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Timberland Bank v. Mesaros

Court of Appeals of Washington, Division 2

December 12, 2017

TIMBERLAND BANK, a Washington corporation, Appellant,
v.
SHAWN A. MESAROS and JANE DOE MESAROS, individually, and the marital community they comprise; THE STATE OF WASHINGTON, DEPARTMENT OF SOCIAL AND HEALTH SERVICES; AND Also all other persons or parties unknown claiming any right, title, estate, lien, or interest in the real estate described in the complaint herein, Respondents.

          Lee, J.

         Lee, J. - Shawn Mesaros appeals the superior court's order confirming a sheriff's sale of his commercial property that was conducted after Timberland Bank obtained a judgment and decree of foreclosure against the property. Mesaros argues that (1) the sheriff's sale of his property was void; and (2) the superior court abused its discretion when it (a) denied his request for a hearing to set a fair value, (b) confirmed the sheriff's sale to Timberland Bank, and (c) imposed a deficiency judgment against him.

         We hold that the sheriff's sale was void because the sale was held and the execution was returned outside the authorized statutory period, and thus, the confirmation of sale was also void. Accordingly, we reverse and remand to the superior court for further proceedings.[1]

         FACTS

         On December 14, 2009, in exchange for a loan from Timberland Bank, Mesaros signed a promissory note (the Note) for $375, 000. To secure the Note, Mesaros conveyed a deed of trust to Timberland over a piece of commercial property that Mesaros owned (the Property). Under the terms of the Note, failure to make a payment when due constituted a default. Upon default, Timberland would be able to declare the entire unpaid balance of principal and interest immediately due and foreclose on the Property.

         Mesaros defaulted on the Note[2] and on August 12, 2015, Timberland filed a complaint against Mesaros in superior court for judicial foreclosure of the Property. Timberland alleged that Mesaros defaulted on his payment of the Note, breached his obligations under the deed of trust, and owed Timberland $364, 428.25 as of August 10. Mesaros did not respond to Timberland's complaint.

         On October 13, the superior court entered a judgment and decree of foreclosure in favor of Timberland against Mesaros in the amount of $386, 499.25. The judgment placed a lien on the Property and ordered the Property to be sold. The judgment also awarded Timberland a deficiency judgment to the extent the judgment exceeded the proceeds from the sale of the Property.

          On February 5, 2016, the superior court ordered the sheriff to sell the Property to satisfy, in whole or in part, the unpaid portion of the judgment. A sale date of April 29 was set. Notice of the sale was published in a legal newspaper in Grays Harbor County on March 31, April 7, April 14, and April 21.

         On April 29, the superior court entered an order extending the order of sale. The order stated that "the Order of Sale issued on February 5, 2016 . . . along with any timing requirements or deadlines contained therein, is extended thirty days." Clerk's Papers (CP) at 30. Also on April 29, the sheriff issued a "Postponement Notice" stating the sale was postponed until further notice from the court. Amended CP at 254 (some capitalization omitted). On May 16, the sheriff issued another "Postponement Notice" stating the sale was postponed until May 27.[3] Amended CP at 251 (some capitalization omitted).

         On May 27, the Property was sold to Timberland for $202, 400. Timberland was the only bidder for the Property at the sale.

         On June 2, the sheriff filed a Return on Sale of Real Property. A hearing on the entry of the Order Confirming Sale was set for June 27. Mesaros filed an objection to the confirmation of the sale and requested a hearing to set an upset price for the Property.

         On June 27, the superior court held a hearing on the entry of the Order Confirming Sale, Mesaros's objection to entry of the order, and Mesaros's request for hearing to set an upset price.

          The superior court found that there was insufficient evidence warranting further hearing to set an upset price and entered the Order Confirming Sale.

         On July 22, Mesaros filed a notice of appeal on the Order Confirming Sale. We ...


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