Oakwood Holdings, LLC v. Mortgage Investments Enterprises, LLC ( 2018 )


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    ADVANCE SHEET HEADNOTE
    February 12, 2018
    
    2018 CO 12
    No. 16SC666, Oakwood Holdings, LLC v. Mortgage Investments Enterprises, LLC—
    Foreclosure—Redemption—§ 38-38-302, C.R.S. (2017)—Right to Cure.
    This case requires the supreme court to determine whether a junior lienor who
    has complied with its obligations under section 38-38-302, C.R.S. (2017), is entitled to
    redeem, or whether it has a duty to accept a tendered lien payoff from the certificate of
    purchase holder who bought the property at a foreclosure sale and who obtained a
    power of attorney from the debtor-prior owner authorizing the certificate holder to pay
    off the prior owner’s debts.
    The court concludes that under the plain language of the applicable redemption
    statutes, a junior lienor who has complied with its obligations by timely filing its notice
    of intent to redeem is entitled to do so and, at that point, has no duty to accept a
    tendered payoff from a certificate of purchase holder like the respondent did here.
    Although the debtor-prior owner had a right to cure before the foreclosure sale, the
    respondent gained no additional rights by obtaining a limited power of attorney from
    the debtor-prior owner after the sale.
    Accordingly, the supreme court reverses the judgment of the court of appeals
    and remands this case for further proceedings.
    The Supreme Court of the State of Colorado
    2 East 14th Avenue • Denver, Colorado 80203
    
    2018 CO 12
    Supreme Court Case No. 16SC666
    Certiorari to the Colorado Court of Appeals
    Court of Appeals Case No. 15CA1046
    Petitioner:
    Oakwood Holdings, LLC,
    v.
    Respondent:
    Mortgage Investments Enterprises LLC.
    Judgment Reversed
    en banc
    February 12, 2018
    Attorneys for Petitioner:
    Sweetbaum Sands Anderson PC
    Geoffrey P. Anderson
    Reagan Larkin
    Denver, Colorado
    Navaro & Associates LLC
    Steven Navaro
    Castle Rock, Colorado
    Attorneys for Respondent:
    Murr Siler & Accomazzo, P.C.
    Joseph A. Murr
    Daniel R. Delaney
    Kara J. Snow
    Denver, Colorado
    JUSTICE GABRIEL delivered the Opinion of the Court.
    ¶1       This case involves the rights of two parties who participated in Colorado’s
    statutory foreclosure and redemption process. Petitioner Oakwood Holdings, LLC and
    respondent Mortgage Investments Enterprises LLC each claim a right to the deed on a
    piece of foreclosed property. In 2014, Mortgage Investments purchased the property at
    a foreclosure sale. On or around the date of the foreclosure sale, Oakwood purchased
    junior liens on the property and then attempted to redeem pursuant to section
    38-38-302, C.R.S. (2017). Mortgage Investments, however, did not provide redemption
    figures and instead, acting under a limited power of attorney granted by the prior
    property owner, attempted to pay off the amount due to Oakwood under the junior
    liens. Oakwood, however, refused the payment.
    ¶2       Mortgage Investments then filed the present declaratory judgment action,
    seeking a declaration that its payoffs were valid and that Oakwood was not entitled to
    redeem the property.          The parties ultimately filed cross-motions for summary
    judgment, the district court granted summary judgment for Oakwood, Mortgage
    Investments appealed, and in a unanimous, published opinion, a division of the court of
    appeals reversed. Mortg. Inv. Enter. LLC v. Oakwood Holdings, LLC, 
    2016 COA 111
    ,
    ___ P.3d ___. Oakwood then sought certiorari, which we granted.1
    1   Specifically, we granted certiorari to review the following issue:
    Did the court of appeals err in holding that petitioner, a junior lienor, has a duty
    to accept the tender of funds from the respondent, a certificate of purchase
    holder acting on behalf of a foreclosed debtor, after the junior lienor has filed a
    notice of intent to redeem but before it has tendered redemption funds.
    2
    ¶3    We now reverse the division’s judgment. We conclude that under the plain
    language of the applicable redemption statutes, a junior lienor who has complied with
    its obligations under section 38-38-302 by timely filing its notice of intent to redeem is
    entitled to redeem, and at that point, it has no duty to accept a tendered lien payoff
    from a certificate of purchase holder. Although a debtor-owner is sometimes entitled to
    cure, the statute is clear that he or she must do so before the foreclosure sale is
    complete, and Mortgage Investments gained no additional rights by obtaining the
    limited power of attorney from the debtor-prior owner after the sale in this case.
    Accordingly, once Oakwood complied with the statutory requirements to redeem, it
    was permitted to do so and had no obligation to accept what amounted to cure funds
    tendered by Mortgage Investments on behalf of the debtor-prior owner. The district
    court therefore properly granted summary judgment in Oakwood’s favor.
    I. Facts and Procedural Background
    ¶4    The prior owners of the home at issue in this case purchased the property in
    2006. By 2014, the owners had defaulted on their obligations to several homeowners’
    associations affiliated with their property.     The senior lienor-association initiated
    foreclosure proceedings, and on September 25, 2014, the Sheriff’s Department sold the
    property to Mortgage Investments at a public auction.
    ¶5    The next day, Mortgage Investments obtained a limited power of attorney from
    the previous homeowner.        This limited power of attorney authorized Mortgage
    Investments to pay off the outstanding balances on the junior liens.
    3
    ¶6       At about the same time, Oakwood acquired the liens held by the junior
    lienor-associations, and on October 1, 2014 and October 6, 2014, Oakwood filed notices
    of intent to redeem those liens pursuant to section 38-38-302. After receiving these
    notices, Mortgage Investments sent Oakwood cashier’s checks, which it asserted were
    “being tendered on behalf of” the prior owner and as “payment in full” on the junior
    liens.    Oakwood acknowledged receipt of these tenders but informed Mortgage
    Investments that it was unwilling to accept the payoffs.
    ¶7       Upon Oakwood’s refusal of the tendered funds, Mortgage Investments filed the
    present declaratory judgment action, as well as a motion for a temporary restraining
    order and preliminary injunction. As pertinent here, Mortgage Investments’ complaint
    sought the “entry of an order declaring that the payoffs in question are valid; [and] that
    Defendant Oakwood Holdings, LLC is not entitled to redeem the Property.” Oakwood
    filed counterclaims, and subsequently, both parties moved for summary judgment.
    ¶8       The district court granted summary judgment in Oakwood’s favor. The court
    began its analysis by noting that effective January 1, 2008, the pertinent statutes had
    eliminated a homeowner’s formal statutory redemption rights after the foreclosure sale
    and had combined the pre- and post-sale cure periods into one before-sale cure and
    payoff period. Because the foreclosure sale had already occurred in this case, the court
    found that (1) Mortgage Investments, which was standing in the debtor-prior owner’s
    shoes under a power of attorney, could not pay off Oakwood’s liens and (2) the
    pertinent statutes “[did] not compel a party to accept a payment that would satisfy its
    debts.”    In support of this determination, the court observed that “the General
    4
    Assembly has not taken affirmative action to give a certificate of purchase holder the
    right to purchase recorded debts. Meanwhile, the General Assembly has specifically
    preserved the right of a junior lienholder to redeem.” The court thus concluded that
    Oakwood had a right to redeem, notwithstanding Mortgage Investments’ attempted
    payoffs.
    ¶9    Mortgage Investments appealed, and in a unanimous, published opinion, a
    division of the court of appeals reversed. Mortg. Inv., ¶ 1. As pertinent here, the
    division concluded that contrary to Oakwood’s contention, Mortgage Investments had
    not attempted to make a post-foreclosure redemption. 
    Id. at ¶
    25.          Rather, it had
    attempted “to pay, on behalf of the debtor, outstanding liens encumbering the property
    it had purchased at the foreclosure sale.” 
    Id. The division
    noted that the redemption
    statute does not explicitly give a certificate of purchase holder the right to make such a
    payment. 
    Id. at ¶
    27. Conversely, however, the division observed that the statute also
    does not explicitly give a junior lienor the right to refuse such a payment prior to the
    start of the junior lienor’s redemption period and before the junior lienor tenders
    redemption funds. 
    Id. The division
    thus looked to what it perceived to be the intent of
    the statutory scheme and concluded that “prior to the start of a junior lienor’s
    redemption period and before a junior lienor tenders redemption funds, a certificate of
    purchase holder may pay, on behalf of the debtor, existing liens encumbering the
    foreclosed property.” 
    Id. at ¶
    37.
    ¶10   We then granted certiorari.
    5
    II. Analysis
    ¶11    We begin by discussing the standard of review and the applicable principles of
    statutory construction. We then consider the general principles behind the right of
    redemption and Colorado’s statutory scheme governing the right of redemption as part
    of the foreclosure process.
    A. Standard of Review and Principles of Statutory Construction
    ¶12    This case requires us to consider the pertinent redemption statutes, and we
    review questions of statutory interpretation de novo. UMB Bank, N.A. v. Landmark
    Towers Ass’n, 
    2017 CO 107
    , ¶ 22, ___ P.3d ___, ___. In construing a statute, “we look to
    the entire statutory scheme in order to give consistent, harmonious, and sensible effect
    to all of its parts, and we apply words and phrases in accordance with their plain and
    ordinary meanings.” 
    Id. If the
    statutory language is clear, we must apply it as written
    and need not resort to other rules of statutory construction. 
    Id. Our ultimate
    goal is to
    effectuate the legislature’s intent. See St. Vrain Valley Sch. Dist. RE-1J v. Loveland, 
    2017 CO 54
    , ¶ 11, 
    395 P.3d 751
    , 754. Accordingly, we must respect the legislature’s choice of
    language, and we do not add words to the statute or subtract words from it. Turbyne v.
    People, 
    151 P.3d 563
    , 567–68 (Colo. 2007).
    B. The Right of Redemption: General Principles
    ¶13    The redemption laws were developed to help creditors “recover their just
    demands, nothing more.” Plute v. Schick, 
    71 P.2d 802
    , 804 (Colo. 1937). The goal of
    redemption is to use the debtor’s property to pay “as many debts as possible.”
    Walker v. Wallace, 
    246 P. 553
    , 553 (Colo. 1926). Redemption statutes therefore seek “to
    6
    benefit both debtors and creditors by reducing the property owner’s debt while
    satisfying every possible creditor through the continual redemption of the same piece of
    real property.” First Nat’l Bank of Southglenn v. Energy Fuels Corp., 
    618 P.2d 1115
    ,
    1119 (Colo. 1980). Thus, when a piece of property is purchased at a foreclosure sale, a
    junior lienor may redeem and obtain a certificate of redemption. Sant v. Stephens,
    
    753 P.2d 752
    , 756 (Colo. 1988). Such a certificate operates as an assignment of the
    purchaser’s interest in the foreclosed property. 
    Id. The assignment,
    however, is subject
    to the rights of others who may be entitled to redeem. 
    Id. After all
    redemption periods
    have expired, the holder of the certificate of purchase or the lienor who last redeemed
    receives a deed to the property. 
    Id. ¶14 Notably,
    [t]he right to redeem from an execution sale is a creature of statute. The
    right of redemption has long been recognized as a substantive right to be
    exercised in strict compliance with statutory terms. It is not a right
    derived from principles of equity, but depends entirely upon the
    provisions of the statute creating the right.
    Johnson v. Smith, 
    675 P.2d 307
    , 310 (Colo. 1984) (citations omitted). Accordingly, the
    right of redemption “is not to be enlarged by judicial interpretation, yet a liberal
    construction is to be given the statute allowing redemption to the end that all the
    property of a debtor may pay as many debts as possible.” 
    Walker, 246 P. at 553
    .
    C. Section 38-38-302
    ¶15   In Colorado, the right to redeem has been codified by the General Assembly at
    section 38-38-302. In its current form, the statute provides that a lienor or assignee of a
    7
    lien is entitled to redeem if certain conditions have been met. Specifically, the statute
    provides, in pertinent part:
    A lienor or assignee of a lien is entitled to redeem if the following
    requirements are met to the satisfaction of the officer:
    (a) The lienor’s lien is a deed of trust or other lien that is created or
    recognized by state or federal statute or by judgment of a court of
    competent jurisdiction;
    (b) The lien is a junior lien as defined in section 38-38-100.3(11);
    (c) The lienor’s lien appears by instruments that were duly recorded in the
    office of the clerk and recorder of the county prior to the recording of the
    notice of election and demand or lis pendens and the lienor is one of the
    persons who would be entitled to cure pursuant to section 38-38-104(1),
    regardless of whether such lienor filed a notice of intent to cure. If, prior to
    the date and time of the recording of the notice of election and demand or
    lis pendens, a lien was recorded in an incorrect county, the holder’s rights
    under this section shall be valid only if the lien is rerecorded in the correct
    county at least fifteen calendar days prior to the actual date of sale.
    (d) The lienor has, within eight business days after the sale, filed a notice
    with the officer of the lienor’s intent to redeem.
    § 38-38-302(1).
    ¶16    The plain language of this provision makes clear that a junior lienor is “entitled”
    to redeem if it meets the requisite conditions, 
    id., and it
    is undisputed that Oakwood
    has satisfied each of these conditions here.       Moreover, we perceive nothing in the
    statute that requires a junior lienor to accept payment from a more senior lienor in
    satisfaction of its claim once the junior lienor has complied with the prerequisites for
    redemption.       Had the legislature intended such a requirement, it could have so
    8
    provided. We, however, may not add such words to the statute. See 
    Turbyne, 151 P.3d at 567
    .2
    ¶17    We are not persuaded otherwise by Mortgage Investments’ assertion that the
    statute gives it a right to pay off a junior lien at any time prior to a junior lienor’s tender
    of the redemption funds.       Under section 38-38-104(1), C.R.S. (2017), subject to an
    exception not pertinent here, a debtor-owner has a right to cure before the foreclosure
    sale. To do so, the owner must file a written notice of intent to cure together with
    evidence of his or her right to cure “no later than fifteen calendar days prior to the date
    of sale . . . .” § 38-38-104(1)(a)(I). The statute does not provide the owner with any right
    to cure after the sale has occurred. See § 38-38-104(1).
    ¶18    Here, Mortgage Investments claims that it acquired what is essentially a right to
    cure by way of the power of attorney that it obtained from the debtor-prior owner the
    day after the foreclosure sale. We perceive nothing in the redemption statute, however,
    that grants Mortgage Investments greater rights than the prior owner had.
    Accordingly, just as the prior owner had no right to cure after the sale had occurred,
    Mortgage Investments had no right to pay off the junior liens after the sale had
    occurred and after Oakwood had filed its timely notices of intent to redeem, regardless
    of when Oakwood tendered its redemption funds.
    2 Although we reach our decision based on the statute’s plain language and therefore
    need not turn to other tools for determining legislative intent, we note that in 2010, the
    General Assembly considered and rejected an amendment to the redemption statute
    that would have added what Mortgage Investments now contends is already there.
    Specifically, Senate Bill 10-93 proposed requiring “a junior lienor to accept the tendered
    payment and to execute a release of the lien.” See S.B. 10-93, 67th Gen. Assemb.,
    2d Reg. Sess. (Colo. 2010). This bill, however, was never enacted.
    9
    ¶19   We likewise are unpersuaded by Mortgage Investments’ assertion that this
    court’s decisions in 
    Plute, 71 P.2d at 803
    –04, and WYSE Financial Services, Inc. v.
    National Real Estate Investment, LLC, 
    92 P.3d 918
    , 919-23 (Colo. 2004), mandate the
    relief that Mortgage Investments seeks.
    ¶20   In 
    Plute, 71 P.2d at 803
    , a man named Schick held a lien on a property and
    purchased the property at a foreclosure sale. Thereafter, the holder of a junior lien (in
    this case, a judgment) sold that lien to the Plutes, and the Plutes claimed a right to
    redeem. 
    Id. As soon
    as Schick learned of this, he tendered to the district court payment
    of the Plutes’ judgment. 
    Id. The Plutes,
    however, refused to allow the judgment to be
    satisfied and filed a notice of intent to redeem, although they did not tender any
    redemption funds to the trustee until after Schick had paid the money to the clerk of
    court. 
    Id. Relying primarily
    on equitable principles, this court ultimately concluded
    that the Plutes had no right to the property but rather could only collect and satisfy
    their judgment. 
    Id. at 804.
    ¶21   In 
    WYSE, 92 P.3d at 919
    –20, a junior lienholder, National, obtained an
    assignment of a judgment against the debtor, gave notice of its intent to redeem,
    tendered payment of the statutory redemption amount to the public trustee, and
    received a certificate of redemption, which it recorded. Two days later, the certificate of
    purchase holder, Realamerica, contracted with the debtor for the right to act as her
    agent and to satisfy the judgment against her. 
    Id. at 920.
    That same day, Realamerica
    tendered a cashier’s check to the county court in satisfaction of the judgment, and the
    question became whether National’s right to redeem could be extinguished by a
    10
    subsequent satisfaction of the underlying judgment. 
    Id. at 920–21.
    We concluded that
    because National had complied with the statutory requirements for redemption, it was
    entitled to the deed to the property. 
    Id. at 923.
    As pertinent here, we explained, “In the
    absence of any satisfaction of its judgment by at least the point at which it paid the
    public trustee, National was entitled to, and did, make redemption as permitted by
    statute.” 
    Id. (emphasis added).
    We thus concluded that National’s redemption rights
    were necessarily unaffected by Realamerica’s later attempts to satisfy the judgment. 
    Id. ¶22 For
    several reasons, we do not agree that Plute and WYSE support Mortgage
    Investments’ position here.
    ¶23   First, both Plute and WYSE were decided under versions of the statute that
    preceded the legislative amendment eliminating the right of debtor-owners to redeem
    after the foreclosure sale. For example, at the time that we decided WYSE, the statute
    provided, in pertinent part:
    [W]ithin seventy-five days after the date of the sale of the property by
    virtue of any foreclosure of a mortgage, deed of trust, or other lien or by
    virtue of an execution and levy, the owner of the property, or any other
    person liable after the foreclosure sale for the deficiency, may redeem the
    property . . . .
    § 38-38-302(1), C.R.S. (2004). In 2008, however, the General Assembly repealed and
    reenacted section 38-38-302 in its entirety, amending all of its language. See Ch. 305,
    sec. 21, § 38-38-302, 2006 Colo. Sess. Laws 1467–71. As pertinent here, the amended
    statute, which is the one applicable in this case, removed all references to an owner’s
    redemption after foreclosure. See § 38-38-302. For this reason alone, the analysis in
    Plute and WYSE does not assist Mortgage Investments.
    11
    ¶24   Second, as Oakwood points out, Plute turned on the application of equitable
    principles. See 
    Plute, 71 P.2d at 804
    . As noted above, however, the right of redemption
    is a creature of statute, and the right to redeem must be exercised in strict compliance
    with the statute’s terms. 
    Johnson, 675 P.2d at 310
    .
    ¶25   Finally, to the extent that Mortgage Investments suggests that the “dispositive
    fact” in WYSE was the timing of the tender there at issue and that WYSE stands for the
    proposition that a certificate of purchase holder can preclude redemption by tendering
    payment in full at any time before the junior lienholder tenders the redemption amount,
    we perceive nothing in WYSE that goes that far. Rather, in our view, WYSE simply
    made clear that a certificate of purchase holder could not prevent a junior lienholder
    from redeeming once the junior lienholder had given notice of its intent to redeem and
    tendered the redemption funds, as had occurred there. 
    WYSE, 92 P.3d at 923
    . We did
    not reach the question presented in this case, namely, whether the certificate of
    purchase holder could prevent redemption under the present statute once the
    foreclosure sale had occurred and a junior lienor had filed a timely notice of intent to
    redeem.
    III. Conclusion
    ¶26   For these reasons, we conclude that under section 38-38-302, once the foreclosure
    sale was complete and Oakwood had timely filed its notice of intent to redeem, the
    statute entitled it to redeem, and it had no obligation to accept Mortgage Investments’
    tendered payoff of the junior lien. Accordingly, we reverse the judgment of the division
    below and remand this case for further proceedings consistent with this opinion.
    12