Padgett Law Group
Menu

PLG NEWS

News + updates + recent press

Categories

All
ALABAMA
Arkansas
Bankruptcy
Case Law
Closings
Compliance
Evictions
FDCPA
FHA
Florida
Foreclosure
Georgia
Illinois
Indiana
Kentucky
Legislative
Michigan
Moratoriums
New Jersey
Ohio
PANDIFFERENT
Pennsylvania
Personnel
Real Estate
Regulatory
REO
Tennessee
Texas
Title
Trending Cases
USDA
WASHINGTON

Archives

May 2025
April 2025
March 2025
February 2025
January 2025
December 2024
October 2024
August 2024
July 2024
June 2024
May 2024
March 2024
February 2024
August 2023
May 2023
April 2023
January 2023
November 2022
September 2022
August 2022
June 2022
April 2022
March 2022
September 2021
August 2021
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
October 2020
September 2020
August 2020
July 2020
June 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
August 2019
June 2019
May 2019
April 2019
February 2019
January 2019
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
March 2018
January 2018
December 2017
October 2017
September 2017
August 2017
July 2017

Washington State SOL Pitfall: Edmundson Overturned

8/8/2023

 
In the Winter 2021, I wrote an article warning about the statute of limitations in Washington where it had been erroneously determined that the statute of limitations begins to run with the discharge in bankruptcy upholding Edmundson v. Bank of America, 378 P.3d 272, 278 (Wash. Ct. App. 2016). In March 2022, I followed it with a case law update which was the beginning of the end of Edmundson. In Copper Creek Homeowners’ Association v. Wilmington, No. 82083-4-I, slip op. (January 18, 2022), the Court of Appeals for the State of Washington Division I gave the servicing industry an end to the misunderstanding created by the various interpretations of Edmundson. On Thursday, July 20, 2023, The Supreme Court of Washington put the final nail in the coffin of Edmundson with its opinion in Merritt v. USAA Fed. Sav. Bank, 2023 Wash. LEXIS 376 where the running of the statute of limitations was returned to its correct origination point of the date of default.
The Merritts had several properties with Home Equity Lines of Credit (“HELOC”). After not making payments and receiving a discharge in the Bankruptcy Court, the Merritts initiated quiet title actions in the state court. Of course, the argument was that under Edmundson the discharge in the Bankruptcy Court caused the statute of limitations to begin to run. USAA filed a motion for summary judgment arguing the opposition. The trial courts granted summary judgment agreeing with USAA, and the Merritts appealed. The Court of Appeals also agreed with USAA citing Copper Creek Homeowners’ Association. In turn, the Merritts sought review of the Supreme Court of Washington.

In the analysis the Court referenced the case law which has become all too familiar. The findings that the statute runs for each payment, the deed of trust follows the note, the statute does not begin until there is a breach…. And the list goes on. More specifically in relation to the Merritts’ loans, they were installment contracts where the statute of limitations began to run upon the date of each missed payment. The Court noted that the final statute of limitations had not yet run because the loans had not reached maturity.

Then, the Court began its analysis of the effect of a bankruptcy discharge. It specifically noted that a Chapter 7 discharge eliminates the in personam liability on a loan. Most importantly, the Court stated that the underlying debt is not extinguished and advised that more than a century of precedent states that a creditor’s right to foreclose survives a bankruptcy discharge. Further, the Court notes that the discharge does not alter the terms of the loan. In applying all of these concepts to the case at hand, the Court determined that the Merritts are not entitled to quiet title because the statue of limitations “…has not even begun to run.”

After a ruling that is music to all lenders ears, the Court attacked Edmundson. It explained and disavowed the dicta in Edmundson that a bankruptcy discharge triggers the statute of limitations. In its review, the Court advised that Edmundson was correct up to the point that it implied the statute of limitations stops accruing following a bankruptcy discharge. For that concept, the Court highlights the fact that no cases are cited in support thereof. In addition, the Court points out that this concept is contrary to contract and bankruptcy law. As the Court disavows this dicta, it reiterates the fact that a lien survives bankruptcy and only personal liability is eliminated by a bankruptcy discharge; thus, the statute of limitations does not begin to run until a payment is missed. This leaves the in rem remedies available to a lender. In a footnote, the Court lists all of the cases where courts have incorrectly relied upon Edmundson.1

While Copper Creek Homeowners’ Association gave the default industry some relief from this pitfall, that ruling was from the Court of Appeals. The ruling in Merritt was the final end to the nightmare because it came from the Washington Supreme Court.
___________________________
1. On a personal note, the laundry list of cases gave me vindication. The case where I fought the good fight and lost was included in the list. Also, the Court’s reasoning here was much like reading my briefing.

​
This post was prepared by Kristin A. Zilberstein, Esq.

Comments are closed.
    PLG BLOG DISCLAIMER
    ​The information contained on this blog shall not constitute legal advice or a legal opinion. The existence of or review and/or use of this blog or any information hereon does not and is not intended to create an attorney-client relationship. Further, no information on this blog should be construed as investment advice. Independent legal and financial advice should be sought before using any information obtained from this blog. It is important to note that the cases are subject to change with future court decisions or other changes in the law. For the most up-to-date information, please contact Padgett Law Group (“PLG”). PLG shall have no liability whatsoever to any user of this blog or any information contained hereon, for any claim(s) related in any way to the use of this blog.  Users hereby release and hold harmless PLG of and from any and all liability for any claim(s), whether based in contract or in tort, including, but not limited to, claims for lost profits or consequential, exemplary, incidental, indirect, special, or punitive damages arising from or related to their use of the information contained on this blog or their inability to use this blog. This Blog is provided on an "as is" basis without warranties of any kind, either express or implied, including, but not limited to, warranties of title or implied warranties of merchantability or fitness for a particular purpose. 
HOME
ABOUT
PRACTICE AREAS
CAREERS
CONTACT US
Picture
Picture

Padgett Law Group and Padgett Law Group EP are D/B/As of Timothy D. Padgett, P.A. Timothy D. Padgett, P.A.'s practice areas include creditors' rights, estate planning and probate, real estate transactions and litigation. Not all practices or services are available in all states in which Timothy D. Padgett, P.A. practices.
PRIVACY STATEMENT | WEBSITE DESIGN BY SQFT.MANAGEMENT
  • HOME
  • ABOUT PADGETT
    • THE DIFFERENCE
    • AFFILIATIONS
  • STATES OF SERVICE
    • FLORIDA
    • GEORGIA
    • TENNESSEE
    • ARKANSAS
    • TEXAS
    • OHIO
    • INDIANA
    • PENNSYLVANIA
    • NEW JERSEY
    • ALABAMA
    • MISSISSIPPI
  • PRACTICE AREAS
    • NATIONAL
    • FORECLOSURE
    • BANKRUPTCY
    • REGULATORY AFFAIRS
    • LITIGATION
    • REO, TITLE, & EVICTIONS
    • CLOSINGS
  • PLG NEWS
  • CAREERS
  • CLOSINGS
  • CONTACT US
  • HOME
  • ABOUT PADGETT
    • THE DIFFERENCE
    • AFFILIATIONS
  • STATES OF SERVICE
    • FLORIDA
    • GEORGIA
    • TENNESSEE
    • ARKANSAS
    • TEXAS
    • OHIO
    • INDIANA
    • PENNSYLVANIA
    • NEW JERSEY
    • ALABAMA
    • MISSISSIPPI
  • PRACTICE AREAS
    • NATIONAL
    • FORECLOSURE
    • BANKRUPTCY
    • REGULATORY AFFAIRS
    • LITIGATION
    • REO, TITLE, & EVICTIONS
    • CLOSINGS
  • PLG NEWS
  • CAREERS
  • CLOSINGS
  • CONTACT US