Hummel v. Nw. Tr. Servs., Inc.

• Decision Date: 23 March 2016
• Docket Number: CASE NO. C15-255RAJ
• Parties: Tana Chung Hummel, Plaintiff, v. Northwest Trustee Services, Inc., et al., Defendants.
• Court: U.S. District Court — Western District of Washington

180 F.Supp.3d 798

Tana Chung Hummel, Plaintiff,

v.Northwest Trustee Services, Inc., et al., Defendants.

CASE NO. C15-255RAJ

United States District Court, W.D. Washington, at Seattle.

Signed March 23, 2016

Jill J. Smith, Natural Resource Law Group, PLLC, Seattle, WA, for Plaintiff.

Joshua Schaer, RCO Legal, P.S., Heidi Buck Morrison, Northwest Trustee Services, Inc., Bellevue, WA, Vanessa Soriano Power, J. Will Eidson, Stoel Rives, Seattle, WA, Amy Edwards, Stoel Rives, Portland, OR, Jody M. McCormick, Michael J. Kapaun, Steven Joseph Dixson, Witherspoon Kelley, Spokane, WA, for Defendants.

ORDER

The Honorable Richard A. Jones, United States District Court

I. INTRODUCTION

This matter comes before the Court on Defendant Northwest Trust Services, Inc.'s (“NWTS”) Motion to Dismiss (Dkt. # 54), Defendant Bank of America National Association's (“BOA”) Motion to Dismiss (Dkt. # 56), and Defendants Select Portfolio Servicing, Inc. (“SPS”) and Mortgage Electronic Registration Systems, Inc.'s (“MERS”) Motion for Summary Judgment (Dkt. # 58). For the reasons set forth below, the Court GRANTS the Motions.

II. BACKGROUND

On November 13, 2006, Plaintiff executed a promissory note (the “Note”) for $650,000.00 payable to First Franklin, a Division of National City Bank. Plaintiff's Revised First Am. Compl. (“RFAC”) ¶ 14; Dkt. # 55 (NWTS Request for Judicial Notice (“RJN”)) Ex. 1.¹ Plaintiff also executed a deed of trust securing repayment of the Note (the “Deed of Trust”). See RFAC ¶ 15; Dkt. # 55 (RJN) Ex. 2. The Note was secured by property located at 2536 Lake Whatcom Boulevard, Bellingham, Washington 98229 (the “Property”).

See RFAC ¶¶ 13-14; Dkt. # 55 (RJN) Ex. 2 at 1. The Deed of Trust named Stewart Title as the trustee and MERS as a beneficiary as “nominee for Lender and Lender's successors and assigns.” See Dkt. # 55 (RJN) Ex. 2 at 2. It also permitted the lender to appoint a successor trustee at any time. See id. at 14.

Subsequently, First Franklin² endorsed the Note to First Franklin Financial Corporation and First Franklin Financial Corporation endorsed the Note in blank.³ See Dkt. # 59-1 (Power Decl.) Ex. A at 5. MERS assigned its interest under the Deed of Trust to U.S. Bank, National Association (“U.S. Bank”), Successor Trustee to Bank of America, N.A., as Successor Trustee to the Holders of the First Franklin Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FF1 (the “First Franklin Trust”). See Dkt. # 55-3 (RJN) Ex. 3 at 1. U.S. Bank later, as the holder of the Note⁴ and beneficiary of the Deed of Trust, executed a limited power of attorney in favor of SPS, appointing it as the servicer. See Dkt. # 59-1 (Power Decl.) Ex. C.⁵

In December 2013, U.S. Bank executed a Declaration of Ownership, which stated that U.S. Bank “is the actual holder of the Promissory Note evidencing” Plaintiff's loan. See Dkt. # 55-4 (RJN) Ex. 4.⁶ In January 2014, U.S. Bank, through SPS, named NWTS as the successor trustee under the Deed of Trust by recording an appointment of successor trustee with the Whatcom County Auditor. See id. Ex. 5. On July 1, 2014, NWTS issued a Notice of Default to Plaintiff regarding the Property, indicating that Plaintiff had been in default on the Note since February 1, 2012. See id. Ex. 6. The Notice of Default identified U.S. Bank as the “Note Owner” and SPS as the “Loan Servicer.” Id. at 3. It indicated that Plaintiff was $155,176.99 in arrears. See id. at 2. Finally, on October 13, 2014, NWTS recorded a Notice of Trustee's Sale with the Whatcom County Auditor, setting a sale date of February 13, 2015. Id. Ex. 7. The Notice referenced both the Deed of Trust and the assignment from MERS to U.S. Bank. See id. at 2.

The bases for Plaintiff's claims principally focus on allegations that First Franklin was not licensed to do business in Washington State and therefore that it had no authority to act as a lender. See RFAC ¶ 14. MERS, Plaintiff further claims, is an improper, unlicensed beneficiary and LaSalle Bank did not record the Series 2007-FF1 mortgage loan asset-backed certificate in violation of RCW 65.08.070

. Id. ¶¶ 15, 17-18. Plaintiff further claims that the Note and the Deed of Trust were not properly transferred, assigned, or recorded, or done so in violation of the Pooling & Servicing Agreement (“PSA”) (see id. ¶¶ 24-25) and, as a result, that the Deed of Trust and the Note are invalid (id. ¶ 27). As a result, Plaintiff claims, none of the Defendants holds a secured claim against her and are somehow estopped from asserting an unsecured claim against her. See

id. ¶ 37.

III. LEGAL STANDARD

a. Motion to Dismiss

Fed. R. Civ. P. 12(b)(6)

permits a court to dismiss a complaint for failure to state a claim. The rule requires the court to assume the truth of the complaint's factual allegations and credit all reasonable inferences arising from those allegations. Sanders v. Brown , 504 F.3d 903, 910 (9th Cir.2007). A court “need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint.” Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir.2008). The plaintiff must point to factual allegations that “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly , 550 U.S. 544, 568, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). If the plaintiff succeeds, the complaint avoids dismissal if there is “any set of facts consistent with the allegations in the complaint” that would entitle the plaintiff to relief. Id. at 563, 127 S.Ct. 1955 ; Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

The court typically cannot consider evidence beyond the four corners of the complaint, although it may rely on a document to which the complaint refers if the document is central to the party's claims and its authenticity is not in question. Marder v. Lopez , 450 F.3d 445, 448 (9th Cir.2006)

. The court may also consider evidence subject to judicial notice. Ritchie , 342 F.3d at 908.

b. Motion for Summary Judgment

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a)

. The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007)

. On an issue where the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district court that there is an absence of evidence to support the non-moving party's case. Celotex Corp. , 477 U.S. at 325, 106 S.Ct. 2548. If the moving party meets the initial burden, the opposing party must set forth specific facts showing that there is a genuine issue of fact for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Reeves v. Sanderson Plumbing Prods. , 530 U.S. 133, 150–51, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

IV. ANALYSIS

a. Plaintiff's “Wrongful Foreclosure Attempt” Claim

The Court begins with Plaintiff's claim for “Wrongful Foreclosure Attempts.” See RFAC ¶¶ 40-56. Essentially, Plaintiff contends that Defendants have wrongfully attempted to foreclose on the Property. Nevertheless, Plaintiff does not—and cannot—allege that Defendants have actually completed a foreclosure sale. See id. ¶ 40 (“BOA, SPS, NWTS [sic] have tried to wrongfully foreclosure [sic] Plaintiff's property.”) (emphasis added).

Of course, no cause of action exists for an attempt to wrongfully foreclose. To the contrary, Washington law does not recognize such a claim under the Deeds of Trust Act (“DTA”). See Frias v. Asset Foreclosure Servs., 181 Wash.2d 412, 334 P.3d 529, 533 (2014)

(en banc) (holding that the DTA “does not create a cause of action for violations of its terms in the absence of a completed foreclosure sale”). Simply put, after Frias, “there is no actionable, independent cause of action for monetary damages under the DTA based on DTA violations absent a completed foreclosure sale.” Meyer v. U.S. Bank Nat'l Ass'n , 530 B.R. 767, 775–76 (W.D.Wash.2015) (quoting id. at 537 ).

Plaintiff does not dispute this point, instead arguing that she is bringing some sort of distinct claim for a violation of RCW 19.144.080

. See Dkt. # 72 at 8; Dkt. # 80 at 9. Although that provision makes it unlawful to defraud or mislead a borrower during the process of creating a residential mortgage loan, it does not create a private right of action. See

Johnson v. JP Morgan Chase Bank N.A., No. 14–5607 RJB, 2015 WL 4743918, at *11 (W.D.Wash. Aug. 11, 2015) ; Douglass v. Bank of Am. Corp. , No. CV–12–0609–JLQ, 2013 WL 2245092, at *8 (E.D.Wash. May 21, 2013). Instead, the enforcement provision of Washington's Mortgage Lending and Homeownership Act provides that only “[t]he director or the director's designee may ... enforce, investigate, or examine persons covered by this chapter.” RCW 19.144.120. In short, RCW 19.144.080 does not apply. With no other basis for this claim, Plaintiff's “Wrongful Foreclosure Attempt” claim fails.

b. Plaintiff's “Lack of Standing” Claim

Plaintiff next alleges a claim for “lack of standing.” See RFAC ¶¶ 57-74. Although somewhat unclear, Plaintiff appears to allege that Defendants cannot enforce the Deed of Trust or the Note for various reasons relating to MERS' presence on the Deed of Trust or that subsequent assignments of the Deed of Trust were invalid.

To begin, MERS' mere presence on the Deed of Trust does not invalidate that...