Merry v. Quality Loan Serv. Corp.
| Decision Date | 25 August 2015 |
| Docket Number | No. 32603-9-III,32603-9-III |
| Court | Washington Court of Appeals |
| Parties | THOMAS F. MERRY, Appellant, v. QUALITY LOAN SERVICE CORP. OF WASHINGTON, INC.; JPMORGAN CHASE BANK NATIONAL ASSOCIATION, Respondents. |
LAWRENCE-BERREY, J. — The trial court granted the respondents' summary judgment motions dismissing Thomas Merry's complaint. In general, Mr. Merry alleges that he is the owner of a note secured by a deed of trust, and challenges both the bank's senior deed of trust and the trustee's right to foreclose that deed of trust. Prior to summary judgment, the trustee discontinued the trustee's nonjudicial foreclosure sale. In granting summary judgment dismissal, the trial court concluded as a matter of law that Mr. Merry lacked standing and no justiciable controversy existed. We conclude that no justiciable controversy exists between Mr. Merry and the trustee. We however concludethat a justiciable controversy exists between Mr. Merry and the bank. We reach the merits of that controversy and affirm the summary judgment dismissal on that alternate basis.
On January 31, 2001, property owners and nonparties Gaery and Janet Rutherford signed a promissory note (Note) to obtain a $210,000 loan from Washington Mutual Bank (Washington Mutual). The Note included a statement that the Rutherfords "understand that [Washington Mutual] may transfer this Note." Clerk's Papers (CP) at 77. The Note is endorsed in blank.1 To secure their obligations under the Note, the Rutherfords also signed the subject Deed of Trust on the same date, granting Washington Mutual a security interest in the property located at 17600 Chumstick Highway, Leavenworth, Washington 98826. The Deed of Trust is ostensibly in first position and provides that "[t]he Note or a partial interest in the Note (together with this Security Instrument) may be sold one or more times without prior notice to Borrower." CP at 86. Pioneer Title Company—Wenatchee is listed as the trustee on the Deed of Trust.
On September 25, 2008, JPMorgan Chase Bank (Chase) acquired Washington Mutual's loan assets, including all of its loans, mortgage servicing rights, and obligations, from the Federal Deposit Insurance Corporation (FDIC), after the federal government's Office of Thrift Supervision placed Washington Mutual in receivership. The Purchase and Assumption Agreement (P&A Agreement) sets forth the terms of the sale. On February 19, 2013, Chase, in its capacity as attorney-in-fact, for FDIC assigned itself FDIC's interest in the Deed of Trust.
The Rutherfords defaulted on their loan. On April 24, 2013, Chase appointed Quality Loan Service Corporation of Washington (Quality) successor trustee under the Deed of Trust. The Deed of Trust provides the trustee with the power of sale in the event of default. Due to the Rutherfords' default, Quality issued a Notice of Default on May 8, 2013. Chase executed a Beneficiary Declaration stating it was the "holder" of the Note on May 9, 2013. CP at 184.
Mr. Merry is not a party to the Rutherford Note or Deed of Trust. He is a junior lienholder ostensibly in fourth position.
On August 13, 2013, Quality issued a Notice of Trustee's Sale against the property, scheduling an auction date for December 13, 2013. The sale was subsequently continued beyond that date.
Mr. Merry filed an action on December 19, 2013, seeking declaratory relief against Chase and Quality. Mr. Merry sought to invalidate Chase's security interest and Quality's status as trustee under various theories.
Chase and Quality filed motions for summary judgment on March 5, 2014. and March 13, 2014, respectively. In its motion for summary judgment, Chase stated it acquired the Rutherfords' original Note and Deed of Trust pursuant to the P&A Agreement. In support of its motion, Chase filed declarations of two of its employees, Amber Alegria and Sunserayer W. Edwards. In Ms. Alegria's declaration, she stated Chase now holds the Rutherfords' original Note and Deed of Trust. In Mr. Edwards's declaration, he stated Chase has held the original Note since 2009.
In his motion opposing summary judgment, Mr. Merry contended the Note was not included in the assets Chase acquired pursuant to the P&A Agreement. Instead, he argued that Chase, while acting as attorney-in-fact for the FDIC, assigned itself the Deed of Trust and the Note on February 19, 2013. In his brief on appeal, Mr. Merry now contends that Chase only assigned itself the Deed of Trust, not the Note, on February 19, 2013. Mr. Merry also argues that to prove its status as a holder, Chase should have produced the original Note for examination by the court, and it failed to do so.
At the summary judgment hearing on April 11, 2014, Chase's attorney advised the court that the trustee's sale had been discontinued for a pending loan modification. The trial court requested additional briefing to address whether Mr. Merry had standing to bring his action. On May 23, 2014, after supplemental briefing was submitted, the trial court granted summary judgment and dismissed the complaint with prejudice. The order granting Chase's and Quality's summary judgment motions was entered on May 29, 2014. The court determined that Mr. Merry lacked standing to bring the suit because (1) there was no justiciable controversy since there was no pending foreclosure sale, and (2) Mr, Merry lacked standing to seek declaratory judgment under Washington's deeds of trust act (DTA), chapter 61.24 RCW, because he was not "within the zone of interests protected by the DTA and he otherwise failed to show any injury." CP at 287. Mr. Merry appeals.
A trial court's decision on summary judgment is reviewed de novo, meaning this court will engage in the same inquiry as the trial court. Nivens v. 7-11 Hoagy's Corner, 133 Wn.2d 192, 197, 943 P.2d 286 (1997). A trial court's ruling on the admissibility of evidence in a summary judgment proceeding is also reviewed de novo. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Summary judgment is proper "if thepleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). "The facts and all reasonable inferences therefrom must be considered in the light most favorable to the nonmoving party." Degel v. Majestic Mobile Manor, Inc., 129 Wn.2d 43, 48, 914 P.2d 728 (1996). The facts presented must be more than "speculative and argumentative assertions." Adams v. King County, 164 Wn.2d 640, 647, 192 P.3d 891 (2008). "Mere allegations or conclusory statements of facts unsupported by evidence are not sufficient to establish a genuine issue." Rucker v. NovaStar Mortg., Inc., 177 Wn. App. 1, 10, 311 P.3d 31 (2013).
Chase and Quality contend that Mr. Merry, as a third party stranger to the Note, Deed of Trust, and related subsequent assignments and appointments, did not have standing to bring this action. Quality also argues that because the trustee's sale was discontinued when the court heard and decided the motions for summary judgment, there was no activity for the court to enjoin and, thus, the court properly dismissed the claim for injunctive relief.
Id. (footnote and citations omitted) (quoting Diversified Indus. Dev. Corp. v. Ripley, 82 Wn.2d 811, 815, 514 P.2d 137 (1973)).
In To-Ro, the court repeated the oft-quoted rule that "'[o]ne may not . . . challenge the constitutionality of a statute unless it appears that he will be directly damaged in person or in property by its enforcement.'" Id. at 411-12 (emphasis in original) (quoting DeCano v. State, 7 Wn.2d 613, 616, 110 P.2d 627 (1941)). In that case, To-Rochallenged the constitutionality of RCW 46.70.021, a statute that requires all dealers who display their vehicles at trade shows to be licensed. To-Ro is not a dealer. Rather, To-Ro produces consumer trade shows. The court concluded that To-Ro did not have standing for two reasons. First, To-Ro failed to show how the Department of Licensing's enforcement of the challenged statute had harmed or would harm it. Id. at 413. Second, the court reasoned: "To have standing to challenge the constitutionality of a statute, a party must show, in addition to 'sufficient factual injury,' that '"the interest sought to be protected . . . is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question."'" Id. at 414 (quoting Seattle Sch. Dist. No. 1 v. State, 90 Wn.2d 476, 493-94, 585 P.2d 71 (1978)). The court noted the purpose of the statute was to protect consumers,...
To continue reading
Request your trial