                                                                   mm-2 m9lU,




       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TRUDY M. DAVIS, a single person
                                                   DIVISION ONE
                     Appellant,
                                                   No. 71090-7-1


                                                   UNPUBLISHED OPINION
THE BLACKSTONE CORPORATION,
successor trustee; and MICHAEL E.
MENASHE, whose marital status is
unknown,

                      Respondents.                 FILED: March 2, 2015


       Dwyer, J. — Trudy Davis obtained a $250,000 loan from Michael

Menashe. The loan was evidenced by a promissory note that was secured by a

deed of trust, which was recorded against residential real estate owned by Davis.

After Davis refused to make scheduled interest payments, a nonjudicial

foreclosure was initiated against her property. Davis filed suit to enjoin the

foreclosure sale, claiming that the loan was usurious. Concluding that Davis was

unlikely to prevail on the merits, the trial court refused to enjoin the sale.

Thereafter, the trial court found that Davis's purpose for the loan was primarily a

business purpose and, as a result, granted summary judgment against her and

dismissed her claims. We conclude that the foreclosure sale should have been
No. 71090-7-1/2



enjoined, and that summary judgment was improperly granted. Therefore, we

reverse and remand for further proceedings consistent with this opinion.

                                         I


       In early November 2011, Davis obtained a loan from Menashe. The loan

was arranged by a loan broker named Michael Knapp. The loan was evidenced

by a promissory note, which was secured by a deed of trust that was recorded

against residential real estate owned by Davis in King County. Knapp's letter

confirming the terms of the loan stated, in pertinent part, that the loan amount

was $250,000, that the interest rate of the loan was 11.5 percent, and that the

lender, Menashe, would charge a 6 percent fee. In addition, Knapp's handwritten

notes describing the loan sought by Davis contained the following statement:

"Needs money to live, build up reserves and to rehab Seattle prop for

business/rental cash flow."

       The promissory note authorized Menashe to withhold $12,500 as a "repair
reserve" and $16,770.83 as an "interest reserve." Following satisfactory

completion of certain repairs to Davis's property described in the deed of trust,
Davis was permitted to request disbursements from the "repair reserve." The

"interest reserve" was to be used, under certain circumstances, to cover Davis's

monthly interest payments.

       In closing the transaction, Menashe wired into escrow $210,729.27—
rather than the $250,000 face amount of the loan. Also at closing, the title

insurance company issued a document entitled, "Borrower's Final Settlement
Statement." Therein, under the heading "New Loan(s)," certain charges pertinent

                                        -2-
No. 71090-7-1/3



to this appeal were listed.

       •   Our origination charge - Michael E. Menashe               $10,000.00
       •   Loan fee - Michael E. Menashe                             $ 5,000.00
       •   Underwriting fee - Michael E. Menashe                     $ 1,195.00
       •   Loan Processing Fee - Universal Financial LLC             $ 1,500.00
       •   Mtg Fee - Columbia Mortgage                               $ 2.500.00
       TOTAL                                                         $20,195.00

       Loan proceeds in the amount of $198,999.89 were distributed to various

parties. The bulk of the loan, $147,721.18, was distributed to a man named Greg

Yamate. This amount was disbursed to Yamate because Davis wished to loan

the same amount to Lowell Ing—a man to whom she had previously loaned

money—who, in turn, wished to relend the same amount to Yamate. Therefore,

Davis arranged to have the amount disbursed directly to Yamate.

       A lesser amount, $25,809.27, was distributed to King County in order to

pay delinquent taxes, interest, and penalties on Davis's property in King County.

       Additionally, $9,474.44 was used to pay off a loan that Davis had obtained

in connection with the acquisition of the real property against which the deed of

trust had been recorded.

       Finally, the remainder of the proceeds, $15,995, was distributed to Davis.

       Following disbursal, Davis made no interest payments pursuant to the

promissory note. However, funds from the interest reserve were disbursed

monthly on her behalf and were applied to her monthly interest payment of

$2,276.04. The interest reserve was exhausted in July 2012. Davis still did not

make any interest payments. Instead, Davis, through her counsel, informed

Menashe's counsel that she believed the interest rate on the loan to be usurious.
No. 71090-7-1/4



        Menashe appointed the Blackstone Corporation as "successor trustee"

under the deed of trust. The Blackstone Corporation then commenced a

nonjudicial deed of trust foreclosure on Davis's property against which the deed

of trust had been recorded. The foreclosure sale date was set for February 22,

2013.

        On January 30, 2013, Davis filed an action in King County Superior Court

seeking to enjoin the nonjudicial foreclosure pursuant to the Washington deeds
oftrust act1 (DTA). She averred that the nonjudicial foreclosure was improperly
commenced because, owing to the allegedly usurious loan, the foreclosure was

based on incorrectly calculated sums owing. She pleaded violations of
Washington's usury act2 and Washington's Consumer Protection Act (CPA),3 and
sought a declaratory judgment.

        On March 15, 2013, at a hearing on Davis's motion seeking a temporary

restraining order, the superior court judge, in an oral ruling, denied Davis's
request to enjoin the sale, but granted her 30 days to appeal. The trial court also
ruled that the foreclosure sale was to be postponed to allow Davis to file an

appeal and post a supersedeas bond.

        Following the superior court's oral ruling, but prior to entry ofa written
order, the Blackstone Corporation abandoned the foreclosure sale. It did so due
to its discovery that "figures used in the contested non-judicial foreclosure were
incorrect." However, the Blackstone Corporation stated its intent "to re-

        1Ch. 61.24 RCW.
        2Ch. 19.52 RCW.
        3Ch. 19.86 RCW.
No. 71090-7-1/5



commence the non-judicial foreclosure process and issue an amended notice of

default."

       Owing to this abandonment, Davis argued to the trial court that the issue

had been mooted. Menashe disagreed, arguing that Davis "offers no authority

for the extraordinary proposition that an oral ruling on a plainly justiciable issue

should not be preserved in the record by the entry of an order memorializing that

ruling."

       Subsequently, the court entered a written order memorializing its oral

ruling, therein concluding that, "the Court deems Plaintiff unlikely to prevail on the

merits of her usury defense at trial."

           Following its recalculation of the amount purportedly owed by Davis, the

Blackstone Corporation set a new sale date of August 16, 2013.

           Thereafter, Menashe and Davis filed cross motions for summary

judgment. On June 21, at a hearing on the cross motions, the court denied
Davis's motion and granted Menashe's motion. The "tentative" basis for the

court's oral ruling was the judge's conclusion that the rate of the loan was not

usurious.

           Davis moved for reconsideration, which was denied. However, in denying

the reconsideration motion, the court amended its summary judgment ruling so

as to provide a different justification therefor than that which had been given at
the hearing: "Defendant is entitled to judgment as a matter of law, because
Washington law governs the question ofwhether the loan at issue is usurious,
and the loan is exempt from that state's usury restrictions because the loan was

                                           -5-
No. 71090-7-1/6



taken primarily for commercial, investment, or business purposes." Davis's

claims were then dismissed.

       On July 18, Davis moved, pursuant to RCW 61.24.090(2), for a

determination of the amount of fees she would be required to pay in order to

reinstate the loan. Rather than providing Davis a judgment declaring the

reinstatement amount, the superior court entered a money judgment in

Menashe's favor, awarding him $131,678.90. Apparently feeling unshy about his

good fortune, Menashe then moved for reconsideration, arguing that the

judgment improperly deferred postjudgment interest to the date of the foreclosure

sale. His motion for reconsideration was granted and the judgment amended to

authorize postjudgment interest from the date that the judgment had been

entered.

       On August 15, Davis obtained a supersedeas order by which the

foreclosure process was stayed pending appeal.

       After Davis filed an opening brief in this court, Menashe filed a motion to

affirm on the merits pursuant to RAP 18.14. Because we no longer utilize the

motion on the merits procedure,4 a commissioner of this court permitted

Menashe to file a brief of respondent but provided that, in the event that he chose

not to avail himself of this opportunity, his motion on the merits to affirm would be

treated as the briefof respondent. Menashe did not file a respondent's brief.

        4Due to budget cut-backs, Division One reduced its number ofcourt commissioners from
four to one between 2009 and 2013. A second commissioner was added in September 2013. As
a result ofthese changes, Division One at first revised and later abandoned entirely the motion on
the merits procedure. See, §_£,, General Order ofAugust 18, 2014 (memorializing Division One's
renunciation of the RAP 18.14 procedure).

                                              -6-
No. 71090-7-1/7




      Davis first contends that the trial judge erred in refusing to enjoin the sale

of her property. Davis maintains that, in considering whether to issue an

injunction, the judge mistakenly considered the likelihood that Davis would

prevail on the merits of her usury defense. Once she raised the defense of

usury, Davis argues, she was entitled, pursuant to the DTA, to have the

foreclosure sale restrained. We agree.

      Statutory interpretation is a question of law that we review de novo.

HomeStreet, Inc. v. Dep't of Revenue. 166 Wn.2d 444, 451, 210 P.3d 297

(2009). The primary objective of statutory interpretation is "'to ascertain and

carry out the intent of the Legislature.'" HomeStreet, 166 Wn.2d at 451 (quoting

Rozner v. City of Bellevue. 116 Wn.2d 342, 347, 804 P.2d 24 (1991)).

       In the DTA, the legislature prescribed a specific procedure for obtaining

injunctive relief from nonjudicial foreclosure. See RCW 61.24.130. Notably, the

legislature stated, "Nothing contained in this chapter shall prejudice the right of
the borrower... to restrain, on any proper legal or equitable ground, a trustee's

sale." RCW 61.24.130(1) (emphasis added). However, the legislature

authorized courts to "condition granting the restraining order or injunction upon

the giving of security by the applicant" for payment of damages suffered as a
result of a restraining order being granted. RCW 61.24.130(1 )(b).

       Menashe points out that Civil Rule 65 contains a general procedure for

obtaining injunctive relief. While this is so, the rule is "intended to supplement
and not to modify any statute prescribing the basis for obtaining injunctive relief."
                                         -7-
No. 71090-7-1/8



CR 65(e). Hence, when the legislature has prescribed a means of obtaining

injunctive relief, CR 65 may not negate the will of the legislature.

       The dispute herein turns on the proper showing that must be made by an

applicant seeking to restrain a nonjudicial foreclosure sale. Citing the absence of

prior interpretations of RCW 61.24.130(1), the trial judge required a showing by

Davis that she was likely to prevail on the merits—the same showing that must

be made in order for a restraining order to issue pursuant to CR 65. San Juan

County v. No New Gas Tax, 160 Wn.2d 141, 154, 157 P.3d 831 (2007).

Challenging the trial court's reliance on CR 65, Davis maintains that, in order to

obtain injunctive relief pursuant to the DTA, she needed only to assert a "proper
legal or equitable ground." She contends thatthis showing was made when she
raised the defense of usury.

        It is understandable that, in the absence of precedent interpreting RCW

61.24.130(1), the trial judge turned to the familiar CR 65 standard. Nevertheless,
the court erred in so doing. The accommodating language used by the

legislature in the DTA—"any proper legal or equitable ground"—is at odds with
the CR 65 requirement of showing a likelihood of prevailing on the merits.5 The
use ofaccommodating language signals the legislature's intent to lighten the load
ofthose already burdened by the prospect of losing their home—an intent that
has been recognized and reaffirmed by our Supreme Court.

        5Ordinarily, this would occasion a conflict analysis. See, e^, Putman v. Wenatchee
Vallev Med. Ctr.. P.S.. 166 Wn.2d 974, 979-85, 216 P.3d 374 (2009). However, CR 65(e) plainly
states, "These rules are intended to supplement and not to modify any statute prescribing the
basis for obtaining injunctive relief." Because RCW 61.24.130 prescribes a basis for obtaining
injunctive relief, it is not, by the plain language of CR 65(e), displaced by the court rule.

                                                 -8-
No. 71090-7-1/9



       Indeed, our Supreme Court "has frequently emphasized that the deed of

trust act 'must be construed in favor of borrowers because of the relative ease

with which lenders can forfeit borrowers' interests and the lack of judicial

oversight in conducting nonjudicial foreclosure sales.'" Klem v. Wash. Mut. Bank,
176Wn.2d 771, 789, 295 P.3d 1179 (2013) (quoting Udall v. T.D. Escrow Servs..

Inc.. 159 Wn.2d 903, 915-16, 154 P.3d 882 (2007)). After all, "[t]he power to sell

another person's property, often the family home itself, is a tremendous power to

vest in anyone's hands," and "[trustees have considerable financial incentive to

keep those appointing them happy and very little financial incentive to show the
homeowners the same solicitude." Klem. 176 Wn.2d at 789. This

accommodation for borrowers facing property loss is a legislative analog to the

time-honored tradition of Washington courts protecting property from

misappropriation through means of the judicial process. Klem. 176 Wn.2d at 790
n.10 ("When 'a jury ... returned a verdict which displeased [Territorial Judge J.E.
Wyche] in a suit over 160 acres of land' he threatened to set aside their verdict
and remarked, 'While Iam judge it takes thirteen men to steal a ranch.'"
(alterations in original) (quoting 2 Wilfred A. Airey, A History of the Constitution
and Government of Washington Territory, at 312 (June 5, 1945) (unpublished

Ph.D. thesis available in the Washington State Library, Olympia, Washington))).
       The purpose of RCW 61.24.130 is to allow property owners to restrain a
sale in order to allow for a decision on the merits following an opportunity for

discovery and fact-finding. By requiring merely a showing of"any legal or
equitable ground" as the basis for an injunction to issue, the legislature provided
                                         -9-
No. 71090-7-1/10



property owners in default with an opportunity to prevent the loss of their home, if

only temporarily, without needing to first marshal sufficient evidence to show a

likelihood of prevailing on the merits. By permitting courts to require security

from an applicant seeking an injunction, the legislature provided a deterrent

against dilatory or duplicitous tactics designed only to frustrate the purposes of

the nonjudicial foreclosure process, particularly those of efficiency and economy.

The statutory scheme reflects a careful calibration of conflicting values that would

be disturbed were the required showing under CR 65 superimposed upon it. We

hold, therefore, that Davis was not required to show a likelihood of prevailing on

the merits but, rather, merely had to assert any proper legal or equitable ground

to obtain an order restraining the sale.

       Consequently, we are left to inquire only whether the defense of usury

constitutes a proper ground for restraint. While the DTA "does not define what

constitutes proper grounds for restraint," the language used in the statute

"suggests a broad scope," including "'defenses to the default(s) such as
payments having been made, lender liability issues, fraud, usury, violation of
truth in lending and consumer protection laws.'" Vawter v. Quality Loan Serv.
Corp. of Wash.. 707 F. Supp. 2d 1115, 1122 (W.D. Wash. 2010) (emphasis

added) (quoting 27 Marjorie Dick Rombauer, Washington Practice:

Creditors' Remedies—Debtors' Relief § 3.62 (2008)). We agree that usury is

a proper ground for restraint. Therefore, once Davis asserted the defense of
usury, it was incumbent upon the trial court to restrain the foreclosure sale.
Accordingly, on remand, so long as Davis complies with all other statutory

                                           -10-
No. 71090-7-1/11



requirements, the trial court should restrain the foreclosure sale, pending ultimate

disposition of this matter.

                                         Ill


       Davis next contends that the adverse grant of summary judgment was

made in error. She asserts that genuine issues of material fact existed regarding

both the issue of whether the loan exceeded the permissible interest rate for

consumer loans and the issue of whether the loan was taken primarily for

business purposes. We agree.

       We review a grant of summary judgment de novo. Lokan &Assocs.. Inc.

v. Am. Beef Processing. LLC. 177 Wn. App. 490, 495, 311 P.3d 1285 (2013).

Summary judgment is appropriate if there is no genuine issue of material fact and

the moving party is entitled to judgment as a matter of law. Am. Express

Centurion Bank v. Stratman. 172 Wn. App. 667, 673, 292 P.3d 128 (2012). We

consider the evidence and the reasonable inferences therefrom in the light most

favorable to the nonmoving party. Stratman. 172 Wn. App. at 673. A genuine

issue of material fact exists where reasonable minds could differ regarding the

facts controlling the outcome of the litigation. Parks v. Fink, 173 Wn. App. 366,

374, 293 P.3d 1275, review denied. 177 Wn.2d 1025 (2013).

       In order to establish the defense of usury, the following elements must be

proved by a preponderance of the evidence: (1) a loan or forbearance, express

or implied, of money or other negotiable tender; (2) an understanding between

the parties that the principal must be repaid; (3) the exaction of a greater rate of
interest than is allowed by law; and (4) an intention to violate the law—that is, an

                                        -11 -
No. 71090-7-1/12



intention merely to enter into the transaction. Liebergesell v. Evans. 93 Wn.2d

881, 887, 613 P.2d 1170 (1980); Metro Hauling. Inc. v. Daffern. 44 Wn. App. 719,

721, 723 P.2d 32 (1986). Only the third element is at issue in this matter. Yet,

two inquiries, each encompassed within the third element, must be made in order

to determine whether summary judgment was properly granted: (A) was the loan

usurious, and, if so, (B) was it primarily for business purposes?

                                                 A

       The usury act sets a maximum rate of 12 percent interest that may be

charged on a loan.6

       Highest rate permissible—Setup charges. (1) Any rate of
       interest shall be legal so long as the rate of interest does not
       exceed the higher of: (a) Twelve percent per annum;... No person
       shall directly or indirectly take or receive in money, goods, or things
       in action, or in any other way, any greater interest for the loan or
       forbearance of any money, goods, or things in action.

RCW 19.52.020.

        "A lender may not evade the usury laws by executing a note which is

nonusurious on its face while actually disbursing less than the principal amount

of the note." Sparkman & McLean Income Fund v. Wald. 10 Wn. App. 765, 768,

        6 To be more specific, the usury act permits any rate of interest so long as it does not
exceed the higher of 12 percent or
        (b) four percentage points above the equivalent coupon issue yield (as published
        by the Board of Governors of the Federal Reserve System) of the average bill
        rate for twenty-six week treasury bills as determined at the first bill market
        auction conducted during the calendar month immediately preceding the later of
        (i) the establishment of the interest rate by written agreement of the parties to the
        contract, or (ii) any adjustment in the interest rate in the case of a written
        agreement permitting an adjustment in the interest rate.
RCW19.52.020(1)(b).
        Neither party has ventured to determine whetherthe yield of subsection (1)(b) exceeded
12 percent at the time the note was executed. In the absence of evidence from either party that
the latter exceeded the former at that time, we presume that 12 percent represented the
maximum permissible interest rate.

                                               -12-
No. 71090-7-1/13



520 P.2d 173 (1974). In calculating whether a loan is usurious, courts "will look

behind subterfuge, devices and evasions by which the real rate of interest

contracted for or reserved may be hidden." Busk v. Hoard. 65 Wn.2d 126, 135,

396 P.2d 171 (1964): accord Home Sav. & Loan Ass'n v. Sanitary Fish Co.. 156

Wash. 80, 91, 286 P. 76 (1930). "Though not conclusive in all instances, the

most reliable test for usury ... is to compare the amount of money actually

received with the amount of money the borrower is obliged to repay, adding

thereto whatever additional charges are imposed upon the borrower for the use

of the money." Busk. 65 Wn.2d at 135.

       "A charge for interest is not part of the loan transaction, regardless of what

the parties may call the charge." Aetna Fin. Co. v. Darwin. 38 Wn. App. 921,

926, 691 P.2d 581 (1984) (citing Sparkman &McLean. 10 Wn. App. at 768).

Charges for interest include "[c]harges for making a loan and for the use of

money." Aetna. 38 Wn. App. at 926 (citing Testera v. Richardson. 77 Wash. 377,

379, 137 P. 998 (1914); Sparkman & McLean. 10 Wn. App. at 768). However,

"charges are not interest if they are for services actually provided by the lender,

reasonably worth the price charged, and for which the borrower agreed to pay."
Aetna. 38 Wn. App. at 926. "Although not dispositive, the fact that... services

were obtained by payment to a third party is evidence the services were actually
provided to the borrower and were reasonably worth the amount charged."
Aetna. 38 Wn. App. at 926 n.5. Whether a charge represents "interest or

legitimate costs ofthe loan" is a question offact. Sparkman &McLean. 10Wn.
App. at 768; accord Buckley v. Stevens. 3 Wn. App. 593, 594-95, 476 P.2d 724
                                        -13-
No. 71090-7-1/14



(1970).

       Davis contends that the following charges, which were all listed in the

"Borrower's Final Settlement Statement" issued by the title company at closing,

are properly characterized as interest.

       •     Our origination charge - Michael E. Menashe                $10,000.00
       •     Loan fee - Michael E. Menashe                              $ 5,000.00
       •     Underwriting fee - Michael E. Menashe                      $ 1,195.00
       •     Loan Processing Fee - Universal Financial LLC              $ 1,500.00
       •     Mtg Fee - Columbia Mortgage                                $ 2.500.00
       TOTAL                                                            $20,195.00

          Based on the deposition testimony of Knapp and Menashe, it is apparent

that the $10,000 charge and the $5,000 charge corresponded to the 6 percent

"Lender's Fee" listed in Knapp's letter confirming the terms of the loan. As

detailed in their testimony, Knapp and Menashe split this 6 percent fee such that

Knapp received $5,000 and Menashe received $10,000. For his part, Knapp

stated that the fee was paid in exchange for "Operating a business." Neither

party has identified the services provided by Menashe in exchange for the

$10,000 charge.

          Knapp testified that the "Underwriting fee" of $1,195 represents "[t]he

energy and effort it takes to underwrite to determine the viability of a transaction

is the underwrite. So determining the value of the property." Davis, on the other

hand, testified that she did not agree to the "Underwriting fee" charge and did not

receive services in exchange for payment. In addition, the fee was not listed on

the term sheet that she signed.

          Menashe testified that he did not know to what the $1,500 "Loan


                                          -14-
No. 71090-7-1/15



Processing Fee" referred. Davis testified that she did not agree to the "Loan

Processing Fee" and did not receive services in exchange for payment. In

addition, the fee was not listed on the term sheet that she signed.

       Neither Menashe nor Knapp knew to what the $2,500 "Mtg Fee" charge

referred. Davis testified that she did not agree to the "Mtg Fee" charge and did

not receive services in exchange for payment. In addition, the fee was not listed

on the term sheet that she signed.

       The foregoing evidence, all of which was before the trial court,

demonstrates that there were genuine issues of material fact concerning whether

the fees that Davis was charged represented interest or legitimate costs of the

loan. Davis was entitled to have a finder of fact determine whether the fees were

setup charges that were incidental to the loan, or whether they were services for

which she agreed to pay and for which she received actual value. See Aetna. 38

Wn. App. at 926. In the event that these charges are excluded from the principal

of the loan, as calculated by Davis, the interest rate of 12.57 percent exceeds

that which is permitted by the usury act.7

                                                   B


        Davis presented sufficient evidence to withstand summary adjudication on

the question of whetherthe interest rate exceeded that which may be charged for
consumer loans. However, the trial court, as indicated in its written order

granting summary judgment, ruled against Davis because it concluded that the


        7 In fact, when the charges are added to the nominal interest charged, the rate, as
calculated by Davis, increases to 18.76 percent.

                                              -15-
No. 71090-7-1/16



loan was primarily for business purposes and was, therefore, exempt from the

maximum interest rate for consumer loans set forth in the usury act.

      The 12 percent maximum interest rate in the usury act is subject to a

statutory exemption for certain transactions.

      Defense of usury or maintaining action thereon prohibited if
      transaction primarily agricultural, commercial, investment, or
      business—Exception. Profit and nonprofit corporations,
      Massachusetts trusts, associations, trusts, general partnerships,
      joint ventures, limited partnerships, and governments and
      governmental subdivisions, agencies, or instrumentalities may not
      plead the defense of usury nor maintain any action thereon or
      therefor, and persons may not plead the defense of usury nor
      maintain any action thereon or therefor ifthe transaction was
       primarily for agricultural, commercial, investment, or business
       purposes: PROVIDED, HOWEVER, That this section shall not
       apply to a consumer transaction of any amount.
              Consumer transactions, as used in this section, shall mean
       transactions primarily for personal, family, or household purposes.

RCW 19.52.080.

       It is well settled that "a loan's 'purpose' in the context of RCW 19.52.080 is

principally established by the representations the borrower makes to the lender

at the time the loan is procured." Brown v. Giger. 111 Wn.2d 76, 82, 757 P.2d

523 (1988): cf. Jansen v. Nu-West. Inc.. 102 Wn. App. 432, 440, 6 P.3d 98

(2000) (observing that, although not dispositive, the fact that loan proceeds were

actually used for business purposes may be persuasive evidence). "The lender's
purpose for the loan, which almost always is a business purpose, is irrelevant."
Aetna. 38 Wn. App. at 928. "When a loan is usurious on its face, the burden is

on the lender to show the business exception applies." Marashi v. Lannen. 55

Wn. App. 820, 823, 780 P.2d 1341 (1989).

                                       -16-
No. 71090-7-1/17



      "Washington cases consistently have noted the importance of objective

indications of purpose in determining the applicability of the 'business purpose'

exemption." Brown. 111 Wn.2d at 82. "[W]hen other representations of the

borrowers are inconclusive, written statements in the loan documents may be

dispositive." Marashi. 55 Wn. App. at 824. A direct conflict in the evidence on

the issue of the loan's purpose, however, will normally create an issue for the

trier of fact. Marashi. 55 Wn. App. at 824. "Determination of the purpose is for

the jury, and the question of whether that purpose constitutes a business

purpose is a question of law to be decided by the court." Marashi. 55 Wn. App.

at 824 n.3. Put differently, while "[a] jury decides the factual question of what the

parties understood the funds were going to be spent on," it is for the court to

"decide as a matter of law whether the[] proposed expenditures constitute

business purposes." Jansen. 102 Wn. App. at 441.

       Menashe contends that the trial court did not improperly resolve issues of

material fact and that, as a matter of policy, Davis is not the type of borrower the

usury laws were designed to protect. We are not persuaded by either contention.

       Davis has consistently maintained that the purpose of the loan was

personal. She stated that her intent was to pay offa prior loan on the property in

King County, pay taxes on the same property, and make a personal loan to

Lowell Ing. Her position is supported by the averments contained in Ing's

declaration, including his statement that Davis provided him with an interest free

loan, the principal of which he then loaned to Greg Yamate. Her position is also
supported by Michael Knapp's handwritten note, in which he stated that Davis

                                        -17-
No. 71090-7-1/18



"[njeeds money to live, build up reserves and to rehab Seattle prop for

business/rental cash flow."

       This evidence, considered together, creates genuine issues of material

fact necessitating resolution by a fact finder. Given that the bulk of the loan

proceeds were devoted to the purportedly interest free loan, it could reasonably

be inferred that the primary purpose of the loan was personal. Moreover, Davis's

statement, "[njeeds money to live," is evidence suggesting a personal purpose

for the loan.

        Nevertheless, Menashe asserts that Davis's act of relending the bulk of

the loan proceeds shows that the purpose of the loan was primarily business in

nature. In an effort to support his assertion, Menashe quotes misleadingly from

Aetna: "a lender's purpose for making a loan 'almost always is a business

purpose[.]'" Respondent's Motion on the Merits to Affirm at 14 (quoting Aetna. 38
Wn. App. at 928). The principle actually set forth in Aetna is this: "The lender's

purpose for the loan, which almost always is a business purpose, is irrelevant."

38 Wn. App. at 928 (emphasis added). Aetna does not vindicate Menashe's

position.8

        Menashe also relies on our Supreme Court's decision in Brown. Read

closely, Brown does not assist Menashe. In Brown, the borrower signed loan

documents that contained, in at least three separate places, statements


       8Moreover, in citing to Aetna, Menashe confoundsthe role of the parties to the loan at
issue. With regard to Menashe's loan to Davis, Menashe is the lenderand Davis is the borrower.
Thus, Davis's purpose—to subsequently make a no-interest, personal loan to Ing—is relevant
and is not the intent of the lender in the transaction at issue. Davis is not a "lender" as discussed
in Aetna.


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No. 71090-7-1/19



describing the loan as having a business or commercial purpose. 111 Wn.2d at

82-83. The court's decision was quite clearly rooted in the descriptions

contained in the loan documents. Yet, as a coda to its holding, the court

observed, "[the borrower] did not need the money she borrowed and, in fact,

never personally controlled or expended it in any way." Brown, 111 Wn.2d at 83.

This observation is dicta; it does not vindicate Menashe's position.

       Menashe's policy argument—that usury laws are not designed to protect

sophisticated borrowers such as Davis—does not obviate the need for fact
finding. Because there are factual disputes in need of resolution, summary

judgment was improperly granted.9
                                               IV


       Davis next contends that the trial court erred by entering an enforceable

money judgment in favor of Menashe prior to a foreclosure sale occurring. Davis
asserts that RCW 61.24.090(2) does not empower trial courts to enter money

judgments but, rather, authorizes only a determination of the reasonableness of
any fees demanded or paid as a condition to reinstatement ofa loan.
        RCW 61.24.090(2) provides for the following:

       Any person entitled to cause a discontinuance ofthe sale
       proceedings shall have the right, before or after reinstatement, to
       request any court, excluding a small claims court, for disputes
       within the jurisdictional limits of that court, to determine the
        reasonableness of any fees demanded or paid as a condition to

        9 Davis also maintains that her CPA claim, which was dismissed on summary judgment,
should be reinstated. This is so, she asserts, because her theorywas that a violation of the usury
act constitutes a perse violation ofthe CPA. Given thatthe trial court did not indicate any
independent basis for dismissing Davis's CPA claim, Davis's contention is well-taken.
Accordingly, we reversethe dismissal of Davis's CPA claim.

                                              -19-
No. 71090-7-1/20



      reinstatement. The court shall make such determination as it
      deems appropriate, which may include an award to the prevailing
      party of its costs and reasonable attorneys' fees, and render
      judgment accordingly. An action to determine fees shall not
      forestall any sale or affect its validity.

      Pursuant to RCW 61.24.090(2), Davis, as a "borrower," was entitled to

request that the trial court "determine the reasonableness of any fees demanded

or paid as a condition to reinstatement" of the loan. When she exercised her

right to do so, the trial court granted her motion to determine the loan

reinstatement fees. However, when Menashe requested that the court enter a

money judgment against Davis and in his favor for "reasonable foreclosure and
litigation expenses and judgment," the court honored his request and entered a
"reinstatement judgment" against Davis. Subsequently, Menashe sought and
obtained from the court an amendment to the reinstatement judgment allowing

him to collect interest on the amount awarded.

       Davis argues that RCW 61.24.090 contains a method of determining

reasonable foreclosure fees for the purpose of reinstating a loan, not for

collecting a money judgment that bears interest incident to the reinstatement of a
loan. By entering a money judgment in favor of Menashe, Davis contends, the
court created a potential deficiency judgment, which is prohibited by RCW
61.24.100(1): "Except to the extent permitted in this section for deeds oftrust
securing commercial loans, a deficiency judgment shall not be obtained on the
obligations secured by a deed oftrust against any borrower, grantor, or guarantor
after a trustee's sale under that deed of trust."

       Davis asks, therefore, that we vacate the reinstatement judgment and its

                                          -20-
No. 71090-7-1/21



amendment. However, based on the manner in which we have resolved the

preceding issues, and owing to the lack adversarial briefing on this particular

issue, it is unnecessary and undesirable for us to decide it herein.

                                         V


       Finally, Davis requests an award of attorney fees and costs on appeal

pursuant to the DTA, the usury act, the promissory note, and the deed of trust.

She asserts that, as the substantially prevailing party on appeal, she is entitled to

recover both costs and fees.

       Pursuant to RAP 14.2, a party that "substantially prevails" on appeal is

entitled to recover costs. Where the dismissal of a party's claim as a result of

summary judgment is reversed on appeal, costs may be awarded. See. §ji.,

Sorrel v. Eagle Healthcare. Inc.. 110 Wn. App. 290, 300, 38 P.3d 1024 (2002).

However, "[wjhere a party has succeeded on appeal but has not yet prevailed on

the merits," an award of attorney fees should abide the ultimate resolution of the

issues in the case. Riehl v. Foodmaker. Inc.. 152 Wn.2d 138, 153, 94 P.3d 930

(2004).

       Davis is the substantially prevailing party on appeal and, therefore, is

entitled to recover costs. However, because the merits of her claims have yet to

be adjudicated to completion, her fee request must abide ultimate resolution of

the lawsuit.




                                         21
No. 71090-7-1/22



      Reversed and remanded.

                                     "X>   JJ-




                               -22
