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Merceri v. Deutsche Bank AG

Court of Appeals of Washington, Division 1

January 22, 2018

MICHELLE MERCERI, Respondent,
v.
DEUTSCHE BANK AG a/k/a DEUTSCHE BANK doing business in the United States as DEUTSCHE BANK USA, and as DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking association, as trustee for holders of the BCAP LLC Trust 2007-AA2; and NORTHWEST TRUSTEE SERVICES, INC., a Washington corporation, Appellants.

          Spearman, J.

         Under RCW 4.16.230, the statute of limitations is tolled when the commencement of an action is stayed by a statutory prohibition. Under the federal bankruptcy code, actions to foreclose on a debtor's property are stayed while the property at issue is part of the bankruptcy estate. We are asked to determine whether the bankruptcy stay is a statutory prohibition that tolls the statute of limitations. We conclude that it is.

         Michelle Merceri defaulted on a home loan in 2008. Deutsche Bank and its predecessor in interest (Deutsche) initiated foreclosure proceedings on several occasions between 2008 and 2015 but did not complete a foreclosure sale. For over two years during this period a bankruptcy stay was in place.

         In 2015, Merceri asserted a variety of claims against Deutsche and alleged that Deutsche's interest in her home was unenforceable. In 2016, Merceri sought partial summary judgment on the theory that Deutsche's foreclosure claim was time barred. She asserted that a six year statute of limitations began to run on Deutsche's claim in 2008 and the statute expired in 2014. Deutsche moved to amend its answer to assert a counterclaim for judicial foreclosure. The trial court ruled that Deutsche's interest was time barred and granted Merceri's motion for, partial summary judgment. But because the statute of limitations was tolled during the bankruptcy stay, we reverse.

         FACTS

         Merceri took out a $2.8 million home loan in 2006 and defaulted in 2008. In August 2008, Deutsche sent Merceri a notice of default. A notice of trustee's sale was recorded in 2009 but the sale did not occur. Another notice of trustee's sale was recorded in June 2010. In November 2010, Merceri petitioned for chapter 7 bankruptcy. Her home remained part of the bankruptcy estate until December 4, 2012.

         Deutsche initiated nonjudicial foreclosure proceedings in 2014. These proceedings were discontinued when Merceri sought foreclosure mediation. Deutsche and Merceri participated in mediation but were unable to reach an agreement. In September 2015, Deutsche again recorded a notice of trustee's sale.

         In December 2015, Merceri filed the complaint in this action. She alleged that Deutsche failed to follow a number of statutory procedures and engaged in other wrongdoing, including manipulation of the LIBOR (London Interbank Offered Rate). Merceri sought damages and a declaration that Deutsche's interest in her property was unenforceable. The foreclosure sale was continued.

         In May 2016, Merceri moved for partial summary judgment, arguing that Deutsche's claim on her home was time barred. Merceri asserted that the home loan had been accelerated in 2008, a six year statute of limitations began to run at that time, and the limitation period expired in 2014.

         In response, Deutsche moved to amend its answer to add a counterclaim for judicial foreclosure. Deutsche disputed that the loan was accelerated in 2008. But even if it was, Deutsche contended that its claim was not time barred because the statute of limitations was tolled during the bankruptcy stay, during foreclosure mediation, and while nonjudicial foreclosure proceedings were pending.

         The trial court granted Merceri's motion for partial summary judgment. The court denied Deutsche's motion to amend and Deutsche's motion for reconsideration. The court granted Deutsche's motion to certify the question of whether the statute of limitations is tolled during a bankruptcy stay. This court granted discretionary review.

         DISCUSSION

         The trial court certified for review the question:

Even though 11 U.S.C. § 108(c)(1) does not, itself, toll a state statute of limitations, is RCW 4.16.230 a state statute incorporated into section 108(c)(1) to toll the statute of limitations during a bankruptcy stay? Cf Hazel v. Van Beek. 135 Wn.2d 45, 64-66, 954 P.2d 1301 (1998).

         Clerk's Papers (CP) at 733. Certified questions are questions of law that we review de novo. Allen v. Dameron. 187 Wn.2d 692. 701. 389 P.3d 487 (2017V Where the question certified pertains to a motion for summary judgment, we perform the same inquiry as the trial court, considering the legal question in light of the record that was before the court.[1] Id.

         The certified question in this case involves interpretation of the tolling provision in RCW 4.16.230 and its relation to the bankruptcy code. Our goal when interpreting statutes is to effect the intent of the legislature. Rivas v. Overlake Hosp. Medical Center. 164 Wn.2d 261, 266-67, 189 P.3d 753 (2008) (citing Wright v. Jeckle. 158 Wn.2d 375, 379, 144 P.3d 301 (2006)). We discern legislative intent from the plain meaning of the text and the statutory scheme as a whole, id. We must "consider that tolling provisions, by ...


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