Seven Sales Llc v. Beatrice Otterbein And Pierce County, Wa

ILC
DB 51ON 1
II - AUC, - 4
P,fl 9: 5;
e,,
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
SEVEN SALES LLC as assignee No. 46208 -7 -II
HERITAGE REHAB LLC,
Appellants,
V.
BEATRICE OTTERBEIN; PIERCE PUBLISHED OPINION
COUNTY, WASHINGTON,
JOHANSON, C. J. — Seven Sales LLC appeals the trial court' s order quashing its writ of
garnishment and discharging Pierce County ( County) as garnishee. Seven Sales is the assignee of
a judgment against Beatrice Otterbein. The County foreclosed on property that Otterbein owned
to satisfy a sewer tax lien, which resulted in the County holding surplus funds. Seven Sales argues
that, as Otterbein' s creditor, it should be able to " apply" to the county treasurer for the surplus
funds on Otterbein' s behalf or, in the alternative, the surplus funds are subject to a writ of
garnishment.
We hold that under RCW 84. 64. 080, the statute that governs the sewer tax lien foreclosure
process, only the property' s record title holder may apply to the County for any surplus funds and
the surplus funds. after foreclosure are not subject to garnishment. We affirm the trial court' s order
quashing Seven Sales' writ of garnishment.
No. 46208 -7 -II
FACTS
In June 2012, Heritage Rehab LLC obtained a money judgment against Beatrice Otterbein
for $8, 860. 63. 1 In May 2013, Heritage assigned its judgment to Seven Sales.
In August 2012, the County filed certificates of delinquency as notice that Otterbein was
delinquent in paying " sewer service fees." Clerk' s Papers ( CP) at 96. Otterbein was the record
title holder of the property on the date the County filed its certificates of delinquency. In April
2013, the County held a foreclosure sale of Otterbein' s real property to satisfy the sewer liens,
which resulted in a $ 34,323. 54 surplus.2 Under the sewer tax lien foreclosure statute, the County
informed Otterbein that she could claim the surplus funds within three years by filing an
application. Although post office tracking records suggest that Otterbein received the County' s
notice, she did not apply to claim the surplus.
In November 2013, Seven Sales obtained a writ of garnishment, naming the County as the
garnishee and attempting to satisfy its judgment against Otterbein from the surplus foreclosure
funds. The County answered the writ, arguing that
the foreclosure sale surplus money is.being held in trust by the County at this time.
Since [ Otterbein] is the only person entitled to those proceeds at this time and she
has not yet applied for them, [ Seven Sales] is not entitled to garnish the excess
proceeds from the foreclosure sale.
1 Because Seven Sales does not assign error to any of the trial court' s findings of fact, they are
verities on appeal and establish the facts of this case. Humphrey Indus., Ltd. v. Clay S,treetAssocs.,
LLC, 176 Wash. 2d 662, 675, 295 P.3d 231 ( 2013).
2 Liens for unpaid water or sewer connection charges and usage fees are foreclosed using the same
procedure outlined in RCW 84. 64. 080 that the County uses to foreclose on property tax liens.
RCW 36. 94. 150.
2
MGMWIMUM
CP at 46. Seven Sales controverted the County' s answer, arguing that the " application" that RCW
84. 64.080 requires is merely a way to determine where to send the surplus funds, that the statute
applies primarily to holders of an interest in the foreclosed property and not judgment creditors,
and that garnishing money that the County holds for Otterbein is not practically very different from
garnishing Otterbein' s bank account.3
After a hearing, the trial court concluded that the surplus is not " reachable through
garnishment" after a foreclosure under RCW 84. 64. 080. Report of Proceedings at 21. The trial
court denied Seven Sales' motion to controvert the County' s answer to the writ of garnishment
and discharged the County as garnishee. Seven Sales appeals the trial court' s order discharging
the County as garnishee.
ANALYSIS
Seven Sales argues that ( 1) it should be allowed to apply for the surplus funds on
Otterbein' s behalf, and ( 2) the surplus funds are subject to garnishment.' We disagree.
I. STANDARD OF REVIEW AND Runs OF LAW
Seven Sales does not challenge the trial court' s findings of fact, therefore they are verities
on appeal. Humphrey Indus., Ltd. v. Clay StreetAssocs., LLC, 176 Wash. 2d 662, 675, 295 P.3d 231
3 The County' s application form requires the applicant to identify him or herself as the record title
holder and inform the County whereto send the money. The form must be notarized.
Seven Sales also argues that the application process after a tax foreclosure sale is " not authorized
by law" because it requires Otterbein to apply for the surplus before she can claim an ownership
interest in the surplus funds. Br. of Appellant at 3. This argument fails because neither party
argued nor did the trial court conclude that the application is what establishes Otterbein' s
ownership interest in the surplus. The trial court, in fact, concluded that Otterbein is entitled to
the surplus and that the County is holding it. The application is merely the statutory procedure by
which Otterbein receives the surplus; it has no impact on her ownership interest in the surplus.
3
No. 46208 -7 -II
2013). We review de novo whether the trial court' s findings of fact support its conclusions of
law. Viking Bank v. Firgrove Commons 3, LLC, 183 Wash. App. 706, 712, 334 P.3d 116 ( 2014).
We review the trial court' s interpretation of a statute' s meaning de novo. Manary v.
Anderson, 176 Wash. 2d 342, 350, 292 P.3d 96 ( 2013). Our primary purpose in statutory
interpretation is to ascertain and carry out legislative intent. Manary, 176 Wash. 2d at 350- 51 ( citing
Dep' t of Ecology v. Campbell & Gwinn, LLC, 146 Wash. 2d 1, 9, 43 P.3d 4 ( 2002)).
We begin statutory interpretation by analyzing the statute' s plain meaning. Manary, 176
Wash. 2d at 352. Where the statute' s meaning is " plain on its face," we give effect to that plain
meaning and presume it is the legislature' s. intent. Campbell & Gwinn, 146 Wash. 2d at 0- 10. Plain
meaning can be determined "from all that the Legislature has said in the statute and related statutes
which disclose legislative intent about the provision in question." Campbell & Gwinn, 146 Wash. 2d
at 11. " It is fundamental that in construing any statute we avoid absurd results." Lowy V.
PeaceHealth, 174 Wash. 2d 769, 779, 280 P.3d 1078 ( 2012)
Where a statute is ambiguous, we consider legislative history and principles of statutory
construction to discern legislative intent: Stephenson v. Pleger, 150 Wash. App. 658, 662, 208 P.3d
583 ( 2009) ( citing State ex rel. Citizens Against Tolls v. Murphy, 151 Wash. 2d 226, 242-43, 88 P.3d
375 ( 2004)). Statutory language is ambiguous when it is " susceptible to more than one reasonable
interpretation." Stephenson, 150 Wash. App. at 662.
The sewer tax lien foreclosure statute provides, in part, that
i]f the highest amount bid for any such separate unit tract or lot is in excess of the
minimum bid due upon the whole property included in the certificate of
delinquency, the excess shall be refunded following payment of all recorded water -
sewer district liens, on application therefor, to the record owner of the property.
The record owner of the property is the person who held title on the date of issuance
of the certificate of delinquency. Assignments of interests, deeds, or other
C!
No. 46208- 7- 11
documents executed or recorded afterfiling the certificate of delinquency shall not
affect the payment of excess funds to the record owner. In the event no claim for
the excess is received by the county treasurer within three years after the date of the
sale he or she shall at expiration of the three year period deposit such excess in the
current expense fund of the county which shall .extinguish all claims by any owner
to the excess funds.
RCW 84. 64. 080 ( emphasis added).
II. ONLY THE RECORD TITLE HOLDER MAY APPLY FOR SURPLUS TAX FORECLOSURE FUNDS
Seven Sales argues that the trial court erred when it concluded that only the record title holder
may apply to receive the surplus funds after a tax foreclosure sale. We hold that RCW 84. 64. 080
permits only the record title holder to apply for the surplus funds.
The sewer tax lien foreclosure statute provides that the record title holder is the only
possible recipient of the surplus sewer tax lien foreclosure funds and that the record title holder
shall receive the surplus funds upon application for them. RCW 84. 64. 080 states that the excess
funds " shall be refunded following payment of all recorded water -sewer district liens, on
application therefor, to the record owner of the property. The record owner of the property is the
person who held title on the date of issuance of the certificate of delinquency." ( Emphasis added.)
Although the statute does not explicitly state that the surplus shall be refunded to the record title
holder " on his or her application therefor," this is the only reasonable reading of the sewer tax lien
foreclosure statute.
Seven Sales argues that " anyone" can apply for the surplus funds on the record title holder' s
behalf. Specifically, Seven Sales claims that it can apply to have the surplus funds deposited in
the court registry, permitting its garnishment action. But it is unreasonable to interpret the statute
to allow a third parry such as a creditor to apply for the surplus funds and to have said funds
deposited into the court registry subject to garnishment when the statute' s language provides that
No. 46208 -7 -II
the funds shall be refunded only " to the record owner." RCW 84. 64. 080. Where, as here, the
statute provides that only the record owner may receive the surplus funds, it is not reasonable to
permit " anyone" to apply for those funds, as Seven Sales argues. Here, the application form that
the County used required the applicant to state that she " had a recorded, ownership interest in the
real property" and the form must be notarized. CP at 31. This application process allows the
county treasurer to confirm that the person applying to receive the surplus funds actually is the
record title holder and the person entitled to receive the funds as required by the statute. This
confirmation could not be accomplished if "anyone," such as a creditor like Seven Sales, could
apply for the surplus on the record title holder' s behalf. Accordingly, we hold that RCW 84. 64.080
permits only the record title holder to apply to receive the surplus funds.
III. THE SURPLUS FUNDS ARE NOT SUBJECT TO GARNISHMENT
Seven Sales next argues that the surplus funds from a sewer tax lien foreclosure sale are
subject to garnishment under ch. 6. 27 RCW, the general garnishment statute. Because RCW
84. 64. 080 precludes garnishment of such surplus funds, we disagree.
A. APPLICABLE STATUTES
Generally, Washington law permits garnishment of a judgment debtor' s property if the
judgment creditor " files a writ of garnishment on a parry who is indebted to the [ judgment] debtor
at the time of service [ of the writ]." Weyerhaeuser Co. v. Calloway Ross, Inc., 133 Wash. App. 621,
624, 137 P.3d 879 ( 2006) ( citing RCW 6. 27. 250( 1)( a)). If the garnishee is " indebted" to or " has
possession or control of personal property or effects belonging to the defendant," the garnishee
must hold the defendant' s property pursuant to a writ of garnishment. RCW .6. 27. 060, . 100.
Washington law recognizes that " the garnishment process is necessary for the enforcement of
2
No. 46208 -7 -II
obligations debtors otherwise fail to honor, and that garnishment procedures benefit the state and
the business community as creditors." RCW 6. 27. 005.
However, the garnishment statute appears to conflict with the sewer tax lien foreclosure
statute. As noted above, RCW 84. 64.080 provides that surplus sewer tax lien foreclosure funds
shall be refunded following payment of all recorded water -sewer district liens, on application
therefor, to the record owner of the property." Further, in 2003, the sewer tax lien foreclosure
statute was amended to include the following sentence:
Assignments of interests, deeds, or other documents executed or recorded after
filing the certificate of delinquency shall not affect the payment of excess funds to
the record owner.
LAWS OF 2003, ch. 23, § 5; RCW 84. 64. 080. The purpose of the 2003 amendment was to " ease
the job of the county treasurer because the statute had previously been `` ambiguous as to whether
other creditors have rights to intervene and receive the refund before it goes to the record owner."'
Stephenson, 150 Wash. App. at 663 ( quoting S. B. REP. ON ENGROSSED SUBSTITUTE H.B. 1564, 58th
Leg., Reg. Sess. ( Wash. 2003)).
When considering two statutes that address the same subject, one method of interpretation
is to determine whether one statute is " general" and the other is " specific." " It is a fundamental
rule that where the general statute, if standing alone, would include the same matter as the special
act and thus conflict with it, the special act will be considered as an exception to, or qualification
of, the general statute." Wark v. Wash. Nat' l Guard, 87 Wash. 2d 864, 867, 557 P.2d 844 ( 1976).
Although we must try to consider statutes " related to the same subject together" where possible, if
statutes conflict " irreconcilably," the more specific statute prevails. Hallauer v. Spectrum Props.,
Inc., 143 Wash. 2d 126, 146- 47, 18 P.3d 540 ( 2001).
7
No. 46208 -7 -II
B. RESOLVING STATUTORY CONFLICT
Seven Sales argues that the tax foreclosure statute does not conflict with garnishment law
and the. two statutes can be applied together.5 The County argues, and we agree, that the tax
foreclosure statute, including the 2003 amendment, is a specific statute that plainly precludes
judgment creditors from directly receiving the surplus funds after a foreclosure sale.
Garnishment law directs garnishees regarding what to do if they hold property that belongs
to a judgment debtor. See ch. 6. 27 RCW. The sewer tax lien foreclosure statute is a more specific
law because it directs the county treasurer regarding what to do specifically with a surplus after a
sewer tax lien foreclosure sale. Therefore, we examine whether the tax foreclosure statute conflicts
with general garnishment law.
Two provisions of RCW 84.64. 080 support the County' s argument that the statutes conflict
and the tax foreclosure statute should control. First, RCW 84. 64. 080 provides that " the [ surplus]
shall be refunded following payment of all recorded water -sewer district liens, on application
therefor, to the record owner of the property." This provision conflicts with general garnishment
law, which provides that Otterbein' s surplus funds held by the County would besubject to
garnishment by a creditor and, thus, would not be refunded directly to the record owner of the
property.
Second, the 2003 amendment provides that "[ a] ssignments of interests" executed after the
certificates of delinquency are issued " shall not affect the payment of excess funds to the record
5
Seven Sales also argues that the " exemptions" from garnishment, e. g., the earnings that the
garnishment defendant canhold exempt pursuant to RCW 6. 27. 150, are irrelevant to this appeal.
This argument misunderstands the County' s position. The County argues not that the surplus funds
generated by a tax foreclosure sale are " exempt" from garnishment but that the sewer tax. lien
foreclosure law itself provides that garnishment law does not apply to the surplus funds.
8
No. 46208 -7 -II
owner." LAWS OF 2003, ch. 23, § 5 ( emphasis added); RCW 84. 64. 80. But garnishment law would
permit such a creditor' s interest to affect the payment of surplus funds to the record owner.
Weyerhaeuser, 133 Wash. App. at 624 ( citing RCW 6. 27.250( 1)( a)).
The plain language of the specific sewer tax lien foreclosure statute and general
garnishment law conflict and therefore the specific foreclosure statute must control. Under the
plain language of RCW 84.64. 080, Seven Sales is not entitled to garnish the surplus funds because
1) those funds are payable only to the record title owner, and ( 2) although Seven Sales received
an interest in the funds by assignment, the statute states that said assignment will not affect the
payment of the surplus to Otterbein, the record title owner.
To the extent that RCW 84. 64.080 is ambiguous, the legislative history of the 2003
amendments to RCW 84. 64. 080 bolsters our analysis. Examining the same legislative history as
this court considered in Stephenson, the purpose of the 2003 amendment is clear. The legislature
found that the previous version of the statute was " ambiguous as to whether other creditors have
rights to intervene and receive the refund before it goes to the record owner." S. B. REP. ON
ENGROSSED SUBSTITUTE H.B. 1564, 58th Leg., Reg. Sess. ( Wash. 2003). Therefore, the 2003
amendment was enacted to eliminate this ambiguity and states that "[ a] ssignments of interests ...
executed or recorded after filing the certificate of delinquency shall not affect the payment of
excess funds to the record owner." LAWS OF 2003, ch. 23, § 5; RCW 84. 64. 080.
Reading the 2003, amendment together with its legislative history, Seven Sales is precluded
from using garnishment law to " affect the payment of excess funds" to Otterbein, the record title
holder. Legislative history demonstrates that creditors such as Seven Sales are not permitted to
use garnishment as a method to intervene to prevent the record title holder from receiving the
1
No. 46208 -7 -II
surplus funds after a tax foreclosure sale. Accordingly, we hold that surplus funds following a
sewer tax lien foreclosure sale are payable only to the record title holder of the foreclosed property
and said surplus is not subject to garnishment by a creditor.
We affirm the trial court' s order quashing Seven Sales' writ of garnishment.
IHiNSON, C. J.
We concur:
BJC'
SUTTON, J.
10