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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kuretich v. Alaska Trustee, LLC (9/14/2012) sp-6707

Kuretich v. Alaska Trustee, LLC (9/14/2012) sp-6707

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER . 

        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 

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                 THE SUPREME COURT OF THE STATE OF ALASKA 



TIMOTHY KURETICH, SR.,                          ) 

                                                )       Supreme Court No. S-14196 

                        Appellant,              ) 

                                                )       Superior Court No. 3AN-09-10371 CI 

        v.                                      ) 

                                                )       O P I N I O N 

                                                ) 

ALASKA TRUSTEE, LLC,                            )      No. 6707 - September 14, 2012 

STEPHEN ROUTH, and PHH                          ) 

MORTGAGE CORPORATION,                           ) 

                                                ) 

                        Appellees.              ) 

                                                ) 



                Appeal from the Superior Court of the State of Alaska, Third 

                Judicial District, Anchorage, Andrew Guidi, Judge. 



                Appearances:       James   J.   Davis,   Jr.,   Chelsea   C.   Hicks,   and 

                Robert     P.  Lynch,     Alaska    Legal    Services    Corporation, 

                Anchorage, for Appellant.  Richard Ullstrom, Routh Crabtree 

                Olsen, PS, Anchorage, for Appellees. 



                Before:       Carpeneti,    Chief   Justice,   Fabe,   Winfree,     and 

                Stowers, Justices. [Christen, Justice, not participating.] 



                CARPENETI, Chief Justice. 



I.      INTRODUCTION 



                A homeowner sought a declaratory judgment that foreclosure fees were not 



properly included in the reinstatement amount necessary to halt foreclosure proceedings 


----------------------- Page 2-----------------------

under Alaska law.  The superior court concluded that the foreclosure fees were properly 



included in the reinstatement amount.        We agree and therefore affirm. 



II.     FACTS AND PROCEEDINGS 



                Timothy Kuretich purchased his home in 2001 and financed this purchase 



through a promissory note and deed of trust with PHH Mortgage Corporation.   In 2008, 



Kuretich fell behind on his mortgage payments and PHH Mortgage authorized Alaska 



Trustee, LLC to begin foreclosure.  Kuretich paid the reinstatement amount provided by 



Alaska Trustee, including foreclosure fees and expenses.   In early 2009, Kuretich again 



fell behind on his payments and Alaska Trustee again began the foreclosure process. 



This time, Kuretich sought counsel before requesting a reinstatement amount.                 When 



Alaska Trustee provided a reinstatement amount that contained its foreclosure fees and 



costs, Kuretich refused to pay the full amount and brought this suit. 



                Kuretich    alleged   that  Alaska    Trustee   had   violated   AS   34.20.070(b) 



(Alaska's non-judicial foreclosure statute), federal regulations, and Alaska's Unfair Trade 



Practices and Consumer Protection Act (UTPCPA) by including foreclosure fees and 



costs in the reinstatement amount.       The superior court granted a preliminary injunction 



in September 2009, delaying the foreclosure sale.  In October 2009, PHH Mortgage and 



Kuretich entered into a loan modification agreement, which terminated foreclosure and 



reinstated   the   mortgage.     Kuretich   continued   the   litigation   to   pursue  a  declaratory 



judgment   and   the   superior   court   granted   summary   judgment   for   Alaska   Trustee   in 



December 2010.       This appeal followed. 



III.    STANDARD OF REVIEW 



                We review a grant of summary judgment de novo, drawing all reasonable 

inferences in favor of the party against whom summary judgment is granted.1              The grant 



        1      Kiernan v. Creech , 268 P.3d 312, 315 (Alaska 2012). 



                                                 -2-                                            6707 


----------------------- Page 3-----------------------

will be upheld if there is no genuine issue of material fact.2          We may affirm the grant of 



summary judgment on any grounds discerned from the record, even grounds not asserted 

by the trial court or parties.3 



                "We apply our independent judgment to questions of law, adopting the rule 

of   law    most   persuasive     in  light   of  precedent,    reason,    and   policy."4    Statutory 



interpretation is a question of law that requires our independent judgment.5                   We will 



interpret a statute "according to reason, practicality, and common sense, considering the 

meaning of the statute's language, its legislative history, and its purpose."6 



IV.     DISCUSSION 



                Kuretich challenges the superior court's conclusion that Alaska Trustee 



could add various fees and charges to Kuretich's reinstatement amount even though 



those fees were not sums "in default" under Kuretich's reading of AS 34.20.070(b). 



Alaska   Trustee,   arguing   that   Kuretich   improperly   changed   his   argument   on   appeal, 



encourages us to affirm the superior court on two alternate grounds: (1) federal housing 



regulations allowed for collection of the disputed fees, and because this loan was secured 



by   HUD,   federal   law   preempted   any   contrary   requirements   under   the   state   statute, 



AS 34.20.070(b); and (2) the UTPCPA does not apply to non-judicial foreclosures and 



Kuretich has no standing to sue for damages or injunctive relief under that statute. 



        2       Id.
 



        3       Id . at 1039; Moore v. Allstate Ins. Co., 995 P.2d 231, 233 (Alaska 2000).
 



        4
      Jacob v. State, Dep't of Health & Soc. Servs., Office of Children's Servs. , 



177 P.3d 1181, 1184 (Alaska 2008) (internal citations omitted). 



        5       Parson v. State, Dep't of Revenue, Alaska Hous. Fin. Corp. , 189 P.3d 1032, 



1036 (Alaska 2008). 



        6       Id. 



                                                   -3-                                             6707
 


----------------------- Page 4-----------------------

                 Superior Court Judge Andrew Guidi concluded that                    "Alaska Trustee's 



inclusion of foreclosure fees and costs in plaintiff's reinstatement quote, as permitted by 



the parties' deed of trust, is consistent with Alaska's non-judicial foreclosure statute, 



AS 34.20.070."       We agree. 



                 Alaska Statute 34.20.070(b) provides that a borrower can halt non-judicial 



foreclosure   and   cure   the   default   "by   payment   of   the   sum   in   default   other   than   the 



principal that would not then be due if no default had occurred, plus attorney fees or 



court costs actually incurred by the trustee."           The central dispute in this case concerns 



what costs a lender, or its foreclosure beneficiary, may include in the reinstatement 



amount as the "sum in default." 



                 The only case in which we have considered this portion of the statute is 

Hagberg   v.   Alaska   National   Bank.7        In   that   case,   we   held   that   an  amendment   to 



AS   34.20.070   providing   for   reinstatement   did   not   violate   the   contract   clause   of   the 



Constitution, even when applied to deeds of trust executed before the amendment's 

effective date.8    In doing so, we reasoned that reinstatement affected only the lender's 



ability to accelerate the loan, not the value of the right itself, because the function of 



reinstatement is to place the lender and borrower in the same position as they were before 

default.9   The Hagberg court noted that an obligor may halt non-judicial foreclosure by 



"paying costs and by bringing his payments current," but did not specify which costs 

could be included.10     In this case the superior court correctly noted, however, that "[o]nly 



        7        585 P.2d 559 (Alaska 1978). 



        8       Id. at 561. 



        9       Id. at 562. 



        10      Id. 



                                                    -4-                                              6707
 


----------------------- Page 5-----------------------

by allowing recovery of these [foreclosure] fees will the value of the lender's rights be 



preserved and the parties returned to their status quo prior to the default." 



                The superior court also interpreted AS 34.20.070 as deferring to the terms 



and conditions contained in the deed of trust to govern the lender's and borrower's rights 



upon foreclosure. The superior court noted that the deed of trust in this case "specifically 



delineates   the   reinstatement   amount   as   including   costs   of   foreclosure   not   limited   to 



attorney fees."  Thus, the costs incident to foreclosure were properly included within the 



sum   in   default   in   this   case   by   the   express   terms   of   the   deed   signed   by   the   parties. 



Because the court's decision correctly granted summary judgment for Alaska Trustee, 

we adopt the superior court's decision, attached as an appendix.11 



V.      CONCLUSION 



                For the reasons stated above and in the attached opinion of the superior 



court, we AFFIRM the grant of summary judgment for Alaska Trustee. 



        11      The only issue raised on appeal that was not addressed by the superior court 



is whether Kuretich has impermissibly changed his argument on appeal thereby waiving 

his claim that "the foreclosure expenses included in the reinstatement quote were not 

actually 'in default' because no demand for payment of them had been made."   We 

believe that Kuretich did not change his argument on appeal, but rather maintained his 

same argument throughout the entire course of proceedings, principally that forfeiture 

fees    are  not  properly    included    in  the  reinstatement     amount    under   any    section   of 

34.20.070(b).     Accordingly, we reject Alaska Trustee's assertion. 



                Finally, having upheld the superior court's grant of summary judgment on 

the   grounds   on   which   it   was   issued,   we   have   no   need   to   consider   Alaska   Trustee's 

alternate bases for upholding the grant of summary judgment. 



                                                   -5-                                             6707
 


----------------------- Page 6-----------------------

                                          APPENDIX 



             IN THE SUPERIOR COURT FOR THE STATE OF ALASKA 

                    THIRD JUDICIAL DISTRICT AT ANCHORAGE 



TIMOTHY KURETICH, SR.,                         )
 

                                              )
 

               Plaintiff,                     )
 

                                              )
 

v.                                            ) 

                                              ) 

ALASKA TRUSTEE, LLC,                           ) 

STEPHEN ROUTH, and PHH                         ) 

MORTGAGE CORPORATION,                          ) 

                                              ) 

               Defendant.                     ) 

_______________________________ )                     Case No. 3AN-09-10371 CI 



      ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT* 



               On    June   4,   2010,   plaintiff   Timothy  Kuretich,   Sr.,   filed  a  motion  for 



summary judgment urging the Court to narrowly define the costs and fees included in the 



reinstatement amount, or "sum in default", under AS 35.20.070, Alaska's non-judicial 



foreclosure   statute.   Defendant   Alaska   Trustee   opposed   the   motion   and   moved   for 



        *       This decision has been edited   to   conform to the technical rules of the 



Alaska Supreme Court. 



                            Appendix -  Page 1 of  14                                          6707 


----------------------- Page 7-----------------------

summary judgment as to Counts I and III of the plaintiff's Third Amended Complaint.1 



The Court considers the motions and the parties' arguments here. 



I.      FACTUAL BACKGROUND 



             In June 2001, plaintiff Timothy Kuretich, Sr., executed a deed of trust with 



Premier Mortgage in the amount of $111,122.00 to secure the balance due on a note for 



purchase of the property at issue in this case.          In March 2009, plaintiff defaulted on his 



mortgage.      As   a   result,   PHH   Mortgage   accelerated   the   debt   and   authorized   Alaska 

Trustee to commence foreclosure proceedings as the trustee of the deed of trust.2               In June 



2009, Alaska Trustee recorded a Notice of Default in Palmer, citing plaintiff's failure to 



"pay   the   indebtedness   due   under   the   Deed   of   Trust,   $115,495.88,   plus   interest,   late 



charges, costs, and any future advances" and setting September 28, 2009 as the date of 



sale. Upon request by plaintiff's counsel, Alaska Trustee provided a reinstatement quote 



totaling $11,479.28.      The quote provided by Alaska Trustee reflects: 



             1.   $8,845.27 in payments due to PHH Mortgage; 

             2.   $146.44 in accrued late fees; 

             3.   $200 for a broker's price opinion; 



        1        Count I of Plaintiff's Third Amended Complaint alleges violation of the 



Unfair Trade Practices and Consumer Protection Act by including "unlawful fees" in the 

reinstatement amount "that exceed those provided for in AS 34.20.070(b)." In Count III, 

plaintiff   seeks   a   declaration   from   this   Court   holding   that   under   AS   34.20.070(b), 

"attorney fees" and "court costs" do not include fees for inspections, appraisals, title 

reports,   recording,   certified   mailings,   property   posting,   public   posting,   publication, 

postponements, and other fees.          Plaintiff also seeks injunctive relief and requests the 

Court     "declare   void   and   set  aside   any  and   all  non-judicial    foreclosure    sales  that 

defendants have conducted in the past two years, and may conduct in the future, where 

they    have   told  homeowners        that  they   must   first  pay  it[s]  excessive    or  unlawful 

reinstatement amounts in order to cure their mortgage default." 



        2        Alaska Trustee had been substituted   as the trustee of the deed of trust 



during a previous foreclosure in 200[8].          Plaintiff was able to cure the default and halt 

foreclosure in 200[8]. 



                             Appendix -  Page 2 of  14                                               6707 


----------------------- Page 8-----------------------

             4.	  $13.25 for drive-by inspections; 

             5.	  $26.50 for other fees incurred by PHH Mortgage; 

             6.	  Alaska Trustee's fee of $1250 

             7.	  $630 paid to First American Title for the trustee's sale guarantee; 

             8.	  $44    for  recording    documents     in  the  real  property   records    ($22   for 

                  recording the Notice of Default, and $22 for recording the termination 

                  notice should the loan reinstate and the foreclosure be terminated); 

             9.	 $72.02 for certified mail postage for mailing the Notice of Default; 

             10. $45 paid to the property poster for posting the Notice of Default 

                  on the property; 

                  and 

             11. $206.80 for publication of the foreclosure sale notice in the Alaska 

                  Journal of Commerce.3 



The sale date was subsequently postponed to November 18, 2009.  However, as a result 



of the completed loan modification, the sale was terminated by Alaska Trustee at PHH 



Mortgage's request on October 29, 2009.            The parties now seek a declaration from the 



Court   on   the   permissible   costs   and   fees   of   reinstatement. The   issue   is   capable   of 



reoccurrence between the parties. 



             Plaintiff asserts that he should be able to reinstate the terms of his mortgage 



for the amount of mortgage payments missed plus late fees, i.e., $8,990.00, rather than 



for the $ 11,479.28 reinstatement figure produced by Alaska Trustee. Plaintiff argues that 



defendant     Alaska    Trustee   should    not  be  allowed    to  -   in  his  words    -   "pad"    a 



reinstatement quote with fees and costs that are not "attorney fees or court costs" as 



expressly authorized by statute.       Alaska Trustee argues the costs of reinstatement were 



actually and necessarily incurred, not padding, and the reinstatement quote it provided 



to plaintiff properly identified the "sum in default" according to the terms of the note and 



deed of trust.   Both parties have moved for summary judgment on this point of law. 



II.     SUMMARY JUDGMENT STANDARD 



        3        Affidavit of Rose Santiago, June 25, 2010. 



                             Appendix -  Page 3 of  14                                             6707 


----------------------- Page 9-----------------------

             Summary judgment is appropriate if there are no genuine issues of material 

fact and the movant is entitled to judgment as a matter of law.4          To prevail on his motion, 



plaintiff bears the initial burden of proving the absence of a genuine factual dispute and 

the legal right to a judgment.5      The "Court is not bound by the formal issues framed in 



the pleadings when deciding a motion for summary judgment under Rule 56."6                    Instead, 



the Court "will examine the pleadings to ascertain what issues of fact they present and 



then   consider   the   affidavits,   depositions,   admissions,   answers   to   interrogatories   and 



similar   material to   determine   whether   any   of these   issues   are   real and   genuine   and 



whether any of the post-pleading material suggests the existence of any other triable 

genuine issues of material fact."7 



             The relevant facts of this case are   largely undisputed; the parties' dispute 



instead is centered on the interpretation of Alaska's non judicial foreclosure statute. 



Accordingly, the legal questions before the Court are appropriate for summary judgment. 



III.    LEGAL ARGUMENT 



             In Alaska, lenders have three choices of remedy when a borrower defaults on 



a deed of trust: (1) judicial foreclosure; (2) suing on the note secured by the deed of trust; 



or (3) non-judicial foreclosure.       Judicial foreclosures are processed through the courts 



and require the lender to file a complaint and record a notice of lis pendens.   If the court 



finds the debt valid, and in default, it will issue judgment for the total amount owed 



        4        Cikan v. ARCO Alaska, Inc., 125 P.3d 335, 339 (Alaska 2005). 



        5        Philbin   v.   Matanuska-Susitna   Borough ,   991   P.2d   1263,   1265   (Alaska 



1999). 



        6        Prentzel v. State, Dep't of Pub. Safety , 169 P.3d 573, 582 (Alaska 2007). 



        7        Jennings v. State , 566  P.2d 1304, 1310 (Alaska 1977) (quoting 10 C. 



WRIGHT , A. MILLER & M. KANE , FEDERAL               PRACTICE AND PROCEDURE : CIVIL   2721, 

at 475-76 (1973)). 



                             Appendix -  Page 4 of  14                                              6707 


----------------------- Page 10-----------------------

including the costs of the foreclosure process, and a court-ordered foreclosure sale will 



follow.     Upon   sale   of   the   foreclosed   property,   the   lender   can   obtain   a   deficiency 

judgment against the borrower for amounts still owed after the sale. 8                    The defaulting 



borrower   has   a   right   to   redeem   the   property   if   within   twelve   (12)   months   after   the 



judicial foreclosure sale the borrower pays the sale price (plus 8% per annum) and costs 

incurred in the sale.9 



              Lenders may also sue on the note secured by the deed of trust if it reserves the 



right to do so in the note.       If the lender, or beneficiary, pursues judicial foreclosure or 



sues on the note and a court judgment is obtained, "the beneficiary may not exercise the 

non-judicial remedies."10 



              Non-judicial foreclosures are processed without court intervention, and may 

be pursued by the lender only if authorized by the deed of trust.11                    Upon default, the 



lender or its trustee must record a notice of default reflecting the nature of the default and 



the sum of the obligation owed and deliver a copy of the notice to the borrower.  The 



borrower   does   not   have   the   statutory   right   of   redemption   provided   for   in   judicial 



foreclosures, but has an equitable right to redeem the property and halt foreclosure by 

curing the   default.12     If the default is not cured, the lender holds a foreclosure sale. 



Because Alaska prohibits the lender from pursuing a deficiency judgment after a non- 



         8        See Hull v. Alaska Fed. Sav. & Loan Ass'n, 658 P.2d 122 (Alaska 1983). 



         9        AS 09.35.250. 



         10       AS 34.20.070(a). 



         11       Id . 



         12       AS 34.20.070(b). 



                               Appendix -  Page 5 of  14                                                 6707 


----------------------- Page 11-----------------------

judicial foreclosure, the lender's remedy is limited to the value of the property at the 

foreclosure sale.13 



              The language of the statute at issue in this case, AS 34.20.070(b), establishes 



the procedure by which the borrower can halt non-judicial foreclosure: 



             At any time before the sale, if the default has arisen by failure to make 

             payments   required   by   the   trust   deed,   the   default   may   be   cured   by 

             payment of the sum in default other than the principal that would not 

             then be due if no default had occurred, plus attorney fees or court costs 

              actually incurred by the trustee due to the default. 



(Emphasis added). Plaintiff emphasizes that AS 34.20.070(b) allows the addition of only 



"attorney fees or court costs" and argues these terms cannot plausibly include any costs 



other than what their plain meaning delineates - attorney's fees and costs incurred in 



a court proceeding or defined by the Civil Rules.              Plaintiff does not argue that the fees 



included in his reinstatement amount are excessive or unreasonable, nor does he argue 



that the fees were not actually incurred. Instead, plaintiff simply argues the fees were not 



explicitly authorized by statute and   therefore cannot be demanded as a condition of 



reinstatement under AS 34.20.070(b). 



        A.    Statutory Interpretation Of AS 34.20.070 



             Plaintiff    urges   a  strict  statutory   interpretation     of  Alaska's    non-judicial 



foreclosure statute.      According to plaintiff, the only sums the lender can require as a 



condition to reinstatement are (1) the "sum in default," (2) attorney's fees, and (3) court 



costs.    Plaintiff goes to great lengths to rationalize an interpretation which only allows 



for recovery of attorney's fees and court costs in a non-judicial foreclosure.  However, 



after considering the parties' arguments the Court must interpret Alaska law "according 



        13       AS 34.20.100.
 



                              Appendix -  Page 6 of  14
                                              6707 


----------------------- Page 12-----------------------

to reason, practicality, and common sense, taking into account the plain meaning and 

purpose of the law as well as the intent of the drafters."14 



              1.   Attorney's fees and court costs 



              Plaintiff argues that attorney's fees are available in a non-judicial foreclosure 



only when attorneys are hired to perform the foreclosure, and "court costs" can also be 



recovered      if  they   are  within    the   costs   defined    in  Civil   Rule    79(f).   Plaintiff's 



interpretation of "court costs" is supported by Judge Gleason's decision in Bachmeier 

v. Alaska Trustee, LLC et al.15       On the record, Judge Gleason stated that "court costs" are 



defined "more broadly than costs incurred in court" and "include costs that would be 

recoverable under Rule 79."16         While Rule 79 allows for recovery of costs not normally 



thought to be literally incurred in court, such as the costs of publishing notices and the 



costs   of   copying,   these   costs   are   only   obtained   by   the   prevailing   party   in   a   court 



proceeding.     Even if the legislature intended to extend the costs defined in Rule 79 to a 



non-judicial matter, the costs that commonly attend a non-judicial foreclosure - e.g., 



recording fees and the costs of title searches - would be excluded. 



              Plaintiff devotes a significant portion of [his] brief disputing the notion that 



the lender's costs and fees in this case constitute "attorney fees or court costs" within the 



meaning of the statute.  Plaintiff's contention that attorneys' fees can only be recovered 



in   a   non-judicial   foreclosure   if   a   foreclosing   lender   hires   attorneys   to   perform   the 



foreclosure seems to the Court an arbitrary distinction.   Alaska Trustee does not dispute 



        14        Young v. Embley, 143 P.3d 936, 939 (Alaska 2006) (quoting Native Vil. 



of Elim v. State, 990 P.2d 1, 5 (Alaska 1999)). 



        15        No. 3AN-09-08695 CI (Alaska, Super., June 8, 2010). 



        16        Exhibit 6 to Certificate of Chelsea Hicks in Support of Plaintiff's Motion 



for Partial Summary Judgment, pg. 46. 



                              Appendix -  Page 7 of  14                                                 6707 


----------------------- Page 13-----------------------

this point and agrees that the costs of reinstatement it sought from plaintiff are not within 



the plain meaning of "attorney fees or court costs."              Instead, Alaska Trustee argues its 



costs or fees are recoverable as the "sum in default." 



              2.   The "sum in default" 



              The central dispute in this case is what costs a lender, or its beneficiary, may 



include in the reinstatement amount, or "sum in default."                Plaintiff argues interpreting 



"sum in default" so as to include foreclosure fees and costs incurred by the beneficiary 



would      render   "wholly     superfluous      the  two    recoverable     fees   that  the   legislature 

specifically enumerated."17        According to plaintiff, "[t]here would be no reason for the 



Alaska   Legislature   to   specifically   allow   for   'attorney   fees'   and   'court   costs'   to   be 



included in the reinstatement amount if such fees and costs already constituted part of the 

'sum in default.' "18    Alaska Trustee does not argue that attorney fees and court costs are 



part of the sum in default.  Instead, Alaska Trustee argues the sum in default necessarily 



includes   the   other   costs   of   a   non-judicial foreclosure   incurred   by   the   lender   and   its 



beneficiary. 

              In Hagberg v. Alaska National Bank ,19 the Alaska Supreme Court considered 



whether a recent amendment to AS 34.20.070   authorizing the right to reinstatement 

violated the contract clause of the Constitution.20          Hagberg is the first and only reported 



Alaska Supreme Court decision to analyze the portion of the non-judicial foreclosure 



        17        Memorandum in Support of Plaintiff's Motion for Summary Judgment at 



7. 



        18       Id . at 8. 



        19        585 P.2d 559 (Alaska 1978). 



        20       The amendment to AS 34.20.070 considered in Hagberg added the right 



of reinstatement to the non-judicial foreclosure statute as it reads today. 



                              Appendix -  Page 8 of  14                                                 6707 


----------------------- Page 14-----------------------

statute pertinent to the case at hand.21  The lender in Hagberg argued that it had no duty 



to apply the amendment, i.e., the right to reinstatement, to a deed of trust executed before 



the amendment's effective date because the amendment's impact upon a lender's contract 



remedy of accelerating principal due upon a borrower's default violated the contract 



clause.   The Court held that the amendment did not violate the contract clause because 



the change in the lender's contract remedy "[did] not unreasonably affect the value of the 

right."22   The    Court   reasoned   that   because   reinstatement   only   alters   the   ability   to 



accelerate the loan, it "does not reduce the value of a beneficiary's note or the security 

ensuring payment in any perceptible way."23            Thus, the Court construed the function of 



reinstatement as placing the lender and borrower in the same position as they were before 



the default. 



             Consistent     with   this  reasoning,     the  Court   recognized     the   inclusion   of 



foreclosure costs in the "sum in default": 



             The right of an obligor to call a halt to a non-judicial foreclosure 

             by   paying   costs   and   by   bringing   his   payments   current   carries 

             within it an implied duty on the part of the beneficiary to accept a 

             tender of the sum in default and to seasonably advise the obligor 

             on request the amount in default.24 



        21       In  Young v. Embley, 143 P.3d  936  (Alaska 2006), the Supreme Court 



interpreted AS 34.20.070(b) only in so far as it related to who (e.g. junior lienholder, 

senior lienholder, etc.) has the right to cure a default  on  a deed of trust.              In a brief 

discussion of what the statutory right of cure  entails, the Embley opinion stated that 

according to the statute, "foreclosure may be forestalled by payment of arrearages, costs 

and attorney's fees."  Id . at 942. 



        22      Hagberg , 585 P.2d at 561. 



        23       Id . at 562. 



        24       Id . (emphasis added). 



                             Appendix -  Page 9 of  14                                              6707 


----------------------- Page 15-----------------------

Again,   the   Court   noted   that   the   non-judicial   foreclosure   process   stops   "where   the 

overdue amount is brought current and costs are paid."25                 The Hagberg opinion never 



specified what constitutes "costs," but it appears the Court contemplated certain costs to 



be a part of the "sum in default." 

              While legislative history on the relevant portion of the statute is sparse,26 the 



Alaska Supreme Court has held that the common law "is an especially important tool" 



in interpreting AS 34.20.070 as the right of cure is "analogous" to the equitable remedy 

of   redemption.27      The  Hagberg        opinion   confirms   that   the   addition   of   the   right   of 



reinstatement to AS 34.20.070 "does no more than codify a form of relief from forfeiture 

which courts have often exercised" at equity.28            At common law, the goal of the Court's 



equitable discretion to prevent forfeiture was to "save the respective parties harmless 



from loss or damage and, if just and equitable, place them in the status quo of their 



contract so as to permit them as vendor and vendee to each have the benefit of their 

respective     bargains."29     Whether       a  lender   proceeds     judicially   or  non-judicially,     a 



        25       Id . at 561-562. 



        26        Plaintiff contends that the legislative history shows the legislature intended 



"sum in default" to only include "the amount behind" in mortgage payments.                         Plaintiff 

cites the amendment's sponsor, Representative Sullivan, as stating the "bill gives a 30 

day grace period, provides a cure of paying the amoun[t] behind plus court and attorney 

fees."   [R.   255   (Exhibit   1   to   Plaintiff's   Opening   Brief   in   Support   of   Motion   for   a 

Preliminary   Injunction,   Minutes   of   the   House   Judiciary   Committee,   May   19,   1975, 

testimony   of   Representative   Sullivan.)]   The   Court   does   not   find   this   brief   cite   of 

legislative history controlling or that persuasive. 



        27        Young, 143 P.3d at 945. 



        28       Hagberg , 585 P.2d at 562. 



        29        Moran v. Homan , 501 P.2d 769, 771   (Alaska 1972) (quoting  Ward v. 



                                                                                            (continued...) 



                               Appendix - Page 10 of  14                                                 6707 


----------------------- Page 16-----------------------

borrower's default is not a cost-free occurrence to the lender.               In order to restore the 



parties, both lender and borrower, to their position before the default - as "if no default 



had   occurred"   -   the   lender,   and   his   beneficiary,   must   be   reimbursed   the   costs   of 



preparing the property for foreclosure.  Only by allowing recovery of these fees will the 



value of the lender's rights be preserved and the parties returned to their status quo prior 



to the default.  All of this supports construing the term "sum in default" as including the 



costs of non-judicial foreclosure, other than attorney's fees and court costs, in so far as 

it is necessary to return the parties to their status quo ante.30          The parties' deed of trust 



in this case further supports this outcome. 



        B.   Terms Of The Promissory Note And Deed Of Trust 



             The note and deed of trust on plaintiff's mortgage govern the parties' interests 



and obligations with respect to the property.           By defaulting on his mortgage payments, 



plaintiff failed to meet his agreed-upon obligations in the deed of trust.               AS 34.20.070 



refers to lenders' and borrowers'   deed of trust as the source of the lenders' right to 



pursue non-judicial foreclosure: 



             If a deed of trust is executed conveying real property located in the 

             state to a trustee as security for the payment of an indebtedness 

             and the deed provides that in case of default or noncompliance 

             with the terms of the trust, the trustee may sell the property for 

             condition broken, the trustee, in addition to the right of foreclosure 

             and sale, may execute the trust by sale of the property, upon the 

             conditions and in the manner set forth in the deed of trust. . . .[31] 



        29      (...continued) 



Union Bond & Trust Co., 243 P.2d 476 (9th Cir. 1957)). 



        30         This   does   not   exclude    the  possibility   the   parties  may    narrow    their 



recoverable costs by the terms of their contract, i.e., their deed of trust. 



        31       AS 34.20.070(a) (emphasis added). 



                              Appendix - Page 11 of  14                                               6707 


----------------------- Page 17-----------------------

The legislature also deferred the foreclosure sale to "the terms and conditions and in the 

manner set out in the deed of trust."32 



              Plaintiff argues that the terms in its deed of trust are not controlling and cannot 



"subvert or otherwise trump" state law, but fails to address the statute's deference to the 



conditions   in   a   deed   of   trust.  While   plaintiff   cites   a   parallel   superior   court   case, 



Bachmeier , as persuasive authority, Judge Gleason did inquire into the effect of the terms 



of the deed of trust in that case.       From the hearing transcript, it appears the terms in the 



deed of trust in Bachmeier were different than the deed of trust in this action, which 



specifically delineates the reinstatement amount as including costs of foreclosure not 

limited to attorney fees.33      According to this Court's interpretation of AS 34.20.070, the 



conditions outlined in the deed of trust control non-judicial foreclosure. 



              Alaska Trustee argues that AS 34.20.070 permits reinstatement only upon 



payment of the entire sum in default as determined by reference to the parties' contract. 



The deed of trust plaintiff signed provides that where the lender elects to non-judicially 

foreclose upon the deed, the "borrower has a right to be reinstated."34                    Pursuant to the 



note and deed of trust, plaintiff agreed that in order to reinstate the terms of his loan he 



would   "tender   in   a   lump   sum   all   amounts   required   to   bring   [his]   account   current, 



including   .   .   .   foreclosure   costs   and   reasonable   and   customary   attorneys'   fees   and 

expenses properly associated with the foreclosure proceeding."35                 Plaintiff's deed of trust 



         32       AS 34.20.080(a).        See Cook Schumann & Groseclose, Inc. v. Brown & 



Root, Inc., 116 P.3d 592, 596 (2005). 



         33       Exhibit 6 to Certificate of Chelsea Hicks in Support of Plaintiff's Motion 



for Partial Summary Judgment, pg. 33-35. 



         34       Deed of Trust, Attachment 2 to the Santiago Affidavit,  10. 



         35       Id . 



                               Appendix - Page 12 of  14                                                  6707 


----------------------- Page 18-----------------------

further provides that lender "shall be entitled to collect all expenses incurred in pursuing 



the remedies provided . . . including, but not limited to, reasonable attorney's fees and 

costs of title evidence."36 



              By signing the note and deed of trust, lender and borrower agreed to the terms 



of the deed of trust and evinced their clear intent to a right of reinstatement conditioned 



on payment of the costs the lender or   its beneficiary incurred pursuing non-judicial 



foreclosure.  Plaintiff contends that even if the note and deed of trust are controlling, the 



terms of the note specifically limit[] the reinstatement fees to those "not prohibited by 

applicable law,"37 including AS 34.20.070.              However, the Court does not find that AS 



34.20.070 strictly limits or prohibits costs that are not attorney fees and court costs, but 



rather   contemplates   recovery   of   the   costs   incident   to   foreclosure   within   the   sum   in 



default.    The Court finds nothing in the statute to preclude enforcement of the parties' 



agreement. 



              In the alternative, plaintiff contends that, at most, the terms in the deed of trust 



amount      to  a  contract    right   defendant     can   pursue    in  court    after  the   non-judicial 



foreclosure.  The Court finds this argument unpersuasive.   One purpose of non-judicial 



foreclosure is to minimize or   avoid the costs of litigation.               In choosing non-judicial 



foreclosure over judicial foreclosure, the lender forfeits its right to a deficiency judgment. 



The only financial stake the lender is left with is the amount it can obtain from the 



foreclosure sale.      Interpreting the statute to require the lender or beneficiary to bring a 



        36       Id . 



        37        Defendant offers the affidavit of Terry Bryan, president of Alaska Land 



Title Association, to show that in Alaska it is "the longstanding custom of requiring 

payment of the foreclosure fees and costs as part of the reinstatement."                     Exhibit A to 

Opposition to Motion for Temporary Restraining Order, filed Oct. 16. 2009.                           While 

industry custom is not determinative, it is useful to interpreting the parties' reasonable 

expectations under the deed of trust. 



                               Appendix - Page 13 of  14                                                 6707 


----------------------- Page 19-----------------------

separate   lawsuit   or   a   second   foreclosure   to   recover   its   foreclosure   expenses   would 



unreasonably diminish the value of the right.  In addition, AS 34.20.070(a) specifically 



provides that if the lender sues on the note secured by the deed of trust, it may not also 



exercise non-judicial remedies.  Therefore, a separate suit to obtain foreclosure fees and 



costs after a non-judicial foreclosure is probably not permissible. 



        C.   [This section deleted because inapplicable to the points on appeal.] 



IV.	    CONCLUSION 



             The   position   advocated   by   the   plaintiff   is   inconsistent   with   the   historical 



equitable relief available for mortgage indebtedness recognized by the Alaska Supreme 



Court's decision in Hagberg , which emphasized the restoration of the parties to their 



status quo ante default.     Plaintiff's position also undermines the utility of non-judicial 



foreclosure, contrary to the interests of both lenders and borrowers, by incentivizing 



lenders to pursue deficiency judgments.          There has been no claim that any of the costs 



or fees sought to be recovered by Alaska Trustee are fraudulent or even unreasonable. 



In   light   of   these   considerations,   the   Court   concludes   Alaska   Trustee's   inclusion   of 



foreclosure fees and costs in plaintiff's reinstatement quote, as permitted by the parties' 



deed of trust, is consistent with Alaska's non-judicial foreclosure statute, AS 34.20.070. 



             For the reasons set out, plaintiff's motion for summary judgment is DENIED, 



and defendant Alaska Trustee's cross-motion for summary judgment is GRANTED, 



dismissing Counts I and III of Plaintiff's Third Amended Complaint. 



             DATED:              12/13/10 



                                                       /s/	    Andrew Guidi 

                                                                SUPERIOR COURT JUDGE 



                             Appendix - Page 14 of  14                                             6707 

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