BJORGEN, J.
¶ 1 First-Citizens Bank & Trust Company sued Bruce and Sandra Reikow for a deficiency judgment following a trustee's sale of real property securing a commercial loan, then in default, which the Reikows had guaranteed. The trial court granted partial summary judgment to First-Citizens as to the amount of the debt and the Reikows' liability for any deficiency, but ultimately dismissed the complaint after holding an evidentiary hearing and finding that the fair value of the property exceeded the amount owing on the loan.
¶ 2 First-Citizens appeals, alleging that the trial court erred in denying it summary judgment as to all issues, and, in the alternative, that the court abused its discretion in determining the fair value of the foreclosed property. Because the trial court properly declined to determine the amount of deficiency on summary judgment and because substantial evidence in the record supports the trial court's fair value determination, we affirm.
¶ 3 Venture Bank made a $6,746,803.53 commercial construction loan to NBP LLC, an entity in which the Reikows had a 50 percent interest and in which Bruce Reikow served as a managing member. To secure the promissory note, NBP granted the bank a deed of trust for the property under development, known as Narrows Business Park.
¶ 4 The Reikows also executed personal guaranties for the entire amount of the loan. These guaranties include language by which the Reikows purported to waive, among other things,
Clerk's Papers (CP) at 42, 45. The guaranties also required the Reikows to pay the lender's costs and legal fees incurred in enforcing the loan obligation.
¶ 5 The Washington State Department of Financial Institutions subsequently closed Venture Bank and placed it in receivership. The receiver sold all of the failed bank's assets, including the note and associated guaranties at issue here, to First-Citizens. After NBP began missing scheduled loan payments, First-Citizens declared the promissory note in default and initiated nonjudicial foreclosure of the deed of trust under chapter 61.24 RCW.
¶ 6 First-Citizens submitted the sole bid at the trustee's sale, purchasing the property for $5,215,000.00 on July 9, 2010. At the time of the sale, the amount due on the note, including interest, foreclosure costs, charges, and fees stood at $7,168,710.74.
¶ 7 Following the trustee's sale, First-Citizens sued the Reikows personally for a deficiency judgment
CP at 4. The Reikows answered the complaint, admitting to the amount due on the promissory note, to NBP's default, and to their guarantee of the loan, but denying any remaining liability and requesting judicial determination of the fair value of the property sold.
¶ 8 First-Citizens then moved for summary judgment. In its motion, First-Citizens argued that the Reikows had waived any right to request a fair value hearing by virtue of the guaranties' waiver provisions, and therefore, the deficiency amounted to the difference between the outstanding debt and the sale price as a matter of law.
¶ 9 Bruce Reikow filed a declaration in opposition to the summary judgment motion, attaching an Internal Revenue Service (IRS) form he had received from First-Citizens concerning the trustee's sale. The preparer, a First-Citizens employee, had listed the "fair market value" of the property as $7,820,000 on the form. CP at 150. Reikow also attached documents from the Pierce County Assessor's office showing the 2010 "assessed value" of the property as $7,521,000. CP at 154-56. In its reply, First-Citizens submitted a professional appraisal dated December 30, 2009, giving a "Prospective Market Value at Stabilization" of $7,820,000 and an "As-Is Market Value" of $6,630,000. CP at 207-09.
¶ 10 At the hearing on First-Citizen's summary judgment motion, the Reikows argued pro se
¶ 11 At the fair value hearing, First-Citizens presented the testimony of one of the professionals who had prepared the December 2009 appraisal. One of First-Citizens' employees also testified to the bank's opinion that the "estimated as-is market value" of the property shortly before the trustee's sale stood at $6,370,000. Verbatim Report of Proceedings (VRP) (Feb. 21, 2012) at 41.
¶ 12 Bruce Reikow testified on the Reikows' behalf, describing the difficulties he had obtaining and retaining tenants during the nonjudicial foreclosure, which he attributed in part to the conduct of First-Citizens. Reikow also discussed receiving the IRS
¶ 13 The court found the fair value of the property as of the trustee's sale to have been $7,820,000.00, a sum exceeding the amount due on the note by $651,289.26, and therefore dismissed the complaint. Based on the fee-shifting provision in the guaranties, the court entered judgment in favor of the Reikows for reasonable costs and attorney fees incurred in defending against First-Citizens' deficiency suit. First-Citizens timely appeals.
¶ 14 First-Citizens' claim that the trial court erred in holding a fair value hearing, if correct, would dispose of the question of whether the court's value determination amounted to an abuse of discretion. We therefore first address the trial court's grant of partial summary judgment, then consider the trial court's finding as to the fair value of the foreclosed property.
¶ 15 We review a trial court's denial of summary judgment de novo. Walston v. Boeing Co., 173 Wn.App. 271, 279, 294 P.3d 759, review granted, 177 Wn.2d 1019, 304 P.3d 115 (2013) (citing Baker v. Schatz, 80 Wn.App. 775, 782, 912 P.2d 501 (1996)).
Baker, 80 Wash.App. at 782, 912 P.2d 501.
¶ 16 Washington statutes allow deficiency judgments against a borrower or guarantor following nonjudicial foreclosure on a deed of trust securing a commercial loan. RCW 61.24.100(3). In actions against a guarantor for a deficiency,
RCW 61.24.100(5) (emphasis added). The plain language of the statute thus limits the deficiency judgment to the difference between the outstanding loan balance and the "fair value" of the collateral, plus collection-related costs explicitly allowed by contract.
¶ 17 First-Citizens devotes considerable argument to its claim that the Reikows waived any right they may have had to request a judicial determination of fair value. Nowhere, however, does First-Citizens explain how this questionable proposition,
¶ 18 The record does not support First-Citizens' assertion. To begin with, First-Citizens' complaint itself calls for a fair value hearing, although the Reikows also requested a judicial determination of fair value in their answer to the complaint. At the hearing on First-Citizens' motion for summary judgment, however, the Reikows, then proceeding pro se, did not mention their prior request for a fair value determination. Instead, they argued that the court should prohibit First-Citizens from asserting a value lower than that stated in the IRS form that the bank had prepared.
¶ 19 The court on its own initiative expressed the concern that, having already foreclosed on the collateral and obtained a settlement from a different guarantor,
¶ 20 The statute limits a deficiency judgment following nonjudicial foreclosure based on the fair value of the foreclosed collateral and gives courts discretion to determine that value. Cases where the fair value might exceed the price obtained at the trustee's sale plainly call for such judicial determination. Here, First-Citizens submitted the only bid at the trustee's sale, a bid over $1,000,000 less than its own valuation of the property. The trial court had before it the county assessor's valuation and a tax document prepared by First-Citizens itself,
¶ 21 Under these circumstances First-Citizens' argument, that no issue of material fact remained and that reasonable persons could have concluded only that the law entitled First-Citizens to a specific sum of money, has no merit. We hold that the trial court properly denied summary judgment as to the amount of the deficiency and thus did not err in holding a fair value hearing.
¶ 22 In an action for a deficiency judgment following a nonjudicial foreclosure, the plaintiff bears the burden of establishing a deficiency between the debt and the value of the collateral sold. See Sec. State Bank v. Burk, 100 Wn.App. 94, 101, 995 P.2d 1272 (2000) (interpreting an analogous provision in the Uniform Commercial Code). The statute at issue here defines "fair value" as
RCW 61.24.005(6).
¶ 23 Because this provision and RCW 61.24.100(5) by their terms grant courts discretion to determine fair value, we review such determinations under the abuse-of-discretion standard. See, e.g., In re Guardianship of Matthews, 156 Wn.App. 201, 214, 232 P.3d 1140 (2010) (noting that where a "statute explicitly grants the superior court discretion," we review for abuse of discretion). Under this deferential standard, an abuse of discretion occurs when a decision is "manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons." Mayer v. Sto Indus., Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006) (quoting Assoc. Mortg. Investors v. GP Kent Constr. Co., 15 Wn.App. 223, 229, 548 P.2d 558 (1976)). A discretionary decision rests on untenable grounds or is based on untenable reasons if the trial court relies on unsupported facts or applies the wrong legal standard; the court's decision is manifestly unreasonable if the court, despite applying the correct legal standard to the supported facts, adopts a view that no reasonable person would take. Mayer, 156 Wash.2d at 684, 132 P.3d 115. We defer to the trial court regarding witness credibility and conflicting testimony, viewing the evidence in the light most favorable to the prevailing party: here, the Reikows. City of Walla Walla v. $401,333.44, 164 Wn.App. 236, 256, 262 P.3d 1239 (2011).
¶ 24 First-Citizens presented expert testimony concerning the professional appraisal it had commissioned. The appraiser explained that the difference between the two values given, the "as-is fair market value" of $6,630,000 and the "prospective market value at stabilization" of $7,820,000, resulted largely from the fact that he calculated the latter figure assuming the property were fully leased out, but based the former on the actual tenancy status at the time of the appraisal. VRP (Feb. 21, 2012) at 23-25.
¶ 25 "Fair value" presumes "reasonable exposure in the market under conditions requisite to a fair sale," not a price based on duress. RCW 61.24.005(6). Bruce Reikow testified that his inability to obtain tenants for some of the vacant portions of the property resulted from the actions of First-Citizens itself: the bank's refusal to cooperate with NBP and the prospective tenants' uncertainty about the foreclosure process. First-Citizens did not present any contrary evidence.
¶ 26 The Reikows also presented a document prepared and submitted to the IRS by First-Citizens itself, admitting that the fair market value of the property at issue exceeded
¶ 27 Thus, the uncontroverted evidence showed that First-Citizens' appraisers based the lower valuation on the then-current reduced tenancy status, which resulted in part from the foreclosure process itself. The trial court could reasonably have concluded that this assumption did not comport with the statutory requirement of "reasonable exposure in the market under conditions requisite to a fair sale," but instead reflected a seller under "duress." RCW 61.24.005(6). Further, the resolution of the conflicting testimony concerning First Citizens' apparent admission on the IRS form lies in the province of the trial court. We hold that the trial court's fair value determination was not an abuse of discretion.
¶ 28 First-Citizens points out that the trial court did not discuss the unpaid taxes owed on the property, which the statute requires the court to deduct in determining fair value. Because the value accepted by the court exceeded the outstanding debt by over $650,000.00, and the unpaid taxes amounted to only $133,358.14, the court had no reason to explicitly perform this calculation. The evidence and the findings of fact thus support the trial court's conclusion that the Reikows had no remaining liability to First-Citizens.
¶ 29 First-Citizens' claim that the trial court abused its discretion fails. The evidence supports the trial court's determination of the fair value of the property as of the trustee's sale, a sum exceeding the outstanding debt plus the unpaid taxes. The trial court's conclusions of law properly followed from its findings and required dismissal of the suit. For these reasons, we affirm.
¶ 30 Washington law requires courts to apply one-way fee-shifting provisions bilaterally. RCW 4.84.330. The guaranties at issue here contain such one-way fee-shifting provisions. Having obtained dismissal with prejudice of First-Citizens' lawsuit against them, the Reikows plainly prevailed below. Thus, the trial court properly awarded the Reikows their costs, as well as the attorney fees they incurred before proceeding pro se.
¶ 31 Both parties request fees on appeal. When a contract provides for a fee award in the trial court, the party prevailing before us may seek reasonable costs and attorney fees incurred on appeal. RAP 18.1; Reeves v. McClain, 56 Wn.App. 301, 311, 783 P.2d 606 (1989). The Reikows prevail here and have complied with applicable procedural requirements. We therefore award the Reikows the reasonable costs and attorney fees they incurred in this appeal and deny First-Citizens' fee request.
¶ 32 Affirmed.
We concur: HUNT, P.J., and Penoyar, J.
27 WASHINGTON PRACTICE: CREDITORS' REMEDIES — DEBTORS' RELIEF, § 3.37, at 177. In the context of commercial loans, a foreclosing lender could also, absent this rule, gain such a windfall by obtaining a deficiency judgment against the debtor or a guarantor.