accomplished a
redemption, so its duty as a creditor was to “accept the tender and
to assist in satisfaction of the judgment.” Osborn, 32 Colo. App. at
258, 510 P.2d at 463-64.
¶ 42 We therefore reverse the district court’s judgment and remand
the case with directions to enter summary judgment in favor of
Mortgage Investments.
JUDGE GRAHAM and JUDGE RICHMAN concur.
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