Frontier Federal Savings & Loan Association v. Douglass

853 P.2d 553, 123 Idaho 808, 1993 Ida. LEXIS 96

• Court: Idaho Supreme Court
• Decided: April 23, 1993
• Docket: 18748
• Status: Published

Opinions

McDEVITT, Chief Justice.

BACKGROUND AND PRIOR PROCEEDINGS

On February 3, 1989, respondent, Frontier Federal Savings and Loan Association (“Frontier”), filed a complaint against appellants, Harlan D. Douglass, Maxine H. Douglass, and Steven J. Hassing (“Douglass and Hassing”). Frontier alleged that Douglass and Hassing executed a note and deed of trust upon certain real property in Kootenai County, Idaho, dated October 3, 1985, to secure indebtedness to Frontier in the amount of $1,300,000.00. On July 1, 1988, Frontier alleged that Douglass and Hassing failed to pay the monthly installment due on the note. As a result, Frontier effected a nonjudicial foreclosure of the deed of trust, and held a trustee’s sale on February 2, 1989. At the time of sale, Frontier alleged the following amounts due on the note: (1) principal in the amount of $1,293,608.21; (2) interest in the amount of $84,536.49; and (3) late charges in the amount of $3,211.88. In addition, Frontier alleged that it incurred the following expenses: (1) taxes and insurance on the real property in the amount of $4,235.37; (2) trustee fees and costs in the amount of $4,094.30; (3) appraisal fees in the amount of $3,200.00; and (4) attorney fees in the amount of $600.00.

Frontier purchased the real property at the trustee’s sale for $869,000.00. Applying this figure and the $20,606.01 in net rents received from the property to the above-listed amounts due and fees and costs incurred, Frontier alleged that Douglass and Hassing still owed $500,680.24 plus interest from February 2, 1989, to Frontier. Frontier also requested $25,-000.00 in attorney fees pursuant to the term of the note.

After the complaint was filed, both parties moved for summary judgment. The district court granted Frontier’s motion for summary judgment, and entered an order requiring Douglass and Hassing to pay Frontier $241,811.46, interest at $36.65 per day from May 1, 1990, until the date of the judgment, and attorney fees and costs.

ISSUES RAISED ON APPEAL

Douglass and Hassing raise a number of issues on appeal to this Court. First, they argue that Frontier (the beneficiary) was precluded from recovering a statutory deficiency judgment allowed by I.C. § 45-1512 by waiver or estoppel because the notice of trustee’s sale stated that “[t]he beneficiary elects to sell or cause the trust property to be sold to satisfy said obligation____” (Emphasis appellant’s.) Second, they argue that the sale was invalid, precluding a deficiency judgment, due to multiple violations of the nonjudicial deed of trust foreclosure statute. In this regard, Douglass and Hassing point to the following:

1. Frontier failed to nominate First American Title Insurance Company (“First American”) as successor trustee to Pioneer Title Company (“Pioneer”) in writing pursuant to I.C. § 45-1504(2), after Pioneer’s resignation as trustee on September 7, 1988;

2. Frontier failed to obtain Pioneer’s resignation by failing to serve notice of intention to appoint a successor trustee upon Pioneer and Douglass and Hassing, pursuant to I.C. § 45-1504(2);

3. Frontier requested that notice of default be issued by First American when it was not the trustee, rather than by Pioneer;

4. The appointment of First American as trustee was made before the resignation of Pioneer as evidenced by the order in which they were recorded;

5. Frontier failed to deposit the deed of trust and note with the trustee as required under the terms of the deed of trust;

6. The trustee’s deed provides that “the beneficiary made demand upon said Trustee to sell said property pursuant to the terms of said deed of trust.” Frontier failed to make such demand upon Pioneer, and any such demand made on First American was not made on the then-existing trustee;

7. The trustee’s deed certification of acknowledgment was defective because one signator did not sign in the presence of a notary;

8. The trustee’s deed was void because it was not executed by the trustee because of improper resignation and appointment; and

9. The trustee breached its fiduciary relationship with Douglass and Hassing under the deed of trust by acting solely for and on behalf of Frontier.

Further, Douglass and Hassing argue that the district court erred in calculating damages, that this Court should reverse the district court based upon I.R.C.P. 54(d), 54(e), and I.C. §§ 12-120 or 12-121, and that if this Court reverses the district court, they are entitled to attorney fees and costs on appeal pursuant to I.A.R. 41. Finally, Frontier requests attorney fees on appeal.

ANALYSIS

A. Argument Regarding Waiver and Estoppel.

The thrust of Douglass and Hassing’s argument goes to the language of the notice of trustee’s sale and similar language in the notice of default: “[t]he beneficiary elects to sell or cause the trust property to be sold to satisfy said obligation.” Essentially, Douglass and Hassing are saying that Frontier has waived or is estopped from asserting its right to a deficiency judgment, as set forth in I.C. § 45-1512, because the relevant language in the notice of trustee’s sale and notice of default provides that the sale of the property will satisfy the obligation.

Idaho Code § 45-1505 (1957)¹ sets forth the conditions under which the trustee may foreclose a trust deed by advertisement and sale. It provides:

45-1505. Foreclosure of trust deed, when.—The trustee may foreclose a trust deed by advertisement and sale under this act if:

(1) The trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in mortgage records in the counties in which the property described in the deed is situated; and

(2) There is a default by the grantor or other person owing an obligation the performance of which is secured by the trust deed or by their successors in interest with respect to any provision in the deed which authorizes sale in the event of default of such provision; and

(3) The trustee or beneficiary shall have filed for record in the office of the recorder in each county wherein the trust property, or some part or parcel, is situated, a notice of default identifying the deed of trust by stating the name or names of the trustor or trustors and giving the book and page where the same is recorded, or a description of the trust property, and containing a statement that a breach of the obligation for which the transfer in trust security has occurred, and setting forth the nature of such breach and his election to sell or cause to be sold such property to satisfy such obligation; and a copy of such notice by registered or certified mail to any person requesting such notice of record as hereinafter provided.

(4)No action, suit or proceeding has been instituted to recover the debt then remaining secured by the trust deed, or any part thereof, or if such action or proceeding has been instituted, the action or proceeding has been dismissed.

(Emphasis added.)

Idaho Code § 45-1512 permits a beneficiary under a deed of trust to seek a deficiency judgment after a trustee’s sale under a deed of trust. It provides:

45-1512. Money judgment—Action seeking balance due on obligation.—At any time within 3 months after any sale under a deed of trust, as hereinbefore provided, a money judgment may be sought for the balance due upon the obligation for which such deed of trust was given as security, and in such action the plaintiff shall set forth in his complaint the entire amount of indebtedness which was secured by such deed of trust and the amount for which the same was sold and the fair market value at the date of sale, together with interest from such date of sale, costs of sale and attorney[ ] fees. Before rendering judgment the court shall find the fair market value of the real property sold at the time of sale. The court may not render judgment for more than the amount by which the entire amount of indebtedness due at the time of sale exceeds the fair market value at that time, with interest from date of sale, but in no event may the judgment exceed the difference between the amount for which such property was sold and the entire amount of the indebtedness secured by the deed of trust.

The above-quoted statutes, I.C. § 45-1505 (1957) and I.C. § 45-1512, were both enacted in 1957 as part of an act relating to deeds of trust. An Act Relating To Deeds Of Trust, ch. 181, §§ 5, 12, 1957 Idaho Session Laws 345, 347, 351-52. Thus, these statutes are in pari materia and must be construed together as parts of the act. Curtis v. Canyon Highway Dist. No. 4, 122 Idaho 73, 82, 831 P.2d 541, 550 (1992); Achenbach v. Kincaid, 25 Idaho 768, 775, 140 P. 529, 531 (1914).

Subdivision (3) of I.C. § 45-1505 requires that the trustee or beneficiary file a notice of default identifying the deed of trust and containing, among other things, a statement setting forth his or her “election to sell or cause to be sold such property to satisfy such obligation.” (Emphasis added.) Douglass and Hassing argue that the relevant language of the notice of trustee’s sale and notice of default, regarding Frontier’s election to sell the property to satisfy the obligation, is inconsistent with I.C. § 45-1512, resulting in Frontier waiving or being quasi-estopped from asserting its right to seek a deficiency judgment. However, it is clear that the relevant language in the notice of trustee’s sale and notice of default is required by I.C. § 45-1505(3). It is well settled that “[wjaiver is a voluntary, intentional relinquishment of a known right or advantage.” Tiffany v. City of Payette, 121 Idaho 396, 403, 825 P.2d 493, 500 (1992), quoting Brand S Corp. v. King, 102 Idaho 731, 734, 639 P.2d 429, 432 (1981). Nothing in the record before this Court establishes that Frontier voluntarily and intentionally relinquished its right to seek deficiency judgment.

We must construe I.C. §§ 45-1505 and 45-1512 together, since they are both parts of the same act, directly relating to the same subject matter. If Douglass’ and Hassing’s argument were correct, I.C. § 45-1505(3) would render I.C. § 45-1512 meaningless. Every time a beneficiary or trustee complied with the requirements of I.C. § 45-1505(3), they would not be permitted to seek deficiency judgment after the sale because, as appellant argues, they would have agreed to accept the amount received at the sale in full satisfaction of the obligation. In order for quasi-estoppel to apply, Frontier would have had to have taken an earlier position, with knowledge of the facts and its rights, inconsistent with its later position that it was entitled to seek deficiency judgment, to the detriment of Douglass and Hassing. KTVB, Inc. v. Boise City, 94 Idaho 279, 282, 486 P.2d 992, 994 (1971). The record clearly shows that Frontier complied with the relevant statutes. In other words, Frontier’s actions evidence its intent to follow the statutory scheme so that it could seek a deficiency judgment on Douglass’ and Hassing’s note obligation.

B. Argument Regarding Multiple Violations of the Nonjudicial Deed of Trust Foreclosure Statute, I.C. § 45-1504.

Douglass and Hassing essentially argue that there were cumulative errors made by Frontier and, these errors, taken in toto, require this Court to reverse the district court. Our review of the record, however, establishes that none of the alleged errors are violations of the statute.

Subdivision (2) of I.C. § 45-1504 provides:

(2) In the event of death, dissolution, incapacity, disability or resignation of the trustee, the beneficiary may nominate in writing another qualified trustee. Provided, however, that the beneficiary may, for any reason obtain the resignation of the trustee by serving upon the trustee and the grantor in the deed of trust, at their last known address, a notice of intention to appoint a successor trustee. Said notice shall be given by registered or certified mail, and twenty (20) days .after the date of mailing the notice of intention to appoint a successor trustee the beneficiary may nominate a successor trustee. Upon recording in the mortgage records of the county or counties in which the trust deed is recorded of the appointment of a successor trustee, the successor trustee shall be vested with all of the powers of the original trustee. Provided that a trustee may not be changed at the beneficiary’s nomination after foreclosure has commenced by the filing of the notice of default and is proceeding timely.

As to Douglass’ and Hassing’s first assignment of error, regarding the nomination of First American as successor trustee to Pioneer, we find no error. The record clearly shows that Pioneer voluntarily resigned as trustee on September 7, 1988, and First American was appointed successor trustee on the same day. Frontier’s actions in this regard comply with the language of the statute.

Douglass’ and Hassing’s second assignment of error, regarding Frontier’s failure to serve notice of its intention to appoint First American as successor trustee, also fails. The second and third sentences of I.C. § 45-1504(2), which provide for notice, are clearly intended to apply to those situations where the trustee refuses to resign. Here, Pioneer voluntarily resigned.

The third assignment of error, regarding Frontier’s request for issuance of the notice of default by First American, is also not error. There is no requirement that a resignation of trustee be recorded. The fact is that First American was appointed successor trustee and that appointment was recorded, thus giving First American all powers of the original trustee, I.C. § 45-1504(2), and complying with the first of three requirements before foreclosure could proceed, I.C. § 45-1505(1). Furthermore, the record shows that the notice of default was executed after Frontier had appointed First American as successor trustee.

The fourth assignment of error, regarding the appointment of First American before the recordation of Pioneer’s resignation, also must fail. There is no requirement that the resignation of a trustee be recorded.

The fifth assignment of error, regarding deposit of the deed of trust and note with the trustee as required by the deed of trust, also fails. The record shows that First American received the notice of default, which provided that “a breach of the obligation for which such transfer has occurred ... and that the beneficiary elects to sell or cause the trust property to be sold to satisfy said obligation.” Furthermore, the deed of trust does not state when the deed of trust and note must be deposited with the trustee. Based on these facts, we conclude that the district court correctly ruled that Douglass and Hassing were not prejudiced by any delay in providing the instruments to First American.

The sixth assignment of error, regarding demand to sell upon the trustee, is also not error. Once again, Douglass and Hassing are arguing that First American was not the trustee at the time Frontier made demand upon it. As we have already held, the record clearly shows that Pioneer had resigned as trustee and that First American was properly appointed as trustee.

The seventh assignment of error, regarding a signator of the trustee’s deed not signing in the presence of a notary, also fails. This argument relates only to whether the deed could be recorded and not to the validity of the deed or sale.

The eighth assignment of error, relating to execution of the trustee’s deed, is simply another attack on whether First American was properly appointed as successor trustee, and, for the reasons stated above, fails.

The ninth assignment of error, regarding the trustee fiduciary relationship with the grantors, also fails. The record shows that First American accepted Frontier’s bid of $869,000.00. Frontier, acting through First American, was the only bidder at the sale, and the trustee under the terms of the notice of sale was obligated to accept Frontier’s bid. Idaho Code § 45-1506(8) dictates, inter alia, that: “[t]he trustee shall sell the property in one parcel or in separate parcels at auction to the highest bidder. Any person, including the beneficiary under the trust deed, may bid at the trustee’s sale____” (Emphasis added.) In addition, I.C. § 45-1506(9) provides that “[t]he purchaser at the sale shall forthwith pay the price bid and upon receipt of payment the trustee shall execute and deliver the trustee’s deed to such purchaser____” (Emphasis added.) Frontier was the only bidder at the sale. Thus, First American was obligated to accept Frontier’s bid and deliver the trustee’s deed to Frontier upon receipt of payment.

C. Argument Regarding the District Court’s Calculation of Damages.

Idaho Code § 45-1512 (which is quoted above) establishes the beneficiary’s right to seek a deficiency judgment, as well as the formula for calculating that judgment. The statute states that “£he plaintiff shall set forth in his [or her] complaint the entire amount for which the same was sold and the fair market value at the date of sale, together with interest from such date of sale, costs of sale and attorney fees.” I.C. § 45-1512. This amount may include such items as “taxes, assessments, premiums for insurance or advances made by a beneficiary in accordance with the terms of the deed of trust____” I.C. § 45-1506(12). The district court’s award complied with these limitations.

The deed of trust provides that in the event of default, the holder of the note can declare the whole amount due and payable “and the same shall thereafter bear interest at the rate of sixteen percent (16%).” The note provides for the payment of interest until the entire indebtedness is fully paid. This language clearly gives Frontier a right to receive the 16% interest it alleged in the amounts owing. We hold that Frontier is entitled to this rate of interest until the date of judgment.

D. Frontier’s Request for Attorney Fees on Appeal.

Frontier requests attorney fees on appeal pursuant to provisions in the note, deed of trust, and I.C. §§ 12-120(3) and 121.

The first provision of the note, appearing in the second paragraph on page 3, states:

Should any action be brought for the collection of any principal or interest of this Note, the undersigned promises to pay all costs thereof, including such additional sum as attorney fees as the court may adjudge reasonable.

Douglass and Hassing were the “undersigned” who promised to pay reasonable attorney fees in the event that an action was brought to collect any principal or interest. Pursuant to this provision, and because Frontier is the prevailing party on appeal, we award reasonable attorney fees on appeal to Frontier. See Hellar v. Cenarrusa, 106 Idaho 571, 578, 682 P.2d 524, 531 (1984) (“attorney fees are to be awarded only where they are authorized by statute or contract”).

For the foregoing reasons, we affirm the decision of the district court.

Costs and attorney fees on appeal to Frontier.

JOHNSON and TROUT, JJ., concur. BAKES, J., Pro Tern (following retirement on February 1, 1993), concurs.

1 . Idaho Code § 45-1505 was amended, for the first time, in 1990, ch. 401, § 1, 1990 Idaho Session Laws 1122. Since the nonjudicial foreclosure in this case occurred prior to this amendment, we apply the 1957 version of I.C. § 45-1505.