IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
WILMINGTON SAVINGS FUND SOCIETY, FSB, AS TRUSTEE OF No. 79949-5-I THE STANWICH MORTGAGE LOAN TRUST A, DIVISION ONE
Appellant, UNPUBLISHED OPINION v.
HIGHLANDS EAST EIGHT GROUP, LLC;
Respondent,
DOES 1-10,
Defendants.
CHUN, J. — Wilmington Savings Fund Society, FSB (Wilmington) seeks to
foreclose on its deed of trust on a condominium unit in Enumclaw, Washington
(Unit). The trial court determined that the priority of action rule and res judicata
bar Wilmington’s suit. For the reasons discussed herein, we reverse.
I. BACKGROUND
In 2012, in a separate matter (original lawsuit), the Pointe East
Condominium Homeowners Association (HOA) sought to judicially foreclose on
its lien on the Unit. The HOA named the Unit’s owners and Mortgage Electronic
Registration Systems, Inc. (MERS), the beneficiary of a deed of trust on the Unit,
as defendants. The owners and MERS failed to appear, and the court entered a
Citations and pin cites are based on the Westlaw online version of the cited material. No. 79949-5-I/2
default judgment and foreclosure decree against them. The Condo Group, LLC,
submitted the highest bid at a Sheriff’s auction of the Unit in 2013, and the Sheriff
conveyed the Unit to Highlands East Eight Group, LLC (Highlands) in 2014.1
In 2018, MERS moved to vacate the default judgment. By this time,
Wilmington had become the beneficiary of the deed of trust on the Unit; MERS
had assigned its interest in the deed of trust to U.S. Bank, who assigned it to the
United States Secretary of Housing and Urban Development (HUD), who, in turn,
assigned it to Wilmington. The court granted the motion to vacate.
MERS then moved to substitute Wilmington for itself. Highlands opposed
the motion on the ground that, once substituted, Wilmington would attempt to
foreclose on their deed of trust. According to Highlands, if Wilmington did so, it
would upset the stability of the property in violation of public policy and cause
Highlands prejudice, since they had incurred substantial costs on the Unit after
purchasing it more than four years prior to the motion. The court entered an
order denying the motion to substitute (Order Denying Substitution) but noted
therein that “[t]he motion to add the denoted current Deed of Trust beneficiary is
not before this court at this time.” Wilmington did not thereafter seek to join the
original lawsuit.
Instead, Wilmington then filed the current lawsuit, seeking to foreclose on
its deed of trust on the Unit. Highlands moved for summary judgment on the
1 It appears that The Condo Group purchased the Unit on behalf of Highlands, or that Highlands is The Condo Group’s successor in interest. The Condo Group is not a party to this action.
2 No. 79949-5-I/3
grounds of res judicata and the priority of action rule. The trial court granted
Highlands’s motion. Wilmington moved for reconsideration, and the trial court
denied its motion. Wilmington appeals.2
II. ANALYSIS
We review de novo summary judgment rulings. Strauss v. Premera Blue
Cross, 194 Wn.2d 296, 300, 449 P.3d 640 (2019). We also review de novo
questions of law, such as a trial court’s application of res judicata or the priority of
action rule. Atlantic Cas. Ins. Co. v. Oregon Mut. Ins. Co., 137 Wn. App. 296,
302, 153 P.3d 211 (2007).
A. Res Judicata
Wilmington argues the trial court erred in concluding that res judicata bars
their foreclosure action, because none of the doctrine’s required elements are
met. Highlands disagrees. We conclude that the Order Denying Substitution did
not constitute a final judgment, so res judicata does not bar Wilmington’s claim.
“[R]es judicata bars the relitigation of claims that were litigated, might have
been litigated, or should have been litigated in a prior action.” Weaver v. City of
Everett, 4 Wn. App. 2d 303, 320, 421 P.3d 1013 (2018) (emphasis omitted).
“The party asserting the defense of res judicata bears the burden of proof.”
Ensley v. Pitcher, 152 Wn. App. 891, 902, 222 P.3d 99 (2009). Res judicata
2 Wilmington included the trial court’s Order Denying Motion for Reconsideration in its Notice of Appeal. However, they make no reference to this order in their briefing and assign no error to it and otherwise do not brief the issue. Accordingly, we consider only the trial court’s Order Granting Motion for Summary Judgment. See RAP 10.3(a)(6), (g).
3 No. 79949-5-I/4
cannot apply without a valid and final judgment on the merits in a prior suit.
Ensley, 152 Wn. App. at 899.
Highlands argues that, since Wilmington apparently intended to foreclose
on its deed of trust once substituted, the Order Denying Substitution constituted a
final judgment that, under principles of res judicata, bars Wilmington’s current
foreclosure claim. Highlands primarily analogizes to Ensley in support of their
argument. In Ensley, the plaintiff sued a tavern for negligence after a patron
drunkenly injured them. 152 Wn. App. at 895. The trial court partially granted
the tavern’s motion for summary judgment but did not enter a final judgment.
Ensley, 152 Wn. App. at 896–97. The plaintiff then moved to add an individual
claim against the bartender who allegedly overserved the patron; the trial court
denied the motion. Ensley, 152 Wn. App. at 897. The plaintiff then filed a new
lawsuit for negligence against the bartender. Ensley, 152 Wn. App. at 897. In
the new lawsuit, the plaintiff filed a motion to amend their claim to add the tavern
as a defendant, and to add a claim of vicarious liability against them. Ensley,
152 Wn. App. at 898. The court held that, while the record lacked an entry of
final judgment, the partial summary judgment constituted a final judgment for the
purposes of res judicata. Ensley, 152 Wn. App. at 901–02.
Unlike in Ensley, where the trial court granted partial summary judgment
against the plaintiff’s claims, the record here does not demonstrate that the
original court made any ruling as to MERS’s or Wilmington’s ability to foreclose
4 No. 79949-5-I/5
on the deed of trust. Thus, the Order Denying Substitution did not constitute a
final judgment.3 Accordingly, res judicata does not bar Wilmington’s claims.
B. Priority of Action Rule
Wilmington argues the trial court erred in concluding that the priority of
action rule bars their foreclosure action, because they are not currently
attempting to foreclose on their deed of trust in the original lawsuit. Again,
Highlands disagrees. We conclude the priority of action rule does not bar the
current lawsuit.
Under the priority of action rule, “the first court to obtain jurisdiction over a
case possesses exclusive jurisdiction to the exclusion of other coordinate courts,”
lasting “until the matter is finally and completely disposed of.” Atlantic Cas. Ins.,
137 Wn. App. at 302. The rule applies where there is identity of subject matter,
parties, and relief between the two actions.
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
WILMINGTON SAVINGS FUND SOCIETY, FSB, AS TRUSTEE OF No. 79949-5-I THE STANWICH MORTGAGE LOAN TRUST A, DIVISION ONE
Appellant, UNPUBLISHED OPINION v.
HIGHLANDS EAST EIGHT GROUP, LLC;
Respondent,
DOES 1-10,
Defendants.
CHUN, J. — Wilmington Savings Fund Society, FSB (Wilmington) seeks to
foreclose on its deed of trust on a condominium unit in Enumclaw, Washington
(Unit). The trial court determined that the priority of action rule and res judicata
bar Wilmington’s suit. For the reasons discussed herein, we reverse.
I. BACKGROUND
In 2012, in a separate matter (original lawsuit), the Pointe East
Condominium Homeowners Association (HOA) sought to judicially foreclose on
its lien on the Unit. The HOA named the Unit’s owners and Mortgage Electronic
Registration Systems, Inc. (MERS), the beneficiary of a deed of trust on the Unit,
as defendants. The owners and MERS failed to appear, and the court entered a
Citations and pin cites are based on the Westlaw online version of the cited material. No. 79949-5-I/2
default judgment and foreclosure decree against them. The Condo Group, LLC,
submitted the highest bid at a Sheriff’s auction of the Unit in 2013, and the Sheriff
conveyed the Unit to Highlands East Eight Group, LLC (Highlands) in 2014.1
In 2018, MERS moved to vacate the default judgment. By this time,
Wilmington had become the beneficiary of the deed of trust on the Unit; MERS
had assigned its interest in the deed of trust to U.S. Bank, who assigned it to the
United States Secretary of Housing and Urban Development (HUD), who, in turn,
assigned it to Wilmington. The court granted the motion to vacate.
MERS then moved to substitute Wilmington for itself. Highlands opposed
the motion on the ground that, once substituted, Wilmington would attempt to
foreclose on their deed of trust. According to Highlands, if Wilmington did so, it
would upset the stability of the property in violation of public policy and cause
Highlands prejudice, since they had incurred substantial costs on the Unit after
purchasing it more than four years prior to the motion. The court entered an
order denying the motion to substitute (Order Denying Substitution) but noted
therein that “[t]he motion to add the denoted current Deed of Trust beneficiary is
not before this court at this time.” Wilmington did not thereafter seek to join the
original lawsuit.
Instead, Wilmington then filed the current lawsuit, seeking to foreclose on
its deed of trust on the Unit. Highlands moved for summary judgment on the
1 It appears that The Condo Group purchased the Unit on behalf of Highlands, or that Highlands is The Condo Group’s successor in interest. The Condo Group is not a party to this action.
2 No. 79949-5-I/3
grounds of res judicata and the priority of action rule. The trial court granted
Highlands’s motion. Wilmington moved for reconsideration, and the trial court
denied its motion. Wilmington appeals.2
II. ANALYSIS
We review de novo summary judgment rulings. Strauss v. Premera Blue
Cross, 194 Wn.2d 296, 300, 449 P.3d 640 (2019). We also review de novo
questions of law, such as a trial court’s application of res judicata or the priority of
action rule. Atlantic Cas. Ins. Co. v. Oregon Mut. Ins. Co., 137 Wn. App. 296,
302, 153 P.3d 211 (2007).
A. Res Judicata
Wilmington argues the trial court erred in concluding that res judicata bars
their foreclosure action, because none of the doctrine’s required elements are
met. Highlands disagrees. We conclude that the Order Denying Substitution did
not constitute a final judgment, so res judicata does not bar Wilmington’s claim.
“[R]es judicata bars the relitigation of claims that were litigated, might have
been litigated, or should have been litigated in a prior action.” Weaver v. City of
Everett, 4 Wn. App. 2d 303, 320, 421 P.3d 1013 (2018) (emphasis omitted).
“The party asserting the defense of res judicata bears the burden of proof.”
Ensley v. Pitcher, 152 Wn. App. 891, 902, 222 P.3d 99 (2009). Res judicata
2 Wilmington included the trial court’s Order Denying Motion for Reconsideration in its Notice of Appeal. However, they make no reference to this order in their briefing and assign no error to it and otherwise do not brief the issue. Accordingly, we consider only the trial court’s Order Granting Motion for Summary Judgment. See RAP 10.3(a)(6), (g).
3 No. 79949-5-I/4
cannot apply without a valid and final judgment on the merits in a prior suit.
Ensley, 152 Wn. App. at 899.
Highlands argues that, since Wilmington apparently intended to foreclose
on its deed of trust once substituted, the Order Denying Substitution constituted a
final judgment that, under principles of res judicata, bars Wilmington’s current
foreclosure claim. Highlands primarily analogizes to Ensley in support of their
argument. In Ensley, the plaintiff sued a tavern for negligence after a patron
drunkenly injured them. 152 Wn. App. at 895. The trial court partially granted
the tavern’s motion for summary judgment but did not enter a final judgment.
Ensley, 152 Wn. App. at 896–97. The plaintiff then moved to add an individual
claim against the bartender who allegedly overserved the patron; the trial court
denied the motion. Ensley, 152 Wn. App. at 897. The plaintiff then filed a new
lawsuit for negligence against the bartender. Ensley, 152 Wn. App. at 897. In
the new lawsuit, the plaintiff filed a motion to amend their claim to add the tavern
as a defendant, and to add a claim of vicarious liability against them. Ensley,
152 Wn. App. at 898. The court held that, while the record lacked an entry of
final judgment, the partial summary judgment constituted a final judgment for the
purposes of res judicata. Ensley, 152 Wn. App. at 901–02.
Unlike in Ensley, where the trial court granted partial summary judgment
against the plaintiff’s claims, the record here does not demonstrate that the
original court made any ruling as to MERS’s or Wilmington’s ability to foreclose
4 No. 79949-5-I/5
on the deed of trust. Thus, the Order Denying Substitution did not constitute a
final judgment.3 Accordingly, res judicata does not bar Wilmington’s claims.
B. Priority of Action Rule
Wilmington argues the trial court erred in concluding that the priority of
action rule bars their foreclosure action, because they are not currently
attempting to foreclose on their deed of trust in the original lawsuit. Again,
Highlands disagrees. We conclude the priority of action rule does not bar the
current lawsuit.
Under the priority of action rule, “the first court to obtain jurisdiction over a
case possesses exclusive jurisdiction to the exclusion of other coordinate courts,”
lasting “until the matter is finally and completely disposed of.” Atlantic Cas. Ins.,
137 Wn. App. at 302. The rule applies where there is identity of subject matter,
parties, and relief between the two actions. Atlantic Cas. Ins., 137 Wn. App. at
302. “The identity must be such that a decision of the controversy by one
tribunal would, as res judicata, bar further proceedings in the other tribunal.” City
3 Highlands offers a second argument in support of its claim that the Order Denying Substitution constituted a final judgment. It contends that, according to Ensley, res judicata’s finality requirement is “quite similar” to that of appellate review. 152 Wn. App. at 900. Accordingly, it argues that, since an order denying a motion to substitute “may be appealed as with other final orders,” it also constitutes a final judgment for purposes of res judicata. In support of their argument that such an order is final and may be appealed, Highlands cites Barker v. Mora, 52 Wn. App. 825, 826, 764 P.2d 1014 (1988). But there, the trial court dismissed a claim on the ground that the plaintiff’s personal representative had not substituted in for the plaintiff within a year after the latter had died. Barker, 52 Wn. App. at 826–827. In doing so, the trial court also dismissed as untimely a pending motion to substitute that the plaintiff’s counsel filed more than a year after the plaintiff’s death. Barker, 52 Wn. App. at 827. Thus, the trial court denied a motion to substitute, but unlike here, also dismissed the plaintiff’s substantive claims. Barker therefore does not demonstrate that such orders denying substitution are final.
5 No. 79949-5-I/6
of Yakima v. Int’l Ass’n of Fire Fighters, 117 Wn.2d 655, 675, 818 P.2d 1076
(1991).
MERS’s motion to substitute did not substantively argue that Wilmington
has a right to foreclose on its deed of trust. The original court denied MERS’s
motion to substitute without making any substantive ruling as to Wilmington’s
ability to foreclose on its deed of trust. The record does not demonstrate that the
original court is currently adjudicating Wilmington’s ability to foreclose on its deed
of trust. While the original court stated that it was not deciding a motion to add
Wilmington as a party, no law cited by Highlands establishes that Wilmington
must seek to join the original lawsuit. Neither is it clear, based on the record
before us, whether Wilmington could successfully join the original lawsuit at this
point. Because the original court has not ruled on Wilmington’s substantive
claims, and does not appear to be doing so currently, a decision of the
controversy by the original court would not, as res judicata, bar proceedings in
the current lawsuit. Thus, the priority of action rule does not bar Wilmington’s
suit.
We reverse.
WE CONCUR: