[WSBARP] Acceleration & Chapter 7 Discharge /// Copper Creek Homeowners Association v. Wilmington Savings Fund Society, et. al

Wed Jan 19 12:51:00 PST 2022

Thanks Ann for the summary. Interesting opinion.

*Brett T. Sullivan*
Attorney at Law

*Lucent Law, PLLC <https://lucentlaw.com>*
*South Hill Office*
1403 S. Grand Blvd., Suite 201-S
Spokane, WA  99203-2278

P: (509) 455-3713
D: (509) 828-4642
F: (509) 455-3718
E: brett at lucentlaw.com

LinkedIn <https://www.linkedin.com/in/brettsullivanspokane>
Facebook <http://www.facebook.com/lucentlaw>

CONFIDENTIALITY NOTICE: This email and any attachments are confidential and
may be protected by legal privilege. If you are not the intended recipient,
be aware that any disclosure, copying or distribution, or use of this email
or any attachment is prohibited. If you have received this email in error,
please notify me by returning it to the sender and delete this copy from
your system.

On Wed, Jan 19, 2022 at 12:39 PM Ann Marshall <AMarshall at jamsadr.com> wrote:

> Hi, All:
>
> I know this issue has been percolating for a few years. I saw this
> published Division 1 case from yesterday and, well, old habits die hard I
> guess, so I did a case summary! Here it is if you're interested in this
> issue. Disclaimer: rely at your peril & always consult the full opinion
> before use! 😀
>
> *Holding*: The Washington Court of Appeals Division 1 held that a
> discharge in a Chapter 7 bankruptcy case does not accelerate an installment
> promissory note, reversing the trial court’s summary judgment in favor of
> the current property owner. Accordingly, the statute of limitations barred
> recovery of certain installment payments, but not the entirety of the debt.
>
>
>
> *Facts*:
>
>    - 2007: the Kurtzes purchased residential property, obtained a loan,
>    and granted a deed of trust to secure the loan. Mr. Kurtz was active duty
>    in the military at the time of the loan and through 2020. The property was
>    in a HOA called Copper Creek.
>    - 2007 or 2008: the Kurtzes failed to make monthly mortgage payments
>    and moved out of the property in 2008.
>    - February 2010: Ms. Kurtz filed a Chapter 7 bankruptcy.
>    - June 2010: the debt was discharged in the bankruptcy as to Ms. Kurtz
>    and the BK case was closed June 18, 2010.
>    - July 2010: the Kurtzes failed to pay HOA assessments.
>    - March 2011: Mr. Kurtz filed a Chapter 7 bankruptcy.
>    - July 13, 2011: the debt was discharged in the bankruptcy as to Mr.
>    Kurtz, and his case BK closed on July 18, 2011.
>    - November 2018: the HOA recorded a lien for unpaid assessments and
>    commenced a judicial foreclosure. It did not seek to foreclose or otherwise
>    impar the DOT because the DOT was senior.
>    - October 30, 2019: the trustee on the Selene DOT issued a Notice of
>    Trustee’s Sale.
>    - June 2020: Copper Creek/HOA obtained title to the property through a
>    deed in lieu of foreclosure from the Kurtzes.
>
>    The HOA sought to restrain the trustee’s sale, asserting that the
>    statute of limitations barred enforcement of the DOT. Selene challenged
>    Copper Creek’s standing. Copper Creek obtained a deed in lieu of
>    foreclosure from the Kurtzes and obtained title to the property. Discovery
>    disputes ensued and eventually the trial court granted summary judgment in
>    favor of Copper Creek, quieting title free and clear of the Selene DOT and
>    awarding attorney’s fees to Copper Creek in the amount of approximately
>    $96,000.
>
>    *Analysis*:
>
>    First, the Court held that Mr. Kurtz’s active military service tolled
>    the state statute of limitations under 50 U.S.C. § 3936(a), the
>    Servicemembers Credit Relief Act (SCRA). Specifically, the 6-year statute
>    of limitations on the unpaid installments began to run on July 14, 2011,
>    the day after Mr. Kurtz’s BK discharge.
>
>    Second, the Court held that the BK discharge did not accelerate the
>    maturity date of an installment promissory note, noting that the debt could
>    still be enforced in rem. The Court noted that several federal court
>    decisions relying on *Edmundson v. Bank of America*, 194 Wn. App. 920,
>    378 P.3d 272 (2016) for the proposition that discharge accelerates an
>    installment note were in error. The Court also said that, to the extent
>    that unpublished state court opinions have repeated the federal
>    interpretation, were in error. The Court discussed the *Edmundson* case
>    in depth, as well as the cases that have interpreted it. The Court held
>    that the bankruptcy discharge did not change the debt, the note, or the
>    payment schedule. Therefore, because the discharge did not accelerate the
>    note, the statute of limitations did not run on the entirety of the debt,
>    but only on those payments due prior to November 2013.
>
>    Third, the Court reversed the trial court’s attorney fee award in
>    favor of Copper Creek. And it awarded fees and costs to Selene because
>    Copper Creek acquired its interest from Kurtz through the deed in lieu of
>    foreclosure and is subject to the terms of the DOT.
>
>
> Full opinion here: https://www.courts.wa.gov/opinions/pdf/820834.pdf
>
>
>
>
>
>
>
>
>
>
> [image: cid:image005.png at 01D46634.8C1313A0]
>
>
> *Ann T. Marshall, Esq. *Mediator/Arbitrator
>
>
>
> *JAMS - Local Solutions. Global Reach.TM*
>
> 1420 Fifth Ave. | #1650 | Seattle, WA  98101
>
> Cell/Text: 206.619.8043
>
> E-mail: amarshall at jamsadr.com
>
> www.jamsadr.com <https://www.jamsadr.com/marshall/>
>
> ***Disclaimer: Please note that RPPT listserv participation is not
> restricted to practicing attorneys and may include non-practicing
> attorneys, law students, professionals working in related fields, and
> others.***
>
> _______________________________________________
> WSBARP mailing list
> WSBARP at lists.wsbarppt.com
> http://mailman.fsr.com/mailman/listinfo/wsbarp
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20220119/111fa672/attachment.html>