Blair v. Nw. Tr. Servs., Inc.

• Decision Date: 17 March 2016
• Docket Number: No. 32816–3–III.,32816–3–III.
• Citation: 372 P.3d 127,193 Wash.App. 18
• Court: Washington Court of Appeals
• Parties: James C. BLAIR, II, Appellant, v. NORTHWEST TRUSTEE SERVICES, INC., Bank of America, N.A., Mortgage Electronic Registration Systems, Inc., Federal Home Loan Mortgage Corporation and Doe Defendants 1 through 20, Respondents.

193 Wash.App. 18

372 P.3d 127

James C. BLAIR, II, Appellant

v.NORTHWEST TRUSTEE SERVICES, INC., Bank of America, N.A., Mortgage Electronic Registration Systems, Inc., Federal Home Loan Mortgage Corporation and Doe Defendants 1 through 20, Respondents.

No. 32816–3–III.

Court of Appeals of Washington, Division 3.

March 17, 2016.

As Amended on Denial of Reconsideration May 12, 2016.

Melissa Ann Huelsman, Law Offices of Melissa A. Huelsman, Seattle, WA, for Appellant.

Joshua Saul Schaer, RCO Legal, P.S., Bellevue, WA, Matthew William Daley, Witherspoon, Kelley, Davenport & Toole, Jody Marie McCormick, Washington Trust Bank, Spokane, WA, for Respondents.

LAWRENCE–BERREY

, J.

¶ 1 James C. Blair appeals the trial court's summary judgment dismissal of his Consumer Protection Act (CPA), chapter 19.86 RCW, and misrepresentation claims against the respondents. Mr. Blair's claims arise out of a nonjudicial foreclosure proceeding initiated against his residential property. Mr. Blair predicates his CPA claims on asserted violations of the Deed of Trust Act (DTA), chapter 61.24 RCW. We hold that only Northwest Trustee Services, Inc. (NWTS) violated the OTA, and it did so when it relied on an ambiguous beneficiary declaration. But because Mr. Blair failed to establish NWTS's violation was causally linked to any injury he suffered, he may not recover against NWTS on his CPA claim. We additionally hold that Mr. Blair's misrepresentation claims lack a factual basis. We therefore affirm the trial court.

FACTS

¶ 2 In September 2008, James Blair refinanced his mortgage with Countrywide Bank, FSB (Countrywide). Mr. Blair signed a promissory note and a deed of trust that encumbered his Chelan County residence. The deed of trust identifies Land America as the original trustee, Countrywide as the lender, and Mortgage Electronic Registration Systems, Inc. (MERS) as the deed of trust beneficiary. The note likewise identifies Countrywide as the lender, and is endorsed in blank by Countrywide. In August 2010, Mr. Blair became delinquent on his mortgage payments. While Mr. Blair was seeking a loan modification and was more than $34,000 behind on monthly payments, Bank of America, N.A. (BoA) initiated nonjudicial foreclosure proceedings in spring 2012.

¶ 3 According to the Federal Home Loan Mortgage Corporation's (Freddie Mac's) website, it became the owner of Mr. Blair's “mortgage” on September 25, 2008. Clerk's Papers (CP) at 698. BoA has physically possessed Mr. Blair's note “for the benefit of Freddie Mac and in accordance with Freddie Mac guidelines” since that time. CP at 1142. Freddie Mac routinely enters into agreements where home loan promissory notes it has bought are physically placed in the possession of a document custodian, who may also be the loan servicer. Under Freddie Mac's document custody procedures handbook, the primary duty of the document custodian is to “[h]old Notes and assignments in trust for the sole benefit of Freddie Mac.” CP at 1046. Consequently, Freddie Mac and the document custodian “[d]o not enter into any understanding, agreement or relationship with any party to obtain, retain or claim any interest, including ownership or security, in Mortgages owned by Freddie Mac, unless specifically approved in writing, in advance.” CP at 1046.

¶ 4 BoA serviced Mr. Blair's loan for Freddie Mac and was authorized “to take all actions necessary for the collection and enforcement of the Loan, including receiving and processing loan payments, communicating with [sic] regarding the loan, and, should such action be necessary, initiating foreclosure, consistent with the Note, Deed of Trust and Freddie Mac servicing guidelines.” CP at 853.

¶ 5 After Mr. Blair became delinquent on his payments in August 2010, he applied for a loan modification through BoA in 2011 and early 2012. BoA rejected Mr. Blair's application on the asserted basis that he failed to provide the required documents. Prior to the initiation of the nonjudicial foreclosure proceedings, MERS assigned its interest in Mr. Blair's deed of trust to BoA. In a document dated October 18, 2011, BoA appointed NWTS as the successor trustee of Mr. Blair's deed of trust. The document appointing NWTS as the successor trustee refers to BoA as the beneficiary, and was publicly recorded in March 2012.

¶ 6 In March 2012, NWTS issued a notice of default to Mr. Blair. The notice of default states “[t]he owner of this note is Federal Home Loan Mortgage Corporation (Freddie Mac)” and “[t]he loan servicer for this loan is Bank of America, N.A.” CP at 925. In April 2012, NWTS issued and recorded a notice of trustee's sale, setting a foreclosure date in August 2012. Prior to issuing the notice of trustee's sale, NWTS received a beneficiary declaration from BoA that it relied on. The beneficiary declaration stated:

[BoA] is the beneficiary (as defined by RCW § 61.24.005(2)

) and actual holder of the promissory note or other obligation secured by the deed of trust or has requisite authority under the RCW 62A.3–301 to enforce said obligation for the above mentioned loan account.

CP at 566 (emphasis added).

¶ 7 Shortly before the scheduled trustee's sale, Mr. Blair filed this lawsuit, naming NWTS, BoA, MERS, and Freddie Mac as defendants. In his complaint, Mr. Blair sought (1) a temporary restraining order (TRO) and preliminary injunction prohibiting the trustee's sale, (2) damages under the DTA against NWTS, (3) damages under the CPA against all defendants, and (4) damages resulting from intentional or negligent misrepresentation against all defendants. The crux of Mr. Blair's complaint was that the defendants misrepresented BoA as the DTA beneficiary, and because BoA was not the DTA beneficiary, it had no lawful authority to appoint NWTS as the successor trustee, and therefore the entire nonjudicial foreclosure was unlawful.

¶ 8 Mr. Blair incurred attorney fees of $5,350.00 in enjoining the trustee's sale. Additionally, Mr. Blair estimated that he incurred costs totaling $890.35 associated with the TRO and preliminary injunction, including missing work at the title insurance company he owns and operates. According to Mr. Blair's counsel, she has brought at least 10 cases against NWTS in the last few years containing similar allegations (and is aware of other attorneys doing the same).

¶ 9 NWTS moved for summary judgment in November 2013, arguing that it complied with the DTA by relying on BoA's beneficiary declaration, and that BoA was the note holder and DTA beneficiary with the power to appoint the successor trustee. NWTS also argued that any damages Mr. Blair incurred were proximately caused by his failure to make his home loan payments, and that he cannot prove he suffered “actual prejudice” relating to the nonjudicial foreclosure. BoA, MERS, and Freddie Mac (represented by the same counsel) also moved for summary judgment in November 2013, similarly arguing that BoA was the DTA beneficiary with the authority to appoint NWTS as the successor trustee. Mr. Blair opposed both summary judgment motions, arguing that the DTA only allows a beneficiary who is also the owner of the note to initiate nonjudicial foreclosure. During the summary judgment hearing, Mr. Blair argued that BoA's beneficiary declaration was also insufficient because BoA had not proved it was in physical possession of the note when the beneficiary declaration was prepared. Consequently, the trial court allowed BoA to submit a supplemental declaration. The supplemental declaration shows that BoA had physical possession of the note at the time the beneficiary declaration was prepared.

¶ 10 The trial court granted summary judgment to all of the defendants. In a memorandum decision, the trial court stated that BoA “actually held the note” based on the “supplemental declaration establishing that it held the note continuously beginning September 25, 2008 as the successor to BAC Home Loans.” CP at 1148. The trial court further held that although BoA's beneficiary declaration to NWTS was “insufficient” on its face, BoA “supplemented the record to establish that it in fact held the requisite documents at all relevant times to the attempted foreclosure in this case.” CP at 1149. Therefore, BoA “had the authority to appoint NWTS as a successor trustee.” CP at 1149. As the trial court concluded that the DTA claim should be dismissed, it likewise dismissed the CPA claim as it was predicated on the alleged DTA violation. Similarly, the intentional and negligent misrepresentation claims were dismissed as “plaintiff has failed to establish a material false representation by any of the defendants that plaintiff relied on and proximately caused him damage.” CP at 1150. Mr. Blair timely appeals.

ANALYSIS

A. Standard of review

¶ 11 This court reviews an order granting summary judgment de novo. Lyons v. U.S. Bank NA, 181 Wash.2d 775, 783, 336 P.3d 1142 (2014)

. Under de novo review, this court engages in the same inquiry as the trial court, viewing the facts and all reasonable inferences in the light most favorable to the nonmoving party. Id. (quoting Reid v. Pierce County, 136 Wash.2d 195, 201, 961 P.2d 333 (1998) ). “The object and function of summary judgment procedure is to avoid a useless trial.” Barber v. Bankers Life & Cas. Co., 81 Wash.2d 140, 144, 500 P.2d 88 (1972).

¶ 12 Summary judgment is appropriate only if the record demonstrates there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c)

. Judgment as a matter of law for summary judgment purposes is warranted “if reasonable people could reach one conclusion based on the evidence when viewing the facts in the light most favorable to the nonmoving party.”

O.S.T. v. Regence BlueShield, 181 Wash.2d 691, 703, 335 P.3d 416 (2014)

. “A material fact is one upon which the outcome of the litigation depends in whole or in part.” Atherton Condo. Apt.–Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wash.2d 506, 516, 799 P.2d 250 (1990). “A trial...