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Oakwood Holdings, LLC v. Mortgage Investments Enterprises, LLC

Supreme Court of Colorado, En Banc

February 12, 2018

Oakwood Holdings, LLC, Petitioner
v.
Mortgage Investments Enterprises LLC Respondent

         Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 15CA1046

          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.

          GABRIEL JUSTICE

         ¶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]

         ¶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.

         ¶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 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 ...


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