Washington's high court just gave servicers a way to challenge foreclosure losses after bankruptcy. Here's how this new path could impact your business
On October 9, 2025, the Washington Supreme Court clarified when mortgage servicers can challenge foreclosure rulings after a borrower’s bankruptcy and conflicting court decisions.
The case began with Prince Eric Luv, who filed for bankruptcy in 2008 and received a discharge in 2009. He stopped making payments on a note secured by a deed of trust on his property. In 2018, the deed of trust was transferred to West Coast Servicing, Inc., which then started nonjudicial foreclosure proceedings against the property. Luv responded by filing a lawsuit to quiet title, arguing that West Coast’s attempt to enforce the note and foreclose on the deed of trust was barred by Washington’s six-year statute of limitations. The trial court agreed with Luv, finding that the limitations period began running when the bankruptcy court discharged his debt in 2009, and quieted title to Luv.
West Coast Servicing appealed, but the Court of Appeals affirmed the trial court’s decision. The Washington Supreme Court initially denied review. Shortly after, however, a different panel of the Court of Appeals issued a decision in another case, Copper Creek (Marysville) Homeowners Ass’n v. Kurtz, that expressly disagreed with the outcome in Luv’s case. This created a split in how Washington courts interpreted when the statute of limitations starts running in similar foreclosure situations.
After exhausting direct appeals, West Coast Servicing returned to the trial court, asking for relief from the quiet title judgment under Civil Rule 60(b)(11), which allows a court to relieve a party from a final judgment for “any other reason justifying relief.” The trial court denied the motion, reasoning that the Copper Creek decision did not change the law and that the original judgment was simply an error of law, not grounds for relief under the rule. The Court of Appeals affirmed this decision.
West Coast Servicing again petitioned the Supreme Court, which agreed to review the case. The Supreme Court held that the trial court had abused its discretion by applying the wrong legal standard. The justices found that the combination of legal mistakes and the conflicting appellate decisions created circumstances that justified relief from the judgment under CR 60(b)(11). The Supreme Court reversed the Court of Appeals and remanded the case, instructing the trial court to vacate the quiet title judgment awarded to Luv and to conduct any other relevant proceedings.
For mortgage professionals, the outcome of Luv v. West Coast Servicing, Inc. clarifies that when there is a genuine conflict in appellate decisions and a party has pursued its case properly through the courts, there may be grounds to reopen a final judgment. The decision does not address insurance policy clauses or involve large financial institutions, but it does highlight the importance of monitoring legal developments that could affect foreclosure actions after bankruptcy.
This ruling is not about a massive lender or a high-profile sum, but it sets a precedent for how mortgage servicers might respond when appellate courts disagree on key issues. The message for the industry is clear: when the law is unsettled, there may still be a path to challenge a judgment, even after it appears final.
The Supreme Court’s decision is final, subject to further proceedings in the trial court as directed.
