U.S. Bank Nat'l Ass'n v. Roosild

• Citation: 17 Wash.App.2d 589,487 P.3d 212
• Decision Date: 18 May 2021
• Docket Number: No. 53772-9-II,53772-9-II
• Parties: U.S. BANK NATIONAL ASSOCIATION AS Legal Title TRUSTEE FOR TRUMAN 2016 SC6 TITLE TRUST, its successors in interest and/or assigns, Respondents, v. Tarmo Paul ROOSILD; Samantha Castronovo; Occupants of the Premises, Appellants.
• Court: Washington Court of Appeals

17 Wash.App.2d 589

487 P.3d 212

U.S. BANK NATIONAL ASSOCIATION AS Legal Title TRUSTEE FOR TRUMAN 2016 SC6 TITLE TRUST, its successors in interest and/or assigns, Respondents,

v.Tarmo Paul ROOSILD; Samantha Castronovo; Occupants of the Premises, Appellants.

No. 53772-9-II

Court of Appeals of Washington, Division 2.

Filed May 18, 2021

Ronald D. Richmond, Richmond & Richmond Ltd., 1521 Piperberry Way Se Ste. 135, Port Orchard, WA, 98366-1231, for Appellants.

John Daniel Groseclose, G S Jones Law Group, P.S., 1155 Bethel Ave., Port Orchard, WA, 98366-3125, Michael John Farrell, Attorney at Law, David William Esq. Cramer, MB Law Group, LLP, 117 Sw Taylor St. Ste. 200, Portland, OR, 97204-3029, for Respondents.

PUBLISHED OPINION

Glasgow, J. ¶ 1 Samantha Castronovo and Tarmo Paul Roosild borrowed $227,000, signed a promissory note payable to Bank of America, N.A., and secured the note with a deed of trust encumbering their house and property in Poulsbo, Washington. The deed of trust required the lender to provide notice of default, notice of intent to accelerate the loan, and an opportunity to cure prior to starting foreclosure.

¶ 2 Castronovo and Roosild stopped making payments. In 2015, they received a notice of default and intent to accelerate from a loan servicer stating it was acting on behalf of a new lender, Christiana Trust. Castronovo and Roosild failed to cure their default. In 2017, U.S. Bank National Association, which then held the note and the deed of trust, started judicial foreclosure.

¶ 3 Castronovo¹ appeals the trial court's order granting summary judgment to U.S. Bank, contending that the preforeclosure notice requirements in the deed of trust were conditions precedent to foreclosure and notice could only be sent by the then-current lender. Castronovo asserts that an issue of material fact exists about whether Christiana Trust was the lender in 2015 when the notice was sent. Castronovo alleges no other defect in the preforeclosure notice.

¶ 4 We conclude that the notice requirements in the deed of trust were conditions precedent to foreclosure, but we decline to apply the strict compliance that Castronovo's argument demands. The notice of default and intent to accelerate contained the required substantive notices and identified the party with authority to work out the loan. The notice sufficiently satisfied the deed of trust requirements, regardless of whether Christiana Trust was the lender in 2015 when the notice was sent.

¶ 5 We affirm the summary judgment order. We also award attorney fees on appeal to U.S. Bank with the amount to be determined by a commissioner of this court.

FACTS

¶ 6 Castronovo and Roosild purchased a home in Poulsbo in 1993. In 2006, they borrowed $227,000 from Bank of America and signed a promissory note for that amount payable to Bank of America, which was designated the "lender" and "note holder." Clerk's Papers (CP) at 13. Castronovo and Roosild were required to make monthly payments. The note provided that anyone who took the note by transfer and was entitled to receive payments under it would be the note holder.

¶ 7 The promissory note was secured by a deed of trust executed and recorded the same day. The deed of trust encumbered the Poulsbo property. The deed of trust defined the "lender" as "the beneficiary under this Security Instrument" and named Bank of America as the lender. CP at 17.

¶ 8 Section 20 of the deed of trust described the conditions under which the borrower or lender could initiate judicial action:

Neither Borrower nor Lender may commence, join, or be joined to any judicial action ... pursuant to this Security Instrument ... until such Borrower or Lender has notified the other party ... of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action.

CP at 27. Section 20 also provided that "[t]he notice of acceleration and opportunity to cure given to Borrower pursuant to Section 22 ... shall ... satisfy the notice and opportunity to take corrective action provisions of this Section 20." CP at 27.²

¶ 9 Section 22 addressed the procedure for notice and acceleration if the borrower defaulted. The notice was to specify:

(a) [T]he default; (b) the action required to cure the default; (c) a date ... by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration ... and sale of the Property .... The notice shall further inform Borrower of the right to reinstate after acceleration, the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale, and any other matters required to be included in the notice by Applicable Law.

CP at 28. Both the note and the deed of trust contained provisions authorizing the lender to recover attorney fees.

¶ 10 In December 2006, Bank of America determined that the original note had been lost or destroyed and it executed a lost note affidavit and provided a copy of the note.³

¶ 11 Castronovo and Roosild moved away from their Poulsbo home and began renting it. They encountered financial hardships and attempted unsuccessfully to apply for loan modification from Bank of America's loan servicer. They stopped making loan payments in January 2012.

¶ 12 U.S. Bank states in its brief that Bank of America transferred its interest in the note to a different lender, Christiana Trust, at some point before May 2015. In May 2015, Castronovo received a letter from BSI Financial Services, a loan servicer. BSI stated that it was acting "on behalf of Christiana Trust." CP at 94. The letter referenced the loan number and stated that the loan was in default because Castronovo had missed 40 monthly payments and owed $75,420.69.

¶ 13 The default letter provided that Castronovo had five weeks to cure the default by paying the amount owed. Absent a cure, Christiana Trust would accelerate the loan to collect the full amount due and start foreclosure.

The letter instructed Castronovo to contact BSI's loss mitigation department with any questions and provided a phone number. The letter stated that if the borrowers sent a written request to BSI within 30 days of receiving the default notice, BSI would "provide ... the name and address of the original creditor, if ... different from the current creditor." CP at 95.

¶ 14 Castronovo sent a timely written request to BSI's loss mitigation department requesting an in-person meeting with a representative and "verification of any financial obligation to BSI and/or Christiana [T]rust." CP at 121. Castronovo then hired a lawyer, who sent another letter to BSI requesting documentation of the alleged debt.

¶ 15 In September 2015, BSI responded that the "owner or assignee" of the loan was Christiana Trust and said it would provide additional information after further research. CP at 125. Castronovo did not cure the default.

¶ 16 In 2016, Bank of America assigned the deed of trust to Christiana Trust and the assignment was recorded. In November 2016, Christiana Trust then assigned the deed of trust to U.S. Bank and that assignment was recorded.

¶ 17 In 2017, U.S. Bank filed a summons and complaint in Kitsap County Superior Court initiating judicial foreclosure. U.S. Bank attached the lost note affidavit and a copy of the note to the complaint. Although U.S. Bank had obtained these documents by 2017, the record contains no evidence of when the note was transferred from Bank of America to Christiana Trust or from Christiana Trust to U.S. Bank.

¶ 18 In April 2019, U.S. Bank moved for summary judgment. U.S. Bank supported its motion with an affidavit describing the successive assignments of the deed of trust. The affidavit stated, "The Deed of Trust was assigned to Christi[a]na Trust ... [and] recorded ... on June 10, 2016." CP at 54.

¶ 19 Castronovo opposed the motion for summary judgment. She argued that the default notice was defective because there was no evidence that Christiana Trust had an interest in the loan in May 2015 when the notice was sent, so the notice was not sent by the lender as required by the preforeclosure notice requirements in section 22 of the deed of trust. Castronovo asserted that this constituted a failure to meet a condition precedent and claimed this precluded foreclosure and meant U.S. Bank was not entitled to summary judgment as a matter of law.

¶ 20 The trial court concluded that no material facts were in dispute and granted U.S. Bank's motion for summary judgment. The trial court reasoned that section 22 applied only to nonjudicial foreclosures. The trial court explained, "Defendants have not established that a judicial foreclosure requires pre-foreclosure notice procedures." CP at 137.

¶ 21 Castronovo appeals the trial court's order granting summary judgment to U.S. Bank.

ANALYSIS

¶ 22 A deed of trust can be foreclosed in a nonjudicial foreclosure under RCW 61.24.040 or in a judicial foreclosure under RCW 61.12.040. See Deutsche Bank Nat'l Tr. Co. v. Slotke , 192 Wash. App. 166, 171 n.8, 367 P.3d 600 (2016) ; see also RCW 61.24.100(8). A judicial foreclosure is commenced by filing an action in superior court. Slotke , 192 Wash. App. at 171, 367 P.3d 600 ; see also RCW 61.12.040. Because a deed of trust is a kind of mortgage, a deed of trust foreclosed judicially is subject to laws applicable to mortgages. Boeing Emps. Credit Union v. Burns , 167 Wash. App. 265, 272, 272 P.3d 908 (2012).⁴

A. Summary Judgment Burden and Standard of Review

¶ 23 In reviewing a summary judgment decision, we apply the same standard as the trial court. Mackey v. Home Depot USA, Inc. , 12 Wash. App. 2d 557, 569, 459 P.3d 371, review denied , 195 Wash.2d 1031, 468 P.3d 616 (2020). We review all evidence and reasonable inferences in the light most favorable to the nonmoving party. Id. Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled...