Onewest Bank FSB v. Maureen M. Erickson

FILED
NOVEMBER 13,2014
In the Office of the Clerk of Court
W A State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
ONEWEST BANK, FSB, its successors in )
interest and/or assigns, ) No. 31944-0-III
)
Respondent, )
)
v. )
) PUBLISHED OPINION
MAUREEN M. ERICKSON, )
)
Appellant, )
)
PALISADES COLLECTION LLC, )
ASSIGNEE OF AT&T; GONZAGA )
PREPARATORY SCHOOL, INC.; )
SOCIETY OF JESUS OREGON )
PROVINCE; JOHN TRAYNOR AND )
JANE DOE TRAYNOR, individually and )
marital community ifany; ALBERT )
FAULKNER AND JANE DOE )
FAULKNER, individually and marital )
community if any; PHIL MCLEAN AND )
JANE DOE MCLEAN, husband and wife; )
LARRY SMITH AND JANE DOE )
SMITH, individually and marital )
community if any; KEVIN R. MALONE )
AND CHRISTINE MALONE, )
individually and marital community if )
any; OCCUPANTS OF THE PREMISES; )
QUALCHAN HILLS HOMEOWNERS' )
ASSOCIATION; and any persons or )
parties claiming to have any right, title, )
estate, lien or interest in the real property )
described in the complaint, )
)
Defendants. )
No. 31944-0-III
One West Bank v. Erickson
FEARING, 1. - We address the unique circumstance of an Idaho court authorizing
an Idaho conservator to encumber a Washington residence. Following established
principles from the hoary past concerning state jurisdiction over real property, we hold
that the Idaho court lacked jurisdiction and that the order authorizing the encumbrance is
invalid.
Plaintiff One West Bank FSB seeks to judicially foreclose upon a deed of trust
purportedly encumbering a Spokane home. A conservator appointed by an Idaho court
signed the deed of trust on behalf of the home's owner or former owner, Bill McKee.
McKee's daughter, defendant Maureen Erickson, challenges the deed of trust as invalid
and she appeals a summary judgment order enforcing and foreclosing on the instrument.
We reverse the summary judgment order and grant Erickson a dismissal of the complaint.
FACTS
Bill McKee had three children, Jerome McKee, Craig McKee, and Maureen
Erickson. Bill and his wife, Erickson's mother, acquired property in Canada, Idaho, and
Washington. Erickson's mother died in 1994, leaving her daughter by will "all of her
one-half of the community property owned by her and [Bill McKee]." Clerk's Papers
(CP) at 124. Bill McKee hid the will from Maureen Erickson. McKee later explained to
Erickson that he did not desire to take property from her that her mother intended she
have, but he wanted to maintain control over all of the marital couple's combined estate
and properties.
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In 1997, a driver rear-ended Maureen Erickson at a high speed, rupturing several
discs in her back. Erickson and her three sons moved from California to Spokane later
that year to be near Bill McKee. Bill McKee lived in Idaho at that time.
Maureen Erickson underwent back surgery in 2000. With Erickson distracted by
her surgery, Jerome McKee traveled from Louisiana to visit his father, Bill McKee, in
Idaho. Jerome convinced his father to sell property in Canada and entrust him with the
proceeds as a means of avoiding United States taxes. Under her mother's will, Maureen
Erickson would have owned an interest in the property and would have been entitled to
some of the sales proceeds. McKee obliged Jerome. Bill McKee later repeatedly asked
Jerome to return the money, but Jerome refused.
In 2001, with Maureen Erickson's financial assistance, Bill McKee purchased a
home in Spokane, at 4702 South Pender Lane. This foreclosure action concerns the
residence. McKee initially lived in the home half of the time. Erickson and her three
sons lived there full time. McKee and Erickson planned for Erickson to eventually own
the home, and Erickson made the mortgage payments. Erickson and her sons cared for
. the home.
In 2004, Maureen Erickson underwent another back surgery, after another car
collision. In 2005, Erickson discovered her mother's will in Bill McKee's safety deposit
box. By January 2007, Maureen Erickson's health improved. Bill McKee, who had
recently turned 90 years old, began residing year round in the Spokane residence with
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One West Bank v. Erickson
Erickson and his three grandchildren. McKee lived with Erickson in the South Pender
Lane home the rest of his life. He did not reside even temporarily in Idaho after January
2007.
Bill McKee anticipated undergoing heart surgery, and he sought to qualifY for
Medicaid payments. McKee and Maureen Erickson sought legal advice from attorney
Richard Sayre. Sayre astutely advised Erickson to sue her father for failing to deliver her
share of her mother's assets, upon the mother's death. According to Sayre, McKee could
settle the suit by transferring assets to Erickson and then qualifY for Medicaid. Bill
McKee was receptive to the recommendation because he knew he had wronged his
daughter. Maureen Erickson sued her father in Spokane County Superior Court, and, in
tum, Bill McKee transferred assets, including the Spokane residence, to Erickson to
satisfY the claim. McKee transferred the Spokane home in January 2007 and completed
other transfers in February 2007. After a lengthy review of the transfers, Medicaid
declared them valid and qualified Bill McKee for Medicaid payments.
In response to the transfers from Bill McKee to Maureen Erickson, McKee's son,
Jerome, filed suit in the Shoshone County, Idaho, District Court. Jerome McKee asked
that the Idaho court appoint him as his father's guardian or, in the alternative, appoint
someone else as Bill's conservator. Bill McKee appeared in the suit through counsel and
informed the Idaho court that he resided in Washington. Maureen Erickson may have
attended one or more hearings, but the extent of her involvement is not clear. She was
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One West Bank v. Erickson
not a party to the conservatorship action. According to Erickson, the court viewed her
negatively because of the property transfers from Bill McKee to her. Trial for the Idaho
proceeding spanned three nonconsecutive days, with the first day of trial being May 31,
2007.
Physicians scheduled Bill McKee's heart surgery for July 3, 2007. As McKee
prepared for surgery, Maureen Erickson and he looked for but could not find the deed he
executed in January to transfer the Spokane home. On June 28, 2007, McKee again
conveyed the property to Erickson by quitclaim deed. Erickson did not immediately
record this deed.
On July 2,2007, the Shoshone County, Idaho, District Court, at the request of
Jerome McKee, signed an order enjoining Bill McKee's heart surgery. Doctors believed
Bill McKee would not survive without surgery, and McKee underwent open heart
surgery at Spokane's Deaconess Hospital anyway on July 3. After surgery, McKee
recovered at the South Pender Lane, Spokane, residence with the care of Maureen
Erickson.
The Idaho District Court conservatorship trial resumed on July 10 and July 12,
2007. Bill McKee could not participate in the Idaho proceedings as he recovered from
heart surgery. Maureen Erickson later declared:
At that time, my father was 90 years old, had recently undergone
open heart surgery, was extremely hard of hearing, and occasionally had
difficulties with his eyesight, but he was certainly not incompetent. His
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doctors wrote affidavits to the court saying he was competent. There were
telephone proceedings that I vaguely recall, with my recollection being that
nothing I said seemed to matter or help and that my father could not
participate because he could not hear what anyone said.
CP at 130.
On August 22, 2007, the Spokane County Superior Court dismissed, without
entering ajudgment, Maureen Erickson's action for fraud against Bill McKee, for his
hiding Erickson's mother's will. On August 27,2007, the Idaho District Court signed
"Letters of Conservatorship" appointing Shelley Bruna, dba Idaho Fiduciary Services, as
conservator for Bill McKee. CP at 18. The letters do not declare Bill McKee to be an
Idaho resident.
On September 10,2007, Bill McKee faxed a handwritten letter to his attorney "to
make sure that the judge [in Idaho] was told that [he] lived in Washington and that he had
given the Property to [Maureen Erickson] for taking care of him for years and because he
had hid [Erickson's] mother's will." CP at 130. Jerome McKee filed the "Letters of
Conservatorship" from the Idaho proceeding with Spokane County on September 18,
2007. CP at 17. On September 24,2007, the Idaho court entered an order granting
Jerome's petition to appoint Shelley Bruna as Bill McKee's conservator. We do not
know why the letters of conservatorship were issued 28 days before the signing of the
appointment order. The order does not declare Bill McKee to be an Idaho resident.
By late September 2007, Bill McKee's and Maureen Erickson's Spokane home
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One West Bank v. Erickson
faced foreclosure. To save the home, the father and daughter sought refinancing. Shelley
Bruna meanwhile sought to procure a reverse mortgage for the home. Maureen Erickson
declared:
By September 2007, it became apparent that Ms. Bruna was
attempting to assert control over the Property. At that time, I had been
working with three different mortgage lenders to attempt to work on a
mortgage for the Property. In mid-September, I was advised by one of the
mortgage brokers that Ms. Bruna had instructed him not to talk to me
anymore and he stopped communicating with me. I also had contact with
the mortgage broker Ms. Bruna ultimately dealt with, John Tenold, mid­
September. I informed him that my father had transferred the Property to
me and that I held a deed. At about the same time I was informed by the
other mortgage broker that I had been dealing with that Ms. Bruna
instructed him not to talk to me, Mr. Tenold advised me that Ms. Bruna, as
the conservator, was the only one he would deal with or allow to sign any
loan. It was apparent to me she had convinced the potential mortgage
lenders that my father's transfer of the Property to me was not valid.
However, I am not aware of any request made to, or order issued by, any
court that provided that.
I certainly did not want Ms. Bruna to be involved in getting any
mortgage loan on the Property .... Ms. Bruna's actions, and the lenders'
responses, eventually eliminated any other loan possibility. At the very end
of the process, after I had been shut out of negotiations, Ms. Bruna drove
home the point that she was in control by threatening to stop all effort to get
any mortgage and let the Property be in my name. By that time, it was too
late. The Property was in foreclosure and would have been lost. In large
part because of that threat, I stayed out of the dealings as Ms. Bruna and the
lender obviously did not want my involvement.
CP at 129-30.
On October 22, 2007, the Idaho District Court directed conservator Shelley Bruna
to "facilitate a reverse mortgage" on the property and to enter a reverse mortgage with
Quick Mortgage on the Spokane home. CP at 108. The order indicates that Maureen
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One West Bank v. Erickson
Erickson "read and approved" it, and seems to bear her signature. CP at 111. Erickson
later declared, "I do not recall seeing or signing any court order from those proceedings."
CP at 131. Bill McKee's attorneys, Jack Rose and Lloyd Herman, signed the order. The
order directing Shelley Bruna to sign the reverse mortgage does not identify Bill McKee
as a resident of Idaho.
On October 24, 2007, Maureen Erickson gave Bill McKee $1,750 "to be applied
toward the purchase of the property." CP at 165. The transfer of funds was
memorialized in a "gift letter." CP at 165. That same day, Shelley Bruna wrote Jack
Tenold of Quick Mortgage that "[a]s Conservator for Bill E. McKee, I will be delivering
the sum of$I,700.00 to Gustafson and Hogan Trust Account from Mr. McKee's bank
account for the closing of a reverse mortgage." CP at 166.
On October 25,2007, Shelley Bruna, as conservator of Bill McKee, signed a
$398,587.65 Mortgage Adjustable Rate Note in favor of Financial Freedom Senior
Funding Corporation, a subsidiary of IndyMac Bank FSB. The initial interest rate was
8.375 percent, but the amount would be monthly adjusted as long as the rate never
exceeded 20.375 percent. Shelley Bruna, as conservator of Bill McKee, also signed a
deed of trust on the Spokane residence, which deed secured the note. The deed of trust
was in the nature of a reverse mortgage, and we will refer to the instrument hereafter as a
"reverse mortgage." Paragraph five of the reverse mortgage included a covenant that Bill
McKee would "at all times occupy, establish, and use the" home as his "principal
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One West Bank v. Erickson
residence." CP at 39. Like other reverse mortgages, no amount was payable to the
lender until the death of Bill McKee, unless he earlier conveyed or vacated the home.
Upon closing, $255,460.44 was paid to the prior mortgage holder. Financial Freedom's
vice president indorsed in blank the Mortgage Adjustable Rate Note.
Maureen Erickson testified by affidavit:
I did not know, and still do not know, how much equity [Shelley
Bruna] withdrew in cash from the Property to divert to other things, such
as her expenses. The reverse mortgage option was the absolutely worst
possible alternative and not what my father or I wanted. It was far more
expensive and carried a much higher interest rate than any other loan.
CP at 129.
On appeal, Maureen Erickson argues that Financial Freedom had actual or
constructive knowledge that she owned the property at the time Shelley Bruna signed the
reverse mortgage. Erickson declared in response to One West Bank's summary judgment
motion:
Except for the disclosure I made to the mortgage brokers, in early to
mid-September 2007, including Mr. Tenold, no one from the lender Ms.
Bruna eventually dealt with talked to my father or me regarding ownership
of the Property. No one discussed anything further with either of us
regarding the fact that he resided in Washington, not Idaho, at the time my
brother initiated guardianship proceedings against him. My father and I
both lived at the Property. Either of us were able to confirm that the
Property belonged to me. If asked, I would have confirmed this truth.
Based on what I knew of my father and his September 2007 note for Judge
McFadden, I am confident that if anyone had asked my father about
ownership of the Property he would have confirmed it had been transferred
tome.
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CP at 131.
On January 28, 2008, the Spokane County Superior Court entered judgment in
Maureen Erickson's suit against Bill McKee for hiding her mother's will. The
Washington court noted that its August 22, 2007 "dismissal was signed without a formal
judgment being entered beforehand. This stipulated motion is to correct the record nunc
pro tunc." CP at 19. The judgment retroactively awarded Erickson multiple properties,
including the South Pender Lane home.
Maureen Erickson later declared:
25. In February 2008, after my father had resided full time in
Washington for over a year, Ms. Bruna refused to give my father any of his
money for dentures. Attorney Lloyd Herman [Bill McKee's attorney
throughout] had [Bill's] doctors write letters to Ms. Bruna demanding
money for dentures, explaining that he was losing weight without them.
She would only give him $400.00 to $550.00 a month to live on. My
adopted brother, Craig McKee, then assisted by conservator Bruna, along
with my brother Jerry, filed for an emergency guardianship with Judge
McFadden in Idaho saying he was wasting away because I wasn't caring
for him. Judge McFadden then issued a warrant to take my father
forcefully from his home in Spokane.
26. Mr. Herman went to court in Spokane that day and got a
restraining order against my brother, Jerome McKee, and his wife Mina
McKee; my adopted brother, Craig McKee and his wife Sylvia McKee; and
the Honorable Judge McFadden [the Idaho District Court judge]. The
Washington court granted a guardianship in Washington, which was still
not necessary because he was never ruled incompetent. I was named as my
father's guardian so I could prevent my brothers from further terrifying or
kidnapping him. In about 2009, my son Garth was named in Washington
as guardian of my father's finances to again fight my brothers (who were
fighting my guardianship in Washington and saying my father needed a
guardian of his finances). Judge Sypolt left permanently in place the
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No. 31944-0-III
One West Bank v. Erickson
restraining order against all the same parties, and denied my brothers'
motion to have them lifted.
27. Proceedings to attempt to remove Ms. Shelly [sic] Bruna as
my father's conservator were also renewed in early 2008 when it was
determined that she had never posted a bond as required by Judge
McFadden in connection with her having been appointed as conservator of
his property. In February 2008, my father wrote a letter directly to Judge
McFadden reinforcing his opinions about Ms. Bruna, his unhappiness that
she had been appointed as a conservator for his property, and his opinions
of what a poor job she was doing.
CP at 131-32.
On February 26, 2008, at age 92, Bill McKee wrote to the Idaho District Court
judge:
I lived in Idaho for forty years. I don't ever intend to go back except
to visit Maureen and her boys at Priest Lake. By the fact this trial went
forward was a huge embarrassment to me.
The government has no damned business in my life. I am
competent. I chose my Powers of Attorney for when I am not.
Who would believe that in this country a complete stranger could
take my entire Social Security and retirement and refuse to give me enough
money for food and teeth.
Jerry and Craig are trying to use your court to undermine my right to
have transferred that property to Maureen. I was competent and my
attorney Peacock help[ed] me with the transfer in January last year.
Ask Jerry [Le., Jerome] and Craig if they would like to be my
guardian ifthey have to promise to leave Maureen and her property alone.
Craig has not called me once or come to see me since my heart
surgery last July.
I am going to live with my daughter. She has such a good
disposition and takes really good care of me and my dog. I have already
chosen a retirement home in Seattle for when necessary.
I don't have long to live and would like to have some peace in my
life. I would rather be dead than have either Jerry or Craig toss me around
or take me away from [my] daughter and her boys.
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I want you to get rid of that women [sic] who is stealing from me
and trying to steal from Maureen. I don't trust her and she has caused me
to suffer. Besides I live in Washington. She bounces more checks than I
do. She has made my life hell.
Sincerely,
Bill E. McKee
CP at 142-44.
On June 20, 2008, the Idaho court terminated the conservatorship of Bill McKee
"pursuant to the suggestion of the Washington court" and ordered Shelley Bruna "to tum
over all funds belonging to Bill McKee to his attorney, Lloyd A. Herman." CP at 145.
On September 25,2009, Freedom Financial assigned the deed of trust and
mortgage note to Mortgage Electronic Registration Systems, Inc. (MERS). Freedom
Financial recorded the assignment with Spokane County on October 2, 2009.
Bill McKee died on March 12,2011, at age 94. The death certificate lists the
causes of death as "failure to thrive" spanning one month and "dementia" spanning
"years." CP at 51. The note, secured by the reverse mortgage, then fell due in full.
On April 13, 2011, Maureen Erickson sent Freedom Financial a proposed loan
repayment schedule. In that proposal, Erickson wrote, "I am in the process of contacting
a realtor to list property," and she indicated that the loan would be repaid "[ f]rom
proceeds ofthe sale of the property." CP at 153. On September 9,2011, Maureen
Erickson asked Freedom Financial for additional time to pay the loan. The due date was
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One West Bank v. Erickson
extended to December 12, 2011.
On December 8, 2011, Maureen Erickson recorded the June 28, 2007 quitclaim
deed signed by her father and transferring the Spokane residence to her with the Spokane
County. On December 9,2011, Erickson wrote Freedom Financial to request a second
extension in payment. One West denied the request.
On January 27, 2012, MERS assigned to One West the deed oftrust, but not the
note. OneWest recorded this assignment with Spokane County on February 3,2012.
PROCEDURE BELOW
On March 8, 2012, OneWest brought suit in Spokane County Superior Court to
foreclose upon the Spokane residence. Maureen Erickson had a recorded interest in the
property because of her filing of the judgment against her father and the recorded deed.
Therefore, One West included Maureen Erickson as a defendant in its suit.
In its complaint, One West Bank asserts an interest in the South Pender Lane home
only by reason of the reverse mortgage. In its complaint, One West Bank asks for a
money judgment against "the [d]efendants." CP at 201. Elsewhere in the complaint,
One West Bank asks "that no deficiency judgment be entered against the defendants." CP
at 202. In its complaint, One West Bank asserts no claim against Maureen Erickson other
than to have its interest in the property be declared first in priority over Erickson's
interest in the property.
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No. 31944-0-111
One West Bank v. Erickson
On May 22,2013, OneWest moved for summary judgment. Rudy Lara, an agent
of One West, attached five exhibits to a declaration supporting the motion: the note, the
deed of trust, the assignment from Freedom Financial to MERS, the assignment from
MERS to OneWest, and Bill McKee's death certificate.
Maureen Erickson opposed OneWest's motion for summary judgment and asked
the trial court to grant her judgment removing the lien of the deed of trust from the title to
the South Pender Lane residence. Erickson argued: the deed of trust's acknowledgement
was deficient, OneWest is not the note holder, the Idaho conservatorship did not extend
to real property in Washington, and OneWest was not a bona fide purchaser of the
mortgage. On June 20, 2013, OneWest filed a declaration oflegal counsel Babak
Shamsi. Shamsi attached a copy of the Idaho court orders. He stated that he attempted to
obtain an authenticated copy of the order from the Idaho court, but the court clerk refused
on the ground the file was sealed. He obtained the copies of the orders from Jerome
McKee's Idaho lawyer.
On July 2,2013, the trial court granted OneWest's motion for summary judgment
in part. The trial court concluded as a matter of law that One West holds the note and the
deed of trust was properly acknowledged. Although Maureen Erickson did not formally
move for summary judgment, the trial court formally denied Erickson's motion for
summary judgment on the two issues.
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One West Bank v. Erickson
On August 2,2013, OneWest filed a second affidavit from Rudy Lara. In this
affidavit, Lara declared:
In the regular performance of my job functions, I am familiar with
business records maintained by One West for the purpose of servicing
mortgage loans. These records (which include data compilations,
electronically imaged documents, and others) are made at or near the time
by, or from information provided by, persons with knowledge of the
activity and transactions reflected in such records, and are kept in the
course of business activity conducted regularly by One West It is the
regular practice of One West's mortgage servicing business to make these
records. In connection with making this Affidavit, I have personally
examined the business records relating to the subject "reverse mortgage"
loan.
Prior to its recording on December 8, 2011, Plaintiff has no record or
knowledge of the presence of the unrecorded quit claim [sic] deed
transferring the interest in the property.
CP at 151. Lara's second affidavit provided the foundation for: the April 13, 2011
repayment schedule; Maureen Erickson's first request for an extension; Erickson's
second request for an extension; Erickson's October 24,2007 gift memorandum of
$1,750 to Bill McKee; a letter from Shelley Bruna to Realtor Jack Tenold; and the U.S.
Department of Housing and Urban Development settlement statement for the closing of
the Freedom Financial loan.
On August 7, 2013, Maureen Erickson moved to strike OneWest's exhibits as not
authenticated and lacking foundation. ·On August 16,2013, the trial court denied
Maureen Erickson's motion to strike and granted One West summary judgment, writing:
As to Defendant's Motions to Strike the Idaho Court Order (Exhibit
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No. 31944-0-111
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A to Mr. Shamsi's third Declaration), said motion is denied. There are
justifiable reasons for not being able to authenticate the Order, as the Idaho
court file is sealed. There are sufficient indicia of authenticity, and th~
Order is admissible as a business record. The records are capable of being
authenticated. In the alternative, even if the Idaho Order should be stricken
due to lack of authenticity per RCW 5.44.010, said Order is not critical to
this Court's determination of this matter, and this Court would have
reached the same conclusion without consideration of the Idaho Order.
As to Defendant's Motion to Strike all exhibits attached to Plaintiffs
(Rudy Lara) Affidavit number 2, is denied. Said exhibits are business
records, and there is sufficient indicia of reliability. Further, the documents
are capable of being authenticated, albeit at significant effort and expense.
In the alternative, if those exhibits should be stricken, this Court would
have reached the same conclusion. They are not critical to the result.
The Court having reviewed the pleadings and other records and files
herein, and having considered the arguments of counsel, the Court finds
that no material issues of fact exist which would preclude the granting of
Plaintiffs Motion for Summary Judgment, and the Plaintiff is entitled to
judgment as a matter of law.
OneWest is a bonafide purchaser for value.
Defendant took title to the property subject to Plaintiffs Deed of
Trust.
CP at 188-89.
LA W AND ANALYSIS
Maureen Erickson asserts numerous trial court errors on appeal and she asks that
the summary judgment order in favor of One West be reversed. She argues (l) the trial
court relied on inadmissible evidence, (2) Freedom Financial's deed oftrust was not
properly notarized and thus failed to attach to the property, (3) One West failed to prove it
holds the note and cannot foreclose on the deed of trust alone, and (4) Shelley Bruna
lacked the authority to encumber property that Bill McKee no longer owned, because (a)
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Idaho law does not authorize a conservator for a nonresident to encumber real property
outside the state of Idaho, (b) Financial Freedom had actual or constructive knowledge
that Maureen Erickson owned the property, and (c) OneWesfs interest in the property is
not superior to Financial Freedom's since OneWest was not a bona fide purchaser. We
agree that the Idaho court lacked authority to authorize a conservator to encumber the
Spokane residence and reverse on this ground. Therefore, we do not address Erickson's
other arguments.
Maureen Erickson argues that Shelley Bruna, as an Idaho appointed conservator
for a nonresident, lacked the authority to encumber real property in Washington. Under
Idaho's version of the Uniform Probate Code, an Idaho court may appoint a conservator
"in relation to the estate and affairs of a person ... that ... is unable to manage his
property and affairs effectively for reasons such as ... mental disability, physical illness
or disability ... and ... the person has property [that] will be wasted or dissipated unless
proper management is provided." I.C. § 15-5-401(b). In support of her argument,
Erickson cites I.C. § 15-1-301, titled "Territorial application," a provision applicable to
the entire Probate Code:
Except as otherwise provided in this code, this code applies to (1)
the affairs and estates of decedents, missing persons, and persons to be
protected, domiciled in this state, (2) the property ofnonresidents located
in this state or property coming into the control ofa fiduciary who is
subject to the laws ofthis state, (3) incapacitated persons and minors in this
state, (4) survivorship and related accounts in this state, and (5) trusts
subject to administration in this state.
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(Emphasis added.) By its plain language, I.C. § 15-1-30 I limits an Idaho conservatorship
for a nonresident to property located in that state.
The undisputed facts show that Bill McKee established his domicile or residency
in Washington State by January 2007. Conversely, OneWest Bank presents no testimony
showing McKee to be a domiciliary of Idaho on August 27, 2007, when the Idaho court
appointed Shelley Bruna as McKee's conservator, or on October 24,2007, when the
Idaho court authorized the encumbrance on the Spokane residence. To the contrary, the
reverse mortgage, upon which the bank relies, declared that B ill McKee's principal
residence was the South Pender Lane, Spokane, property. The note would fall due if
McKee no longer occupied the home. Under the Idaho statute, the Gem state court could
appoint a conservator over Bill McKee, but the conservator's authority to manage and
encumber property was limited to real property situated in Idaho. Conversely,
conservator Shelley Bruna's powers did not extend to the South Pender Lane home.
OneWest Bank emphasizes that portion of Idaho Code § 15-1-301 that applies
Idaho's Uniform Probate Code to "property coming into the control of a fiduciary who is
subject to the laws of this state." The bank contends that Shelley Bruna, as a conservator,
was a fiduciary and the South Pender Lane residence came under her control. This is a
circular argument, because we must first decide whether the Spokane residence came
under her control.
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One West Bank insists that Shelley Bruna's Idaho conservatorship powers
extended to foreign land because of the language of other Idaho statutes. One West cites
I.C. § IS-S-420 and § 1~-S-424. I.C. § IS-S-420 provides in part, "The appointment of a
conservator vests in him title as trustee to all property of the protected person, presently
held or thereafter acquired." (Emphasis added.) And I.C. § IS-S-424 provides:
(3) A conservator, acting reasonably in efforts to accomplish the
purpose for which he was appointed, may act without court authorization or
confirmation to:
(g) Acquire or dispose of an estate asset including land in another
state for cash or on credit, at public or private sale; and to manage, develop,
improve, exchange, partition, change the character of or abandon an estate
asset.
(Emphasis added.) We recognize that I.C. § IS-S-424(3 leg) read literally bestows power
to transfer land in Washington State. This argument, however, ignores the jurisdictional
nature ofI.C. § IS-I-301. IfI.C. § IS-1-301 is not satisfied, then the Idaho court lacked
statutory authority over the action to entrust Shelley Bruna with the powers I.e. § IS-S­
420 and § IS-S-424 enumerate. I.C. § IS-I-301 is the jurisdictional statute that
encompasses all Idaho probate provisions. No Idaho decision addresses I.C. § IS-S­
424(3)(g) and no decision holds that an Idaho court has authority to impact or approve a
mortgage on Washington land.
Even if Idaho law authorized the Idaho courts to approve a mortgage on property
in Washington State, we would rule to the contrary, because we are not bound by a
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No. 31944-0-III
One West Bank v. Erickson
foreign state's order concerning property here. See Olympia Mining & Milling Co. v.
Kerns, 64 Wash. 545, 551, 117 P. 260 (1911) (collecting hoary rhetoric). Even if Bill
McKee was a resident of Idaho at the time of the encumbrance, we would conclude that
the Idaho order authorizing the mortgage is invalid. Historically the laws of the place,
where such real property lies, exclusively govern in respect to the rights of the parties, the
modes oftransfer, and the solemnities, which should accompany them. JOSEPH STORY,
COMMENTARIES ON THE CONFLICT OF LAWS § 424 (1834). Thus, the local forum is the
ultimate arbiter of a party litigant's interest in land, or more properly immovables, within
its jurisdiction. See RUSSELL J. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS
ch. 8 (1971); ROBERT A. LEFLAR, THE LAWOF CONFLICT OF LA WS § 22 (1959); Herbert
F. Goodrich, Two States and Real Estate, 89 U. PA. L. REv. 417 (1941).
Based on these ancient principles, a court of one state has no jurisdiction over the
real estate in a second state. Brown v. Brown, 46 Wn.2d 370,372,281 P.2d 850 (1955).
It is a fundamental maxim of international jurisprudence that every state or nation
possesses an exclusive sovereignty and jurisdiction within its own territory. Brown, 46
Wash. 2d at 372. The rule is well established that the courts of one state cannot directly
affect the legal title to land situated in another state. Brown, 46 Wash. 2d at 372.
Legions of cases, olden and modem, hold that a court of one state cannot
administer or affect title to real property sited in another state. Therefore, the home state
of the property need not enforce decrees entered by a foreign state concerning the home
20
No. 3 1944-0-III
One West Bank v. Erickson
state's real estate. Decrees of one state affecting interests in land of another state are not
accorded full faith and credit under the United States Constitution. Fall v. Eastin, 215
U.S. 1,30 S. Ct. 3,54 L. Ed. 65 (1909).
The United States Supreme Court even issued an opinion on this subject. In Fall,
the court affirmed the Supreme Court of the State of Nebraska, which held that a deed to
land situated in Nebraska, made by a commissioner under the decree of a court of the
State of Washington in an action for divorce, was not effective in Nebraska because the
Washington court lacked in rem jurisdiction. The divorcing wife argued that the
Nebraska court must give full faith and credit to the Washington court's order authorizing
the commissioner to transfer the husband's land in Nebraska to the wife. The high Court
disagreed. The Court wrote:
This doctrine is entirely consistent with the provision of the
Constitution of the United States, which requires a judgment in any state to
be given full faith and credit in the courts of every other state. This
provision does not extend the jurisdiction of the courts of one state to
property situated in another, but only makes the judgment rendered
conclusive on the merits of the claim or subject-matter of the suit. "It does
not carry with it into another state the efficacy of a judgment upon property
or persons, to be enforced by execution. To give it the force of a judgment
in another state, it must be made a judgment there; and can only be
executed in the latter as its laws may permit."
Fall, 215 U.S. at 12 (quoting McElmoyle v. Cohen, 38 U.S. (13 Pet.) 312, 324, 10 L. Ed.
177 (1839)).
In Green v. Wilson, 163 N.C. App. 186,592 S.E.2d 579 (2004), Wadell H. Pate
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No. 31944-0-III
One West Bank v. Erickson
deeded real property in North Carolina to his wife, Mildred Green Pate, and stepson,
Aaron L. Green (the Greens). The administratrix of Mildred Pate's estate, Polly Pate
Wilson, asserted that the deeds were conveyed by undue influence and sought to have the
deeds reformed. The Greens sued in North Carolina to quiet the title. Thereafter, the
administratrix filed suit in Georgia, where the Greens resided, seeking to set aside the
deeds. The North Carolina trial court granted Wilson's motion to stay the proceedings to
allow the Georgia suit to proceed. The trial court granted the motion on the ground that
the Georgia forum was the more convenient forum for the parties. The North Carolina
Court of Appeals reversed. The court held that North Carolina has exclusive in rem
jurisdiction to address the validity of a deed executed to convey property located entirely
within North Carolina. The convenience of the parties was irrelevant. "In rem"
proceedings encompass any action brought against a person in which the essential
purpose of suit is to determine title to or affect interests in specific property located
within territory over which court has jurisdiction. A court in a jurisdiction foreign to the
subject property could not determine title to the property. Going further the courts of the
situs of lands cannot be compelled to enforce the decrees affecting the lands and issued
by the courts of another state.
Washington follows the rule that only courts within the Evergreen State hold
jurisdiction to impact title or transfers of Washington land. Werner v. Werner, 84 Wn.2d
360,367,526 P.2d 370 (1974). In State ex ret. Mann v. Superior Court, Thurston
22
No. 31944-0-111
One West Bank v. Erickson
County, 52 Wash. 149, 100 P. 198 (1909), Edward Harkness died testate at his home in
Los Angeles, California. He left an estate in California and real property in Thurston
County, Washington. The California estate was in process of administration in
California, when the will and California probate papers were filed with the Thurston
County Superior Court. Devisees named in the will moved the superior court to dismiss
the probate proceedings instituted in this state on the ground that there was no necessity
for administration here. The trial court denied the petition and the Supreme Court
affirmed. The court ruled there was a necessity for administration in this state, since the
California court had no jurisdiction over the real property of the decedent having its situs
in this state.
More on point is Smith v. McKelvey, 28 Ohio App. 361, 162 N.E. 722 (1928),
because the issue was whether one state may authorize a guardian to dispose of property
rights of the ward in an adjoining state and the transfer was not of fee simple. A party
objected to a warranty deed executed and delivered in Indiana, by Solon Arms, guardian
of Gertrude Arms Whicker, a person of unsound mind. The Franklin County, Indiana,
court authorized the guardian to sign the deed, which conveyed the undivided inchoate
interest and right of dower in Ohio property of Gertrude Arms Whicker. The Ohio court
held that the courts of the state of Indiana had no authority to authorize and empower a
guardian to convey real estate, or, more particularly, an inchoate right of dower in land
situated in Ohio. The rule that one state will not take jurisdiction of an action concerning
23
No. 31944-0-III
One West Bank v. Erickson
real estate situated in another state is the necessary result of the independence of distinct
sovereignties. The action for authorization should have been brought in the courts of the
state of Ohio.
In Richardson v. Allen, 185 S.W. 252 (Mo. Ct. App. 1916), the Missouri court
appointed L. L. Allen as guardian of Banks M. Burrow, an incompetent person. Banks
owned real estate in Texas and Allen sought to sell the land. Allen did the right thing.
He got approval from the Missouri court to sell the land, but then petitioned a Texas court
for an ancillary guardianship and authorization to sell the land. The Texas court
appointed a guardian in Texas to sell the land. The Texas guardian delayed forwarding
the sale proceeds, and Caleb Richardson, the predecessor guardian in Missouri, argued
that Allen should pay interest on the proceeds during the delay and even as far back as
the date that the Missouri court authorized the sale. In ruling to the contrary, the
Missouri court noted that its probate courts have no extraterritorial jurisdiction, and any
Missouri order to sell lands in Texas was void. The court noted that courts repeatedly
hold that any attempted sale of lands in another state by an administrator, executor, or
guardian made by virtue of his appointment in Missouri and authority derived from our
courts is so utterly void that such administrator, executor, or guardian cannot be charged
with and compelled to account for the proceeds of such land, much less for interest
thereon. Richardson, 185 S.W. at 253.
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No. 31944-0-III
One West Bank v. Erickson
In re Bruhns' Estate, 58 Mont. 526, 193 P. 1115 (1920), a California resident, who
owned land in Montana died intestate. Heirs of the decedent argued that the Montana
court should apply California law, to the detriment of the widow, when distributing the
Montana land. The court disagreed and wrote:
We do not deem it necessary to cite authorities to the effect that
jurisdiction of the courts in Montana in probate matters pertaining to real
estate is confined solely to property situated in this state, and that any order
or decree affecting realty in another state would be a nullity. Likewise the
California probate courts may make no binding orders pertaining to real
property in this state.
193 P. at 1116.
Finally, we return home to Sparkman & McLean Income Fund v. Wald, 10 Wn.
App. 765, 772, 520 P.2d 173 (1974), which extends the prohibition of one state's
authority to real property in another state to the handling of mortgages. The Walds
successfully defended a suit for the collection of a debt by proving usury. Penalties
accrued because of usury extinguished the debt. Both Washington and Oregon real
property secured the debt, and the trial court ordered the lender to release the mortgages
on the Washington and Oregon property. The Wald court affirmed all rulings, except the
trial court order releasing the mortgage on the Oregon land. The court wrote:
The trial court's attempt to directly affect the title to Oregon real
property by extinguishing the Oregon mortgages was, however, of no force
or effect. Courts of one state cannot directly affect the title to real property
beyond that state's territorial limits.
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No. 31944-0-III
One West Bank v. Erickson
10 Wash. App. at 772.
A grantor can convey no greater title or interest than the grantor has in the
property at issue. Firth v. Hefu Lu, 146 Wash. 2d 608, 615, 49 P.3d 117 (2002); Sofie v.
Kane, 32 Wash. App. 889, 895, 650 P.2d 1124 (1982). Since Freedom Financial's
mortgage on the South Pender Lane property was invalid, it could not assign an effective
interest in the property to One West Bank.
One West Bank argues that Maureen Erickson had the opportunity to litigate
before the Idaho court the question of whether the Idaho court could authorize an Idaho
conservator to encumber the property. Alternatively, OneWest Bank argues that the
Idaho court must have ruled that Bill McKee was a domiciliary of Idaho for the Idaho
court to proceed as it did. OneWest Bank complains that Maureen Erickson's defense of
this suit is a collateral attack on Shelley Bruna's authority.
We reject OneWest Bank's arguments for several reasons. The record before the
trial court and this court does not show that the Idaho court rendered any ruling
concerning the domiciliary of Bill McKee. Nor does the record show that the Idaho court
specifically held that it had jurisdiction to encumber real property in Washington State.
We also question whether Maureen Erickson was a party to the Idaho proceeding and
would be bound by the Idaho court ruling.
Even if the Idaho District Court ruled it had jurisdiction to approve a mortgage on
26
No. 31944-0-III
One West Bank v. Erickson
Washington property, we would and could reject the ruling. Even if the Idaho District
Court held Bill McKee to be an Idaho resident, we would and could reject authorization
to encumber Washington property. Such a ruling is not entitled to full faith and credit.
Fall, 215 U.S. 1.
The only fact relevant to the Idaho court's authority to authorize an encumbrance
is the location of the mortgaged property being in Washington State. This fact cannot be
disputed. When the facts are not in dispute, this court may grant summary judgment to
the nonmoving party. Leland v. Frogge, 71 Wn.2d 197,201,427 P.2d 724 (1967); Wash.
Ass 'n ofChild Care Agencies v. Thompson, 34 Wash. App. 225, 660 P.2d 1124 (1983);
Impecoven v. Dep't ofRevenue, 120 Wash. 2d 357, 365,841 P.2d 752 (1992). Maureen
Erickson did not formally move for summary judgment on the issue of the validity of the
Idaho order directing the conservator to enter the reverse mortgage, but she asked for
such a ruling in response to One West Bank's summary judgment motion. She also
requested this ruling on appeal. Therefore, we grant Erickson summary judgment on this
issue. Upon reversal of summary judgment in favor of one party, a grant of summary
judgment to the other party can be an appropriate remedy when the two motions take
diametrically opposite positions on the dispositive legal issue and raise no issues of fact.
Weden v. San Juan County, 135 Wash. 2d 678, 710, 958 P.2d 273 (1998); Ki Sin Kim v.
Allstate Ins. Co., 153 Wash. App. 339, 353, 223 PJd 1180 (2009).
27
No. 31944-0-III
One West Bank v. Erickson
In its complaint, One West Bank asks for a money judgment against "the
defendants." CP at 201. Technically this request seeks a money judgment against
Maureen Erickson, but the request appears to be an error, since elsewhere One West Bank
waives any right to a deficiency judgment. In one paragraph of the claim for relief,
One West Bank asks. "that no deficiency judgment be taken against the defendants." CP
at 202. OneWest Bank asserts no claim against Maureen Erickson other than a claim to
have its interest in the property be declared first in priority over Erickson's interest in the
property.
In its complaint, One West Bank asserts an interest in the South Pender Lane home
only by reason of the reverse mortgage. We declare the reverse mortgage invalid.
Because we rule against OneWest Bank on the only claim it asserts, we dismiss OneWest
Bank's complaint.
CONCLUSION
We declare the October 22,2007 Idaho court order ineffective to the extent it
sought to approve conservator Shelley Bruna's encumbering the Pender Lane, Spokane
residence. In turn, we declare the October 25,2007 deed of trust, signed by Shelley
Bruna and encumbering South Pender Lane, invalid. We reverse the trial court's grant of
summary judgment in favor of One West Bank and instead grant Maureen Erickson
28
No. 31944-0-I11
One West Bank v. Erickson
summary judgment dismissing OneWest Bank's complaint with prejudice.
WE CONCUR:
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29