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<p>There are apparently two other cases. Eng v. Specialized Loan
filed 12/13/21 and Love v. West Coast Servicing. And apparently
some conflict between the cases, but I have not read them to
compare.<br>
</p>
<pre class="moz-signature" cols="72">Kary L. Krismer
206 723-2148</pre>
<div class="moz-cite-prefix">On 1/19/2022 12:34 PM, Ann Marshall
wrote:<br>
</div>
<blockquote type="cite"
cite="mid:MW3PR18MB348466A59CF6D4DD89184EB0B2599@MW3PR18MB3484.namprd18.prod.outlook.com">
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<span style="font-family: Calibri, Helvetica, sans-serif;"></span>Hi,
All:</div>
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<br>
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<div style="font-family: Calibri, Arial, Helvetica, sans-serif;
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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! <span id="😀"
contenteditable="false">😀</span></div>
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<br>
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font-size: 12pt; color: rgb(0, 0, 0);">
<p class="MsoNormal"
style="margin:0in;font-size:medium;font-family:Calibri,
sans-serif;margin-right:0in;margin-left:0in;caret-color:rgb(0,
0, 0)">
<b><span style="font-family: Calibri, Helvetica, sans-serif;
font-size: 12pt;">Holding</span></b><span
style="font-family: Calibri, Helvetica, sans-serif;
font-size: 12pt;">: 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.</span><span
style="font-family:"Times New Roman", serif"><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></span></p>
<p class="MsoNormal"
style="margin:0in;font-size:medium;font-family:Calibri,
sans-serif;margin-right:0in;margin-left:0in;caret-color:rgb(0,
0, 0)">
<span style="font-family:"Times New Roman", serif"><o:p><br>
</o:p></span></p>
<p
style="margin-right:0in;margin-left:0in;font-size:medium;font-family:"Times
New Roman", serif;caret-color:rgb(0, 0, 0)">
<span style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"><b>Facts</b></span><span style="font-size:
12pt; font-family: Calibri, Helvetica, sans-serif;">:</span><span
class="Apple-converted-space" style="font-size: 12pt;
font-family: Calibri, Helvetica, sans-serif;"> </span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></p>
<ul>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">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.</span><span class="Apple-converted-space"
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span><o:p><span style="font-size: 12pt;
font-family: Calibri, Helvetica, sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">2007 or 2008: the Kurtzes
failed to make monthly mortgage payments and moved out of
the property in 2008.</span><o:p><span style="font-size:
12pt; font-family: Calibri, Helvetica, sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">February 2010: Ms. Kurtz
filed a Chapter 7 bankruptcy.</span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">June 2010: the debt was
discharged in the bankruptcy as to Ms. Kurtz and the BK
case was closed June 18, 2010.</span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">July 2010: the Kurtzes
failed to pay HOA assessments.</span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">March 2011: Mr. Kurtz
filed a Chapter 7 bankruptcy.</span><span
class="Apple-converted-space" style="font-size: 12pt;
font-family: Calibri, Helvetica, sans-serif;"> </span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">July 13, 2011: the debt
was discharged in the bankruptcy as to Mr. Kurtz, and his
case BK closed on July 18, 2011.</span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">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.</span><span
class="Apple-converted-space" style="font-size: 12pt;
font-family: Calibri, Helvetica, sans-serif;"> </span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p></li>
<li style="font-size:12pt;font-family:Calibri, Helvetica,
sans-serif"><span style="font-size: 12pt; font-family:
Calibri, Helvetica, sans-serif;">October 30, 2019: the
trustee on the Selene DOT issued a Notice of Trustee’s
Sale.</span><o:p><span style="font-size: 12pt;
font-family: Calibri, Helvetica, sans-serif;"> </span></o:p></li>
<li><span style="font-size: 12pt; font-family: Calibri,
Helvetica, sans-serif;">June 2020: Copper Creek/HOA
obtained title to the property through a deed in lieu of
foreclosure from the Kurtzes.</span><o:p><span
style="font-size: 12pt; font-family: Calibri, Helvetica,
sans-serif;"> </span></o:p><br>
<br>
<span style="font-size: 12pt;">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.</span><o:p><span
style="font-size: 12pt;"> </span></o:p><br>
<br>
<span style="font-size: 12pt;"><b>Analysis</b></span><span
style="font-size: 12pt;">:</span><span
class="Apple-converted-space" style="font-size: 12pt;"> </span><o:p><span
style="font-size: 12pt;"> </span></o:p><br>
<br>
<span style="font-size: 12pt;">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.</span><span class="Apple-converted-space"
style="font-size: 12pt;"> </span><o:p><span
style="font-size: 12pt;"> </span></o:p><br>
<br>
<span style="font-size: 12pt;">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 </span><span
style="font-size: 12pt;"><i>Edmundson v. Bank of America</i></span><span
style="font-size: 12pt;">, 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</span><span
class="Apple-converted-space" style="font-size: 12pt;"> </span><span
style="font-size: 12pt;"><i>Edmundson</i></span><span
class="Apple-converted-space" style="font-size: 12pt;"> </span><span
style="font-size: 12pt;">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.</span><span
class="Apple-converted-space" style="font-size: 12pt;"> </span><o:p><span
style="font-size: 12pt;"> </span></o:p><br>
<br>
<span style="font-size: 12pt;">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.</span><o:p><span style="font-size: 12pt;"> </span></o:p></li>
</ul>
<br>
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font-size: 12pt; color: rgb(0, 0, 0);">
Full opinion here: <a
href="https://www.courts.wa.gov/opinions/pdf/820834.pdf"
id="LPlnk123150" moz-do-not-send="true"
class="moz-txt-link-freetext">https://www.courts.wa.gov/opinions/pdf/820834.pdf</a></div>
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<p style="margin:0in 0in 0.0001pt 0.1in;
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<b><span style="margin:0px; font-size:10pt">Ann
T. Marshall, Esq.<br>
</span></b><span style="margin:0px;
font-size:10pt">Mediator/Arbitrator</span></p>
<p style="margin:0in 0in 0.0001pt 0.1in;
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<span style="margin:0px; font-size:10pt"> </span></p>
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<b><span style="margin:0px; font-size:10pt">JAMS
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<span style="margin:0px; font-size:10pt">1420
Fifth Ave. | #1650 | Seattle, WA 98101</span></p>
<p style="margin:0in 0in 0.0001pt 0.1in;
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<span style="margin:0px; font-size:10pt">Cell/Text:
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