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FILE THIS OPINION WAS FILED
FOR RECORD AT 8 A.M. ON
JULY 20, 2023
IN CLERK’S OFFICE
SUPREME COURT, STATE OF WASHINGTON
JULY 20, 2023
ERIN L. LENNON
SUPREME COURT CLERK
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
)
COPPER CREEK (MARYSVILLE) )
HOMEOWNERS ASSOCIATION, a ) No. 100918-6
Washington nonprofit corporation, )
)
Petitioner, ) En Banc
)
v. )
) Filed: July 20, 2023
SHAWN A. KURTZ and STEPHANIE A. )
KURTZ, husband and wife and the marital )
or quasi-marital community composed )
thereof; QUALITY LOAN SERVICE )
CORPORATION OF WASHINGTON, a )
Washington corporation, )
)
Defendants, )
)
WILMINGTON SAVINGS FUND )
SOCIETY, FSB, d/b/a CHRISTIANA )
TRUST, not individually but as trustee )
from Pretium Mortgage Acquisition Trust; )
SELENE FINANCE, LP, )
)
Respondents. )
____________________________________)
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
YU, J. — This case concerns the statute of limitations to foreclose on a deed
of trust securing an installment loan after the borrower receives an order of
discharge in bankruptcy. As detailed in Merritt v. USAA Federal Savings Bank,
No. 100728-1 (Wash. July 20, 2023), we hold that a new foreclosure action on the
deed of trust accrues with each missed installment payment, even after the
borrower’s personal liability is discharged. Actions on written contracts are
subject to a six-year statute of limitations. Therefore, the nonjudicial foreclosure
action on the deed of trust in this case was timely commenced as to all unpaid
installments within the preceding six years, regardless of the borrowers’
bankruptcy discharge orders.
On cross review, respondents (the lender and the loan servicer) challenge the
trial court’s attorney fee award. We hold that the trial court properly exercised its
discretion to award fees as an equitable sanction for respondents’ litigation
misconduct. Therefore, although respondents are entitled to their appellate
attorney fees as the prevailing parties on appeal, we uphold the trial court’s
equitable fee award. The Court of Appeals is affirmed.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
A. Shawn and Stephanie Kurtz purchase a home in 2007
The property at issue in this case is a residential home that was purchased in
2007 by Shawn and Stephanie Kurtz, who are not parties on review. The Kurtzes
2
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
financed their purchase with a home loan evidenced by a promissory note. The
loan was to be repaid in installments with a final maturity date of June 1, 2037.
The promissory note is secured by a deed of trust. The current trustee is
Quality Loan Service Corporation of Washington (QLS), which is not a party on
review. The current beneficiary is respondent Wilmington Savings Fund Society,
FSB, d/b/a Christiana Trust, not individually but as trustee for Pretium Mortgage
Acquisition Trust. The current loan servicer is respondent Selene Finance LP.
The house is located in a subdivision, which requires property owners to pay
homeowners association (HOA) assessments to petitioner Copper Creek
(Marysville) Homeowners Association. The HOA assessments “shall be a
continuing lien upon the Lot against which each such assessment is made.”
Clerk’s Papers (CP) at 793. If the assessments are not paid, then Copper Creek is
entitled to foreclose on its lien. However, Copper Creek’s lien is “subordinate to
any security interest perfected by a first deed of trust or mortgage granted in good
faith and for fair value upon such Lot.” Id. at 753. Thus, it is undisputed that the
deed of trust securing the Kurtzes’ home loan is senior to Copper Creek’s lien for
HOA assessments.
3
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
B. The Kurtzes file for bankruptcy and move out; after years of vacancy, a
custodial receiver is appointed for the property
Stephanie1 moved out of the house in January 2008 and made no further
payments on the home loan. The Kurtzes became legally separated later that year,
and their divorce was finalized in June 2011. The Kurtzes stopped paying their
HOA assessments in July 2010. Shawn stopped making payments on the home
loan sometime around 2010, but he could not recall the “exact date” of his last
payment. Id. at 893.
Stephanie petitioned for Chapter 7 bankruptcy on February 24, 2010, and
received an order of discharge on June 14, 2010. Id. at 916, 864; see 11 U.S.C.
§ 727. Shawn petitioned for Chapter 7 bankruptcy on March 25, 2011, and
received an order of discharge on July 13, 2011. CP at 966-67, 872. Shawn
moved to Hawaii sometime in 2011. Neither of the Kurtzes subsequently returned
to the house, nor did they make any further payments toward their home loan or
their HOA assessments. However, there was no attempt to foreclose on the deed
of trust. As a result, the house sat vacant for years and fell into disrepair. The
Kurtzes remained the property owners of record and HOA assessments continued
to accrue in their names.
1
We refer to the Kurtzes by their first names in order to distinguish between them. We
intend no disrespect.
4
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
In November 2018, Copper Creek recorded a notice of claim of lien for
unpaid HOA assessments, fees, costs, and interest. In January 2019, Copper Creek
filed a complaint against the Kurtzes in Snohomish County Superior Court,
seeking foreclosure on the lien and a custodial receiver for the property.
The trial court signed an agreed order appointing a receiver with authority to
“obtain possession” of the house, “refurbish it for rental up to a reasonable
standard,” and “rent it to third parties” to recoup the costs of the receivership and
the unpaid HOA assessments. Suppl. CP at 1723 (citing RCW 64.34.364(10)).
The receiver observed that the house “needed substantial repairs and appeared to
have been uninhabited for many years.” Id. at 1180. The repairs took “nearly five
months” to complete, at a cost of $22,470.24. Id. The house was rented out at the
end of September 2019.
C. QLS initiates nonjudicial foreclosure; the trial court ultimately quiets title in
favor of Copper Creek
In October 2019, approximately one month after the house was rented out,
QLS initiated nonjudicial foreclosure proceedings by mailing, posting, and
recording a notice of trustee’s sale. Copper Creek requested that QLS cancel the
sale, asserting that it was barred by the statute of limitations. QLS declined.
In February 2020, Copper Creek amended its complaint to add claims
against QLS and respondents for restraint of the trustee’s sale, wrongful
foreclosure, treble damages, quiet title, and declaratory relief. Thereafter, the
5
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
litigation became highly contentious. Additional details are set forth as relevant to
our analysis of the trial court’s equitable fee award, below.
Ultimately, the trial court granted summary judgment and quieted title to
Copper Creek. The trial court ruled that the foreclosure was time barred, reasoning
that respondents “had six years from the date [of] Mr. and Ms. Kurtz[’s]
bankruptcy discharge orders to bring a foreclosure action on the debt secured by
their [deed of trust] and failed to do so.” CP at 251. The trial court also awarded
Copper Creek attorney fees “as a matter of equity” based on respondents’ “bad
faith and misconduct shown repeatedly and throughout this case.” Id. at 21.
Respondents appealed.
In a published opinion, the Court of Appeals reversed the order quieting
title, holding that the Kurtzes’ bankruptcy discharge orders did not affect the
statute of limitations to foreclose on the deed of trust because “[t]he debt, the note,
and the payment schedule remain unchanged.” Copper Creek (Marysville)
Homeowners Ass’n v. Kurtz, 21 Wn. App. 2d 605, 625, 508 P.3d 179 (2022).
Therefore, the Court of Appeals held that the October 2019 notice of trustee’s sale
was timely as to any unpaid installments within the preceding six years, as well as
“the remainder due under the note.” Id. Nevertheless, the Court of Appeals
affirmed the trial court’s fee award, holding that “[t]he change of prevailing party
6
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
does not require vacating that equitable award” because “an independent basis in
equity justified the award of attorney fees.” Id. at 627.
Copper Creek sought review on the statute of limitations issue, supported by
an amicus memorandum filed by the Northwest Consumer Law Center.
Respondents opposed review but contingently sought cross review of the trial
court’s fee award. We granted review of both issues and accepted for filing three
amici briefs on the statute of limitations issue: the Federal Housing Finance
Agency, Federal National Mortgage Association, and Federal Home Loan
Mortgage Corporation filed a joint amici brief supporting respondents, and the
Northwest Justice Project and the Washington chapter of the Community
Associations Institute each filed an amicus brief supporting Copper Creek.
ISSUES
A. Is respondents’ nonjudicial foreclosure action on the deed of trust
securing the Kurtzes’ home loan barred by the statute of limitations?
B. Did the trial court abuse its discretion in awarding attorney fees as an
equitable sanction against respondents?
ANALYSIS
A. Bankruptcy discharge does not affect the statute of limitations to foreclose
on a deed of trust securing an installment loan
The statute of limitations to foreclose on a deed of trust after personal
liability for the underlying debt has been discharged in bankruptcy is a matter of
7
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
first impression in our court. However, this issue has arisen numerous times in the
Court of Appeals and in federal courts applying Washington law.
From 2015 to 2021, nearly every court to consider the issue held, implied, or
stated in dicta that “the statute of limitations does not accrue after discharge
because, at that point, no future installment payments are due and owing.” Luv v.
W. Coast Servicing, Inc., No. 81991-7-I, slip op. at 5 (Wash. Ct. App. Aug. 2,
2021) (unpublished), https://www.courts.wa.gov/opinions/pdf/819917.pdf, review
denied, 198 Wn.2d 1035 (2022); see, e.g., Edmundson v. Bank of Am., NA, 194
Wn. App. 920, 931, 378 P.3d 272 (2016); Silvers v. U.S. Bank Nat’l Ass’n, No. 15-
5480 RJB, 2015 WL 5024173, at *4 (W.D. Wash. 2015) (court order). But see In
re Plastino, 69 Bankr. Ct. Dec. 177, 2020 WL 7753628, at *3-4 (Bankr. W.D.
Wash. 2020) (mem. decision).2
For the reasons stated in Merritt, No. 100728-1, we now reject such a rule.
The six-year statute of limitations to foreclose on a deed of trust securing an
installment loan accrues with each unpaid installment, even after the borrower’s
personal liability has been discharged in bankruptcy. We therefore affirm the
Court of Appeals, reverse the trial court’s order quieting title, and remand for
further proceedings consistent with this opinion. As the prevailing parties on
2
Unpublished court orders and opinions are cited only as “necessary for a reasoned
decision.” GR 14.1(c).
8
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
appeal, respondents are entitled to their appellate attorney fees in accordance with
the fee provision in the deed of trust. See CP at 1042.
B. The trial court properly awarded attorney fees to Copper Creek as an
equitable sanction against respondents
As noted above, in addition to quieting title, the trial court granted Copper
Creek “an attorneys’ fees award as a matter of equity” due to respondents’ “bad
faith and misconduct shown repeatedly and throughout this case.” Id. at 21.
Despite the change in prevailing party on appeal, the Court of Appeals affirmed the
trial court’s equitable fee award. Copper Creek, 21 Wn. App. 2d at 627. We
affirm the Court of Appeals.
1. Additional procedural history
As indicated above, the litigation became highly contentious after Copper
Creek amended its complaint to add claims against respondents in late February
2020. Initially, respondents moved to dismiss pursuant to CR 12(b)(6), arguing
that Copper Creek did not have standing because it was not the property owner of
record. However, with the assistance of a Washington attorney, the Kurtzes
granted Copper Creek a statutory warranty deed in lieu of foreclosure, which was
signed in April 2020 and recorded in June 2020. As a result, Copper Creek
opposed respondents’ motion to dismiss and moved for leave to file a second
amended complaint.
9
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
Respondents argued in June 2020 that amending the complaint would be
futile because “the statute of limitations was tolled from origination of the loan
through at least February 2020, due to Mr. Kurtz’s active duty [military] status”
pursuant to the federal Servicemembers Civil Relief Act (SCRA) and its
Washington counterpart.3 CP at 701. Respondents raised the same SCRA tolling
argument in a supplemental brief supporting their CR 12(b)(6) motion, which was
filed in July 2020.
Meanwhile, between March and June 2020, respondents’ counsel was
communicating via e-mail with counsel for Copper Creek and, separately, with the
Kurtzes. These e-mail exchanges ultimately factored into the trial court’s equitable
fee award.
First, in a March 2020 e-mail to counsel for Copper Creek, respondents’
counsel asserted that the statute of limitations to foreclose on the deed of trust had
not expired because “[t]he borrowers requested a short sale in 2013.” Suppl. CP at
1665. Respondents did not raise that issue in any of their motions to the trial court.
A request for a short sale might have restarted the statute of limitations as a
“written acknowledgment” of the debt, although we express no opinion as to
3
50 U.S.C. §§ 3901-4043; RCW 38.42.090. The Court of Appeals held that “the SCRA
ceased to toll the statute of limitations” once Shawn received his bankruptcy discharge order
because “[w]ithout Shawn’s personal liability, the debt, as evidenced by the note, was no longer
enforceable against a service member.” Copper Creek, 21 Wn. App. 2d at 614. Neither party
sought review of any issue relating to the SCRA in this court. Therefore, we express no opinion
regarding the proper application of the SCRA to the facts of this case.
10
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
whether it necessarily would have done so. In re Receivership of Tragopan Props.,
LLC, 164 Wn. App. 268, 270, 263 P.3d 613 (2011) (citing RCW 4.16.280); see
also U.S. Bank NA v. Kendall, No. 77620-7-I, slip op. at 13-15 (Wash. Ct. App.
July 1, 2019) (unpublished), https://www.courts.wa.gov/opinions/pdf/776207.pdf. 4
Thus, Copper Creek recognized that the Kurtzes’ alleged request for a short sale
might be dispositive of Copper Creek’s statute of limitations argument. However,
the Kurtzes “stated they never did a short sale,” so Copper Creek asked for
documentation from respondents and offered to obtain “authorization” from the
Kurtzes if necessary. Suppl. CP at 1673, 1675.
Respondents refused to provide any documentation, stating only that they
were “not interested in entering into a release or disclosing loan file documents.”
Id. at 1677. Copper Creek made a formal discovery request, but respondents
refused to provide any information about any alleged “acknowledgement of the
debt,” arguing instead that Copper Creek lacked standing, that the discovery
request was “premature,” and that the statute of limitations was tolled by the
SCRA. Id. at 1077-78. As a result, in June 2020, Copper Creek filed a motion to
4
A “short sale” generally occurs when there is “a written agreement for the purchase and
sale of owner-occupied residential real property,” but the “sale proceeds” would be “insufficient
to pay in full the obligation owed to a senior beneficiary of a deed of trust encumbering the
residential real property.” RCW 61.24.026(1)(a); see also Kendall, No. 77620-7-I, slip op. at 13-
15. The property owner may offer “the entire net proceeds of the sale” to the senior beneficiary,
who “may determine, in its sole discretion, whether to accept, reject, or counter-offer the seller’s
written offer.” RCW 61.24.026(1)(b).
11
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
compel discovery, seeking “documentation regarding a short sale or other
acknowledgement of the debt.” Id. at 1687. In opposition, respondents argued that
they had already “produced substantive responses.” CP at 697.
While this discovery dispute was developing, respondents’ counsel also
attempted to contact the Kurtzes. In May 2020, respondents’ counsel e-mailed the
Kurtzes directly (not through counsel), asking if they would “waive the statute of
limitations on the underlying loan” and offering “something in exchange for [their]
trouble.” Suppl. CP at 1570. Shawn forwarded the e-mail to his attorney and
counsel for Copper Creek, stating, “I do not wish to waive anything and don’t like
how they are trying to bribe me into the waiver.” Id. Counsel for Copper Creek
brought the e-mail to the trial court’s attention. The Kurtzes never waived the
statute of limitations.
In June 2020, the trial court granted Copper Creek leave to amend its
complaint. In a separate order filed the same day, the trial court also granted
Copper Creek’s motion to compel discovery and ordered respondents to provide
“good faith responses.” Id. at 1070. Respondents moved for reconsideration of the
order compelling discovery, reiterating the argument that they had “already served
substantive responses.” CP at 640. On the same day, respondents filed a separate
motion for a protective order on a different judicial officer’s calendar. Both of
12
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
respondents’ motions were ultimately heard, and denied, by the same judge who
had granted the order compelling discovery.
Respondents subsequently provided supplemental responses to Copper
Creek’s discovery requests. Respondents admitted that there was no short sale
request, nor were there any other “events [that] resulted in the acknowledgement of
the debt.” Id. at 341. This admission was made in August 2020—approximately
five months after Copper Creek had initially requested documentation of the
alleged short sale request.
In August 2020, the trial court issued a temporary restraining order halting
the trustee’s sale and denied respondents’ CR 12(b)(6) motion. In its oral ruling on
the CR 12(b)(6) motion, the trial court determined that respondents had improperly
attempted to “file a CR 56 [motion for summary judgment] under the guise of a
[CR] 12(b) (6)” motion to dismiss for failure to state a claim. 1 Verbatim Tr. of
Proc. (VTP) (Aug. 4, 2020) at 23.
After their CR 12(b)(6) motion was denied, respondents filed an answer to
Copper Creek’s second amended complaint. Copper Creek subsequently moved
for summary judgment to quiet title, arguing that foreclosure on the deed of trust
was time barred due to the Kurtzes’ bankruptcy discharge orders. In response,
respondents explicitly agreed “that the statute of limitations begins to ‘accrue’
13
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
upon a bankruptcy discharge.” 5 CP at 388. However, respondents argued that the
statute of limitations was tolled pursuant to the SCRA—just as they had previously
argued in their unsuccessful CR 12(b)(6) motion and in their unsuccessful
opposition to Copper Creek’s motion to amend its complaint.
A few days after responding to Copper Creek’s summary judgment motion,
respondents filed a separate motion for judgment on the pleadings pursuant to CR
12(c). Respondents’ CR 12(c) motion argued, again, that the statute of limitations
was tolled pursuant to the SCRA. Copper Creek requested CR 11 sanctions,
arguing that its pending summary judgment motion already covered “the entirety
of the issues” raised in respondents’ CR 12(c) motion. Id. at 281.
Following oral argument, the trial court struck respondents’ CR 12(c)
motion, granted Copper Creek’s motion for summary judgment, and awarded
Copper Creek “its reasonable attorney’s fees, costs, and expenses incurred in this
action, in an amount to be determined by future motion.” Id. at 253. Nevertheless,
when Copper Creek moved to set the amount of the fee award at $113,437.80,
respondents argued that the request for fees should be denied in its entirety because
there was “no basis in law for an award of attorneys’ fees.” Id. at 140. The trial
court reaffirmed that it had already awarded attorney fees to Copper Creek “as a
5
Copper Creek does not argue that respondents are estopped or otherwise barred from
taking the contrary position on appeal.
14
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
matter of equity because [of respondents’] bad faith and misconduct shown
repeatedly and throughout this case,” and awarded $96,779.09 in attorney fees to
Copper Creek. Id. at 21.
On appeal, respondents challenged both the order quieting title and the trial
court’s fee award. However, respondents recognized that even if the order quieting
title was reversed, the fee award could be affirmed “if the Court [of Appeals]
determines that . . . [respondents] still acted in bad faith at the trial court level.”
Appellants’ Reply at 21-22 (Wash. Ct. App. No. 82083-4-I (2021)) (citing Andren
v. Dake, 14 Wn. App. 2d 296, 472 P.3d 1013 (2020)). The Court of Appeals did
precisely that, reversing the order quieting title but affirming the trial court’s fee
award because “an independent basis in equity justified the award of attorney
fees.” Copper Creek, 21 Wn. App. 2d at 627.
On cross review in this court, respondents argue that (1) the trial court did
not make sufficient findings and conclusions to support its fee award and
(2) respondents did not engage in any bad faith or misconduct warranting
sanctions. 6 “Both CR 11 and [the court’s] inherent equitable powers authorize the
award of attorney fees in cases of bad faith.” In re Recall of Pearsall-Stipek, 136
6
At the Court of Appeals, respondents also challenged the amount of the fee award. See
Appellants’ Opening Br. at 40-45 (Wash. Ct. App. No. 82083-4-I (2021)); Appellants’ Reply at
22-23 (Wash. Ct. App. No. 82083-4-I (2021)). They do not raise that issue in their answer to the
petition for review, so we do not consider it. See RAP 13.7(b).
15
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Wn.2d 255, 266-67, 961 P.2d 343 (1998). We review an equitable fee award for
abuse of discretion. Wash. State Physicians Ins. Exch. & Ass’n v. Fisons Corp.,
122 Wn.2d 299, 338, 858 P.2d 1054 (1993).
2. The fee award was supported by adequate findings and conclusions
Respondents primarily argue that the trial court did not make “sufficient
findings of fact and conclusions of law” supporting its equitable fee award.
Resp’ts’ Answer to Pet. for Rev. at 19. We disagree.
When awarding attorney fees, a trial court must enter “findings of fact and
conclusions of law to establish ‘an adequate record on review.’” AllianceOne
Receivables Mgmt., Inc. v. Lewis, 180 Wn.2d 389, 393 n.1, 325 P.3d 904 (2014)
(quoting Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632, 966 P.2d 305
(1998)). “In the absence of a written finding on a particular issue, an appellate
court may look to the oral opinion to determine the basis for the trial court’s
resolution of the issue.” In re Marriage of Booth, 114 Wn.2d 772, 777, 791 P.2d
519 (1990). Although the trial court’s written fee order contains little detail, the
trial court’s oral rulings clearly specify the legal and factual basis for its fee award.
As to the legal basis for fees, respondents claim that the trial court failed to
“state that attorney fees were being awarded to [Copper Creek] as a sanction
against [respondents].” Resp’ts’ Answer to Pet. for Rev. at 18. The record directly
contradicts this claim.
16
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Copper Creek explicitly sought CR 11 sanctions. At oral argument, the trial
court confirmed that Copper Creek was “still asking for the CR 11 sanctions,” and
then “grant[ed] the CR 11 request.” 2 VTP (Oct. 9, 2020) at 98, 100. The trial
court’s written order specifies that the fee award was made “as a matter of equity
because [of respondents’] bad faith and misconduct shown repeatedly and
throughout this case.” CP at 21. Moreover, when respondents sought to stay the
fee award pending appeal, the trial court rejected their request and reiterated that it
had made “an equitable fee award granted to [Copper Creek] due to [respondents’]
[i]mproper [b]ehavior.” Suppl. CP at 1098. Thus, the trial court explicitly and
repeatedly stated that attorney fees were being awarded to Copper Creek as a
sanction against respondents.
As to the factual basis for fees, respondents claim that “[t]he trial court did
not describe any ‘improper behavior.’” Resp’ts’ Answer to Pet. for Rev. at 18. To
the contrary, the trial court listed multiple instances of improper behavior in its oral
ruling: (1) “violations of the duty of candor to the tribunal,” (2) “refus[ing] to
cooperate” with discovery despite court intervention, and (3) bringing “the same
motion that the Court [had] already ruled on” and attempting to “disguise” a
“motion for partial summary judgment” as a CR 12(c) motion. 2 VTP (Oct. 9,
2020) at 98-100. These findings provide a sufficient basis for appellate review.
17
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3. The trial court did not abuse its discretion in awarding fees
In a footnote, respondents argue that the trial court could not “have found a
factual basis for an equity fee award” because respondents “took positions that
[they] reasonably thought were justified under the law, and when the court denied
the relief sought, [they] promptly complied with all court orders.” Resp’ts’
Answer to Pet. for Rev. at 19 n.5. We hold that each of the trial court’s stated
reasons for awarding fees is fully supported by the record.
a. Lack of candor
First, the trial court found that respondents committed “violations of the duty
of candor to the tribunal.” 2 VTP (Oct. 9, 2020) at 98. This finding was well
within the trial court’s discretion. The most egregious example of respondents’
lack of candor relates to their attempt to purchase a waiver of the statute of
limitations from the Kurtzes.
As discussed above, while respondents were arguing to the trial court that
the statute of limitations had not expired as a matter of law, their counsel was
directly e-mailing the Kurtzes seeking a waiver of the statute of limitations.
Respondents did not disclose that e-mail to the trial court. However, respondents
argue that cannot justify sanctions because (1) the e-mail was “irrelevant” and did
not need to be disclosed and (2) Copper Creek’s “hands are ‘unclean’” due to
Copper Creek’s communications with the Kurtzes to obtain a statutory warranty
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deed in lieu of foreclosure. Appellants’ Opening Br. at 40, 39 (Wash. Ct. App. No.
82083-4-I (2021)); see also Appellants’ Reply at 13 (Wash. Ct. App. No. 82083-4-
I (2021)). We reject both arguments.
The trial court reasonably found that respondents’ e-mail to the Kurtzes was
relevant and should have been disclosed. As the trial court explained, respondents’
attempt “to cut a deal” with the Kurtzes showed that respondents “obviously didn’t
believe that [their] position was [unassailable],” thereby directly contradicting their
own court filings. 1 VTP (Aug. 4, 2020) at 43, 42. Furthermore, respondents do
not show that Copper Creek has unclean hands because, unlike respondents,
Copper Creek did not attempt “to cover both sides of the ball at the same time.”
Id. at 43. To the contrary, when respondents initially challenged Copper Creek’s
standing, Copper Creek worked with the Kurtzes (through counsel, not directly) to
obtain a deed in lieu of foreclosure before moving to amend its complaint.
Thus, the trial court properly found that respondents’ violations of the duty
of candor to the tribunal warranted equitable sanctions.
b. Refusal to cooperate with discovery
Next, the trial court found that respondents “refused to cooperate” with
discovery and continued to engage in “obstruction” after the court intervened. 2
VTP (Oct. 9, 2020) at 99. Respondents argue that “they acted entirely properly
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during the discovery dispute.” Appellants’ Reply at 20-21 (Wash. Ct. App. No.
82083-4-I (2021)). The record shows otherwise.
As detailed above, respondents’ counsel asserted in an e-mail to Copper
Creek’s counsel that the statute of limitations restarted when the Kurtzes allegedly
requested a short sale in 2013. However, respondents refused to provide
supporting documentation or answer discovery requests about the alleged short
sale request, prompting Copper Creek’s motion to compel discovery. Eventually,
respondents admitted that there was no short sale request.
At the Court of Appeals, respondents claimed that they “were completely
transparent about their position on debt-reacknowledgement.” Id. at 11.
Respondents further argued that they did not act in “bad faith” because Copper
Creek’s “counsel understood [respondents’] re-acknowledgment argument solely
arose out of the deed-in-lieu application,” rather than a short sale request. Reply in
Supp. of Mot. & Obj. to Trial Ct. Supersedeas Decision at 1 n.1 (Wash. Ct. App.
No. 82083-4-I (2020)). To the extent that respondents maintain the same position
in this court, we reject it.
As shown by respondents’ own citations to the record, counsel for both
parties exchanged e-mails discussing an alleged “short sale,” not a “deed in lieu.”
See id. (citing Resp’t’s App. in Supp. of Trial Ct.’s Supersedeas Decision (Wash.
Ct. App. No. 82083-4-I (2020)) at 155, ¶ 5, 191); see also Suppl. CP at 1665,
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1668-71, 1673-74. If respondents’ counsel simply made a mistake by referring to a
“short sale” in their March 2020 e-mail, then they had about three months to
correct their mistake before Copper Creek moved to compel discovery. They did
not do so. As a result, Copper Creek was forced to file a motion to compel
discovery, seeking documentation of a short sale request that never occurred.
In addition, respondents did not “promptly compl[y]” with the trial court’s
discovery order, as their briefing claims. Contra Resp’ts’ Answer to Pet. for Rev.
at 19 n.5. Instead, they filed separate motions for reconsideration and a protective
order before two different judicial officers based on the same arguments they had
already raised in opposition to Copper Creek’s motion to compel. In denying both
motions, the trial court ruled that respondents’ initial discovery response “was
evasive on its face,” and that respondents’ “extended motion practice” appeared to
be “a tactic that is interposed to cause difficulty.” 1 VTP (Aug. 4, 2020) at 12, 14.
This ruling is fully supported by the record.
Thus, the trial court did not abuse its discretion in finding that respondents’
failure to cooperate with discovery warranted sanctions.
c. Bringing a repetitive, “disguised” summary judgment motion
Finally, the trial court found that respondents’ CR 12(c) motion for
judgment on the pleadings raised matters “that the Court [had] already ruled on”
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and was, in fact, “a motion for partial summary judgment” in “disguise.” 2 VTP
(Oct. 9, 2020) at 99-100. These findings are fully supported by the record.
As discussed above, respondents argued repeatedly that the statute of
limitations was tolled by the SCRA. Respondents raised the SCRA in opposition
to Copper Creek’s motion for leave to amend its complaint, but the trial court
granted Copper Creek’s motion. Respondents also raised the SCRA in a
supplemental brief supporting their CR 12(b)(6) motion. The trial court considered
the “[s]upplemental [b]riefing by the parties” and denied the CR 12(b)(6) motion.
CP at 518. Undeterred, respondents raised the SCRA in opposition to Copper
Creek’s motion for summary judgment, thereby ensuring that the SCRA would be
addressed by the trial court once more. Nevertheless, while Copper Creek’s
summary judgment motion was still pending, respondents filed a CR 12(c) motion
making the same SCRA argument.
Respondents argue that “[t]he CR 12(c) motion was proper” because they
“believed the trial court had not resolved the SCRA tolling issue.” Appellants’
Reply at 18 (Wash. Ct. App. No. 82083-4-I (2021)). Respondents made the same
claim to the trial court, and the trial court did not “believe” them. 2 VTP (Oct. 9,
2020) at 88. We have no basis to disturb the trial court’s credibility determination
on review. Moreover, even if respondents honestly believed the SCRA issue had
not yet been resolved, their CR 12(c) motion was unjustified.
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As noted above, the trial court rejected the SCRA claim in respondents’ CR
12(b)(6) motion, in part, because it should have been brought as a CR 56 motion
for summary judgment. Respondents do not explain why they disregarded the trial
court’s clear instructions and chose to file a CR 12(c) motion instead of a motion
for summary judgment. Moreover, the CR 12(c) motion was entirely unnecessary.
Respondents had already raised the SCRA in opposition to Copper Creek’s
pending motion for summary judgment, and they explicitly acknowledged that “the
ruling on the motion for summary judgment would be dispositive” of the SCRA
issue. Id. at 94-95. On this record, we cannot discern any reasonable justification
for respondents’ CR 12(c) motion. The trial court did not abuse its discretion in
finding that respondents’ conduct warranted sanctions.
In sum, the record amply supports the trial court’s decision to award attorney
fees to Copper Creek as an equitable sanction based on respondents’ repeated
misconduct and bad faith throughout this litigation. We therefore affirm the Court
of Appeals and uphold the trial court’s equitable fee award.
CONCLUSION
Respondents’ nonjudicial foreclosure action on the deed of trust was timely
commenced as to all missed installment payments within the preceding six years.
As the prevailing parties on appeal, respondents are entitled to their appellate
attorney fees. Nevertheless, the trial court properly awarded attorney fees to
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Copper Creek (Marysville) Homeowners Ass’n v. Kurtz et al., No. 100918-6
Copper Creek as an equitable sanction based on respondents’ repeated misconduct.
Therefore, the Court of Appeals is affirmed, and we remand to the trial court for
further proceedings consistent with this opinion.
WE CONCUR:
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Copper Creek (Marysville) Homeowners Ass'n v. Kurtz
Combined Opinion