Author Archive

WA Legal Roundup – Division I: Get out the Nitroglycerine, Bankers! Condo Owners Associations’ superpriority lien status is coming for you!

February 23, 2012

So, there are the occasional court opinions that I read with admiration for the subtlety of reasoning, the fine but important distinctions drawn by the court, and/or the simultaneous adherence to the concept of judicial restraint while advancing the cause of justice.  GMAC v. Summerhill Village Homeowners Ass’n is not one of those opinions.  Summerhill Village is more like a brick, thrown through a window, and smacking me upside the head.

Around the watercoolers of bank lawyers’ offices, the scuttlebutt about RCW 64.34.364 had been that perhaps there is an ambiguity in the state.  Certainly, the legislature could not have intended substantial (hundreds of thousands of dollars) security interests in condos could simply be wiped out at judicial foreclosure by a junior lien arising out of unpaid condominium dues (couple of thousand dollars)!  Even if it did, certainly the senior lienholder that got jumped in priority would have the right to redeem, that is, to pay off the condo association after sale went through to protect its position, right?  Well, Division 1 has spoken, loudly, and sorry senior lienholders, you are up the proverbial creek if you fail to respond to the judicial foreclosure.  The court says that the phrase “subsequent in time” means just that.  Time doesn’t equal “right,” even if the structure of the statute is decidedly first in time, first in right.

Here’s how it works.  Bank A loans a large amount of cash to a borrower for the purpose of buying a condo.  Part of the deal with a condo is that the borrower/owner then pays dues to an association, and these dues go to maintenance of the common areas.  Well, the problem was that when borrowers/owners got into financial trouble, the first thing they stopped paying was these dues.  Sure, the association could lien their property, but so what?  The association is not going to take an owner into foreclosure when there is a giant lien ahead of it on the priority list.  The statute allows them to jump up in priority and to take the property to foreclosure.  The hope is that the senior lienholder would see the lawsuit and pay off the condo association to protect their interest.

And hey man, I get it.  Occupy the senior lienholders, those greedy banksters!  After all, if they were served with a lawsuit, and they sat on their rights, then screw ‘em.  Yeah man, screw ‘em.  Only, it’s not that simple.   The troublesome little detail is that the associations have this sneaky way of serving MERS if it was listed as the “beneficiary” on the senior deed of trust, knowing full well that MERS wouldn’t forward on the summons and complaint the the real party in interest.  So the senior is blissfully unaware, until the sheriff’s sale, when its large stake in the property vanishes!  The association just bought the property for pennies on the dollar!  Only you can’t buy it back because even though your rights were inferior to the association, you acquired them before the condo dues lien attached.  Yay, windfall!

Of course, this opinion isn’t really concerned with any of this.  The brick through the window is meant for the legislature, so that they will fix this obvious loophole in the statute.  Right now, a mortgage banker is choking down some heart pills and calling his lobbyist…

 

Huzzah!

August 4, 2010

Prop 8 overturned!

You can read the full text of the opinion here.  The 9th Circuit will be next, and I have a feeling this is headed to the Supreme Court.  Maybe we can get some more sodomy–>pedophilia–>necrophilia slippery slope analysis from the very serious Antonin Scalia.

Breaking: Death Penalties Move Forward

July 29, 2010

I assume some of you have seen this.  The Supreme Court of Washington has upheld the state’s lethal injection procedures.  Their decision lifts the stay on Cal Brown’s execution.

Happy Birthday, Fearless Leader!

July 25, 2010

Many of you may know this, but the man, myth, and legend behind this here corner of the blogotubes had a birthday today.

Happy Birthday, Justin!

Opinion letters to Agencies are not challengeable “final agency actions” under the WAPA

July 25, 2010

Teamsters Local Union No. 117 v. State Human Rights Commission

The Department of Corrections (DOC) solicited an opinion from the Human Rights Commission (HRC) on whether gender-based hiring criteria could be used for personnel at a specific correctional facility.  In other words, the DOC wanted to know whether it would be cool with everyone if it didn’t hire men to do the pat-downs and shower checks at the women’s prisons.

This opinion says more about the underlying facts of a current controversy than it does about the law.  The holding and analysis are straightforward.  Under the Washington Administrative Procedure Act, a justiciable controversy does not arise before “final agency action.”  Prior cases had established that interpretive letters like the one here, do not constitute final agency action.  Open and shut, as one might say.

Nonetheless, the opinion letter opens up interesting future questions.  The HRC opined that gender may be a bona fide occupational qualification, under certain circumstances, like preventing prison guards from getting free looks at lady parts, and not subject to the Washington Law Against Discrimination.  When the DOC finally gets around to issuing its policies and guidelines, then the Teamsters can sue again.

Jimmy Hoffa is rolling over under the end zone at Giants Stadium.

Court of Appeals, Div. II: The Dead Hand picks the wrong plaintiff

May 27, 2010

Lakewood Racquet Club Inc., v. Jensen

In Lakewood Racquet Club Inc., the court of appeals denies standing to sue for heirs of a long deceased landowner.  This patriarch, a Mr. Orr, entered into real estate agreements with the Racquet Club back in the 60s, selling them part of his land while obtaining a restrictive covenant preventing the Club from building any residential units on the property.

When the Club decided to build condos and townhomes on its property, the diasporated children of the Patriarch sued to enforce the covenants.  Each was removed from the land in some way.  One child lived in Nevada, another in Pierce County, and one with no identifiable location in the record.

Interestingly, this case presented a question of first impression in Washington.  To wit, whether covenantees later removed from the land maintained their right to enforce the covenant.  From that question, the ultimate question of the case can be answered: whether the covenantees suffered and “injury in fact” by the breach of the covenant.  The first question turns on whether the benefit is appurtenant or in gross.  The court held that the benefit was specific to the neighboring parcels to the Club; it is appurtenant to those parcels.  As such, only those with an ownership interest in those parcels would have a justiciable claim to enforce the covenant.  Those without will lack standing to sue for a declaratory judgment.

The court was careful to state that its holding did not foreclose all divested covenantees’ enforcement actions, but the implication is that in most cases they will lack standing.

Court of Appeals – Div. II: GAL Petitioners not on the hook for costs and attorney fees GAL-initiated action

May 20, 2010

Matthews v. Sherwood Assisted Living, Inc.

Ah, human greed and cruelty, why are you so prevalent?  Matthews arose out of the actions of two relatives of an incapacitated elder living in an assisted living facility.  After a State Ombudsman’s investigation and report revealed (the court uses the kinder word “suggested”) that the relatives were siphoning money off of grampa, an employee of the facility petitioned the court to appoint a guardian ad-litem (GAL).

Now, I don’t really want to speculate beyond the facts presented in the opinion, but the situation had reached that point, it must have been quite bad.  Nonetheless, the relatives doubled-down on the greed by trying to move Mr. Matthews to California, out of his erstwhile home of six years, and the GAL petitioned for a temporary restraining order. (TRO)  Because a TRO petition is to be accompanied by a bond, the trial court ordered the facility to one up in the amount of $10,000.  When the facility refused, the court denied the TRO (allowing the relatives to move grampa to California), dismissed the GAL petition, and awarded attorney fees to the relatives.  Ouch.

Thankfully, Division II don’t play that, and reversed the trial court:

We hold that a GAL appointed under RCW 11.96A.160 or former RCW 11.88.010 has an agency relationship with the court much like a permanent guardian or limited guardian appointed under the Trust and Estate Dispute Resolution Act (TEDRA) (ch. 11.96A RCW) has with the court. . . . A GAL is not an agent of a guardianship petitioner.  A GAL makes recommendations and takes actions free of a petitioning parties’ vested interests.  See former RCW 11.88.090(3)(a).  Thus, the petitioner for a guardianship cannot be held liable for the GAL’s actions taken during the guardianship petitioning process and vice versa.

This decision makes sense on a number of levels, but the main point is that unless an interested third party is petitioning for a GAL unreasonably or in bad faith, isn’t this exactly the outcome we as a society want to see?  I would think so, and I’m glad the court read the statutes that way.

Court of Appeals: Div. II – County’s exaction necesitates participation in private lawsuit under CR 19

February 18, 2010

Graziano v. Woodfield Neighborhood Homeowners Assoc.

Mr. Graziano bought a lot within the Woodfield Estates Subdivision at a tax foreclosure sale.  The neighborhood association blocked his permit application on the grounds that his lot is restricted to recreational and park use.  He sued and lost on summary judgment.  The court of appeals reversed and remanded because neither party joined a necessary party under CR 19, namely Pierce County.

Although this case is a fairly straightforward application of basic civil procedure, the reasoning has some implications that merit discussion.  The court reasoned that Pierce County had an interest in “requiring that Woodfield provide recreational opportunities for the new subdivision’s families on site,” and as such Mr. Graziano’s plea for quiet title could not be resolved without the county.  The County’s interest began when it demanded, as a condition for plat approval, the dedication of a certain amount of space in the neighborhood for recreation and park facilities.  When a County does this, it’s called an exaction: where a condition for development is imposed on a parcel of land that requires part of the land to be dedicated to public use.

It is unclear at this point how wide reaching this holding may be.  Possibly, it will be exceedingly rare because most people probably don’t go around buying deed restricted property in tax foreclosure sales.  On the other hand, it’s possible that this sort of thing happens all of the time.  Further, considering how many deed restrictions stem from public regulation, it is possible that Counties will have to be involved in a significantly larger number of lawsuits dealing with homeowners and homeowners’ associations.

Washington Legal Roundup: Supreme Court

December 21, 2009

Gold Star Resorts, Inc. v. Futurewise
Despite the name, this case has nothing to do with resorts, gold, or stars.  Rather, this case represents another chapter in a longstanding challenge to Whatcom County’s comprehensive plan.  Counties planning under the Growth Management Act (GMA) must revisit and update their comprehensive plans every seven years.  When the time for update comes, the revised plan must confirm not only to the original GMA, but any and all amendments made thereto in the intervening years.

Whatcom County failed to properly conform its comprehensive plan revisions to a specific GMA amendment dealing with rural development, and so that portion of its comprehensive plan was struck down by the Court.  The GMA allows for something called a “LAMIRD,”  which stands for a limited area of more intense rural development.  LAMIRDS are pre-existing areas of development, such as a rural crossroad, or an industrial cluster, or an existing rural neighborhood.  The LAMIRD provisions accept the reality that these developments dot the landscape,  but instructs counties to plan for their containment within existing “logical boundaries.”  Where Whatcom County went astray was in its failure to

consider the statutory LAMIRD criteria when defining its designations for more intensely developed rural areas and . . . attempt to analyze the logical outer boundaries of the areas under RCW 36.70A.070(5)(d).

So, Whatcom County must revise it’s comprehensive plan to conform to the LAMIRD provisions in the GMA.

Moreover, the Court applied it’s recent holding in Thurston County v. Western Washington Growth Management Hearings Board, 164 Wn.2d 329, 190 P.3d 38 (2008) barring “bright-line” density rules to reverse the court of appeals and remand back to board for further consideration.  In brief, a Growth Management Hearings Board is no longer allowed to judge a county’s comprehensive plans rural development component by a bright-line density computation.  Here, the Board applied a bright-line of one dwelling unit per five acres to invalidate Whatcom County’s rural plan portion.  The standard now is whether the densities placed in the plan were clearly erroneous under the GMA.  Because no determination was made under that standard, the case must be remanded to the board.

Washington Legal Roundup – Land Use News

November 16, 2009

 

The Growth Management Hearings Boards (Boards) are most likely consolidating into one board in an effort to improve efficiency and save money.  The boards recently commissioned a study that recommended as such, and have provided the report to the governor. (caution: large PDF) I recently attended the November 12th meeting of the Puget Sound Regional Council’s Growth Management Advisory Board, and it would seem that this consolidation is moving forward.

The proposed changes include cutting the number of board members from nine to seven, but to retain “regional panels.”  As the Boards acknowledge, their workload is going to grow, not shrink over the coming years, so the impact of consolidation may slow the resolution of several growth management appeals and other matters over which the Boards have jurisdiction.

Also, one of the interesting recommendations (again, nothing is set in stone yet) is to bring the consolidated board within the Environmental Hearings Office (EHO), which currently houses the Pollution Control Hearings Board, the Shorelines Hearings Board, the Forest Practices Appeals Board, Hydraulic Appeals Board, and the Environmental and Land Use Hearings Board.  Perhaps if this recommendation goes through, we could expect more consolidation within the EHO at a later date.  However, I expect that this recommendation is meeting with resistance from, in part, intra-agency resistance between Department of Ecology, Department of Natural Resources, and Department of Commerce.

More to come as this issue develops.


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