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Troubled Asset Solutions, LLC v. Wilcher

Court of Appeals of Oregon

May 2, 2018

TROUBLED ASSET SOLUTIONS, LLC, in its capacity as Receiver for The Mortgage Exchange, Inc., pending in Washington County Circuit Court Case Number C112822CV, Plaintiff-Respondent,
v.
Eddie WILCHER, and all occupants, Defendant-Appellant. Washington County Circuit Court Number C142009EV Eddie WILCHER, Plaintiff-Appellant,
v.
TROUBLED ASSET SOLUTIONS, LLC, in its capacity as Receiver for The Mortgage Exchange, Inc., pending in Washington County Circuit Court Case No. C112822CV, Defendant-Respondent.

          Argued and submitted May 31, 2016

          Washington County Circuit Court Number C145657CV D. Charles Bailey, Jr., Judge.

          Terrance J. Slominski argued the cause for appellant. With him on the briefs was David W. Venables.

          Charles R. Markley argued the cause for respondent. With him on the brief was Greene & Markley, P.C.

          Before Armstrong, Presiding Judge, and Egan, Chief Judge, and Shorr, Judge.

         [291 Or.App. 523] Case Summary:

         This appeal arises from general and supplemental judgments fled in two consolidated cases concerning the nonjudicial foreclosure of a trust deed. Following the foreclosure, Troubled Asset Solutions, which was both the trustee and the successful bidder at the sale, fled an action for forcible entry and detainer to evict Wilcher from his residence. In a separate action, Wilcher brought suit to quiet title to the property in his name and sought a declaration from the trial court that Troubled Asset Solutions had no interest in the property because the trust deed that formed the basis for the nonjudicial foreclosure sale failed to name him as a grantor, despite the fact that he personally owned the property that was subject to the foreclosure sale. In response, Troubled Asset Solutions fled a counterclaim seeking to reform the deed of trust to add Wilcher as a grantor. The issues on appeal include whether Wilcher waived his right to challenge the nonjudicial foreclosure sale under ORS 86.797(1); whether the trial court properly reformed the deed of trust to add Wilcher as a grantor; and whether the trial court erred in relying upon that reformed deed of trust to deny Wilcher's claims for quiet title and declaratory relief. Held: Wilcher was not precluded from challenging the propriety of the nonjudicial foreclosure sale under ORS 86.797(1); the trial court erred in reforming the trust deed and rejecting Wilcher's quiet title claim based on that reformation; and the court erred in failing to declare the rights of the parties.

         General judgment reversed and remanded for trial court to enter a judgment consistent with this opinion that declares the parties' rights; supplemental judgment reversed.

         [291 Or.App. 524] ARMSTRONG, P. J.

         This appeal arises from general and supplemental judgments filed in two consolidated cases concerning the nonjudicial foreclosure of a trust deed. Following the foreclosure, Troubled Asset Solutions (TAS), which was both the trustee and the successful bidder at the sale, filed an action for forcible entry and detainer to evict Wilcher from his residence. In a separate action, Wilcher brought suit to quiet title to the property in his name and sought a declaration from the trial court that TAS had no interest in the property; his claims were based on the undisputed fact that the trust deed named only Sierra Development, LLC, (Sierra) as grantor notwithstanding that it was Wilcher, and not Sierra, that owned the property when the trust deed was executed. In response, TAS filed a counterclaim seeking to reform the deed of trust to add Wilcher, in his individual capacity, as a grantor. The cases were consolidated for trial, after which the court granted TAS's claim for reformation of the deed of trust and granted restitution of the property to TAS, thereby rejecting Wilcher's claim to quiet title to the property in his name.[1] The court then entered a supplemental judgment awarding attorney fees and costs to TAS.

         The issues on appeal include whether Wilcher waived his right to challenge the nonjudicial foreclosure sale under ORS 86.797(1); whether the trial court properly reformed the deed of trust to add Wilcher as a grantor; and whether the trial court erred in relying upon that reformed deed of trust to deny Wilcher's claims for quiet title and declaratory relief.[2] For the reasons explained below, we conclude that Wilcher is not precluded from challenging the propriety of the nonjudicial foreclosure sale under ORS 86.797(1), that the trial court erred in reforming the trust [291 Or.App. 525] deed and rejecting Wilcher's quiet title claim based on that reformation, and that the court erred in failing to declare the rights of the parties. We therefore reverse the general judgment and remand for further proceedings. Accordingly, we also reverse the supplemental judgment awarding fees and costs to TAS.

         Although Wilcher asks us to exercise our discretion to conduct a de novo review of the facts in this equitable case, this is not an exceptional case justifying de novo review. See Muzzy v. Uttamchandani, 250 Or.App. 278, 280, 280 P.3d 989, rev den, 352 Or. 341 (2012) (quiet-title actions are equitable in nature); A & T Siding, Inc. v. Capitol Specialty Ins. Corp., 358 Or. 32, 42, 359 P.3d 1178 (2015) (reformation is an equitable remedy); ORAP 5.40 (8)(c) ("The Court of Appeals will exercise its discretion to try the cause anew on the record or to make one or more factual findings anew on the record only in exceptional cases."). Instead, we review the trial court's findings to determine whether there is any evidence in the record to support them, and its legal conclusions for legal error. See Frontgate Properties, LLC v. Bennett, 261 Or.App. 810, 812, 324 P.3d 483, rev den, 356 Or. 400 (2014) (stating standard of review when court declines to exercise discretion to review facts in an equitable case de novo).

         The following facts are undisputed. On July 18, 2007, Wilcher signed, in his personal capacity, a promissory note payable to The Mortgage Exchange (MEX) in the amount of $4, 997, 574; the note was also signed by Sierra, a company in which Wilcher was a member. The same day, Wilcher signed a trust deed to secure the note. The trust deed listed Sierra as the sole grantor, and Wilcher's signature appears under a section titled "Corporate or Partnership Grantors." He signed the trust deed as "Eddie Wilcher, Member." The loan was meant to enable Sierra to develop a housing subdivision. However, in addition to properties owned by Sierra, the trust deed also listed, under a section labeled "Additional Security, " three parcels of land that were owned by Wilcher personally. The property at issue in this appeal includes Wilcher's personal residence and 15 acres of land.

         The preparation of the trust deed was overseen by Cruse, an employee of MEX with over 35 years of experience [291 Or.App. 526] preparing loan documents. According to Wilson, the CEO of MEX, Cruse "was a hundred percent responsible for making sure that [the loan documents] were accurate and represented what we were trying to per-proceed with the loan." When asked if Wilson ever found errors in the preparation of Cruse's documents, he answered,

"No. She probably is a premier person in the industry. She was past president of the Escrow Council, past chairman of the Appraisal Board when it was formed to try to get sanity in the-in appraisers doing mortgage work for loan companies and plus she just had all of the credentials that you would need to-to be-well, she was-she operated our escrow company for probably five years."

         Wilson testified that, when MEX prepared the deed of trust, it intended to include Wilcher's residence as part of the collateral for the loan. He also acknowledged that both he and Cruse were aware that a deed of trust must name the owner of the property as a grantor. When confronted with the fact that the trust deed in this case did not include Wilcher as a grantor, Wilson stated that it was a mistake: "I think that if I had to do it over again, I would have put 'and Eddie Wilcher' on-on the additional secured property." However, he also testified that he would not be "alarmed" by the mistake because the property had been adequately described and included in the document, and because he assumed that the title company would read over the documents and find any errors prior to ...


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