No. 31316-2-IIThe Court of Appeals of Washington, Division Two.
March 22, 2005
Appeal from Superior Court of Kitsap County. Docket No: 01-2-00662-4. Judgment or order under review. Date filed: 12/19/2003. Judge signing: Hon. M. Karlynn Haberly.
Counsel for Appellant(s), Piresha Merite Family Trust (Appearing Pro Se), 5348 County Club Rd SE, c/o Marie Shoemaker, Exe Tru, Port Orchard, WA 98367.
Counsel for Respondent(s), Janice L Celotti, Wright Finlay
Zak, 4665 Macarthur Ct Ste 280, Newport Beach, CA 92660-1811.
Craig Lee Jones, Graham Dunn PC, Pier 70, 2801 Alaskan Way Ste 300, Seattle, WA 98121-1134.
Steven K. Linkon, Routh Crabtree Olsen, 3535 Factoria Blvd SE Ste 200 Bellevue, WA 98006-1263. Lance E. Olsen, Routh Crabtree Olsen PS, 3535 Factoria Blvd SE Ste 200, Bellevue, WA 98006-1263.
MORGAN, A.C.J.
In this quiet title action, the Piresha Merite Family Trust appeals an order vacating a default judgment. We affirm. The facts are needlessly complex and confusing. They include several deeds, a loan secured by a deed of trust, a nonjudicial foreclosure proceeding, an unlawful detainer action, several bankruptcy filings, and this quiet title action.
In 1983, John A. Shoemaker, Sr. and Maria J. Shoemaker bought real property located at 5348 County Club Way S.E., Port Orchard, Washington (hereafter `the property’). We will assume that sometime before May 17, 1996, they created an entity called the Piresha Merite Family Trust (the Trust).[1] On May 17, 1996, John quitclaimed his interest in the property to Maria. On May 18, 1996, Maria quitclaimed her interest in the property to the Trust. On November 24, 1997, the Trust quitclaimed its interest back to Maria and John. On November 26, 1997, Maria and John quitclaimed their interests to the Trust. On February 10, 1998, the Trust quitclaimed its interest to John and Maria. On March 17, 1998, John and Maria quitclaimed their interests to the Trust. On September 11, 1998, the Trust quitclaimed its interest to John and Maria. On April 1, 1999, John and Maria quitclaimed their interests to the Trust.
On February 6, 1998, John and Maria sought a $200,000 loan from Conseco Finance Servicing Corporation.[2] That same day, acting in their individual capacities, they each signed a deed of trust on the property in favor of Conseco. On February 10, 1998, as already seen, the Trust reconveyed its interest in the property to them. But then, on March 17, 1998, they reconveyed their interests to the Trust. Conseco did not record its deed of trust which John and Maria had signed individually until March 19, 1998.
John and Maria did not repay the loan, so Conseco commenced a nonjudicial foreclosure proceeding. On January 26, 2001, the trustee named in the deed of trust sold the property to Conseco and issued its trustee’s deed.
On March 5, 2001, Conseco filed an unlawful detainer action in which it sought to evict John, Maria, and any other occupant of the property. Four days later, on March 9, Maria filed this quiet title action in which she named two plaintiffs: (1) the Trust and (2) herself as `Executive Trustee.’
On March 12, 2001, Maria filed an answer and counterclaims to Conseco’s unlawful detainer complaint, to which she affixed the quiet title action’s cause number. The next day, she had the answer, counterclaims, and quiet title complaint served on Conseco’s registered agent. On March 23, 2001, Maria had some of the same documents reserved, together with some additional ones. The process server thereafter submitted an affidavit of service that failed to mention a quiet title complaint, but alleged that a quiet title summons had been served.
The next day, March 24, 2001, John and Maria each signed an `Amended Summons’ in the quiet title action that names each of them as a defendant in his or her individual capacity.[3]
On April 6, 2001, they served `another stack of documents,’ including the amended summons from March 24, and amendments to `many’ of the documents served on March 23.[4]
Conseco did not answer the quiet title action, although it was continuing to actively prosecute the unlawful detainer action. On May 11, 2001, the trial court held a show cause hearing in the unlawful detainer action and apparently set the matter for trial. On May 18, 2001, the plaintiffs obtained an order of default in the quiet title action. On May 25, 2001, the plaintiffs obtained a default judgment in the quiet title action. Four days after obtaining the default judgment in the quiet title action, John and Maria began filing bankruptcy cases. (1) On May 29, 2001, John filed for bankruptcy in the United States District Court for the Western District of Washington. On September 27, 2001, the court dismissed the case because John had failed to appear as required. (2) On October 19, 2001, Maria filed for bankruptcy in the United States District Court for the Eastern District of Washington. On December 12, 2001, the court dismissed that case with a `closing date’ of January 8, 2002.[5] (3) On January 11, 2002, Maria again filed for bankruptcy in the Eastern District. On February 12, 2002, the court dismissed that case and awarded sanctions against her.
On October 22, 2001, just three days after the second of these bankruptcy cases was commenced, the trial court convened a trial in the unlawful detainer case. John and Maria asserted that the default judgment in the quiet title action protected them from eviction. Conseco’s counsel said that he had never received the quiet title complaint and manifested confusion `over the double case numbers.’[6] The trial court ruled that Conseco was entitled to possession, but made the ruling subject to any bankruptcy stay that might exist. After the second bankruptcy case was dismissed but before the third one was started, the trial court entered a judgment of unlawful detainer and granted a writ of restitution.
On September 19, 2002, Conseco moved to vacate the default judgment in the quiet title action. On December 17, 2002, Conseco filed for bankruptcy and stayed the quiet title action until September 9, 2003. On December 3, 2003, Conseco renewed its motion to vacate the default judgment. On December 17, 2003, the process server amended her affidavit of service in the quiet title action. She stated that she was a friend of Maria’s who had `some experience in serving process and some familiarity with the legal system.’[7] On March 13, 2001, she had served Conseco’s registered agent with `an answer and other responsive pleadings to the eviction lawsuit, and the complaint in the quiet title action,’ but not `with a summons in the quiet title action.’[8] On March 23, 2001, she had served Conseco’s registered agent `with the summons with the complaint attached thereto together with a number of pleadings related to a summary judgment motion that [Maria] had scheduled.’[9] On April 6, 2001, she had served Conseco’s registered agent `with another stack of documents,’ including many that had been already served and some that had been amended.[10]
On December 19, 2003, the trial court, acting through the judge who had granted the default judgment, vacated that judgment. Rejecting the process server’s December 2003 assertion that she had served both a quiet title summons and complaint on March 23, 2001, the judge ruled orally that service was improper because the summons and complaint had not been served together and because `there’s never been a summons that matches the complaint for naming of the parties.’[11] The judge also ruled orally that Conseco had shown a meritorious defense, that there was no substantial hardship to the Trust, and that there was excusable neglect and due diligence `based on the misfilings [and] the misleading captions.’[12] The judge found that Conseco had filed its motion within a year after judgment because the one-year period for doing that had been tolled while John and Maria had bankruptcy cases pending.
On December 19, 2003, the court entered its written order granting the motion to vacate. The court found and concluded:
1. Service of the Complaint in this action was defective in that the plaintiff failed to serve the Summons and Complaint concurrently as required by CR 4(d)(1). Since the plaintiff filed the complaint (without the summons) in both the quiet title and the unlawful detainer actions real confusion existed as to whether a separate action had been filed or if she had simply put the wrong case number on the pleadings. Thus service was defective and the default judgment is void under CR 60(b)(5).
2. Separately and in the alternative defendant has met the four pronged test for relief from default in the facts and circumstances of this case. . . . Conseco has established a strong and clear prima facie defense. Moreover as set forth in Paragraph 1 Conseco[‘]s failure to appear resulted from real confusion as to whether a separate action had been filed therefore establishing excusable neglect. Given the multitude of bankruptcy stays operative in this case Conseco has met the due diligence requirement for relief from default. Lastly Plaintiff cannot be said to have suffered prejudice from setting aside the default since she failed to advise the court of the circumstances surrounding the transaction at issue when she obtained a default judgment.[13]
The plaintiffs then filed this appeal.
I.
The first issue is whether the trial court erred by entering Paragraph 1 of its order. CR 4(d)(1) plainly mandates, `The summons and complaint shall be served together.’ As the Trust acknowledges, the trial court made a `factual finding that the summons and complaint were never served together.’[14]
Thus, service was not sufficient.
The plaintiffs argue that they actually did serve the summons and complaint together. In our view, however, the trial court was entitled to believe the process server’s original 2001 assertions in lieu of her amended 2003 assertions. We decline to disturb the trial court’s finding.
Citing Nearing v. Golden State Foods Corp.,[15] Wichert v. Cardwell,[16] and Weiss v. Glemp,[17] the plaintiffs contend that they were not required to serve the summons and complaint together. But this contention contravenes the plain meaning of CR 4(d)(1), and none of the cited cases is on point. In Nearing, the court was addressing RCW 4.16.170, which differs significantly from CR 4(d)(1); whereas CR 4(d)(1) provides that `[t]he summons and complaint shall be served together,’ RCW 4.16.170 provides that a statute of limitation is tolled `when the complaint is filed or summons is served whichever occurs first.’[18] In both Wichert and Weiss, the summons and complaint were served together, so neither case addressed whether that was required. We conclude that the trial court did not err by entering Paragraph 1 of its order dated December 19, 2003.
II.
The second issue is whether the trial court erred by entering Paragraph 2 of its order. The plaintiffs say it did (A) because Conseco did not show excusable neglect and (B) because Conseco’s motion was not timely.
A.
We turn first to excusable neglect. The trial court found and concluded that `real confusion existed as to whether a separate action had been filed or if [Maria] had simply put the wrong case number on the pleadings;’ that `Conseco[‘]s failure to appear resulted;’ and thus that Conseco’s neglect was excusable.[19] The record shows that during March and April 2001, the parties were actively contesting the unlawful detainer action. The record shows that during those months, the plaintiffs served many different documents and pleadings, including some with confusing titles and captions.[20] They served some but not all on March 13, 2001. They served some again, and others for the first time, on March 23, 2001. Maria then `made some changes in the wording of some of her pleadings including amending the summons,’ so that April 6, 2001, the process server delivered yet `another stack of documents including amendments of many . . . served on March 23[,] 2001 with other documents being the same.’[21] This record amply supports the trial court’s determinations that `real confusion’ existed, that it contributed to Conseco’s failure to appear, and thus that Conseco’s neglect was excusable.
B.
We turn next to timeliness. Conseco filed its motion to vacate more than a year after judgment if the entire time counts, but within a year if each period during which a bankruptcy stay was in effect is excluded. The trial court found the motion timely by tolling the time during which John and Maria had bankruptcy cases pending. Given that CR 60(b) is a provision of state law, its construction is a state law question, not a federal law question, and we think the trial court acted properly under the peculiar and unique circumstances of this case.
The plaintiffs argue that no such period should be excluded because John and Maria are not parties to the quiet title action. As we interpret the documents filed in the quiet title action, however, John and Maria are parties. The only summons in the record, an amended one dated March 24, 2001, lists as plaintiffs the Piresha Merite Family Trust, Maria as `Executive Trustee’ and `Secured Party Creditor,’ and John as `Executive Secretary Trustee.’[22] It then lists, apparently as defendants, `Maria J. Shoemaker and John A. Shoemaker’ in their individual capacities. It shows that each was intentionally participating as a party to the case. Citing 11 U.S.C. sec. 362, the plaintiffs argue that John’s and Maria’s bankruptcy cases did not stay the quiet title action. The plaintiffs reason that a bankruptcy court’s automatic stay protects defendants but not plaintiffs, and that John and Maria were plaintiffs.[23] We reject this argument for at least two reasons. First, the plaintiffs invited any error by naming John and Maria as defendants in the amended summons of March 24, 2001. Second, the trial court was obligated to construe CR 60(b) using state law, not federal law, and under the peculiar and unique circumstances present here, it had discretion to toll CR 60(b)’s one-year requirement. Citing 11 U.S.C. sec. 108, the plaintiffs argue that even if the bankruptcy cases tolled CR 60(b)’s one-year requirement, they did not stay it until the date on which Conseco filed its motion to vacate, September 19, 2002. Again however, we reject this argument. Assuming without holding that sec. 108 even applies here, it provides only that CR 60(b)’s time requirement cannot expire before the end of one year, `including any suspension of such period occurring on or after the commencement of the case.’[24] Thus, it expressly permits CR 60(b)’s time requirement to be extended by `any suspension’ properly granted under state law. We conclude that the trial court did not err by entering Paragraph 2 of its order dated December 19, 2003.
We have not commented on CR 60(b)’s `fraud’[25] or `other reason’[26] subsections because the trial court did not rule thereon. It is at least arguable, however, that the trial court could properly have relied on one or both of those.
We refrain from ruling on the plaintiffs’ res judicata, collateral estoppel, and judicial estoppel arguments, as the trial court has not yet done so. Any other arguments are meritless or need not be reached. Concluding that the default judgment was not a thoughtful and just resolution of the parties’ rights, we hold that the trial court did not err by vacating it.
The order vacating the default judgment is affirmed, and the case is remanded to the trial court for any further proceedings that may be appropriate.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HOUGHTON, J. and ARMSTRONG, J., concur.