En Banc. Dore, C.j. Utter, Brachtenbach, Dolliver, Andersen, Durham, Smith, and Guy, JJ., and Callow, J. Pro Tem., concur. Johnson, J., did not participate in the disposition of this case.
U.S. Bank of Washington appeals a summary judgment dismissing its foreclosure action against respondent Mary Ann Hursey on res judicata grounds. The bank judicially foreclosed a mortgage it held on property owned by P&B Services, Inc. (hereinafter P&B), and purchased the encumbered property at the execution sale. Hursey, a junior lienor, was not joined in the foreclosure action because an indexing error by the court clerk's office caused her lien not to appear in the court records.
On January 23, 1981, to secure payment of a promissory note, P&B executed a mortgage in favor of U.S. Bank's predecessor in interest, Old National Bank of Washington (ONB). The mortgage encumbered property in Pierce County and was recorded on January 30, 1981. On January 13, 1982, Hursey obtained a judgment against P&B in federal court for $17,327.24, and on February 1, 1984, filed this judgment in Pierce County.
P&B defaulted on its obligation to ONB, and the bank filed suit to foreclose its mortgage on February 7, 1984, joining junior lienors the Internal Revenue Service and the Washington State Employment Security Department. The bank did not join Hursey, being unaware of her lien because the Pierce County Superior Court Clerk had mistakenly reversed the names when her judgment was entered and Hursey was not listed in the court records as the judgment creditor.
On November 2, 1984, the Pierce County Superior Court entered an order granting summary judgment and a decree of foreclosure in ONB's foreclosure action. ONB's judgment against P&B was for $48,665.65. The county sheriff sold the property on March 1, 1985 to ONB for $51,101.92. An order confirming the sale was entered on April 19, 1985.
ONB discovered the existence of Hursey's lien when contacted by her attorney in early May 1985. The parties stipulated to Hursey's intervention in the case, and an order to that effect was entered on August 8, 1985. On September 27, 1985, the trial court granted ONB's motion to open the summary judgment order and decree of foreclosure and to vacate the sale under CR 60(b). ONB amended its complaint to add Hursey and moved for summary judgment and a decree of foreclosure on its amended complaint. The motion was granted on January 17, 1986. On August 8, 1986, the court amended its order to increase the judgment amount. The sheriff again sold the property to ONB, and an order confirming the sale was entered on January 23, 1987.
Hursey appealed and, on June 8, 1987, Division Two reversed the order to open the summary judgment of foreclosure and vacated all subsequent orders. The Court of Appeals held the omission of Hursey from the original complaint did not justify vacation under CR 60(b). The court denied ONB's June 30, 1987, motion for reconsideration on August 31, 1987. On September 27, 1987, new evidence surfaced indicating that Hursey's name was omitted
from the litigation report as a result of the Pierce County Superior Court Clerk's clerical error. On September 30, 1987, ONB filed a motion in Division Two to direct the trial court to take additional evidence and to make additional findings and conclusions. The court apparently never ruled on this motion.
ONB then petitioned this court for review. On August 3, 1988, ONB filed in this court its motion to direct the trial court to take additional evidence and to make additional findings and conclusions. On October 4, 1988, this court denied ONB's motion and its petition for review. Old Nat'l Bank of Wash. v. P&B Servs., Inc., 111 Wash. 2d 1015 (1988).
On December 19, 1988, U.S. Bank, ONB's successor, began a new foreclosure action against Hursey in Pierce County Superior Court. On June 30, 1989, the court dismissed the action on res judicata grounds. The court also ruled that U.S. Bank's mortgage was extinguished by merger upon the property's sale and was not revived by the new foreclosure action. This summary judgment is the subject of the instant appeal.
Meanwhile, on February 9, 1989, Hursey filed for a writ of execution against the encumbered property and, on that same day, the court clerk signed an order directing the sheriff to sell the property to satisfy Hursey's judgment. On April 21, 1989, the court approved U.S. Bank's request to file a ...