Washington Appellate Court Reminds Parties of the Importance of a Cross-Appeal in Title Dispute

The Court of Appeals of Washington recently taught litigants a stern message: you may want to consider a cross-appeal of any adverse ruling even if you are generally satisfied with the judgment of the lower court.  See Nationstar Mortg. LLC v. Schultz, 2019 WL 6713614 (Wash. Ct. App. Dec. 10, 2019).  In this case, an individual named Danny Schultz (“Schultz”) conveyed, via a “Survivorship Conveyance Deed” (the “Deed”), an interest in a parcel of real property (the “Property”) to Patricia Small (“Small”) and Margaret Duke (“Duke”).  The Deed stated in pertinent part:

THE GRANTOR, DANNY R. SCHULTZ, a single person, for and in consideration of love and affection, grants and conveys to PATRICIA J. SMALL, a married person as her separate estate, and MARGARET A. DUKE, a single person, a complete and unlimited right of survivorship jointly between them, in all of his interest in the [Property]:
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The rights of Grantees hereunder shall be superior to all interests created by Grantor hereafter, or imposed by law hereafter, if any.

One year after executing the Deed, Schultz entered into a reverse mortgage loan agreement utilizing the Property as security and assigned the lender, Nationstar Mortgage LLC (“Nationstar”), a deed of trust. Schultz defaulted on the loan and Nationstar initiated foreclosure proceedings in the superior court, naming Schultz, Small, and Duke as defendants.  Small and Duke answered the complaint, cross-claimed to quiet title, and counterclaimed against Nationstar, asserting that their interests in the Property were superior to Nationstar’s.  Small and Duke moved for summary judgment claiming that “the Deed conveyed the property to them in fee simple absolute as joint tenants, meaning Mr. Schultz could not have had an interest to encumber when he sought his loan.”  In opposition, Nationstar claimed the Deed was ambiguous and argued the matter should be resolved at trial using extrinsic evidence to properly construe the Deed.

The superior court granted summary judgment in favor of Small and Duke, holding that “the Deed was not ambiguous, and that neither a trial nor extrinsic evidence was necessary to construe it.”  However, the court found that the Deed did not convey the property to Small and Duke in fee simple.  Instead, the Deed granted Schultz a life estate in the property and conveyed the remainder to Small and Duke, thereby ruling that Nationstar could only seek foreclosure on Schultz’s life estate—not the entire property.  Nationstar appealed the superior court’s summary judgment order.  Small and Duke did not cross appeal.

On appeal, the Washington Appellate Court affirmed the trial court’s ruling that the Deed was not ambiguous and conveyed all of Schultz’s interests in the property to Small and Duke.  However, the Court disagreed with the superior court’s determination that the deed created a life estate.  Instead, the Court held that the “use of the word ‘survivorship,’ describes the relationship of the grantees, Ms. Small and Ms. Duke, as joint tenants with the right of survivorship. It does not convey an intent to reserve an interest in the property for Mr. Schultz for the remainder of his life.” 

Nonetheless, the Court found that because Small and Duke failed to cross-appeal, the Court could not grant them “greater relief than they received in the superior court” (i.e., a joint tenancy with the right of survivorship) and, accordingly, the “equitable resolution” is to “affirm the superior court’s order finding Mr. Schultz retained a life estate and conveyed the remainder to Ms. Small and Ms. Duke.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at crowley@riker.com, or Anthony Lombardo at alombardo@riker.com.