Blakeley v. Quality Loan Service Corp. of WA

ORS 86.797(2) plainly bars “an action for a deficiency” against “the grantor, the grantor’s successor in interest, or another person obligated on” the relevant note; however, given the text and context of the statute, that does not encompass a nonjudicial or judicial foreclosure of a trust deed.

Plaintiffs appealed from a declaratory judgment, in which the trial court concluded that Citibank had the right to foreclose against their property. On appeal, plaintiffs argued that ORS 86.797(2) bars Citibank from foreclosing on its trust deed. Plaintiffs asserted that the statute bars a subsequent “action for a deficiency” on obligations that were part of the same transaction, because ORS 86.797(4) extends to other actions covered by the anti-deficiency bar. Citibank responded that nothing in the statute prohibits multiple property foreclosures. ORS 86.797(2) provides that “an action for a deficiency may not be brought after a judicial foreclosure of a residential trust deed, and a judgment to foreclose a residential trust deed under ORS 88.010 may not include a money award for the amount of the debt against the grantor, the grantor’s successor in interest or another person obligated on any other note secured by a residential trust deed for the property that was subject to the judicial foreclosure when the debt, of which the note is evidence, and meets the criteria of ORS 86.797(2)(b)(A) and (B).” Based on the text and context of the statute, the Court found that the legislature did not intend to bar more than an action that would result in a deficiency judgment when making amendments to the statute. The court held that an action for deficiency does not encompass a nonjudicial or judicial foreclosure of a trust deed. Therefore, the trial court did not err in concluding that the statute did not prevent Citibank from seeking to foreclose on the Citibank trust deed. AFFIRMED.