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When a borrower defaults on his or her commercial real estate loan in Washington, the bank has a number of options for collecting the debt.  Lenders usually secure their real estate loans with deeds of trust, which gives the lender the option to foreclose on the collateral either non-judicially through a Trustee’s Sale, or non-judicially through a judicial foreclosure and subsequent Sheriff’s Sale.  In each of those situations the rules governing the borrower’s and guarantor’s continuing liability on the loan after the sale differ.

Man cutting treeWhat are the most common sources of disputes between neighbors?  Children?  Noise?  Fences? Dogs?  Trees?  That’s the top five according to that important American sociological barometer, TV’s “Family Feud”.  Topic number five recently made it to the docket of Division I of the Washington State Court of Appeals.

Spokane Entrepreneurial Center v. Spokane Moves to Amend the Constitution, 2016 WL 455957 (Wa.) involved the successful gathering of signatures to put a “Community Bill of Rights,” as an amendment of the Spokane Charter, to send the matter to the voters of the city. Petitioners filed a declaratory judgment challenging the validity of the proposal. The trial court found petitioners had standing to challenge the validity of the proposal and that, on the merits, the proposal exceeded the initiative power. The Washington Court of Appeals made the opposite rulings on these issues and ordered the matter to be put to a vote. The Washington Supreme Court accepted review and posed the questions to be 1) whether petitioners had standing, and 2) whether the initiative was beyond the initiative power.

Some people say that once you get outside the Puget Sound metropolis, you find friendlier people.  I’ve heard of the “Seattle freeze,” where people move here and have a hard time making friends.  It’s not hard to meet people in Manson, Wenatchee or Yakima, Washington, three cities I know and have spent time in.  Overall, they seem like friendlier places to me than the big city on Elliot Bay.

A recent decision by Division III of the Washington Court of Appeals may reflect that warmer culture.  Its decision in Gamboa v. Clark (No. 30826-0-III, March 25, 2014) discussed “presumptions” and “inferences” in the context of prescriptive easements.  The Court ruled that among otherwise friendly neighbors, the use of a roadway on a neighbor’s property is presumed to be permissive.  As a result, in the absence of other evidence, a neighbor who openly, notoriously, uninterruptedly travels on a neighbor’s road does not acquire a prescriptive easement.  The element of “adversity” is missing.  The neighbors are presumed to be acting generously with one another.

Contrast the Eastern Washington appellate decision with the ruling of the Court of Appeals based in Seattle.  Division I of the Court of Appeals ruled in Drake v. Smersh, 122 Wn. App. 147 (2004) that while the presumption of permission may apply in “vacant land cases,” in “developed land cases” evidence of “neighborly sufferance or accommodation” may be the basis for avoiding a presumption of adverse use, but may not in each case.

The Gamboas and the Clarks were neighbors, each of them farmers raising crops and living on their adjoining parcels.  They got along well, and the Gamboas used a road put in by the Clarks which ran across the Clarks’ property to access the Gamboa home.  The Clarks also used that road for their own farming purposes.  Each believed the road was their own and that they were letting the other family use the road out of neighborly accommodation.  However there was no evidence of express permission to use the road coming from either party.

A dispute arose at some point, and they decided to have the road surveyed to determine ownership.  The survey showed it was largely located on the Clarks’ property, and the Gamboas brought a lawsuit to establish their right to a prescriptive easement over the roadway.  The trial court ruled that the Gamboas had demonstrated all the elements required to prove a prescriptive easement.  They’d used the road openly and notoriously for an uninterrupted period of 16 years, believing they were the owners.  They’d also done some maintenance on the road during that period.  While they never openly claimed ownership of the road, conversely, the Clarks never gave them express or implied permission to use it.  The trial court found that “a claimant’s use is adverse unless the property owner can show that the use was permissive.”  Because the Clarks didn’t present evidence of express or implied permission, the Gamboas were granted a prescriptive easement over the Clarks’ land.

The Court of Appeals, sitting in Spokane, by a 2-1 majority, overturned the trial court and ruled, instead, that in cases where there’s a history of neighborliness, or where the claimant is using a road which was established by the property owner along with the property owner, the is no presumption that use by a neighbor of another’s land in such case is adverse.  Instead, in those cases, as in cases where the land is vacant, open and unimproved, the law won’t apply the presumption of adversity necessary to establish prescriptive rights.  In effect, it’s a recognition of a characteristic I’ve observed first hand on the dry side of the Cascades.  It’s just friendlier there.

The Washington State Supreme Court recently held in Edmonson v. Popchoi, 172 W2nd. 272 (2011) that a grantor of a statutory warranty deed cannot summarily settle an adverse title claim but must provide a good faith defense even though there may not be a viable defense for the claim.

In 2006, Kiss sold a parcel of land to Popchoi by statutory warranty deed. By statute, the deed contained the covenant that Kiss would defend Popchoi’s title. Popchoi discovered through a survey that a fence encroached by 165 square feet into the southern part of his new property. The neighbor to the south, Edmondson, sent a letter claiming that property by adverse possession. Popchoi tendered the defense of the claim to Kiss. Kiss conditionally accepted the tender subject however to his right to settle the claim. Kiss said that it would be less expensive to pay damages to Popchoi for the breach of the title covenant than to defend the lawsuit. Kiss’ tender was rejected and Popchoi engaged his own attorney to defend the lawsuit filed by Edmonson.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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