BROWN v. BROWN

• Citation: 239 P.3d 602
• Decision Date: 10 October 2010
• Docket Number: No. 63207-8-I.,63207-8-I.
• Parties: Dorothy (“Dottie”) L. BROWN, by and through her guardian Joyce M. RICHARDS, Appellant, v. Barry Edward BROWN, Defendant, Beverly Ann Hogg, and Wells Fargo Bank, National Association, a foreign corporation, Respondents.
• Court: Court of Appeals of Washington

239 P.3d 602

Dorothy (“Dottie”) L. BROWN, by and through her guardian Joyce M. RICHARDS, Appellant,

v. Barry Edward BROWN, Defendant,Beverly Ann Hogg, and Wells Fargo Bank, National Association, a foreign corporation, Respondents.

No. 63207-8-I.

Court of Appeals of Washington,Division 1.

Aug. 23, 2010.

Publication Ordered Oct. 10, 2010.

COPYRIGHT MATERIAL OMITTED.

Lucy R. Clifthorne, Attorney at Law, Tacoma, WA, for Appellant.

Beverly Hogg, Pro Se, Federal Way, WA, for Respondent.

Ronald Edward Beard, Andrew Gordon Yates, David Christopher Spellman, Lane Powell PC, Seattle, WA, for Respondents, Wells Fargo Bank Nat'l Assn.

LAU, J.

¶ 1 Acting under a power of attorney signed by his 93-year-old mother, Dottie Brown, Barry Brown obtained and then misappropriated proceeds from a reverse mortgage on her condominium. Dottie's guardian ¹ sued Barry, ² his girl friend Beverly Hogg, and Wells Fargo Bank to recover the proceeds. Dottie appeals the summary judgment dismissal of her federal reverse mortgage law and Consumer Protection Act (CPA) claims against Wells Fargo Bank. She also appeals the summary judgment dismissal of her misappropriation and conversion claims against Hogg. Because Dottie presented insufficient evidence to create a genuine material fact issue regarding Wells Fargo's liability, the trial court properly dismissed Dottie's claims against Wells Fargo on summary judgment. But because material issues of fact exist regarding Hogg's liability for conversion, we reverse the summary judgment order granted in Hogg's favor. We affirm in part and reverse in part.

FACTS AND PROCEDURAL HISTORY

¶ 2 Viewed in the light most favorable to Dottie, the record reveals the following facts. Barry assumed primary responsibility for Dottie's health care and financial affairs. He testified that sometime in 2003 or 2004, Dottie arranged for them to meet with a “representative of a reverse mortgage company” ³ who “explained the whole thing about the reverse mortgage and what you had to do to qualify and this and that.” ⁴ About two years later, on February 1, 2006, Barry called Wells Fargo and talked to an employee, who completed a reverse mortgage application based on information supplied by Barry over the telephone. The application names Dottie as the borrower and identifies the subject property as her condominium located in Federal Way, Washington. Barry is shown as the “alternative contact person.” And in response to the question “Do you intend to occupy the property as your primary residence?” the application indicates, “Yes.”

¶ 3 That same day, Wells Fargo sent a letter and a copy of the recently completed reverse mortgage application to Dottie “c/o Mr. Barry Brown” at Barry's home address. ⁵ The letter informed Dottie that she “must obtain credit counseling from one of the agencies referenced in the attached letter.” The letter also included an additional action item that requested, “Power of Attorney-if you are using in conjunction with this loan (must be durable).”

¶ 4 On February 15, Hogg drove Dottie and Barry to a United Parcel Service (UPS) store where Dottie-then 93 years old-signed two powers of attorney (POA) appointing Barry as her attorney-in-fact. The immediately effective durable general power of attorney (general POA) gave Barry the right to “mortgage ... lands ... upon such terms and conditions, and under such covenants as [he] shall think fit” and provided, “This power of attorney shall not be affected by the disability of the principal and shall otherwise become null and void upon death.” And the durable power of attorney (durable POA) ⁶ took effect “upon the disability or incompetence of the principal” and included the power to “[l]ease, sell, convey, exchange, mortgage and release any mortgage on lands and any interest therein.” Both POAs were notarized by UPS employee Ashley Scott, who certified Dottie signed the POAs as her “free and voluntary act....” Scott further testified,

Because of my training and my understanding of the duties of a notary public, I would not have notarized either of ... the powers of attorney had the Principal, Ms. Dottie Brown, appeared in any way to be incompetent or otherwise unable to understand the documents she was signing.

Two witnesses to Dottie signing the durable POA stated under oath,

Principal's Competency. I believe that at the time of the Principal's previously-mentioned signing and request, the Principal was of sound mind and was not acting under duress, menace, fraud, undue influence, or misrepresentation.

¶ 5 The same day she signed the POAs, Dottie and Barry met with a Federal Way Wells Fargo employee to complete a mandatory “Face to Face Certification” and presentation of identification for the reverse mortgage application. Barry also faxed the general POA to Consumer Counseling Northwest, a HUD ⁷ -approved agency that provides mandatory reverse mortgage credit counseling. The following day, Barry completed credit counseling as his mother's attorney-in-fact. Wells Fargo received Barry's signed credit counseling certificate on February 24. Br. of Respondent at 9 (citing CP 954).

¶ 6 Two days earlier, on February 22, Dottie suffered a stroke that caused aphasia and neurological disorder. The record shows, and the parties do not dispute, the stroke rendered her mentally incompetent. Three days after the stroke, she was discharged to a long-term care facility.

¶ 7 Meanwhile, Barry continued to pursue closing the reverse mortgage. He sent Wells Fargo the durable POA to establish his authority to act as Dottie's attorney-in-fact due to her incompetence. On April 1, he also submitted a letter from Dottie's orthopedic surgeon, Dr. Michael Franceschina, to confirm her cerebral vascular stroke and aphasia diagnosis. This letter also described Dottie's “difficulty communicating due to the aphasia.” A Wells Fargo mortgage loan processor then sent a fax to Dr. Franceschina's office requesting additional information about Dottie's aphasia diagnosis and mental competency.

This is in response to the doctor's letter provided to Wells Fargo Bank, NA by Dr. Michael Franceschina for Dottie Brown. My underwriter has reviewed the letter and has questions.

1) When did Ms. Brown develop Expressive Aphasia?

2) Ms. Brown signed the Power of Attorney February 15, 2006. Please clarify if she was competent at that time to sign a Power of Attorney.

We need this information to determine whether or not a Power of Attorney will be needed at the time of signing.

But Dr. Franceschina declined to provide the additional information, citing his lack of medical expertise, to express an opinion on Dottie's mental competency. However, a note in Wells Fargo's underwriting file concludes, “Per Ginny Miller-Dr. letter and Definition is enough to verify that borrower is incompetent regardless of time frame.”

¶ 8 At closing on April 25, Barry signed the deeds of trust securing the loan under the durable POA grant of authority. Hogg also attended the closing with Barry. The deed covenant required Dottie to live in the condominium as her primary residence. ⁸ Barry also signed an occupancy affidavit. It provided in part,

I/We hereby acknowledge and understand that I am executing this Statement of Occupancy which provides that if my loan application on the above described property is approved, I will occupy the same as my principal residence within sixty (60) days of the loan closing.

....

I further confirm my understanding and agreement that if I fail to occupy the property as my principal residence as provided above, such failure shall constitute a default under the terms and conditions of my loan, and upon the occurrence of such default, the whole sum of principal and interest shall immediately become due and payable at the option of the holder of my Note.

¶ 9 After the loan closed, Barry deposited approximately $198,000 in loan proceeds into a joint account shared with his mother. He transferred $20,000 to Hogg's personal bank account from this account. This lawsuit ensued to recover the proceeds.

¶ 10 In May 2008, Dottie moved for summary judgment against Barry and Hogg on her conversion and breach of fiduciary duty claims. Hogg successfully cross-moved for summary judgment dismissal, arguing that she had no knowledge that Barry had “interfered” with Dottie's property and that any sums she received were not identifiable. In June, the court denied without prejudice Dottie's summary judgment motion against Barry and granted his third party complaint against Wells Fargo. In October, Dottie amended her complaint to allege misappropriation, conversion, federal reverse mortgage law violations, and unfair or deceptive trade practice claims against Wells Fargo.

¶ 11 On November 14, Dottie moved for summary judgment against Wells Fargo and Barry, arguing that they converted her assets, Barry breached his fiduciary duties to her, and Wells Fargo violated federal reverse mortgage laws. Wells Fargo cross-moved for summary judgment dismissal against Dottie and Barry. The court (1) granted Wells Fargo's summary judgment dismissal motion against Dottie and Barry, (2) denied Dottie's summary judgment motion against Wells Fargo, and (3) granted Dottie's unopposed summary judgment motion against Barry. On January 7, 2009, the court entered final judgment against Barry for $289,571.89, including interest, costs, and statutory fees. ⁹ Dottie appeals the summary judgment dismissal of her claims against Wells Fargo and Hogg.

ANALYSIS

Standard of Review

¶ 12 When reviewing an order granting summary judgment, we engage in the same inquiry as the trial court, viewing the facts and all reasonable inferences in the light most favorable to the nonmoving party. Jones v. Allstate Ins. Co., 146 Wash.2d 291, 300, 45 P.3d 1068 (2002). Summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Jones, 146...