Kellie Marie Davis v. Fred Findahl

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
FRED FINDAHL, a single man, No. 80399-9-I
Respondent, DIVISION ONE
v.
KELLIE MARIE DAVIS, CHARLES L.F.
PAULSON, and ERICK J.C. PAULSON,
Individually and as Trustees of the
CHESTER L.F. PAULSON REVOCABLE
TRUST,
Appellants,
WELLS FARGO BANK, N.A.; and TOLIN UNPUBLISHED OPINION
NICHOLS, JANE DOE NICHOLS, and
their marital community,
Defendants,
DANIEL and RANDELL WALTON,
husband and wife, and their marital
community,
Intervenor Defendants.
BOWMAN, J. — Jacqueline Paulson, individually and as the personal
representative of the estate of Chester L.F. Paulson, appealed the trial court’s
order granting summary judgment in a quiet title action in favor of Fred Findahl.
Paulson challenged the trial court’s conclusion that a homeowner association’s
foreclosure on a residential property extinguished her judgment lien against the
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 80399-9-I/2
property. Because Paulson failed to establish a genuine issue of material fact for
trial and Findahl is entitled to judgment as a matter of law, we affirm.1
FACTS
The Yarrow Hill Owners Association (Yarrow Hill) manages a development
of homes in Kirkland. Yarrow Hill’s Covenants, Conditions, and Restrictions
(CCRs), recorded in 1986, authorize it to levy annual and special assessments to
pay for common expenses. Homeowners who fail to pay assessments are
subject to a lien on their property.
In 2004, Thomas Mino bought residential property in the Yarrow Hill
development. At some point, he stopped paying the required assessments. On
February 15, 2011, Yarrow Hill filed an action to foreclose on the assessment
lien, naming Mino, Bank of America N.A., and several “John Does” as
defendants. Mino did not appear or respond to the lawsuit. On December 22,
2011, the court entered a decree of foreclosure, a default judgment of
$23,012.71, and an order directing the property to be sold. The judgment
provided that it was “a first and paramount lien upon the above-described real
estate.”
On April 9, 2012, Chester Paulson obtained a judgment against Mino in
Oregon in an unrelated action for $380,923.57. On June 6, 2012, Chester
1
Appellant Jacqueline Paulson died while this appeal was pending. Her children and
heirs, Kellie Marie Davis, Charles L.F. Paulson, and Erick J.C. Paulson, both individually and as
trustees of the Chester L.F. Paulson Revocable Trust, filed a motion to change the designation of
parties under RAP 3.2(a), which allows substitution of the real party in interest upon the death of
an appellant. Respondent Findahl did not file an opposition to the motion. We grant the motion
to substitute the children and heirs of Jacqueline Paulson as the appellants in both their individual
capacities and as trustees of the Chester L.F. Paulson Revocable Trust.
2
No. 80399-9-I/3
executed an exemplification certificate to enforce the Oregon judgment in
Washington.2
On June 7, 2012, Yarrow Hill voluntarily moved to dismiss the lien
foreclosure action against the remaining defendants without prejudice. In an
accompanying declaration, the attorney for Yarrow Hill stated:
2. On December 22, 2011, a Default Judgment was
entered in this action against Defendants Thomas Mino and Jane
Doe Mino.
3. No other Defendants were served, have appeared, or
have answered.
4. This case as against all remaining Defendants should
be dismissed without prejudice and without costs and fees.
The trial court’s order of dismissal, drafted by Yarrow Hill, states, “Now,
therefore, it is hereby ORDERED, ADJUDGED, AND DECREED that this case
shall be and hereby is dismissed without prejudice and without costs and fees.”
On February 27, 2014, Yarrow Hill filed a motion in the lien foreclosure
action seeking a supplemental judgment for the amount of unpaid assessments
that had accrued since the 2011 default judgment against Mino. Yarrow Hill also
sought a finding that Mino had abandoned the property and asked the court to
terminate the redemption period under RCW 61.12.093.3 Yarrow Hill sent notice
2
We refer to Chester and Jacqueline Paulson by their first names when necessary for
clarity and mean no disrespect in doing so.
3
RCW 61.12.093 provides:
In actions to foreclose mortgages on real property improved by structure or
structures, if the court finds that the mortgagor or his or her successor in interest
has abandoned said property for six months or more, the purchaser at the
sheriff’s sale shall take title in and to such property free from all redemption rights
as provided for in RCW 6.23.010 et seq. upon confirmation of the sheriff’s sale by
the court. Lack of occupancy by, or by authority of, the mortgagor or his or her
successor in interest for a continuous period of six months or more prior to the
date of the decree of foreclosure, coupled with failure to make payment upon the
mortgage obligation within the said six month period, will be prima facie evidence
of abandonment.
3
No. 80399-9-I/4
of the motion for supplemental judgment to Mino by certified mail. In March
2014, the court entered a supplemental judgment of $27,095.30 against Mino
and modified the original judgment to eliminate the right of redemption. The
supplemental judgment provided that aside from the modification to the
redemption period, the “default judgment dated December 22, 2011 remains in
full force and effect.”
The court scheduled a sheriff’s sale for May 23, 2014. Fred Findahl
bought the property at the sheriff’s sale. On August 18, 2014, Findahl filed a
quiet title action against multiple defendants, including Chester and “Jane Doe”
Paulson and their marital community “by reason of a judgment against” Mino
entered in 2007.4 Findahl moved for partial summary judgment, seeking a
determination that the sheriff’s sale eliminated Chester’s 2012 judgment lien.
Findahl also requested that the 2012 order of voluntary dismissal be corrected
nunc pro tunc to reflect that the court dismissed the remaining defendants, not
the Yarrow Hill foreclosure action as a whole.
Chester died during the litigation and his spouse, Jacqueline Paulson,
became the personal representative of his estate. Jacqueline, individually and as
personal representative of Chester’s estate (Paulson), filed a cross motion for
summary judgment dismissal of the quiet title action.
The trial court granted summary judgment for Findahl, finding that the
execution and sheriff’s sale of the property extinguished Paulson’s judgment
4
The trial court at first entered a default judgment quieting title as to the Paulsons but
later vacated the judgment due to lack of proper service.
4
No. 80399-9-I/5
lien.5 The trial court also found that Paulson had no right to notice during the
2011 execution process because Chester filed the lien judgment in 2012, after
the foreclosure action commenced. The trial court denied Paulson’s motion for
summary judgment dismissal. Paulson appeals the grant of summary judgment
for Findahl.
ANALYSIS
Summary judgment is proper if there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law. CR 56(c);
Cotton v. Kronenberg, 111 Wash. App. 258, 264, 44 P.3d 878 (2002). We review a
trial court’s order granting summary judgment de novo. Mohr v. Grantham, 172
Wash. 2d 844, 859, 262 P.3d 490 (2011). In doing so, we engage in the same
inquiry as the trial court and consider the facts and reasonable inferences in a
light most favorable to the nonmoving party. Babcock v. Mason County Fire Dist.
No. 6, 144 Wash. 2d 774, 784, 30 P.3d 1261 (2001).
Paulson acknowledges she had no right to notice of Yarrow Hill’s 2011
judicial foreclosure action because she was not a lienholder of record when
Yarrow Hill filed the action. And Paulson does not challenge the adequacy of
notice during the execution process. Instead, Paulson makes several arguments
about why she had a right to notice of Yarrow Hill’s 2014 motion for supplemental
judgment. Citing U.S. Bank of Washington v. Hursey, 116 Wash. 2d 522, 806 P.2d
245 (1991), she argues that because she was not given notice, the sheriff’s sale
5
The record contains a quitclaim deed signed by Mino on August 11, 2017 conveying his
interest in the property to Paulson. The trial court found that Mino could not have conveyed any
interest in the property to Paulson through the 2017 quitclaim deed because the 2014 sheriff’s
sale extinguished his interest. Paulson does not challenge this finding.
5
No. 80399-9-I/6
did not extinguish her judgment lien, and so the trial court erred in granting
summary judgment in Findahl’s quiet title action.6
Paulson first argues that the voluntary order of dismissal dismissed
Yarrow Hill’s lien foreclosure action as a whole. She contends that the voluntary
dismissal of a complaint renders the proceedings “a nullity,” and thus Yarrow Hill
could obtain a supplemental judgment only by filing a new action and serving all
lienholders of record. But the court entered the order dismissing the entire lien
foreclosure action without prejudice in error. It is clear from Yarrow Hill’s motion
that the relief they requested was to dismiss the action only as to any remaining
defendants. At the summary judgment hearing, the trial court entered an order
correcting the dismissal order nunc pro tunc to reflect the court’s intention.
“[W]here the record demonstrates that the court intended to take, and believed it
was taking, a particular action only to have that action thwarted by inartful
drafting,” it properly enters a nunc pro tunc order to reflect that intention. In re
Pers. Restraint of Hendrickson, 165 Wash. 2d 474, 479, 198 P.3d 1029 (2009).
Paulson does not challenge the trial court’s authority to do so.
In the alternative, Paulson argues the court lacked authority to enter the
supplemental judgment. Paulson contends that once Yarrow Hill voluntarily
dismissed the remaining defendants, the judgment became a final order and
Yarrow Hill could not seek additional relief without moving to alter or vacate the
6
Hursey held that a foreclosure of a senior lien extinguishes junior interests only when
the foreclosure action names the holders of those interests as defendants. Hursey, 116 Wash. 2d at
526.
6
No. 80399-9-I/7
judgment pursuant to CR 59(h) or CR 60.7 But Paulson cites no Washington
authority to support this proposition. Furthermore, Yarrow Hill did not seek to
alter or amend the original judgment. Rather, Yarrow Hill sought additional
postjudgment relief—a second judgment for unpaid assessments that had
accrued since the entry of the first judgment and waiver of the redemption period
because Mino had abandoned the property since entry of the first judgment.
Neither CR 59(h) nor CR 60 would apply here.
Finally, Paulson contends that once Yarrow Hill sought a judgment for
unpaid assessments for the years 2012, 2013, and 2014, she had a right to
notice because her 2012 judgment lien was senior in priority. But Paulson cites
no authority in support of the proposition that a foreclosing party must give notice
to lienholders who record their interest after the foreclosure action commences.
Moreover, a homeowner assessment lien’s priority date relates back to the date
the association records its CCRs. Klahanie Ass’n v. Sundance at Klahanie
Condo. Ass’n, 1 Wash. App. 2d 874, 880, 407 P.3d 1191 (2017), review denied,
190 Wash. 2d 1015, 415 P.3d 1192 (2018). “[O]nce a lien for future advances is
recorded, it takes priority over subsequently recorded liens, even where an
obligation under the lien for future advances does not in fact arise until after the
subsequent lien is recorded.” BAC Home Loans Servicing, LP v. Fulbright, 180
Wash. 2d 754, 763, 328 P.3d 895 (2014). Because Yarrow Hill recorded the CCRs
7
CR 59(h) authorizes the trial court to alter or amend a judgment if a motion is brought
within 10 days after entry of the judgment. Under CR 59(h), the trial court may “modify a
judgment to make it conform to the judgment intended to be entered.” Seattle-First Nat’l Bank
Connell Branch v. Treiber, 13 Wash. App. 478, 480-81, 534 P.2d 1376 (1975). CR 60 provides
several grounds for vacation of a judgment, including mistake, excusable neglect, fraud, or newly
discovered evidence.
7
No. 80399-9-I/8
in 1986, all of the delinquent assessments related back to that date and had
priority for foreclosure purposes over Paulson’s 2012 judgment against Mino.
Because Paulson fails to establish a genuine issue of material fact to
defeat Findahl’s quiet title claim and Findahl is entitled to judgment as a matter of
law, we affirm the trial court’s summary judgment order in favor of Findahl.
WE CONCUR:
8