Full Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON LORRIE CARLSON, No. 87473-0-I Appellant, DIVISION ONE v. UNPUBLISHED OPINION SONNY H. HWANG AND JANE DOE HWANG, Husband and Wife and the Marital Community Composed Thereof, Respondents. FELDMAN, J. — Lorrie Carlson appeals from the trial court’s findings of fact and conclusions of law and order concluding that she violated both the Consumer Loan Act (CLA), chapter 31.04 RCW, and the Consumer Protection Act (CPA), chapter 19.86 RCW, by lending $132,000 to Sonny Hwang so that he could purchase a home and accepting an ownership interest in the home as security for the loan. She also appeals the trial court’s order quieting title to the home in Hwang’s favor. We reverse in part, affirm in part, and remand for further proceedings. I In 2018, Hwang and Carlson (who at the time were family friends) agreed that Carlson would purchase a home for Hwang to live in and then sell that home No. 87473-0-I to Hwang—thereby facilitating Hwang’s purchase of his first home. The two parties identified a suitable home and, on May 14, 2018, Carlson entered into a Purchase and Sale Agreement (PSA) to purchase the home. But Hwang demanded to be on the title because he was not comfortable with the agreement. Accordingly, on May 23, Hwang was added through an addendum as a purchaser of the property. On May 30, the sale closed and Carlson paid the total costs of sale, including the purchase price, amounting to $129,214.46. At closing, title was granted to the parties as tenants in common. As Hwang and Carlson had agreed, Hwang then took sole possession of the property as his primary residence. Also per the parties’ agreement, Hwang promptly signed a Promissory Note (the Note) for $132,000, which included both the purchase price of the home and incidental debts. The Note, which was drafted by Carlson’s partner at the time, states as follows: FOR AND IN CONSIDERATION OF VALUE RECEIVED, the undersigned, Sonny H. Hwang, promises to pay in lawful money of the United States to Lorrie D. Carlson, as her sole and separate property, or order, the principal sum of One-Hundred-Thirty-Two- Thousand and No/l00ths Dollars ($132,000). Payment shall be made to her at 14629 - 16th Ave. SW, Burien, Washington, 98166, or at such other place as the holder hereof from time to time may designate in writing. Said principal, together with interest at the rate of 4% per annum, shall be paid in monthly installments of $850 per month until paid in full payable by 5th of each month. Monthly payments may be divided in half and be payable upon the 5th and the 20th of each month. In that event, the interest shall be calculated on the 5th of the month. Upon complet[ion] of payment of the Note in full, then Lorrie D. Carlson shall Quit Claim her interest in the property to Sonny H. Hwang. If default be made in the payment of this Note when due, the entire indebtedness hereby represented shall become immediately due -2- No. 87473-0-I and payable, time being of the essence hereof. Any monthly payments made prior to such default shall be considered payment for the occupancy of said premises. If suit is brought on this note, or if it is placed in the hands of an attorney for collection, after any default in any payment, the undersigned promise and agree to pay all costs of collection, including attorney’s fees, incurred thereby. This note shall be construed according to the laws of the State of Washington and is secured by Deed of even date on property situated 22627 114th Ave. SE, Kent, WA, 98031, situated in King County, Washington. The Note thus acknowledges that it “is secured by Deed,” that Carlson shall quit claim her interest in the home to Hwang upon completion of payment, and that Carlson may accelerate the debt in the event of default in payment. In March of 2020, Hwang began missing payments and making partial payments. This continued through 2023, when Hwang stopped making payments entirely. Accordingly, in April of 2023, as expressly permitted by the Note, Carlson demanded payment of the remaining balance of $116,785.05. Hwang attempted to obtain a new loan and refinance, but those efforts were unsuccessful. Thereafter, Carlson filed a “Complaint for Judgment for Balance owed on Note, and For Possession of Property and Sale of Same.” Hwang, in turn, asserted counterclaims against Carlson under the CLA and CPA. The parties’ claims were resolved in two substantive decisions. First, the trial court granted summary judgment in Carlson’s favor on her claim under the Note for unpaid principal totaling $116,785.05 and accrued interest totaling $3,261.94. The court also awarded Carlson attorney fees totaling $4,942.00 and costs totaling $471.47, for a total judgment of $125,460.46. Second, the court -3- No. 87473-0-I entered findings of fact and conclusions of law following a bench trial concluding Carlson had violated the CLA and CPA, quieting title in the home in favor of Hwang, and ordering Hwang to satisfy the amount owed Carlson by selling the house, apportioning the remainder of the net proceeds to Hwang after payment of Carlson’s judgment. Carlson appeals. II A. The Consumer Loan Act and Consumer Protection Act Carlson argues the trial court erred in concluding she violated the CLA and CPA by lending $132,000 to Hwang so that he could purchase a home and accepting an ownership interest in the home as security for the loan. We agree. “When the trial court has weighed the evidence in a bench trial, we review whether the court’s findings of fact are supported by substantial evidence and, if so, whether the findings support the conclusions of law.” Rufin v. City of Seattle, 199 Wn. App. 348, 354-55, 398 P.3d 1237 (2017). We review conclusions of law de novo. Garrand v. Cornett, 31 Wn. App. 2d 428, 439, 550 P.3d 64 (2024) (citing Tedford v. Guy, 13 Wn. App. 2d 1, 12, 462 P.3d 869 (2020)). Similarly, statutory interpretation is a question of law and is also reviewed de novo. Novalic v. PeaceHealth, 31 Wn. App. 2d 650, 657, 555 P.3d 445 (2024) (citing Lakeside Indus., Inc. v. Dep’t of Revenue, 1 Wn.3d 150, 155, 524 P.3d 639 (2023)). “We must give effect to the plain meaning of a statute as an expression of legislative intent where possible. If the plain language of the statute is unambiguous, our -4- No. 87473-0-I inquiry is over.” Id. (citing Leishman v. Ogden Murphy Wallace, PLLC, 196 Wn.2d 898, 904, 479 P.3d 688 (2021)). Here, the trial court applied two statutes: the CLA, which regulates certain loan transactions for high-risk consumers in Washington, and the CPA, which prohibits unfair or deceptive business practices in trade and commerce. RCW ch. 31.04; RCW 19.86.020. The CLA provides in relevant part as follows: It is a violation of this chapter for a licensee, its officers, directors, employees, or independent contractors, or any other person subject to this chapter to . . . [a]ccept from any borrower at or near the time a loan is made and in advance of any default an execution of, or induce any borrower to execute, any instrument of conveyance, not including a mortgage or deed of trust, to the lender of any ownership interest in the borrower’s primary dwelling that is the security for the borrower’s loan. RCW 31.04.027(1)(j). As can be seen, to violate this provision, the lender must either “[a]ccept from any borrower” or “induce any borrower to execute” an instrument of conveyance to the lender of an interest in the borrower’s primary dwelling as security for the borrower’s loan. Id. (emphasis added). The CPA, in turn, provides, “Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” RCW 19.86.020. To establish a CPA claim, the claimant must establish (1) an unfair or deceptive act or practice (2) occurring in trade or commerce (3) with a public interest impact and (4) an injury to the plaintiff in their business or property (5) caused by that act or practice. Klem v. Wash. Mut. Bank, 176 Wn.2d 771, 782, 295 P.3d 1179 (2013). Critical here, “A claim under the Washington CPA may be predicated upon a per se violation of a statute.” Id. at -5- No. 87473-0-I 787. Hwang’s CPA claim is predicated on his CLA claim. Thus, if Hwang’s CLA claim fails, so too does his CPA claim. Applying these legal principles here, the trial court’s findings of fact do not support its conclusion that Carlson violated the CLA. The trial court concluded, “It is a violation of the [CLA] for Ms. Carlson to have accepted an ownership interest in the home, which—under the terms of the Note—is the security for Ms. Carlson’s loan to Mr. Hwang.” That is not entirely correct. As noted previously, a lender violates the CLA when they accept such a security interest from the borrower or induce the borrower to convey that interest. Critical here, the trial court’s findings show that Carlson received title as a tenant in common at closing of the subject property from the seller under the PSA. The trial court also found that Hwang “demanded to be on the title because he was not comfortable with the agreement.” Thus, while it is undisputed that the home was Hwang’s primary dwelling and that the Note was “secured by Deed” on the property, the trial court did not find, nor does the evidence at trial show, that Carlson accepted an ownership interest in the home from Hwang or that Carlson induced Hwang to execute an instrument of conveyance to her of an interest in the property. The findings do not support the trial court’s conclusion that Carlson violated the CLA. And because the CLA claim fails, so too does the CPA claim. Despite this, Hwang argues Carlson violated the CLA because she agreed to add him to the PSA and the entire transaction was predicated on her acceptance of an ownership interest in the home as security for the loan. Hwang’s argument contradicts the plain language of the statute. Where, as here, the plain language -6- No. 87473-0-I of the statute is clear, we must give effect to that plain meaning and “our inquiry is over.” Novalic, 31 Wn. App. 2d at 657. For Carlson to be liable under the CLA, there must be a finding that she accepted an ownership interest in the home from Hwang or induced him to convey that interest. Because the trial court did not enter any such finding, we reverse its conclusion that Carlson violated the CLA (and hence the CPA). 1 B. Quiet Title Carlson also assigns error to the trial court’s order quieting title to the home in Hwang’s favor and finding her interest in the home satisfied upon repayment of the debt. She argues that there are no grounds to quiet title in favor of Hwang and that the Note is a real estate contract. Neither argument is persuasive. A court exercising equitable powers in partition proceedings may fashion remedies to address the particular facts of each case even if the partition statute does not strictly provide for such a remedy. Overlake Farms B.L.K. III, LLC v. Bellevue-Overlake Farm, LLC, 196 Wn. App. 929, 947, 386 P.3d 1118 (2016). The question of whether equitable relief is appropriate is a question of law, while the fashioning of the remedy is reviewed for abuse of discretion. Borton & Sons, Inc. v. Burbank Properties, LLC, 196 Wn.2d 199, 206, 471 P.3d 871 (2020) (quoting Niemann v. Vaughn Cmty. Church, 154 Wn.2d 365, 374, 113 P.3d 463 (2005)). A trial court abuses its discretion when its decision is manifestly unreasonable or 1 Because we reverse on this basis, we need not separately address Carlson’s assignments of 1, 3, and 6 and corresponding arguments, including her argument that “[t]he trial court erred in concluding that this transaction is subject to the CLA.” -7- No. 87473-0-I exercised on untenable grounds or for untenable reasons. Mayer v. Sto Indus., Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006). Cummings v. Anderson, 94 Wn.2d 135, 614 P.2d 1283 (1980), is instructive here. In Cummings, Cummings and Anderson, contemplating marriage, purchased an interest in a contract for the sale of a single-family residence and assumed the obligations of the underlying contract. Id. at 136. “The assignment was made to [Anderson and Cummings] as tenants in common, and, according to the testimony of the attorney who advised them in this transaction, they intended to acquire the property as equal owners.” Id. The parties subsequently married, lived in the home for several years, and then dissolved their marriage, but the dissolution decree made no disposition of the property. Id. at 137. When Anderson rejected Cummings’ offer to purchase his interest in the property, Cummings filed suit for partition. Id. Addressing that claim, the Supreme Court held that title could properly be quieted in Anderson’s favor, subject to satisfying Cummings’ financial interest in the property, because Cummings had abandoned her obligations under the purchase contract during the parties’ marriage and Anderson had not breached any duty owed by him to Cummings as a cotenant. Id. at 143. In so holding, the Court also recognized, “The intent of the parties at the inception of this undertaking cannot be permitted to govern their rights at this juncture, since their original purpose has been frustrated by the change in their relationship to each other and to the property, a change for which [Anderson] was not responsible.” Id. Consistent with Cummings, the trial court did not abuse its discretion in quieting title to the property in Hwang. Just as the trial court in Cummings ordered -8- No. 87473-0-I Anderson to satisfy Cummings’ financial interest in the property at issue, the trial court here ordered Hwang to satisfy Carlson’s security interest in the home. Carlson does not assign error to the portion of the trial court’s finding of fact 19 which states that “Ms. Carlson’s interest in the home existed for security purposes, as indicated in the last line of the Note.” This finding, in turn, supports the court’s conclusion that Carlson possessed solely a security interest in the home. This conclusion is also consistent with RCW 64.90.010(51), which defines “security interest” to mean “an interest in real estate or personal property, created by contract or conveyance that secures payment or performance of an obligation.” That definition matches the relevant facts as set forth above. The evidence at trial also supports the above analysis. Consistent with finding of fact 19, as quoted above, the Note states, “Upon complet[ion] of payment of the Note in full, then Lorrie D. Carlson shall Quit Claim her interest in the property to Sonny H. Hwang.” The Note likewise confirms that Carlson receives no equity in the home or anything of value other than payment of the debt. The parties’ behavior, including Hwang’s sole residence in the home and responsibility for ownership costs, similarly shows that Carlson possessed solely a security interest. On this record, the trial court did not abuse its discretion in quieting title to the home in Hwang’s favor and finding Carlson’s interest in the home satisfied upon repayment of the debt. This remedy satisfies Carlson’s financial interest in the property in accordance with the terms of the Note and the parties’ intent. Despite this, Carlson assigns error to the trial court’s failure to find the Note was a real estate contract. Washington’s Real Estate Contract Forfeiture Act -9- No. 87473-0-I defines “real estate contract” as “any written agreement for the sale of real property in which legal title to the property is retained by the seller as security for payment of the purchase price,” expressly excluding “earnest money agreements and options to purchase.” RCW 61.30.010(1). Our Supreme Court’s opinion in Sea- Van Investments Associates v. Hamilton likewise states that a real estate contract is a “specific form of financing ‘which leaves legal title to the real property in the seller to secure repayment of the purchase obligation.’” 125 Wn.2d 120, 128 n.4, 881 P.2d 1035 (1994) (quoting Kristine A. Chrey, Real Estate Financing, in JOHN G. BAUER ET AL., BASIC REAL ESTATE LAW IN WASHINGTON 101, 116 (1992)). Here, in contrast, Carlson did not sell the property to Hwang; instead, both parties took title as tenants in common simultaneously at closing with Carlson as the source of funds. Under RCW 61.30.010(1), the “property” subject to a real estate contract is defined as “that portion of real property which is the subject of a real estate contract, legal title to which has not been conveyed to the purchaser.” Here, title was conveyed to both parties, which contradicts Carlson’s assertion that the Note was a real estate contract. Carlson also argues there are no grounds to quiet title and cites Cummings in support of this argument. That reliance is misplaced. In addition to the analysis set forth above, the Supreme Court in Cummings held: Where title to property is taken in the name of two persons as co- tenants and their contributions to the purchase price of the property are unequal and their relationship is not such that a gift from one to the other is presumed to be intended, they will in equity be held to own the property in the proportions of their contributions to the purchase price. 94 Wn.2d at 141. As noted above, the parties in Cummings lived together in the - 10 - No. 87473-0-I residence and the Supreme Court determined that their original purpose of sharing the home had “been frustrated by the change in their relationship to each other and to the property.” Id. at 143. Here, in contrast, the parties’ intent was unchanged: Hwang was to live in the home while Carlson’s interest in the home was and remained a security interest. On this record, Cummings supports the trial court’s analysis while Carlson’s contrary argument fails. 2 III Carlson next argues the trial court erred by awarding Hwang attorney fees under the CPA and by denying her request for attorney fees under the Note. Hwang, in turn, requests attorney fees on appeal. We address these issues in turn. The trial court concluded that Hwang was entitled to recover attorney fees at trial under the CPA. Under RCW 19.86.090, a prevailing plaintiff may recover reasonable attorney fees in pursuing a CPA claim. Eng v. Specialized Loan Servicing, 20 Wn. App. 2d 435, 452-53, 500 P.3d 171 (2021). Because we reverse the trial court’s determination that Carlson violated the CLA, which is the sole basis for finding a CPA violation, Hwang is no longer the prevailing party. We therefore reverse the trial court’s fee award. Turning to Carlson’s argument that she is entitled to fees under the Note, the Note states, “If suit is brought on this Note, or if it is placed in the hands of an attorney for collection, after any default in any payment, the undersigned promise 2 Our analysis in the text above effectively resolves Carlson’s assignments of error 5, 7, 8, 9, 10, 12, 13, and 14, which generally attack the trial court’s decision to quiet title to the home in Hwang’s favor. - 11 - No. 87473-0-I and agree to pay all costs of collection, including attorney’s fees, incurred thereby.” It is undisputed that Hwang missed and eventually ceased making payments that were due and owing under the Note. Accordingly, Carlson is entitled to recover fees under the Note. We reverse the trial court’s contrary ruling and remand the matter to the trial court to award fees accordingly. Lastly, Hwang requests attorney fees on appeal pursuant to RCW 19.86.090 and RAP 18.1. RAP 18.1(a) authorizes an award of attorney fees and costs on appeal when authorized by law. But RCW 19.86.090 only entitles a prevailing party to reasonable attorney fees under the statute. Because Hwang did not prevail on his CPA claim (as stated above), he is not entitled to an award of attorney fees and costs on appeal under the statute. Reversed in part, affirmed in part, and remanded for further proceedings consistent with this opinion. WE CONCUR: - 12 -