Liu v. U.S. Bank National Association

Jon Lucas (defendant) stopped paying the condominium-association assessments and the mortgage payments on his condominium. Lucas’s mortgage was owned by U.S. Bank National Association (bank) (plaintiff). Over the next four years, the condominium association scheduled several foreclosure sales for Lucas’s condominium. Each time, the bank paid the overdue assessments on Lucas’s behalf in order to prevent the sales. However, the assessments went unpaid for another six months, and the condominium association initiated the foreclosure-sale process again. The association advertised that the condominium was being sold subject to the bank’s approximately $590,000 deed of trust. This time, the association did not receive a payment from the bank, and the condominium was sold at the foreclosure sale to Andrea Liu (defendant) for $17,000. The day after the foreclosure sale, the association received a check from the bank attempting to pay the assessments and stop the foreclosure sale. The association returned the bank’s check and notified the bank that the condominium had been sold. The bank filed a judicial-foreclosure proceeding against Lucas and named Liu as a defendant in the case. The bank argued that the association’s foreclosure sale had been subject to the deed of trust and, therefore, had not extinguished the bank’s lien on the property. Liu argued that the foreclosure proceeding had extinguished all liens on the property. The trial court granted summary judgment to the bank because (1) the sale advertisements had stated that the property would still be subject to the bank’s mortgage after the sale and (2) under all the circumstances, it would be inequitable to extinguish the bank’s lien. Liu appealed.