Opinion
Supreme Court No. S-11583.
December 21, 2005.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Stephanie E. Joannides, Judge, Superior Court No. 3AN-97-05580 Civil.
Michael Marshall, pro se, Anchorage, Appellant.
Richard L. Crabtree, Routh Crabtree, APC, Anchorage, for Appellee Brumbaugh.
No appearance by Appellee Antal.
Before: Bryner, Chief Justice, Matthews, Eastaugh, Fabe, and Carpeneti, Justices.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
The trial court's division of property in this divorce case resulted in an award of the marital home to Michael Marshall and an award of $25,298.40 to Nancy Antal to be paid by Marshall by November 1, 1999. Antal's property interest was secured by a deed of trust on the marital home, and a special condition of the deed required Antal to hold the deed of trust. In 2003 Antal assigned her rights in the deed to a third party, who then assigned them to Mark Brumbaugh. Brumbaugh commenced foreclosure proceedings. The house was eventually sold after the superior court lifted a temporary restraining order and denied Marshall's motion for a stay of execution of foreclosure. Marshall now claims that the trial court abused its discretion by refusing to enjoin the foreclosure. Because the language of the deed of trust permitted assignment by Antal, Marshall made no effort to pay his debt to Antal, and Antal waited almost four years from the time Marshall's payment was due before assigning the deed of trust, we affirm the superior court's decision to allow the foreclosure to go forward.
II. FACTS AND PROCEEDINGS
Michael Marshall and Nancy Antal were married in 1987 and divorced in 1998. They have two children from the marriage. A trial pertaining to division of the marital estate was held on June 1, 1999. On July 23, 1999, Superior Court Judge Michael L. Wolverton awarded sixty-five percent of the total marital assets to Antal but awarded the marital home, valued at $14,826 in equity, to Marshall. Judge Wolverton required that Marshall pay Antal $25,298.40, the offset of the estate, by November 1, 1999 and secured her interest in this amount with a deed of trust to the home.
After Marshall refused to sign the deed of trust prepared by Antal's attorney, Antal filed a motion for an order to show cause. A hearing was held on March 17, 2000 before Superior Court Judge Eric T. Sanders. At the hearing, Marshall expressed concern that if he signed the deed, which required him to have paid the money due by November 1, 1999, then he would automatically go into default and he and the children would be thrown out of the house. In response, Judge Sanders explained that Antal "is just doing this for the protection. I don't think she's planning on throwing you out of the house." Marshall further explained that he did not have $25,000 to pay Antal and that the deed of trust did not indicate whether monthly payments were acceptable. Judge Sanders stated that it was too late to begin negotiating the terms of the court order and ordered Marshall to sign or suffer the consequences. Marshall then signed.
The deed of trust is subject to special conditions, three of which are pertinent: (1) that the deed of trust is to be held by the beneficiary, Antal; (2) that the deed of trust is executed pursuant to the superior court's property division order; and (3) that Marshall "shall attempt to obtain an equity loan against the property to pay off the balance due on the Deed of Trust Note secured hereby within 1 year, and every year thereafter until [Marshall] can successfully obtain such an equity loan." The deed of trust also sets its maturity date as three years after the due date of the deed of trust note. The due date in the deed of trust note is given as November 1, 1999, and thus November 1, 2002 is the maturity date.
The deed of trust contains an enforcement provision stating that in the event of default by the Trustor, Marshall, all sums secured by the deed shall immediately become due and payable at the option of Antal. Antal is expressly given the option of selling the property to satisfy the obligation.
There is no evidence in the record that Marshall made any payments to Antal before or after signing the deed. Although Marshall stated in the hearings below and at oral arguments on September 28, 2005 on appeal that his attempt to make partial payments had been refused by Antal, there is no evidence in the record before us to support his claim.
At the same time as these proceedings concerning the deed of trust, Antal was appealing the superior court's property allocation decision. A memorandum opinion and judgment regarding Antal's appeal was issued by this court on December 6, 2000. We affirmed the superior court's decision awarding the marital home to Marshall and concluded that the award was not clearly erroneous "given both parties' difficult financial circumstances and the superior court's finding that [Marshall] could `best preserve and keep the marital residence, which has been and must continue to be a source of stability and security for the parties' children.'"
Antal v. Marshall, Mem. Op. J. No. 1006 (Alaska, December 6, 2000), 2000 WL 34546752.
Id.
On August 15, 2003, almost three and a half years after Marshall signed the deed of trust and note, Antal assigned the deed of trust to McKinley Mortgage Company, which in turn assigned the deed and note to Mark Brumbaugh. On September 5, 2003, Antal also provided Brumbaugh with a warranty of authority to assign her interest in the trust, as well as a power of attorney that empowered Brumbaugh to foreclose on the property in her name.
On October 27, 2003, Brumbaugh wrote Marshall a letter notifying him that he owed $25,298.40 plus interest calculated at 7.5% per annum, for a total of $32,957.33, and that Marshall had thirty days to satisfy his debt or Brumbaugh would commence foreclosure proceedings. A nonjudicial foreclosure sale was originally scheduled for March 16, 2004.
Marshall moved for a stay of execution of foreclosure, which was granted by Superior Court Judge Stephanie E. Joannides on March 15, 2004. In granting the stay, Judge Joannides found that Mark Brumbaugh was a person indispensable to the complete determination of the case and Brumbaugh was made a party to the action under Alaska Civil Rule 19(a). The superior court then held several hearings regarding the foreclosure throughout the spring of 2004.
On June 22, 2004, Judge Joannides issued an order denying Marshall's motion for stay of the deed of trust foreclosure sale. Two motions for reconsideration were filed by Marshall on June 23, 2004 and July 19, 2004. Judge Joannides denied the motions for reconsideration on July 21, 2004.
The deed of trust sale was held on June 29, 2004. Brumbaugh was the purchaser. On July 12, 2004, Brumbaugh quitclaimed the property to Troy Jarvis. Jarvis subsequently evicted Marshall. At some point following his eviction, Marshall instituted proceedings against Jarvis related to property damage caused by the eviction. On March 8, 2005, Marshall and Jarvis agreed to settle their dispute, and Marshall stipulated before District Court Judge Stephanie Rhoades that he would "not take any further action against the property that could subject Jarvis to any 3rd party litigation."
This appeal was filed in April 2005.
Oral arguments for this appeal were held on September 28, 2005. Brumbaugh was present but Antal did not appear.
III. STANDARD OF REVIEW
This court will generally refrain from deciding questions where the facts have rendered the legal issues moot. A claim is moot if it has lost its character as a present, live controversy. Because it involves a question of law, this court exercises its independent judgment in determining whether a case is moot.
See O'Callaghan v. State, 920 P.2d 1387, 1388 (Alaska 1996) (quoting Hayes v. Charney, 693 P.2d 831, 834 (Alaska 1985)).
Akpik v. State, Office of Mgmt. Budget, 115 P.3d 532, 535 (Alaska 2005) (quoting Kodiak Seafood Processors Ass'n v. State, 900 P.2d 1191, 1195 (Alaska 1995)).
Akpik, 115 P.3d at 534 (citing Ulmer v. Alaska Rest. Beverage Ass'n, 33 P.3d 773, 776 (Alaska 2001)).
When reviewing an order denying a preliminary injunction, this court applies an abuse of discretion standard. Furthermore, any order issued by the superior court in an effort to enforce one if its own final decrees is reviewed for abuse of discretion. A superior court abuses its discretion when its decision is "clearly untenable" or "manifestly unreasonable."
North Kenai Peninsula Road Maint. Serv. Area v. Kenai Peninsula Borough, 850 P.2d 636, 639 (Alaska 1993); see also Meidinger v. Koniag, Inc., 31 P.3d 77, 85-86 (Alaska 2001).
See Horchover v. Field, 964 P.2d 1278, 1281 (Alaska 1998) (citing several cases to support this proposition, including Meyeres v. Meyeres, 705 P.2d 921, 922-23 (Alaska 1985) (trial court's ruling on motion to enforce divorce decree reviewed for abuse of discretion)).
Heath v. State, 849 P.2d 786, 788 (Alaska App. 1993).
State Farm Ins. Co. v. Am. Mfrs. Mut. Ins. Co., 843 P.2d 1210, 1212 n. 2 (Alaska 1992).
IV. DISCUSSION
As an initial matter, Brumbaugh contends that this case is moot because the property has been sold to a bona fide third-party purchaser, Jarvis, and because Marshall and Jarvis have agreed to settle their dispute. Brumbaugh further maintains that Marshall's attempt to reserve his right to pursue this appeal in the agreement is irrelevant "since the only cognizable relief he seeks in his present appeal is to reverse the `decision to allow foreclosure' and regain possession of his erstwhile marital residence."
Because the property has been sold and damages from the eviction settled, we would be unable to reverse the superior court's decision and restore the house to Marshall. Nevertheless, if his underlying claim had merit, then Marshall likely would remain eligible to seek at least consequential damages stemming from the foreclosure.
The matter before this court is a narrow one: whether the superior court abused its discretion on June 22, 2004 in denying Marshall's motion to stay the foreclosure sale. Since it is Brumbaugh who was attempting to foreclose on the house, the resolution of this case depends on whether Brumbaugh had the power to foreclose. In turn, his power as Antal's assignee depends on whether Antal herself had the power to foreclose.
Marshall contends that Antal was prohibited from assigning the note and deed of trust by the original court order dividing marital property, the concern the court had for the well-being of the children, and the provision in the deed of trust that states: "This Deed of Trust is to be held by Beneficiary." Marshall argues that Judge Wolverton's only intent was to protect Antal's property interest in the event Marshall chooses to sell or refinance the home.
But other than the special condition stating that "The Deed of Trust is to be held by Beneficiary," there is no language in the deed of trust explicitly prohibiting Antal from assigning the note. Even if the special condition were to be read as a condition that Antal not assign the deed of trust, it is unreasonable from a policy standpoint to require Antal to forebear forever from gaining her share of the marital estate.
Brumbaugh succeeded to whatever rights Antal herself had with regard to the deed of trust and note. Marshall contends that Antal did not have the right of foreclosure because it was the intent of the court order of July 23, 1999 that the children continue to live in the marital home. He argues that the deed of trust was to protect Antal's interests if the house were refinanced or sold but nevertheless was to "act as a shield to protect the children" from eviction.
Given the special conditions in the deed of trust, it (and the note it secured) must be construed in light of the order dividing the marital estate. In that order, Judge Wolverton did find that "the allocation of marital assets involves the determination of who can best preserve and keep the marital residence, which has been and must continue to be a source of stability and security for the parties' children." However, the order further provides: "Mr. Marshall is to pay to Ms. Antal the offset of $25,298.40 by November 1, 1999 (the Court assumes that he will be able to do this by obtaining a home equity loan, but of course he may obtain the funds necessary to satisfy the offset by any means he has at his disposal). Until this amount is satisfied, Ms. Antal's interest will be secured by a deed of trust . . . which is to be prepared by her counsel."
The language of the order makes it clear that Antal was to be paid her share of the marital estate by November 1, 1999. Marshall's only recourse is to argue that the special conditions in the deed of trust extended the time due by stating that "Trustor shall attempt to obtain an equity loan against the property to pay off the balance due on the Deed of Trust Note secured hereby within 1 year, and every year thereafter until Trustor can successfully obtain such an equity loan." As he is not in default of this provision, having tried unsuccessfully to obtain refinancing, Marshall argues that this provision extends the time due of the deed of trust and note indefinitely.
However, the language of the deed of trust, case law, and the interests of justice militate against this argument. First, the deed of trust contains a default clause stating that in the event of default, the "Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of its election to cause to be sold the herein described property to satisfy the obligation hereof."
Marshall attempts to argue around this language, stating that he was given to understand by the court that the deed would not be used to foreclose on the note. At the hearing on March 17, 2000, Marshall's legitimate concern was that given the November 1, 1999 due date he would be in immediate default upon signing the deed of trust. Antal's attorney and the superior court judge reassured him, saying that Antal needed the deed for her own protection and that she had no intention of foreclosing immediately.
Simply because the deed of trust was an instrument created in light of a divorce decree does not confer upon it any special status or shield it from the normal enforcement practices related to deeds of trust. In a similar case involving a debt stemming from a divorce decree, where the debt was also secured by a deed of trust, this court explained in dicta that when the debtor party defaults on its obligation, the creditor has several options, including waiving the security of the deed of trust and choosing to sue on the promissory note, or bringing an action to judicially foreclose the deed of trust, while retaining the right to recover a deficiency judgment.
Smith v. Shortall, 732 P.2d 548, 549 (Alaska 1987). This dicta was disapproved of by Moening v. Alaska Mutual Bank "insofar as it suggests a suit on the note constitutes a legal waiver of the security." 751 P.2d 5, 7 n. 8 (Alaska 1988). However, Moening reaffirms the general notion that "[s]tatutes provide a secured creditor with a variety of remedies when a debtor defaults. For example, the creditor may bring an action for judicial foreclosure." Id. at 7. Cf. AS 09.45.170.
Finally, Antal's interests must be taken into account. It may be appropriate in a divorce order to require one spouse to forebear for a reasonable time before collecting on a marital debt, but it is equally appropriate for the court to set a final due date to ensure that the debt be paid. As one court has put it, "[i]t is inconceivable that a court in a divorce proceeding can divide the property between the parties and yet have no power to make that division effective if the parties are recalcitrant."
Goodsell v. Goodsell, 228 P.2d 155, 157 (Wash. 1951).
Judge Joannides concluded that "Judge Wolverton's order and intent does not act as an indefinite shield to protect [Marshall] from valid creditors." As this court has put it, "a court not only has the right, but it is its duty to make decrees effective and to prevent evasions thereof." In this case, Antal did not in fact foreclose immediately but waited nearly three and a half years after Marshall signed the deed of trust on March 17, 2000 before assigning the note on August 15, 2003 in an effort to collect her share of the marital debt. There is no evidence before us that Marshall made any payments toward his debt to her, either before or after the due date.
State, Dep't of Revenue v. Deleon, 103 P.3d 897, 899 (Alaska 2000) (citing Johnson v. Johnson, 544 P.2d 65, 72 (Alaska 1975)).
In short, Brumbaugh had the power to enforce the note and deed of trust. Brumbaugh succeeded to the same rights of enforcement Antal had. Even if Antal did not have the right to foreclose the deed of trust when it was signed on March 17, 2000, she did have that right as of the time she assigned it in August 2003. The denial of the motion for stay of the foreclosure sale was reasonable under the facts and circumstances of this case.
V. CONCLUSION
For these reasons, we AFFIRM the superior court's decision denying the motion for stay of the foreclosure sale.