Opinion
No. 31370-7-II
Filed: April 26, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of Grays Harbor County. Docket No: 02-2-00386-5. Judgment or order under review. Date filed: 12/22/2003. Judge signing: Hon. F Mark McCauley.
Counsel for Appellant(s), Jack Lee Burtch, Attorney at Law, 218 N Broadway St, PO Box a, Aberdeen, WA 98520-0247.
Counsel for Respondent(s), Gregory B. Durr, Attorney at Law, Old World Bldg Ste 103, 100 S I St, Aberdeen, WA 98520-6502.
Karamjit Cheema appeals from a decision that he was not entitled to equitable relief from a nonjudicial foreclosure. We affirm.
FACTS
In January 2000, Daniel and Robbin Zembal sold a commercial lot located at 608 W. 1st Street, Aberdeen, Washington, in Grays Harbor County to Karamjit and Darlina Cheema for $18,000. Cheema is originally from India but is now a naturalized United States citizen. The Cheemas gave the Zembals a $5,000 deposit. The Zembals took a note from the Cheemas for $13,000, secured by a duly recorded deed of trust. The first required monthly payment was due in February 2000.
Since the beginning of this action, Karamjit and Darlina have divorced. Only Karamjit Cheema is involved with this appeal.
By September 2001, the Cheemas failed to pay nine payments to the Zembals. The Zembals attempted to contact the Cheemas on several occasions about the delinquent payments but the Cheemas did not return their phone calls. Also in September, the Zembals learned that Lakeside Industries had sued them in Grays Harbor Superior Court to foreclose a mechanic's lien on property they had sold to the Cheemas, for breach of contract, and for a dishonored check. The Zembals also learned that the Cheemas had failed to pay real estate taxes on the property in 2000 and 2001, and allowed a lien to the Department of Social and Health Services for $40,000 to attach to the property.
After Lakeside Industries served the Zembals with a complaint, the Zembals commenced a nonjudicial foreclosure action. Nicholas Castleberry, a process server, posted the notice of default on the Cheema's property. The Cheemas made no effort to cure the defaults.
On February 1, 2002, the property was sold following a duly recorded notice of sale and notice of foreclosure. The sale price was $14,944.12, the remaining amount of the debt, together with foreclosure costs and fees to that date. Before the foreclosure sale, the trustee received a letter from Ms. Cheema requesting that the Zembals take part of the money owed to them and that the Cheemas would pay the rest at some future date after the sale.
The Zembals gave the Cheemas 20-days' notice of their intent to take possession of the property following the sale. Then, on February 21, the Zembals served the Cheemas with a three-day notice to vacate. On February 26, Ms. Cheema wrote to counsel indicating that she wanted the Zembals to work with her to resolve the property issue.
When the Cheemas refused to vacate the property, the Zembals filed an eviction action. After several hearings, the trial court entered an order granting possession of the property to the Zembals. The Cheemas deposited $11,000 into the court registry for security damages.
During this time, Cheema filed the current action. In his complaint, he admitted non-payment of the promissory note to the Zembals. He also alleged that: (1) his wife was in charge of paying the bills and failed to do so; (2) that a disparity in price existed between the paid price for the property at the foreclosure sale and the value of the property; (3) that he read English poorly; and (4) that he had no notice of the foreclosure sale. Cheema asserted that the foreclosure was a fraudulent transfer and constructive fraud, and that the court should set aside the sale.
The Zembals moved for summary judgment, arguing that Cheema was not entitled to relief. Cheema did not move for summary judgment. The trial court denied the Zembals' motion for summary judgment and in a letter decision granted Cheema the relief requested in his complaint.
The Zembals filed a motion for reconsideration. They argued that had they known the trial court would grant summary judgment to Cheema they would have refuted several of Cheema's factual assertions. The court granted the motion for reconsideration and held a bench trial.
At trial, Cheema testified that his wife ran the business because he had a hard time reading and understanding English. Cheema denied receiving notice of the foreclosure. He believed the value of the building was $110,000.
The Zembals believed the property was worth between $35,000 and $50,000 at the time of foreclosure. Although a tax statement showed the assessed value of the property was over $71,000, that amount did not take into account the poor condition of the property at the time of foreclosure. It took the Zembals four months to get the property in a usable condition.
Nicholas Castleberry, the process server who posted the notice of default on Cheema's property, also testified. After posting the notice, he went inside the business and told Cheema why he was there. Cheema told Castleberry that he did not understand why Castleberry had posted the notice.
Susan Ruder, one of Cheema's coworkers at Grays Harbor Transit, testified that a bus driver had to speak English in order to communicate any problems while driving. Ruder further stated it was important for a bus driver to speak and understand English.
Dan Zembal testified that he and Cheema negotiated the purchase and sale contract while their wives talked. He also testified that the Cheemas paid three payments the first month of the contract, after that, the Cheemas only paid sporadically. Zembal testified that he called the Cheemas at least three times and left messages but that the Cheemas never returned his phone calls.
The trial court rejected all of Cheema's claims and quieted title in the Zembals. Cheema appeals.
I. Motion for Reconsideration
Cheema first argues that the Zembals' motion for reconsideration did not meet CR 59's requirements. We disagree.
A motion for reconsideration based on CR 59 is within the trial court's discretion to decide. Perry v. Hamilton, 51 Wn. App. 936, 938, 756 P.2d 150, review denied, 111 Wn.2d 1017 (1988). We review the trial court's decision for a manifest abuse of discretion. Perry, 51 Wn. App. at 938. A trial court abuses its discretion when its decision rests on untenable reasons or untenable grounds. Telford v. Thurston County Bd. of Comm'rs, 95 Wn. App. 149, 166, 974 P.2d 886, review denied, 138 Wn.2d 1015 (1999).
The Zembals moved for summary judgment; Cheema did not move for summary judgment. But based on the facts of the case, the trial court entered summary judgment in Cheema's favor. In their motion for reconsideration, the Zembals admitted they did not dispute the price/value discrepancy by submitting documents to the court because they believed that if the court denied their motion, it would set the matter for trial.
Cheema argued in his complaint that because of the great disparity in the amount owed to the Zembals and the value of the property, constructive fraud occurred. But Cheema failed to show any irregularity in the foreclosure proceedings. The Zembals refuted Cheema's argument in their summary judgment motion showing that an inadequate price for property by itself is insufficient reason for a court to set aside the sale. Steward v. Good, 51 Wn. App. 509, 514, 754 P.2d 150, review denied, 111 Wn.2d 1004 (1988).
The trial court erred when it granted summary judgment to Cheema. When it granted the Zembals' motion for reconsideration, it corrected its earlier error. Thus, the trial court did not abuse its discretion by reconsidering its decision. In this case, substantial justice required the court to reconsider its decision, and it did not abuse its discretion by doing so. CR 59 (9).
II. Findings of Fact
Cheema next asserts that substantial evidence does not support the findings of fact and that the court incorrectly denominated some conclusions of law. His assertions are meritless and thus fail.
We review findings of fact to determine whether substantial evidence supports them. Landmark Dev., Inc., v. City of Roy, 138 Wn.2d 561, 573, 980 P.2d 1234 (1999). Substantial evidence is `evidence in sufficient quantum to persuade a fair-minded, rational person of the truth of the declared premise.' Helman v. Sacred Heart Hosp., 62 Wn.2d 136, 147, 381 P.2d 605 (1963) (citing Ruff v. Fruit Delivery Co., 22 Wn.2d 708, 157 P.2d 730 (1945)). After we review the findings of fact, we then look to determine if the findings of fact support the conclusions of law. Landmark Dev., 138 Wn.2d at 573.
Finding of Fact 2:
The Zembals took back a note from the Cheemas in the amount of $13,000.00, which they secured with a duly recorded deed of trust. The note required the first payment to be made in February, 2000, with monthly payments thereafter.
Clerk's Papers (CP) at 240.
Cheema contends the court should have included the purchase price of the property and his down payment. He asserts this information was relevant to the court's decision but he does not explain its relevancy. Cheema testified to the purchase price of the property and no one disputed it. Further, this cost was irrelevant to the foreclosure; the Cheemas' failure to make payments to the Zembals led to the foreclosure. The court correctly stated the facts relevant to the foreclosure action.
Finding of Fact 3:
Defendants Cheema only made three payments the first year; by September, 2001, they were behind by nine payments. In September, 2001, the Zembals learned they had been sued by Lakeside Industries for foreclosure of a mechanics' lien on the property they had sold to the Cheemas, and for the Cheemas' breach of contract and dishonored check in Grays Harbor Superior Court No. 01-2-1057-0.
CP at 240.
Cheema argues that the only relevant sentence in this finding is the first sentence. He asserts that the Zembals never had to pay any of his debts. But the finding does not suggest that the Zembals paid Cheema's debts. The finding is simply a recitation of the facts that led to the nonjudicial foreclosure.
Findings of Fact 4:
The Zembals commenced a non-judicial foreclosure action by Notice of Default on September 20, 2001. Following service of the Notice of Default the Cheemas made no efforts to cure the defaults and, after the Notice of Sale and Notice of Foreclosure had been duly recorded and served, the sale took place on February 1, 2002. The sale price was $14,944.12, which was the remaining principal amount of the debt together with accrued interest, foreclosure costs and fees to that date.
CP at 240.
Cheema objects to the statement that he `made no efforts to cure the defaults.' Br. of Appellant at 14; CP at 240. He argues that he did not find out about the foreclosure until his wife told him. Although Cheema testified that he never received the notice, Castleberry's testimony contradicted him. It was in the court's discretion to accept Castleberry's testimony as true instead of Cheema's.
Finding of Fact 5:
Following the sale, the Zembals gave the Cheemas twenty days' notice of their intent to take possession of the property. On February 21, 2002, a three-day notice to vacate was served on the Cheemas. The Zembals filed an eviction action against the Cheemas in Grays Harbor County Superior Court No. 02-2-281-8 in which an order was entered on show cause granting possession of the property to the Zembals. The Cheemas unsuccessfully pressed the same claims in that case, i.e., that the disparity between the price at sale and the value of the property was so great that equity required a setting aside of the foreclosure sale and deed.
CP at 240-41.
Cheema contends this finding is not relevant to the case. Again, the trial court is reciting the facts that led to the foreclosure. Moreover, Dan Zembal testified to these facts at trial. Substantial evidence supported this finding.
Finding of Fact 6:
Plaintiff Cheema admits in his complaint filed herein the non-payment of the promissory note to the Zembals and he bases his case for equity on his assertion that Mrs. Cheema was the person charged in the relationship with paying the bills and that she had failed to do it, that there was a disparity between the price paid for the property by the Zembals at the sale and the value of the property, and that Mr. Cheema's language difficulties prevented him from understanding the proceedings.
CP at 241.
This finding also simply recites the facts of this case. Cheema testified to these facts during trial. Substantial evidence supported them.
Finding of Fact 7:
Mr. Cheema spoke with Nicholas Castleberry, the process server, when the Notice of Default was posted on the property. Mr. Cheema understood that he and his wife were in default on the obligation owed to the Zembals by the time the Notice of Default was posted. Mrs. Cheema was fully aware of the default. Any lack of understanding on Mr. Cheema's part was due to his own inattention, and his failure to communicate with his wife regarding their financial matters. Mrs. Cheema was primarily in charge of the couple's finances when the Cheemas stopped making their payments to the Zembals.
CP at 241.
Cheema argues that nothing in the record supports this finding. The evidence shows that Cheema talked with Castleberry after Castleberry posted the notice of default. Cheema also admitted in his complaint that his wife knew about the foreclosure proceedings. Substantial evidence supported the trial court's finding.
Finding of Fact 8:
The fair market value of the property was between $55,000.00 and $60,000.00 at the time of the trustee's sale. The actual value of the property was lower than its assessed value of $70,000.00 because it had been poorly maintained. The disparity between the trustee's sale price and the fair market value of the property at the time of sale was not nearly as great as represented by Mr. Cheema prior to trial and the disparity shown does not form a basis for the exercise of the Court's equity jurisdiction.
CP at 241-42.
Cheema again asserts that evidence does not support this finding. Dan Zembal submitted a tax statement showing the assessed value of the building as $71,265. Zembal did not believe that the property was worth that much at the time he took possession upon foreclosure because of the many repairs needed to fix the building. Zembal also testified about the repairs and remodeling he had to do. The trial court considered all these facts and substantial evidence supports the court's finding.
Finding of Fact 9:
There were no procedural defects or irregularities in the non-judicial foreclosure proceeding or trustee's sale conducted in this case and no evidence of any such defects was presented at trial; the beneficiaries did nothing to contribute to the Cheemas' default.
CP at 242.
Cheema contends that the Zembals made no effort to contact him about the default. He had the burden to show a procedural defect in the nonjudicial foreclosure sale and he failed to meet that burden. The testimony at trial was that the Zembals tried several times to contact the Cheemas, leaving messages the Cheemas did not return. Substantial evidence supported this finding.
Finding of Fact 10:
Marital discord probably caused the Cheemas to neglect their finances as their marriage was in a state of turmoil at the time of the foreclosure action. The Cheemas had other financial problems during the time in question, which may have distracted their attention from their obligation on the property.
CP at 242.
Cheema asserts that he and his wife's financial difficulties during the time of the foreclosure was not relevant to the case. The evidence shows several unpaid bills the Cheemas incurred as well as another foreclosure that occurred before the sale. Further, Cheema testified that he and his wife were separated and getting a divorce. The evidence supported this finding.
Finding of Fact 11:
Mr. Cheema's claim that he did not understand legal matters is not supported by the evidence: he sought help on other legal matters, he was able to understand English well enough to hold down a job as a public bus driver that required good communication skills, and he was an owner of a taxi company.
CP at 242.
Cheema argues that no evidence supports this finding. Susan Ruder, Cheema's coworker at Grays Harbor Transit, testified that Cheema had no difficulty understanding English or reading it. Moreover, as a public bus driver, it was important that he understand English in order to safely operate his bus. Further, Mark Carlin, the operations supervisor for Grays Harbor Transit Authority, testified that bus drivers had to be able to understand English in order to read schedules and run cards. Carlin further stated that Cheema understood English. Substantial evidence supported this finding.
Finding of Fact 13:
The Zembals' were bona fide purchasers for value at the trustee's sale and no evidence was offered that the Zembals were not purchasers `who without notice of another's claim of right to, or equity in, the property prior to [their] acquisition of title, have paid the vendor a valuable consideration.'
CP at 242.
Cheema asserts this finding was actually a conclusion of law. But Cheema produced no evidence to refute that the Zembals were not bona fide purchasers, and the finding of fact is not erroneous.
Finding of Fact 14:
The equities do not favor Mr. Cheema in this action. The Zembals did nothing wrong. The trustee followed the law in the conduct of the foreclosure action and the Zembals were the highest bidder at a properly conducted trustee's sale. The Cheemas failed to pay their debts and they ignored the foreclosure proceeding for more than four months. They failed to avail themselves of the presale remedies available to them under the Non-Judicial ForeclosureAct, RCW 61.24.et[.] seq.
CP at 243.
Cheema argues that this finding is both a conclusion of law and a finding of fact. The finding is actually a recitation of the facts in the case. Cheema failed to produce evidence of any procedural defect in the foreclosure sale that would necessitate the sale being set aside. Substantial evidence also supported this finding.
Finding of Fact 15:
The Zembals incurred reasonable attorney fees and costs in defense of this action in the amount of $10,795.00. This amount includes one and one-half hours for preparation of documents for entry of the judgment and one hour for presentation of the judgment. Attorney time was billed at the rate of $150 per hour. That rate is reasonable for attorneys with the experience of Defendants' counsel in this area. The amount of attorney time expended on the matter was reasonable considering the complexities of the action and the length of the trial herein.
CP at 243.
Cheema states in his brief that there is no dispute regarding the reasonableness of attorney fees. The issue is whether the court properly awarded attorney fees in the case. The award of attorney fees was proper because both the promissory note and the deed of trust provided for attorney fees if a dispute arose. Here, the Zembals had to sue Cheema in order to recover their lot. The trial court merely recited how it decided on the amount of attorney fees. The finding is not a conclusion of law.
Substantial evidence supports the trial court's findings of fact. Thus, Cheema's arguments regarding the findings of fact fail.
III. Equitable Relief
Cheema next contends the trial court erred by granting the Zembals relief in equity. We disagree.
Cheema cites to several inapposite cases. In Dexter Horton Bldg, Co. v. King County, 10 Wn.2d 186, 217, 116 P.2d 507 (1941), the Supreme Court held that without a showing of arbitrary or capricious action, the respondent was not entitled to recovery unless a great disparity between the valuation of the building fixed by the tax commission and the valuation found by the court existed and thus amounted to constructive fraud. The court held that the burden of proof rests on the property owner to show by clear and convincing evidence that the property assessment was so excessive that it amounted to constructive fraud. Dexter Horton Bldg., 10 Wn.2d at 217. That situation did not exist in the present case.
Cheema also relies on Malo v. Anderson, 62 Wn.2d 813, 384 P.2d 867 (1963). In Malo, a wife sought to quiet title to property against her ex-husband. Malo, 62 Wn.2d at 814. In the marriage dissolution proceedings, the court awarded the realty to the husband but the court ordered him to pay his wife $2,000 in $35 a month payments. Malo, 62 Wn.2d at 814. The wife subsequently bought the property at an execution sale and later sought to quiet title to the property. Malo, 62 Wn.2d at 814. The superior court granted her summary judgment motion, holding that the husband had no right, title or interest in the property. Malo, 62 Wn.2d at 814.
On appeal, our Supreme Court held that the wife had not come to court with `clean hands' because the husband had no notice of the sheriff's sale, and the wife waited until the husband had paid the mortgage debt before taking action. Malo, 62 Wn.2d at 816. The court held that equity did not extend to the wife because a person seeking equity must also act equitably. Malo, 62 Wn.2d at 817.
But Malo is not relevant here. Cheema failed to show that the Zembals acted inequitably. He received notice of the foreclosure sale but took no action to stop the sale. Equity does not require that this court set aside the judicial sale when Cheema knew about the judicial sale but failed to act. Our recent decision in In re Marriage of Kaseburg, No. 31263-8-II, 2005 WL 647502 (Wash.Ct.App. Mar. 22, 2005), is dispositive. Failure to act after receiving notice of a foreclosure sale precludes review. Kaseburg, 2005 WL 647502, at *6. Thus, Cheema waived the opportunity to appeal this issue.
IV. Attorney Fees Award
Cheema's final argument is that no authority existed for the trial court to award reasonable attorney fees to the Zembals. This argument also fails.
The equity action arose from two contracts that contain attorney fee provisions: the promissory note and the deed of trust. Cheema signed both documents.
The promissory note states, `[i]f action be instituted on this note, Maker agrees to pay such sum as the Court may fix as attorney's fees.' Br. of Resp'ts at Appendix 4. Language in the deed of trust states that the grantor agrees `[t]o pay all costs, fees, and expenses in connection with this Deed of Trust, including the expenses of the Trustee incurred in enforcing the obligation secured hereby and Trustee's and attorney's fees actually incurred, as provided by statute.' Br. of Resp'ts at Appendix 5.
Under RAP 18.1, both the Zembals and Cheema ask this court for attorney fees on appeal. Because the Zembals are the substantially prevailing party on appeal, they are entitled to attorney fees upon compliance with RAP 18.1(d).
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
MORGAN, J. and QUINN-BRINTNALL, C.J., Concur.