Opinion
No. 62280-3-I.
September 21, 2009.
Appeal from the Superior Court, King County, No. 07-2-37563-5, Laura Gene Middaugh, J., entered July 18, 2008.
Affirmed by unpublished opinion per Grosse, J., concurred in by Agid and Appelwick, JJ.
The interests in real property subject to a nonjudicial foreclosure sale continue in the proceeds from a trustee's sale of that property in the same order of priority that they were attached to the property. An award of surplus funds to parties in a dissolution decree does not defeat that priority. Here, the surplus funds from the proceeds were not in excess of the amount owed CIT as the second mortgage holder. Accordingly, CIT was entitled to all the surplus funds notwithstanding a dissolution decree's award of those funds to the Lyons. The trial court's order of disbursement is affirmed.
FACTS
In 2003, Enos and Angela Lyons granted a deed of trust on real property to First Horizon Corporation as beneficiary. Almost three years later, in January 2006, the Lyons granted a second deed of trust on the same real property to CIT Group/Consumer Finance, Inc. (CIT).
On May 14, 2007, the Lyons defaulted on the first mortgage and First Horizon instituted a nonjudicial foreclosure. CIT successfully bid at the nonjudicial foreclosure sale for more money than necessary to satisfy the obligation owed to First Horizon. On November 28, 2007, the surplus funds were placed in the King County Superior Court registry, pursuant to Washington's deed of trust act.
On December 28, 2006, Angela Lyons filed a petition for dissolution of marriage. The petition predated the Lyons' default on the property, but a decree of dissolution was not entered until March 31, 2008, after the nonjudicial foreclosure concluded. The dissolution decree divided the marital property, including the surplus funds resulting from the trustee's sale between the Lyons.
On May 28, 2008, the Lyons moved to distribute the surplus funds pursuant to the dissolution decree. The court entered a distribution order on June 6, 2008. Shortly thereafter, Note Trackers of Washington, appearing as the agent for CIT, the second position lien holder on the property, moved to vacate the order on the ground that proper notice had not been provided to all parties as required by RCW 61.24.080(3). The trial court granted the motion to vacate on June 20. On June 25, Note Trackers filed its own motion for disbursal, giving notice as required by the statute. The Lyons filed a notice of appeal on July 14 appealing the June 20 order vacating the original disbursement. The trial court entered an order disbursing the funds to Note Trackers on July 18. The Lyons filed a second notice of appeal from that July 18 order of disbursement on August 11.
A commissioner of this court dismissed the Lyons' first appeal, holding that the vacated June 6 order was not a judgment and thus was not appealable as a matter of right under RAP 2.2(a)(10). The commissioner also found discretionary review of that order inappropriate as the Lyons failed to show that the decision was obviously or probably erroneous. The commissioner held that the appeal from the July 18 disbursal order could proceed.
ANALYSIS
The Lyons contend that the decree of dissolution awarding them the surplus funds placed them in higher priority than the second mortgage for purposes of receiving the surplus funds. The rights to and distribution of the surplus proceeds are set forth in the deed of trust statute, RCW 61.24.080(3), which states:
The surplus, if any, less the clerk's filing fee, shall be deposited, together with written notice of the amount of the surplus, a copy of the notice of trustee's sale, and an affidavit of mailing as provided in this subsection, with the clerk of the superior court of the county in which the sale took place. The trustee shall mail copies of the notice of the surplus, the notice of trustee's sale, and the affidavit of mailing to each party to whom the notice of trustee's sale was sent pursuant to RCW 61.24.040(1). The clerk shall index such funds under the name of the grantor as set out in the recorded notice. Upon compliance with this subsection, the trustee shall be discharged from all further responsibilities for the surplus. Interests in, or liens or claims of liens against the property eliminated by sale under this section shall attach to the surplus in the order of priority that it had attached to the property. A party seeking disbursement of the surplus funds shall file a motion requesting disbursement in the Superior Court for the county in which the surplus funds are deposited. Notice of the motion shall be personally served upon, or mailed in the manner specified in RCW 61.24.040(1)(b), to all parties to whom the trustee mailed notice of the surplus, and any other party who has entered an appearance in the proceeding, not less than twenty days prior to the hearing of the motion. The clerk shall not disburse such surplus except upon order of the superior court of such county.
There is no dispute that the Lyons received notice of CIT's motion to disburse the surplus funds. The notice and motion were filed on June 25, 2008, and served on all parties entitled to notice on June 24, 2008. The parties were all served by both first class mail and certified mail in accordance with RCW 61.24.080(3). The Lyons did not appear. Since all procedural requirements of RCW 61.24.080(3) were met, the court did not abuse its discretion in granting CIT's motion for relief.
Note Trackers' counsel indicated that he had received a copy of a letter from Lyons' counsel that stated: "Dear Chief, we filed an appeal. Please don't hear the motion." However, neither the trial court nor its clerk received the letter. After carefully checking the records, the trial court determined only that there was a notice of appeal filed, but no stay. The trial court noted that filing the notice of appeal did not stay the proceedings unless an order to stay was obtained. Since no stay was in effect, the court proceeded with Note Trackers' motion to disburse the funds.
Interests in and liens upon real property are transferred to the surplus proceeds. The Lyons as homeowners owed CIT $91,701.70. CIT as the second mortgage holder was entitled to the surplus funds to the extent of the balance owed on the promissory note between the Lyons as maker and CIT as the holder. CIT's interest is superior to that of the Lyons, the previous homeowners, notwithstanding the order in the dissolution decree. Since the balance owed CIT was in excess of the surplus funds, CIT is entitled to the entire amount.
In re Upton, 102 Wn. App. 220, 6 P.3d 1231 (2000).
A decree of dissolution is a judgment. The decree decided which party to that proceeding was entitled to the monies without considering any third parties who were not parties to the dissolution. The decree in effect awarded the Lyons any money in excess of the funds needed to satisfy prior lien holders. Since there was no excess, the Lyons were not entitled to any of those funds.
See RCW 26.09.010(5).
Further, we find no merit to the Lyons' contention that Note Trackers is not the real party in interest or authorized agent of CIT and therefore cannot bring this action. The trial court clearly had information before it on which to find that Note Trackers was the authorized agent. Even though the Lyons had notice of the hearing for the disbursement of funds, they failed to appear. Failure to raise an issue before the trial court precludes a party from raising it on appeal.
Smith v. Shannon, 100 Wn.2d 26, 37, 666 P.3d 351 (1983); RAP 2.5.
We affirm the trial court.
WE CONCUR.