Timmerman v. South Sound Outreach Services
| Decision Date | 02 April 2019 |
| Docket Number | 50954-7-II |
| Citation | 8 Wn.App.2d 1020 |
| Court | Washington Court of Appeals |
| Parties | MICHAEL TIMMERMAN and JUNE TIMMERMAN, Appellants, v. SOUTH SOUND OUTREACH SERVICES and Doe Defendants 1 through 20, inclusive, Respondents. |
UNPUBLISHED OPINION
Michael and June Timmerman appeal from the superior court's orders dismissing their claims on summary judgment. The Timmermans filed a complaint against South Sound Outreach Services for violation of the Consumer Protection Act[1] and intentional infliction of emotional distress, claiming that South Sound's failure to refer them to foreclosure mediation deprived them of the opportunity to prevent foreclosure through mediation. We hold that South Sound's actions did not occur in trade or commerce, and that the Timmermans failed to establish the tort of outrage. Consequently, we affirm.
FACTS[2]
Under the Foreclosure Fairness Act, homeowners facing foreclosure can seek to avoid foreclosure by contacting an approved housing counselor or an attorney to obtain a referral to foreclosure mediation. RCW 61.24.163. Based on the borrower's circumstances, the counselor or attorney can make a referral to mediation. RCW 61.24.163 (1), (2); RCW 61.24.160 (2), (3). The referral can be made any time after a Notice of Default is issued, but no later than twenty days after the Notice of Sale is recorded. RCW 61.24.163 (1); RCW 61.24.160 (3). The Notice of Default instructs homeowners to contact an approved housing counselor for more information on opportunities to avoid foreclosure. Once a housing counselor refers a borrower to mediation, the lender and borrower are required to participate in the mediation process. RCW 61.24.163.
South Sound is a nonprofit organization that provides a variety of financial and housing related services to low income individuals. In 2013, South Sound provided foreclosure mediation services. South Sound did not advertise its services. To become a South Sound client, consumers were required to complete an application and intake paperwork make an intake appointment, sign consent forms to allow South Sound to communicate with their lending institution, attend a group informational meeting, and pay a "statutorily-approved fee" to cover copying costs. Clerk's Papers (CP) at 26.
In 1998, the Timmermans obtained a loan from Citibank to purchase a residential property. The loan was secured by a deed of trust encumbering the property. Citibank assigned the deed of trust to JP Morgan Chase & Co. The Timmermans later took out two additional loans from the Boeing Employees Credit Union (BECU), also secured by deeds of trust encumbering the property.
In 2012, the Timmermans encountered financial difficulties and fell behind on their payments to Chase. In March 2013, Chase sent a Notice of Default to the Timmermans, stating that they had defaulted on their payments and if they did not take action, the property would be sold. In May, the Timmermans filed Chapter 7 bankruptcy. In July, their debts were discharged in bankruptcy. After their bankruptcy discharge, the Timmermans stopped paying BECU.
In the summer months of 2013, Ms. Timmerman's sister, Debbie Bood, went to South Sound for help with her own foreclosure. Bood went to South Sound's office for an intake appointment, completed intake paperwork, and attended a group informational meeting about South Sound's foreclosure prevention program. Ms. Timmerman accompanied Bood to her appointment. South Sound assigned Bood's case to Diane Hall, a housing counselor.
In September, Chase served the Timmermans with a Notice of Trustee's Sale, stating that a nonjudicial foreclosure sale was scheduled for January 31, 2014.
Hall responded the same day saying: CP at 174. There is no showing in the record that the Timmermans provided Hall the property address.
On January 15, 2014, the Timmermans e-mailed Hall, stating that they "ha[d]n't heard back from [her]," and asking about the status of their mediation. CP at 173. On January 27, the Timmermans again e-mailed Hall checking on the status of their mediation because they had not been contacted by a mediator and had not heard from anyone else. The Timmermans also stated that BECU had sent a Notice of Trustee's Sale with a sale scheduled in May 2014. The Timmermans asked Hall to request a mediation for their BECU loan. On January 30, the Timmermans e-mailed Hall to check on the status of their mediation because they had not heard back from her, and Chase's foreclosure sale was scheduled for January 31. Sometime during the week prior to the sale, the Timmermans called South Sound and spoke with "Bob," an employee of South Sound, who told them that Hall had the situation under control, but noted that he did not have access to Hall's files. CP at 133.
On January 31, Chase sold the property to BECU, with surplus funds being distributed to other lienholders. On February 5, the Timmermans e-mailed Hall stating that BECU purchased the property at the foreclosure sale. On February 6, the Timmermans e-mailed Hall asking for information about the status of their home, stating, "If you are NOT able to help then please be up front and let me know so we can seek assistance elsewhere!!!" CP at 59. The record does not show whether Hall responded to the Timmermans' e-mails.
At some point after the foreclosure, the Timmermans spoke with Hall and she assured them that she would "get the sale rescinded." CP at 133. Hall did not get the sale rescinded.
South Sound does not have a record of the Timmermans as a client. The Timmermans never contend that they completed any South Sound intake paperwork.
In 2016, the Timmermans filed a complaint against South Sound, bringing two causes of action. First, the Timmermans claimed that South Sound violated the Consumer Protection Act (CPA). The Timmermans alleged that South Sound "did not adhere to its duties to the Timmermans and did not perform any of the services that they agreed to perform for the Timmermans." CP at 6. Further, they alleged that South Sound "continued to employ Ms. Hall without any oversight" even though it knew that Hall "caused at least on[e] other homeowner to lose her home to foreclosure because she did not do her job." CP at 7.
Second, the Timmermans claimed that South Sound's actions constituted intentional infliction of emotional distress. The Timmermans alleged that South Sound's actions caused significant emotional distress as a result of losing their home to foreclosure and not having an opportunity to save it. Notably, the Timmermans' complaint alleged no action sounding in negligence. They orally verified this tactical decision to the trial court during the course of the proceedings.
On February 23, 2017, South Sound filed a partial motion for summary judgment to dismiss the Timmermans' CPA claim. South Sound argued, in part, that its services did not occur in "trade or commerce," as required by the CPA. CP at 22. Further, South Sound argued that the Timmermans' claim did not affect the public interest as required by the CPA because Hall was no longer employed by South Sound, and South Sound no longer participated in the foreclosure mediation program.
The Timmermans argued that providing housing counseling services constituted trade or commerce, and that their claim affected the public interest because Hall's actions had resulted in another homeowner losing her home. Ms. Timmerman submitted a declaration stating the sequence of events, and providing the e-mails she had sent to Hall. Counsel for the Timmermans also filed a declaration, stating that through her representation of a client in a separate matter, she learned that Hall and South Sound failed to provide competent assistance in her client's foreclosure process. Counsel stated that neither Hall nor South Sound were parties to that case, and the case was settled under confidential terms.
South Sound moved to strike counsel's declaration, arguing that it contained inadmissible hearsay, and therefore should not be considered at summary judgment. South Sound further argued that counsel's declaration was improper under the Rules of Professional Conduct because counsel was acting as a material witness.
The superior court granted South Sound's partial motion for summary judgment, finding that the Timmermans' claim did not meet the requirements of the CPA, even considering counsel's declaration, because the Timmermans failed to establish that the actions occurred in trade or commerce or affected the public interest.
Then South Sound moved for summary judgment to dismiss the Timmermans' claim for intentional infliction of emotional distress. South Sound argued that the Timmermans' allegations did not establish...
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