Appeal from Superior Court of King County. Docket No: 93-2-30943-1. Date filed: 12/18/95. Judge signing: Hon. Nancy A. Holman.
Authored by Ronald E. Cox. Concurring: Walter E. Webster, Susan R. Agid.
The opinion of the court was delivered by: Cox
COX, J. -- American Northwest, Inc., and William G. Moore and June Moore, husband and wife, (American) appeal the trial court's order vacating a judgment of foreclosure. Because the trial court did not abuse its discretion under CR 60(b)(11) by vacating the judgment based on extraordinary circumstances, we affirm.
In August 1993, American purchased two parcels of land from the Mathewses. The Mathewses accepted two promissory notes for $470,500 and $75,000, respectively, as part of the purchase price. The Moores signed the notes as comakers with American. American executed two deeds of trust on the properties in favor of the Mathewses to secure the obligations under the notes.
In December 1993, the Mathewses commenced this action to foreclose the deeds of trust as mortgages *fn1 due to American's monetary defaults under the promissory notes. At the time they commenced the action, the Mathewses recorded a lis pendens against the properties in foreclosure. In addition to foreclosure of the deeds of trust, the Mathewses sought damages for the unauthorized removal of timber from the property.
In June 1994, the trial court granted the Mathewses partial summary judgment against American for the entire unpaid principal balances of the two notes plus interest. At the time of this summary judgment order, a title report on the properties revealed there were 115 lien holders with claims against American.
In June 1995, the trial court entered a stipulated judgment in the amount of $730,000 plus interest. The stipulated judgment also foreclosed the deeds of trust and ordered a foreclosure sale of the properties to satisfy the judgment.
Five months later, the Mathewses moved for an order vacating the summary judgment order and agreed judgment. They based their motion on CR 60(b)(11). The trial court granted that motion. American appeals. CR 60(b)(11)
American argues that the trial court abused its discretion by granting the Mathewses' motion to vacate under CR 60(b)(11). American claims that the basis for the Mathewses' motion did not rise to the level of extraordinary circumstances necessary to meet the requirements of the rule. We disagree.
We review vacation of a stipulated judgment for a manifest abuse of discretion. *fn2 A trial court abuses its discretion only when its decision is manifestly unreasonable or based on untenable grounds or reasons. *fn3 We distinguish between vacation of default judgments and judgments on the merits or stipulated judgments. Because the law favors resolution of cases on their merits and the finality of judgments, we review the former more leniently than we do the latter. *fn4 CR 60(b) allows a court to relieve a party from a final judgment on several enumerated grounds, one of which is in subsection 11:
Any other reason justifying relief from the operation of the judgment. We have held that the "use of CR 60(b)(11) '"should be confined to situations involving extraordinary circumstances not covered by any other section of the rule."'" *fn5 The parties agree that no other section applies here.
The trial court gave two reasons for its ruling to set aside the judgment. First, it relied on the refusal of the title insurance companies to commit to issue title insurance for sale of the properties after the Mathewses acquired title by foreclosure unless the Mathewses joined all 115 lien holders revealed in a June 1994 title report. The court characterized the situation as a potential "twenty-year mess." Second, the court held that American's representations, continuing through the vacation hearing, that it would pay what was owed on the judgment, had caused the delay of the foreclosure sale. The court concluded that extraordinary circumstances existed for both reasons to justify vacation under CR 60(b)(11).
American claims that the trial court abused its discretion by granting the motion to vacate because all of the facts that the Mathewses allege as a basis for vacation were in existence and known at the time of the original agreed judgment. American points particularly to the fact that the title report showing liens against the property was issued in June 1994.
We cannot say that the first basis for the trial court's decision, the unusual situation created by the position of the title companies, was an abuse of discretion. Because of this, we ...