Cummings v. Nw. Tr. Servs. of Wash., Corp.

• Decision Date: 28 November 2016
• Docket Number: No. 74264-7-I,74264-7-I
• Citation: Cummings v. Nw. Tr. Servs. of Wash., No. 74264-7-I (Wash. App. Nov 28, 2016)
• Parties: ROBERT and DORIS CUMMINGS, husband and wife, Appellants, v. NORTHWEST TRUSTEE SERVICES OF WASHINGTON, a Washington corporation; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation; and DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE IN TRUST FOR THE REGISTERED CERTIFICATE HOLDERS OF FIRST FRANKLIN MORTGAGE LOAN TRUST, ASSET-BACKED CERTIFICATES, SERIES 2006-FF8, Respondents, and JOHN DOES 1-10, Defendants.
• Court: Washington Court of Appeals

ROBERT and DORIS CUMMINGS, husband and wife, Appellants, v. NORTHWEST TRUSTEE SERVICES OF WASHINGTON, a Washington corporation;MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation;and DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE IN TRUST FOR THEREGISTERED CERTIFICATE HOLDERS OF FIRST FRANKLIN MORTGAGE LOAN TRUST,ASSET-BACKED CERTIFICATES, SERIES 2006-FF8, Respondents,and JOHN DOES 1-10, Defendants.

No. 74264-7-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

November 28, 2016

UNPUBLISHED

COX, J. — Robert and Doris Cummings (collectively, Cummings) appeal the trial court's order granting summary judgment to Mortgage Electronic Registration Systems Inc. (MERS) and Deutsche Bank National Trust Company. They fail to show that there are any genuine issues of material fact for their claims of violations of the Deeds of Trust Act or the Consumer Protection Act (CPA). MERS and Deutsche Bank are entitled to judgment as a matter of law. We affirm.

In April 2006, Cummings borrowed $240,000 from First Franklin. They executed a promissory note dated April 12, 2006 in the principal amount of $240,000 to memorialize this obligation.

In order to secure payment of the note, Cummings also executed a deed of trust dated April 24, 2006 encumbering their home. The deed of trust was recorded in the Auditor's Records of Snohomish County. It named First Franklin as the lender, First American Title as the trustee, and MERS as the beneficiary nominee for First Franklin.

Thereafter, First Franklin specially endorsed this note to First Franklin Financial Corporation.¹ First Franklin Financial Corporation then endorsed this note in blank.² Deutsche Bank has had possession of both this note and the deed of trust securing it at all times material to enforcement of the obligations evidenced by these documents.

Cummings defaulted on the loan by missing payments due under the terms of the note.

MERS purported to assign "all beneficial interest" in the note and deed of trust to Deutsche Bank by an Assignment of Deed of Trust dated October 6,2011. That assignment was recorded in the Auditor's Records of Snohomish County on October 18, 2011.

Deutsche Bank recorded an agreement dated June 5, 2014 granting Select Portfolio Serving Inc. (SPS) limited power of attorney to service the loan and, if necessary, appoint a successor trustee to foreclose the deed of trust. Deutsche Bank, through SPS, gave Northwest Trustee Services (NWTS) two beneficiary declarations stating that Deutsche Bank, as trustee for the First Franklin Mortgage loan trust, was the actual holder of the note.

On September 23, 2014, Deutsche Bank, through SPS, appointed NWTS as successor trustee. NWTS sent a notice of default to Cummings the next day.

NWTS recorded a notice of trustee's sale on November 11, 2014, setting a sale date for March 13, 2015. The home was sold at the trustee's sale on March 13, 2015.

On March 20, 2015, Cummings commenced this suit against MERS, Deutsche Bank, and NWTS. They claimed violations of the Deeds of Trust Act and the CPA. They sought declaratory and injunctive relief, damages, and attorney fees.

NWTS moved to dismiss all claims against it. The trial court granted that motion. Cummings sought to appeal, but a commissioner of this court directedthem to file a motion for discretionary review.³ They did not do so, and this court dismissed that appeal.⁴ That dismissal is now final.

The trial court then granted summary judgment to MERS and Deutsche Bank. Cummings's notice of appeal that is now before us designates only this order.

SCOPE OF REVIEW

NWTS argues that the summary judgment order dismissing it from this action is not properly before this court because Cummings did not designate that order in their notice of appeal. We agree.

The notice of appeal dated November 11, 2015 designates only the order granting summary judgment to MERS and Deutsche Bank. It neither designates nor refers to the prior order dismissing NWTS. Thus, under RAP 2.4(a), the NWTS order is not before this court.

We note that Cummings attempted to appeal the order dismissing claims against NWTS in a prior notice of appeal. But a commissioner of this court decided that the order was interlocutory and not yet subject to appeal.⁵ At that time, all claims of all parties had not yet been resolved. The commissioner directed Cummings to file a petition for discretionary review.⁶ They did not do so.

At oral argument, Cummings contended that they rely upon their earlier notice of appeal to somehow preserve for our review the earlier order of dismissal. They are mistaken.

An interlocutory notice of appeal has no effect upon consideration of a later appeal from a final judgment unless designated in that later appeal.⁷ Thus, the prior notice of appeal does not change our conclusion that the prior order is not properly before us.

Under RAP 2.4(b), the appellate court reviews orders not designated in the notice of appeal when the undesignated order satisfies two elements. The order must "prejudicially affect[] the decision designated in the notice," and the order must have been entered before the appellate court accepted review of the case.⁸

As for the first element, "prejudicial effect" means that the "order appealed from would not have happened but for the" undesignated order.⁹ This requires that the two orders "be so entwined that to resolve the order appealed, the court must consider the order not appealed."¹⁰ This element is not satisfied because the dismissal of NWTS had no bearing on the subsequent order granting summary judgment in favor of MERS and Deutsche Bank.

Because of failure to meet the first element, we need not address the second.

In sum, the claims directed against NWTS are not properly before this court. Likewise, there is no need to address the remaining arguments of NWTS. We shall not address either any further.

DEEDS OF TRUST ACT

Cummings first argues that the foreclosure of the deed of trust securing their delinquent note was wrongful. There is no merit to this claim.

Summary judgment is proper "only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law."¹¹ "A genuine issue of material fact exists if 'reasonable minds could differ on the facts controlling the outcome of the litigation.'"¹²

Summary judgment is subject to a burden-shifting scheme.¹³ The movant is entitled to summary judgment by submitting affidavits establishing its entitlement to judgment as a matter of law.¹⁴ The nonmoving party avoids summary judgment by setting forth "'specific facts which sufficiently rebut the moving party's contentions'" and disclosing the existence of a genuine issue ofmaterial fact.¹⁵ To accomplish this, the nonmoving party may not rely either on argumentative assertions that unresolved factual issues remain or on speculation.¹⁶

We review de novo a trial court's grant of summary judgment.¹⁷

We may affirm on any basis supported by the record whether or not the argument was made below.¹⁸

We start with basic principles applicable to this case. They arise from the note and deed of trust on which this foreclosure was based.

First, this court and the supreme court have both held that the holder of a promissory note is the person entitled to enforce that obligation.¹⁹ Ownership of a note is irrelevant to the power to enforce that note.²⁰

Second, the holder of the note has the power to enforce the deed of trust because the deed of trust follows the note by operation of law. In Bain v. Metropolitan Mortgage Group, Inc., the supreme court explained that the Deedsof Trust Act "contemplates that the security instrument will follow the note, not the other way around."²¹ This statement is consistent with well-settled law.

Commentators have explained that "transfer of the [note] alone will carry the [deed of trust] along with it."²² Other commentators have elaborated:

[B]etween the parties to a transfer the assignment or negotiation of the note itself is all that must be done. It is unnecessary to have any separate document purporting to transfer or assign the mortgage on the real estate, for it will follow the obligation automatically.²³

These two principles demonstrate that the holder of the note is entitled to enforce both it and the deed of trust securing it. Here, it is undisputed that Deutsche Bank has had possession of the note, which was indorsed in blank, at all times material to this matter. Accordingly, it is the holder of the note, which gives it the power to enforce it.

The deed of trust follows the note. Accordingly, Deutsche Bank also has the power to enforce the deed of trust, by operation of law.

Because Deutsche Bank has possession of both the note and deed of trust, with the power to enforce both, it has established a prima facie case that it is entitled to summary judgment. The burden shifts to Cummings to show the existence of a genuine issue of material fact.

Cummings first argues that RCW 62A.9A-203, part of Article 9 of the Uniform Commercial Code, determines who is entitled to enforce the deed of trust. This argument is without merit.

RCW 61.24.030(7)(a), the controlling portion of the Deeds of Trust Act, states who is entitled to enforce a deed of trust that secures a delinquent note. Case authority makes clear that Article 3 controls the right to enforce a note and deed of trust under this statute.²⁴ Article 9 has no bearing on enforcement of a note and deed of trust.

Cummings next claims that "[t]here has never been a subsequent assignment" of the note and deed of trust to Deutsche Bank. This contention is irrelevant to the resolution of this case.

First, the note was indorsed in blank and Deutsche Bank has had possession of this note at all times material to the foreclosure. The negotiation by this indorsement is sufficient to make Deutsche Bank the holder of that instrument, entitled to enforce it. A separate assignment is not required. Thus, the purported assignment of...