MERCERI v. State of Washington Department of Transportation; and Shawn Casey Jones, Defendants. (2026)

PUBLISHED IN PART OPINION

¶1 Michelle Merceri owned a home in the Fairweather Basin community in Hunts Point. The Fairweather Basin community was protected by several restrictive covenants. The Washington State Department of Transportation (WSDOT) expanded State Route 520, which altered several lots in Merceri's neighborhood.

¶2 In 2021, Merceri filed an inverse condemnation action against WSDOT, alleging WSDOT engaged in a governmental taking. The trial court agreed and entered partial summary judgment in Merceri's favor, establishing WSDOT's liability but left the issue of damages for trial. Merceri and WSDOT settled and the condemnation award was deposited into the court registry.

¶3 Deutsche Bank National Trust Company, the asserted beneficiary of a deed of trust recorded against Merceri's property, sought apportionment of the condemnation award. Merceri opposed Deutsche Bank's apportionment claim, arguing that the Bank's claim was not timely filed and that it did not have the right to enforce the deed of trust. Merceri also argued that even if Deutsche Bank could file an apportionment claim, the asserted attorney's lien took priority. The trial court disagreed with Merceri, granted Deutsche Bank's apportionment claim, and distributed all proceeds from the condemnation award to the Bank.

¶4 Merceri appeals the trial court's orders. Merceri raises several arguments on appeal. Merceri argues that the asserted attorney's lien should have attached to the condemnation award and taken priority over Deutsche Bank's equitable lien.

¶5 Merceri also argues that the trial court erred in granting Deutsche Bank's apportionment claim. Merceri asserts that (1) the applicable statute of limitations barred Deutsche Bank from filing its apportionment claim, (2) Deutsche Bank did not have the right to enforce the deed of trust, and (3) the doctrine of unclean hands barred Deutsche Bank from enforcing its equitable lien and the trial court abused its discretion by denying Merceri's motion for further discovery on this issue. Deutsche Bank requests attorney fees on appeal pursuant to RAP 18.1(a) and the deed of trust.

¶6 First, in the published portion of the opinion, we conclude that the trial court erred in determining the attorney's lien did not attach to the condemnation award, and accordingly we conclude the lien should have taken priority over Deutsche Bank's equitable lien.

¶7 Second, in the unpublished portion of the opinion, we conclude that the trial court did not err in granting Deutsche Bank's apportionment claim because (1) Deutsche Bank was not barred by the applicable statute of limitations because RCW 8.04.140 did not require the bank to commence an action to seek apportionment. But even if it did, Deutsche Bank's motion for apportionment was timely filed under RCW 4.16.130; (2) Merceri's challenge to Deutsche Bank's ability to enforce the deed of trust fails because the Bank possessed the original promissory note indorsed in blank; and (3) the trial court did not abuse its discretion in deciding that the unclean hands doctrine did not apply because the alleged misconduct does not relate to this case, and the trial court also did not abuse its discretion in denying Merceri's motion to compel discovery.

¶8 Lastly, we conclude that Deutsche Bank is not entitled to attorney fees on appeal because it did not substantially prevail on appeal.

¶9 Accordingly, we affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

FACTS

I. Background

A. Merceri's Loan 1

¶10 In 2006, Merceri and Shawn Jones ² purchased a home in the Fairweather Basin residential community in Hunts Point. To finance her purchase, Merceri “executed an interest only adjustable rate note evidencing a $2,800,000.00 loan from Countrywide Bank, N.A.” Clerk's Papers (CP) at 18. The loan was secured by a note that was indorsed in blank. The loan was also secured by a deed of trust, and Mortgage Electronic Registration Systems, Inc. (MERS) was listed as the beneficiary. The deed of trust was recorded with the King County Recorder's Office.

¶11 In 2008, Merceri defaulted on her loan. Merceri proceeded to file for Chapter 7 bankruptcy in 2010. Around this time, MERS assigned the deed of trust to Deutsche Bank. Merceri's home remained in the bankruptcy estate until December 2012.

¶12 During this period, WSDOT condemned two neighboring lots in the Fairweather Basin community to expand State Route 520. The work was completed.

¶13 “Deutsche Bank initiated nonjudicial foreclosure proceedings in 2014.” Merceri v. Deutsche Bank AG, 2 Wash. App. 2d 143, 145, 408 P.3d 1140 (2018) (hereinafter Merceri I). The foreclosure proceedings were discontinued because Merceri pursued foreclosure mediation, but it was ultimately unsuccessful. Deutsche Bank recorded another notice of a trustee's sale.

¶14 Merceri filed a lawsuit against Deutsche Bank in 2015, alleging in part that Deutsche Bank's interest in her property was unenforceable. Merceri filed a motion for partial summary judgment, arguing that Deutsche Bank's claim was time barred. Deutsche Bank argued “that its claim was not time barred because the statute of limitations was tolled during the bankruptcy stay, during foreclosure mediation, and while nonjudicial foreclosure proceedings were pending.” Id. at 146, 408 P.3d 1140. Deutsche Bank also “moved to amend its answer to add a counterclaim for judicial foreclosure.” Id. The trial court agreed with Merceri, also denying Deutsche Bank's motion to amend its answer. Deutsche Bank appealed.

¶15 On appeal, Division I of this court reversed the trial court's order granting partial summary judgment in Merceri's favor and denying Deutsche Bank's motion to amend its answer. The court concluded that “the statute of limitations [was] tolled during the bankruptcy stay,” and Deutsche Bank's “counterclaim for judicial foreclosure was timely.” Id. at 151, 154, 408 P.3d 1140.

B. Merceri's Inverse Condemnation Action

¶16 Merceri filed an inverse condemnation action against WSDOT in August of 2021. Merceri “alleged the State effected a taking by condemning two neighboring lots for a highway project” that violated “the protective restrictions and covenants” for the Fairweather Basin community. Merceri v. State, No. 85865-3-I, slip op. at 2-3, 2024 WL 1367160 (Wash. Ct. App. Apr. 1, 2024) (unpublished), https://www.courts.wa.gov/opinions/pdf/858653.pdf (Merceri II). Deutsche Bank was joined as a party in the case because it purported “to be the beneficiary of [the] 2006 deed of trust encumbering” Merceri's property. Id. at slip op. at 3.

¶17 Merceri moved for partial summary judgment against WSDOT. WSDOT “agreed its construction on the two lots violated one of the covenants,” and the trial “court granted Merceri summary judgment on the issue of” WSDOT's liability. Id. The trial court, however, “reserved the amount of damages for trial.” Id.

¶18 Deutsche Bank “moved to bifurcate [the] trial between the issue of compensation and interest and attorneys’ fees for the taking” between Merceri and “WSDOT and any claim that Deutsche Bank ha[d] to the proceeds.” CP at 430. The trial court granted Deutsche Bank's motion and entered an order that split the trial into “three phases: (1) determination on the amount of compensation on [Merceri]’s inverse condemnation claim as against WSDOT, (2) determination of interest on any award to [Merceri] and attorneys’ fees, and (3) Deutsche Bank's entitlement to and recovery from any such award to [Merceri].” CP at 430. The trial court excused Deutsche Bank from the pretrial and trial proceedings for the first two phases. And the trial court instructed Deutsche Bank to comply with RCW 8.04.140 if it were to “seek entitlement to and recovery from the compensation awarded to” Merceri. CP at 431.

¶19 On October 4, 2022, Merceri and WSDOT settled on the issue of damages, which totaled $205,000. But the parties did not agree on the interest applicable to the award. WSDOT argued for “12 percent from the date of the taking on May 11, 2011,” and Merceri argued for compound interest. Merceri II, No. 85865-3-I, slip op. at 3-4. The trial court ultimately agreed with WSDOT and “entered its judgment and decree of appropriation for the agreed amount of just compensation and statutory interest of 12 percent,” meaning that the original award was $205,000 and the interest was $282,664.11, a total of $487,664.11. Id. slip op. at 4. The compensation was deposited into a court registry on November 17.

¶20 “Merceri filed motions to amend the judgment and for an award of litigation costs including attorney fees incurred to obtain just compensation.” Id. The trial court denied both motions, and Merceri filed a notice of appeal directly with our Supreme Court on December 1, 2022. Deutsche Bank came into physical possession of the note for Merceri's loan on December 7.

¶21 After Merceri filed the first notice of appeal, she filed a motion to enforce an attorney's lien on the condemnation award on May 16, 2023. “Merceri sought disbursal of funds from the court registry to satisfy a claim of lien for attorney fees asserted by her counsel.” Id. The trial court denied Merceri's motion and also denied her motion for reconsideration. Merceri filed another notice of appeal on July 31, 2023.

¶22 Our Supreme Court transferred Merceri's first appeal to Division I of this court. Division I consolidated both of Merceri's appeals.

¶23 On April 1, 2024, Division I of this court affirmed the trial court's order in an unpublished opinion. The court held that the trial court did not err in awarding 12 percent interest versus compound interest. But the court did not address the issue of the attorney's lien because further proceedings below needed to occur before the court could weigh in on the issue.

II. Merceri's Attorney's Lien

¶24 On remand, Merceri filed an amended notice of an attorney's lien on September 17. And on September 23, Deutsche Bank filed a motion for apportionment for the condemnation award. Ultimately, the trial court granted Deutsche Bank's motion for apportionment.

¶25 The trial court concluded that Merceri's attorney's lien did not apply. The trial court explained that an attorney's lien would apply only when Merceri “came into possession of the proceeds” from the condemnation award, which did not happen since the funds were in the court registry. CP at 1085. The trial court apportioned $487,664.11, the entire condemnation award, to Deutsche Bank.

¶26 Deutsche Bank filed a motion to disburse the funds on January 17, 2025. Merceri objected to the disbursement. The trial court granted Deutsche Bank's motion, and the funds were disbursed from the court registry to Deutsche Bank.

¶27 Merceri appeals.

ANALYSIS

I. Merceri's Attorney's Lien

¶28 Merceri argues that, regardless of Deutsche Bank's ability to pursue apportionment, “the trial court erred in giving priority to the Bank's equitable lien before [her] attorneys’ [statutory lien].” Br. of Appellant at 17. Merceri claims that the plain language of RCW 60.40.010, the attorney's lien statute, supports that her attorney had a lien on the judgment for the condemnation award and/or the award deposited into the court registry. Deutsche Bank argues that the trial court correctly denied Merceri's attorney's lien because the award was not considered “proceeds” for the purposes of RCW 60.40.010 since Merceri never came into possession of the award. Br. of Resp't at 41-43. We agree with Merceri.

A. Standard of Review

¶29 Whether a condemnation award deposited into a court registry is considered “proceeds” under RCW 60.40.010 is a question of statutory interpretation. See Aiken, St. Louis & Siljeg, P.S. v. Linth, 195 Wash. App. 10, 15, 380 P.3d 565 (2016). “Interpretation of a statute is a question of law that we review de novo.” Antio, LLC v. Dep't of Revenue, 26 Wash. App. 2d 129, 135, 527 P.3d 164 (2023), aff'd, 3 Wash.3d 882, 557 P.3d 672 (2024).

¶30 When interpreting a statute, “[w]e first look to the statute's plain language, giving effect to the legislative intent” while also avoiding “unjust and absurd consequences.” AARO Med. Supplies, Inc. v. Dep't of Revenue, 132 Wash. App. 709, 717, 132 P.3d 1143 (2006); State v. Vela, 100 Wash.2d 636, 641, 673 P.2d 185 (1983). We consider “the context of the statute in which the provision is found, related provisions, amendments to the provision, and the statutory scheme as a whole.” Cashmere Valley Bank v. Dep't of Revenue, 181 Wash.2d 622, 631, 334 P.3d 1100 (2014).

¶31 “If the statute defines a term, we must rely on that provided definition.” Cave Props. v. City of Bainbridge Island, 199 Wash. App. 651, 656, 401 P.3d 327 (2017). When a term is undefined, we rely on its plain and ordinary meaning, and “[w]e may consult the dictionary to determine a term's plain meaning.” Clark County v. Portland Vancouver Junction R.R., LLC, 17 Wash. App. 2d 289, 295, 485 P.3d 985 (2021). We do not “ ‘add words where the legislature has chosen not to include them.’ ” Porter v. Kirkendoll, 194 Wash.2d 194, 212, 449 P.3d 627 (2019) (quoting Rest. Dev., Inc. v. Cananwill, Inc., 150 Wash.2d 674, 682, 80 P.3d 598 (2003)).

¶32 If the statute is unambiguous, meaning it is only subject to one interpretation, our inquiry ends. HomeStreet, Inc. v. Dep't of Revenue, 166 Wash.2d 444, 451, 210 P.3d 297 (2009). If, however, a statute is “ ‘susceptible to two or more reasonable interpretations,’ ” it is ambiguous. Id. at 452, 210 P.3d 297 (quoting State v. Hahn, 83 Wash. App. 825, 831, 924 P.2d 392 (1996)). In this scenario, “it is appropriate to resort to aids [of] construction, including legislative history.” Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 12, 43 P.3d 4 (2002).

¶33 “A proceeding to enforce a lien is an equitable proceeding,” and trial courts have broad discretion in determining equitable remedies. King County v. Seawest Inv. Assoc., LLC, 141 Wash. App. 304, 314, 170 P.3d 53 (2007). Accordingly, we review the trial court's denial of the motion to enforce the lien for abuse of discretion. Id.

B. Legal Principles

¶34 RCW 60.40.010(1) provides that an attorney may assert a lien to recover attorney fees. This may include a lien “[u]pon a judgment to the extent of the value of any services performed by the attorney in the action.” RCW 60.40.010(1)(e). The attorney must file notice of this type of lien “with the clerk of the court in which such judgment is entered, which notice must be filed with the papers in the action in which such judgment was rendered, and an entry made in the execution docket, showing name of claimant, amount claimed and date of filing notice.” Id.

¶35 Where an attorney has a lien for their compensation, the lien attaches, among other things, to an action and its “proceeds,” as well as to any “judgment,” to the extent of the value of the services rendered by the attorney. RCW 60.40.010(1)(d)-(e). “Attorneys have the same right and power over actions [and judgments] to enforce their liens under [subsections (1)(d) and (e)] ․ as their clients have for the amount due thereon to them.” RCW 60.40.010(2). RCW 60.40.010(5) defines “proceeds” as “any monetary sum received in the action.” The proceeds are limited to the monetary sums the client has received in the action, but proceeds are not limited to the amount in the client's possession. Aiken, 195 Wash. App. at 16-17, 380 P.3d 565.

¶36 An attorney's lien that is “created by subsection (1)(d) ․ upon an action and proceeds and the lien created by subsection (1)(e) ․ upon a judgment for money is superior to all other liens,” except child support liens, which are expressly exempt. RCW 60.40.010(3), (6) (emphasis added).

C. Merceri's Attorney's Lien

¶37 At the outset, the trial court erred in concluding “that the attorney lien would only apply if Ms. Merceri came into possession of the proceeds.” CP at 1085. Courts have previously interpreted the imposition of an attorney's lien even where the proceeds had not come into possession of the client. Ferguson Firm, PLLC v. Teller & Assoc., PLLC, 178 Wash. App. 622, 632-33, 316 P.3d 509 (2013) (concluding that an attorney's lien could be attached to funds deposited into a court registry because it was “a monetary sum in the action” that constituted “proceeds”); Aiken, 195 Wash. App. at 16-17, 380 P.3d 565 (concluding that an attorney lien could be attached to funds received by a client in a trust action even though the funds were not in their possession).

¶38 Under RCW 60.40.010(1)(d), Merceri's attorney had a lien for their compensation following the commencement of the inverse condemnation action. See also Smith v. Moran, Windes & Wong, PLLC, 145 Wash. App. 459, 464-67, 187 P.3d 275 (2008) (concluding that a lien attached to a “malpractice action and its proceeds ․ when th[e] action was commenced” under RCW 60.40.010(1)(d)). And that lien could properly be attached to the condemnation award deposited into the court registry. Ferguson, 178 Wash. App. at 632-33, 316 P.3d 509; Aiken, 195 Wash. App. at 16-17, 380 P.3d 565. Accordingly, the trial court erred in concluding that Merceri's attorney's lien did not attach to the condemnation award.

¶39 Furthermore, Merceri's attorney's lien should have taken priority over Deutsche Bank's equitable lien. Deutsche Bank relies on State v. Hemmingson, 57 Wash.2d 635, 639, 359 P.2d 154 (1961), to argue otherwise. In Hemmingson, our Supreme Court concluded that an attorney's lien did not have a superior interest over a bank enforcing its mortgage. 57 Wash.2d at 639, 359 P.2d 154.

¶40 But Hemmingson is not helpful because, critically, RCW 60.40.010 was amended in 2004. Laws of 2004, ch. 73, §§ 1-2. These amendments added RCW 60.40.010(3), which provides that an attorney's lien “created by subsection (1)(d) ․ and ․ (1)(e) ․ is superior to all other liens.” (Emphasis added); former RCW 60.40.010 (1881). The legislature exempted only child support liens and no others. RCW 60.40.010(6). The plain language unambiguously requires that Merceri's attorney's lien take priority over Deutsche Bank's equitable lien.

¶41 Deutsche Bank argues that “the plain language of RCW 60.40.010(2) confirms that attorneys only have the same rights to judgments or proceeds to the extent their clients have for the amount due to them.” Br. of Resp't at 42-43. As a result, Merceri's “attorneys are only entitled to a lien against any amounts remaining from the judgment after apportionment to Deutsche Bank.” Br. of Resp't at 43. We disagree. As Merceri correctly observes, “[t]he proceeds of Merceri's action would never have gone into the court registry if Merceri had no ‘right and power’ over the ‘action,’ ” meaning that Merceri's attorneys similarly have a right to enforce a lien over the action. Reply Br. at 27 (quoting RCW 60.40.010(2)).

¶42 Therefore, we conclude that the trial court erred in deciding that Merceri's attorney's lien did not attach to the condemnation award. We also conclude that the trial court abused its discretion by failing to give priority to Merceri's attorney's lien over Deutsche Bank's equitable lien.³ ,  ⁴

CONCLUSION

¶43 We conclude that the trial court erred in determining the attorney's lien did not attach to the condemnation award. Therefore, we reverse the trial court's orders apportioning the entire amount of the condemnation award to Deutsche Bank and remand for proceedings consistent with this opinion.

¶44 A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder shall be filed for public record in accordance with RCW 2.06.040, it is so ordered.

FACTS

I. Deutsche Bank's Motion for Apportionment

¶45 Following remand from Division I of this court on the consolidated appeals, Deutsche Bank filed a motion for apportionment of the condemnation award. Merceri filed a motion for summary judgment to dismiss Deutsche Bank's motion for apportionment. Merceri argued that Deutsche Bank's claim was time barred because the claim had accrued years before it filed its motion for apportionment and the applicable statute of limitations had run. In Merceri's response to Deutsche Bank's motion for apportionment, Merceri reiterated that the Bank's claim was time barred. Merceri further argued that Deutsche Bank's claim was barred by the doctrine of unclean hands, the Bank failed to establish how it had acquired the mortgage, and that her attorney's lien had a superior claim for the condemnation award.

¶46 The trial court granted Deutsche Bank's motion for apportionment and denied Merceri's motion for summary judgment.

¶47 Regarding Merceri's motion for summary judgment, the trial court concluded that Merceri's reliance on the statute of limitations was wrong for three reasons. First, the trial court found “that RCW 8.04.140 [did] not require a separate claim” because Deutsche Bank provided sufficient evidence “in support of its claim,” meaning that “a separate action was unnecessary.” CP at 1083. Second, the trial court noted that “Deutsche Bank had given notice of its intent to apply for apportionment [in 2022], before the trial, and Ms. Merceri and her counsel were aware of Deutsche Bank's intended application.” CP at 1084. As a result, there was no issue with notice. And third, the trial court observed that it did not have jurisdiction over the case until the court of appeals issued a mandate returning jurisdiction on September 25, 2024.

¶48 As for Deutsche Bank's apportionment claim, the court found that “Merceri's unclean hands defense ․ lack[ed] merit.” CP at 1084. To that end, the court explained that there was “no problem with notice because Ms. Merceri ha[d] been on notice of Deutsche Bank's intention to make a claim to funds on deposit in the Court for two years.” CP at 1084. And “nothing in the history of th[e] case or underlying litigation support[ed] the application of an unclean hands defense.” CP at 1084. The court also determined that Merceri lacked “standing to challenge the history of her mortgage and how it ended up in Deutsche Bank's possession.” CP at 1085. The court based its decision on the fact that “Deutsche Bank ha[d] possession of the note.” CP at 1085.

¶49 The trial court apportioned the entire condemnation award to Deutsche Bank. After the trial court's order apportioning the award to Deutsche Bank, Merceri filed a motion to compel discovery. Merceri did so to discover Deutsche Bank's rights to enforce the deed of trust.

¶50 The trial court denied Merceri's motion to compel discovery. The trial court explained that because Merceri did “not have standing to contest how Deutsche Bank acquired possession of the note,” the motion was “not within the permissible scope of discovery.” CP at 1123. And because the court's previous order “granting Deutsche Bank's motion for apportionment” was “a final appealable adjudication,” the court did not have authority to “authorize discovery after the final adjudication of [the case].” CP at 1122-23.

ANALYSIS

I. Deutsche Bank's Apportionment Claim

¶51 Merceri argues that the trial court should not have granted Deutsche Bank's motion for apportionment. To that end, Merceri asserts that (1) Deutsche Bank's motion was time barred under RCW 4.16.130 because Deutsche Bank filed its motion years after it was aware of Merceri's inverse condemnation action, (2) the trial court erred in concluding that Merceri could not challenge Deutsche Bank's right to enforce the deed of trust, and (3) the trial court abused its discretion by not applying the doctrine of unclean hands to prevent Deutsche Bank from asserting its equitable lien.

¶52 Deutsche Bank argues that the trial court properly granted its motion for apportionment. Deutsche Bank claims that (1) RCW 8.04.140 does not require an entity pursing apportionment to file a cause of action when a trial court finds that it is unnecessary, so the statute of limitations did not apply, but even if it did, the bank timely filed its motion; (2) Merceri could not challenge Deutsche Bank's enforcement of the note because its possession of the note is completely dispositive; and (3) the trial court did not abuse its discretion by not applying the doctrine of unclean hands because Deutsche Bank's alleged misconduct did not impact Merceri in this action. We agree with Deutsche Bank.

A. RCW 8.04.140 and the Statute of Limitations

¶53 We conclude that Deutsche Bank's motion for apportionment was not time barred.

1. Standard of Review

¶54 We review questions of law, such as those pertaining to the application of a statute of limitation, de novo. Bennett v. Comput. Task Grp., Inc., 112 Wash. App. 102, 106, 47 P.3d 594 (2002).

2. Legal Principles

¶55 Chapter 4.16 RCW governs the statute of limitations of actions. RCW 4.16.005. For actions involving “a contract in writing, or liability express or implied arising out a written agreement,” the statute of limitations is six years. RCW 4.16.040(1). For any civil action that is not addressed by other statutes, the statute of limitations is two years. RCW 4.16.130; In re Pers. Restraint of Heck, 14 Wash. App. 2d 335, 341, 470 P.3d 539 (2020).

¶56 RCW 8.04.140 applies to parties that seek apportionment of an inverse condemnation award. The statute provides,

Any person, corporation, or county claiming to be entitled to any money paid into court, as provided in RCW 8.04.010 through 8.04.160, may apply to the court therefor, and upon furnishing evidence satisfactory to the court that he or she or it is entitled to the same, the court shall make an order directing the payment to such claimant the portion of such money as he or she or it shall be found entitled to; but if, upon application, the court or judge thereof should decide that the title to the land, real estate, or premises specified in the application of such claimant was in such condition as to require that an action be commenced to determine the conflicting claims thereto, he or she shall refuse such order until such action is commenced and the conflicting claims to such land, real estate, or premises be determined according to law.

RCW 8.04.140 (emphasis added).

3. Deutsche Bank's Motion for Apportionment

¶57 RCW 8.04.140 does not specify a period in which a party shall file a motion for apportionment. Because of this, Merceri argues that RCW 4.16.130 governs, meaning that Deutsche Bank had two years to file its motion for apportionment when its interest accrued, which she claims was in May 2011—the date when WSDOT finished expanding State Route 520.

¶58 When reading the plain language of RCW 8.04.140, however, it is evident that the statute contemplates a situation where the party does not need to commence an action to seek apportionment. The statute provides that any person or entity “claiming to be entitled to any money paid into the court ․ may apply” for such relief and a court will “make an order directing payment to such claimant” if they furnish sufficient evidence to establish their entitlement. RCW 8.04.140. Only upon the trial court's determination that an action is necessary to resolve conflicting claims is a party required to file an action seek apportionment. Id. The use of the word “apply” is distinct from the word “action,” especially when the statute contemplates the filing of an action only when the trial court deems necessary.

¶59 Here, the trial court concluded that Deutsche Bank provided sufficient evidence “in support of its claim.” CP at 1083. And thus, Deutsche Bank did not need to commence an action to pursue apportionment. RCW 8.04.140.

¶60 Merceri relies on CR 13(a) to argue that Deutsche Bank was not allowed to pursue apportionment without first bringing some claim that alleged entitlement. CR 13(a) requires a party to file any counterclaims “against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim.” But because RCW 8.04.140 authorizes adjudication of competing interests through a motion, Deutsche Bank was not required to commence an “action” within the meaning of RCW 4.16.130 or a “counterclaim” under CR 13(a).

¶61 Even if we were to conclude that Deutsche Bank needed to file an action or counterclaim, and a two-year statute of limitations under RCW 4.16.130 applied, the Bank timely filed its motion for apportionment. This is so because an entity's ability to seek apportionment begins only when money has been paid into the court registry. RCW 8.04.140. The statute premises a person's or entity's ability to seek apportionment upon money from an award being paid into the court. Id. WSDOT deposited the condemnation award into the court registry on November 17, 2022. Deutsche Bank filed its motion for apportionment on September 23, 2024. This complied with RCW 4.16.130.

¶62 Therefore, we conclude that Deutsche Bank's motion for apportionment was timely filed, and the trial court did not err in denying Merceri's motion for summary judgment on this basis.⁵

B. Merceri's Challenge to Deutsche Bank's Enforcement of the Deed of Trust

¶63 We conclude that Merceri's challenge to Deutsche Bank's enforcement of the deed of trust fails as a matter of law because the Bank, which held the note, was entitled to enforce the deed of trust.

1. Standard of Review

¶64 A party's ability to challenge the enforcement of a deed of trust is a question of law we review de novo. Bavand v. OneWest Bank, 196 Wash. App. 813, 834, 385 P.3d 233 (2016).

2. Legal Principles

¶65 “Article 3 of the Uniform Commercial Code (UCC), incorporated into state law at chapter 62A.3 RCW, governs who is entitled to enforce a negotiable instrument,” such as a promissory note or a deed of trust. 21st Mortg. Corp. v. Nicholls, 25 Wash. App. 2d 795, 804, 525 P.3d 962 (2023). “ ‘When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.’ ” Id. at 805, 132 P.3d 1143 (quoting RCW 62A.3-205(b)).

¶66 It is well established that “[t]he holder of a negotiable instrument may sue thereon in his own name, and ․ [i]t is not necessary for the holder to first establish that he has some beneficial interest in the proceeds.” John Davis & Co. v. Cedar Glen No. Four, Inc., 75 Wash.2d 214, 222-23, 450 P.2d 166 (1969); Deutsche Bank Nat. Trust Co. v. Slotke, 192 Wash. App. 166, 173, 367 P.3d 600 (2016). In other words, “it is the holder of a note who is entitled to enforce it,” and an entity need not “establish that it is also the owner of the note secured by the deed of trust” to do so. Slotke, 192 Wash. App. at 173, 367 P.3d 600.

¶67 When seeking to enforce a deed of trust, a declaration stating that the entity possesses the note is sufficient to establish it is the holder of the note. Bavand, 196 Wash. App. at 837-38, 385 P.3d 233.

3. Merceri's Challenge

¶68 Merceri attempts to distinguish Slotke on the basis that the case “was tailored to the borrower's limited argument that Deutsche Bank had no right to judicial foreclosu[re] on the deed of trust because the Bank had not complied with the ‘pooling and servicing agreement.’ ” Br. of Appellant at 30 (quoting Slotke, 192 Wash. App. at 177, 367 P.3d 600). This is not a meaningful distinction. Slotke reiterated a long-standing principle: the holder of a note indorsed in blank can enforce a deed of trust irrespective of alleged defects in assignments, securitization transfers, or noncompliance with a pooling and servicing agreement. 192 Wash. App. at 177-78, 367 P.3d 600. Nothing in the decision suggests that the scope of this rule varies depending on the asserted defects. Id.

¶69 Merceri also points to Bavand to support that she could challenge Deutsche Bank's right to enforce the deed of trust. In Bavand, the court held that “borrowers have standing to challenge the appointment of a successor trustee.” 196 Wash. App. at 835, 385 P.3d 233. Notably, the case did not address the same issue contemplated in Slotke; instead, it focused on the validity of a successor trustee's appointment—an issue not raised here. Compare Bavand, 196 Wash. App. at 834-36, 385 P.3d 233, with Slotke, 192 Wash. App. at 170-78, 367 P.3d 600.

¶70 Deutsche Bank confirmed in a declaration that it possessed the note securing Merceri's loan and Merceri has offered no evidence to the contrary. Consequently, Deutsche Bank's possession of the note, indorsed in blank, is dispositive on this issue. Slotke, 192 Wash. App. at 177-78, 367 P.3d 600.⁶

¶71 Therefore, we conclude that the trial court did not err in rejecting Merceri's arguments challenging Deutsche Bank's enforcement of the deed of trust.

C. Unclean Hands Doctrine

¶72 We conclude that the trial court did not abuse its discretion by deciding that the unclean hands doctrine did not apply in this case.

1. Standard of Review

¶73 A trial court has “broad discretion when fashioning equitable remedies.” Seawest Inv. Assoc., 141 Wash. App. at 314, 170 P.3d 53. We also review a trial court's decision regarding equitable remedies for an abuse of discretion. Id. Accordingly, we review a trial court's decision regarding the application of the unclean hands doctrine, which bars a party from seeking equitable relief if they engaged in misconduct, for an abuse of discretion. See Miller v. Paul M. Wolff Co., 178 Wash. App. 957, 965, 316 P.3d 1113 (2014). “A trial court abuses its discretion when its decision is manifestly unreasonable or based upon untenable grounds.” Seawest Inv. Assoc., 141 Wash. App. at 314 170 P.3d 53.

2. Legal Principles

¶74 A claim for apportionment of an inverse condemnation award is an equitable remedy. Hemmingson, 57 Wash.2d at 638-39, 359 P.2d 154; Cent. Puget Sound Reg'l Transit Auth. v. LMRK PROPCO 3, LLC, 29 Wash. App. 2d 121, 135, 540 P.3d 141 (2023) (explaining “that courts have both statutory and equitable authority to apportion damages in condemnation proceedings”).

¶75 Under the unclean hands doctrine, a court in equity will not intervene on behalf of a party whose conduct has been unconscientious, unjust, or marked by lack of good faith. Miller, 178 Wash. App. at 965, 316 P.3d 1113. But the doctrine only precludes a party from obtaining equitable relief if the party has committed willful misconduct that has an immediate and necessary relation to the requested relief. J. L. Cooper & Co. v. Anchor Sec. Co., 9 Wash.2d 45, 73, 113 P.2d 845 (1941).

3. Deutsche Bank's Motion for Apportionment

¶76 Merceri points to Deutsche Bank's involvement in systemic financial misconduct, including the London Interbank Offered Rate (LIBOR) manipulation and fraudulent mortgage-backed securities practices as the basis for claiming that the trial court should not have granted the Bank equitable relief in the form of its motion for apportionment. And Merceri claims that this affected her because her “loan was originated in December 2006—squarely within the period of documented manipulation.” Reply Br. at 7.

¶77 Deutsche Bank's alleged misconduct fails to support an assertion that the unclean hands doctrine bars equitable relief in this case. This is so because Deutsche Bank's alleged misconduct is wholly unrelated to the taking of Merceri's property, the condemnation award, and Deutsche Bank's possession of the original note. The misconduct is simply too attenuated to the present action.

¶78 Therefore, we conclude that trial court did not abuse its discretion by determining that the unclean hands doctrine did not bar Deutsche Bank's motion for apportionment.⁷

¶79 Because all of Merceri's arguments fail, we conclude that the trial court did not err in denying Merceri's motion for summary judgment and granting Deutsche Bank's motion for apportionment.

II. Attorney Fees on Appeal

¶80 Deutsche Bank seeks attorney fees on appeal pursuant to RAP 18.1(a) and the deed of trust. Merceri argues that Deutsche Bank waived any claim for attorney fees since it did not request attorney fees below. Alternatively, Merceri argues that the terms of the deed of trust do not provide for attorney fees because the “case is not an action or proceeding to construe or enforce the deed of trust.” Reply Br. at 33 (internal quotation marks omitted). We decline to award Deutsche Bank attorney fees on appeal.

¶81 Under RAP 18.1(a), a court may award attorney fees on appeal “[i]f applicable law grants to a party the right to recover,” and they dedicate a section of their brief to the request.

¶82 In an action on a contract with an attorney fee provision, the prevailing party “shall be entitled to reasonable attorneys’ fees.” RCW 4.84.330. The prevailing party is “the party in whose favor final judgment is rendered.” Id. “If neither party wholly prevails, then the party that substantially prevails on its claims is the prevailing party.” Hawkins v. Diel, 166 Wash. App. 1, 10, 269 P.3d 1049 (2011). If the court determines that both parties prevailed on a major issue, it may conclude that neither is a prevailing party entitled to attorney fees. Hertz v. Riebe, 86 Wash. App. 102, 105, 936 P.2d 24 (1997).

¶83 Deutsche Bank is not a substantially prevailing party on appeal because both parties prevailed on a major issue. The trial court did not err in granting Deutsche Bank's motion for apportionment. But the trial court did err in ruling that Merceri's attorney's lien did not attach to the condemnation award and had priority over Deutsche Bank's lien. Both issues are major issues on appeal because they govern the distribution of the condemnation award.

¶84 Therefore, we conclude that Deutsche Bank is not a substantially prevailing party and is not entitled to attorney fees on appeal.

CONCLUSION

¶85 Accordingly, we affirm the trial court's order denying Merceri's motion for summary judgment and the order granting Deutsche Bank's motion for apportionment. And we deny Deutsche Bank's request for attorney fees on appeal. This concludes the unpublished portion of our opinion.

FOOTNOTES

2.   Jones “disclaimed any interest in the claim for just compensation” arising out of the inverse condemnation action in this case. Merceri v. State, No. 85865-3-I, slip op. at 3, 2024 WL 1367160 (Wash. Ct. App. Apr. 1, 2024) (unpublished), https://www.courts.wa.gov/opinions/pdf/858653.pdf.

3.   Deutsche Bank argues that “the plain language of RCW 60.40.010(2) confirms that attorneys only have the same rights to judgments or proceeds to the extent their clients have for the amount due to them.” Br. of Resp't at 42-43. As a result, Merceri's “attorneys are only entitled to a lien against any amounts remaining from the judgment after apportionment to Deutsche Bank.” Br. of Resp't at 43. We disagree. As Merceri correctly observes, “[t]he proceeds of Merceri's action would never have gone into the court registry if Merceri had no ‘right and power’ over the ‘action,’ ” meaning that Merceri's attorneys similarly have a right to enforce a lien over the action. Reply Br. at 26 (quoting RCW 60.40.010(2)).

4.   Because we conclude that the trial court erred in not prioritizing Merceri's attorney's lien, we also conclude that the trial court erred by disbursing the total amount of the condemnation award to Deutsche Bank.

5.   Merceri also argues that the trial court erroneously believed that it did not have continuous jurisdiction over the case while Merceri's second round of appeals were pending. Merceri claims that, “[w]ithout explicitly saying so, the trial court seemed to believe that any limitations period was tolled” during Merceri's appeal. Br. of Appellant at 24. Merceri then relies on RAP 7.2(c) to claim that the trial court's “judgment was never stayed,” so Deutsche Bank “could have sought to enforce its purported rights at any time.” Br. of Appellant at 24. Because we conclude that Deutsche Bank's motion for apportionment was timely filed on alternative grounds, we need not address this argument.

6.   Merceri points to an inconsistent timeline of Deutsche Bank's acquisition of the note to call into question its rights to enforce the deed of trust. But because we conclude that Deutsche Bank's possession of the note is dispositive, we do not address this issue.

7.   Because we conclude that Merceri's challenge to Deutsche Bank's right to enforce the deed of trust fails as a matter of law and that the unclean hands doctrine does not apply, we do not address Merceri's argument regarding the trial court's denial of her motion to compel discovery.

Veljacic, C.J.

We concur: Lee, J. Glasgow, J.