Vawter v. Quality Loan Serv. Corp. Of Wash.

• Decision Date: 22 April 2010
• Docket Number: Case No. C09-1585JLR.
• Citation: 707 F.Supp.2d 1115
• Parties: Henry VAWTER, et al., Plaintiffs,v.QUALITY LOAN SERVICE CORPORATION OF WASHINGTON, et al., Defendants.
• Court: U.S. District Court — Western District of Washington

707 F.Supp.2d 1115

Henry VAWTER, et al., Plaintiffs,v.QUALITY LOAN SERVICE CORPORATION OF WASHINGTON, et al., Defendants.

Case No. C09-1585JLR.

United States District Court,

W.D. Washington,

at Seattle.

April 22, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Melissa A. Huelsman, Seattle, WA, for Plaintiffs.

Joni Marie Derifield, Matthew Rick Cleverley, McCarthy & Holthus, Poulsbo, WA, Christopher R. Ambrose, Ambrose Law Group, Portland, OR, Fred B. Burnside, Matthew S. Sullivan, Davis Wright Tremaine, Seattle, WA, for Defendants.

Paul Financial LLC, San Rafael, CA, pro se.

ORDER ON CHASE AND MERS'S MOTION FOR JUDGMENT ON THE PLEADINGS

JAMES L. ROBART, District Judge.

I. INTRODUCTION

This matter comes before the court on Defendants JP Morgan Chase Bank, N.A. (“Chase”) and Mortgage Electronic Registration Systems's (“MERS”) motion for judgment on the pleadings (Dkt. # 11). Chase and MERS request that the court dismiss with prejudice Plaintiffs Henry and Rose Vawter's claims against them pursuant to Federal Rule of Civil Procedure 12(c). Defendant Quality Loan Service Corporation of Washington (“QLS”) joins in the motion (Dkt. # 14). Having considered the motion, as well as all papers filed in support and opposition, and having heard the argument of counsel, the court GRANTS judgment on the pleadings with respect to Chase and MERS (Dkt. # 11) but DENIES judgment on the pleadings with respect to QLS (Dkt. # 14).

II. BACKGROUND ¹

This case involves alleged violations of the statutory requirements for the nonjudicial foreclosure of a deed of trust. The Vawters are an elderly couple living on a fixed income in their home of over 38 years. (Compl.(Dkt. # 1) ¶ 2.1.) After confronting financial difficulties arising from mortgage payments, medical expenses, and necessary plumbing repairs, the Vawters chose to refinance their home to help relieve some of their monthly financial burden. ( Id.) In late 2006 or early 2007, the Vawters were solicited by, and began speaking with, Defendant Twin Capital about a possible refinance. ( Id. ¶¶ 2.1-2.2.) These discussions and a subsequent loan application culminated in the Vawters executing an adjustable-rate note (“Note”) in the amount of $328,000 with Defendant Paul Financial, LLC (“Paul Financial”).² ( Id. ¶¶ 2.9, 2.13; Lowry Decl. (Dkt. # 22) Ex. A (Note).) The Note is secured by a deed of trust (“Deed of Trust”), which lists Paul Financial as the lender, MERS as the beneficiary, “acting solely as a nominee for Lender and Lender's successors and assigns,” and First American Title Insurance Company (“First American”) as the trustee. (Compl. ¶ 2.16.1 ³; Sullivan Decl. (Dkt. # 12) Ex. A (Deed of Trust).) The Vawters assert that they were not provided with the various disclosures required by federal law in connection with the refinancing process, that they did not understand the terms of the Note, including that it was an adjustable-rate note as opposed to a fixed-rate note, and that they were charged improper fees.⁴ (Compl. ¶¶ 2.4, 2.9-2.11, 2.13.)

The Note has now changed hands from Paul Financial to Chase. In March 2007, Paul Financial notified the Vawters that Homecomings Financial would begin servicing their loan. ( Id. ¶ 2.15.1.) Shortly thereafter, Homecomings Financial notified the Vawters that Washington Mutual Bank, which was subsequently acquired in part by Chase, would take over the servicing of their loan. ( Id.) The parties agree that Chase now has possession of the Note, which has been endorsed in blank. (Lowry Decl. Ex. A; see Supp. Resp. (Dkt. # 29) at 2.) The Vawters dispute, however, when Chase obtained possession of the Note and characterize Chase in their complaint as merely the “purported” holder of the Note, alleging that they “cannot properly ascertain its real role in connection with their mortgage loan.” ⁵ (Compl. ¶ 1.6.)

The parties to the Deed of Trust also changed over time. In April or May 2009, MERS assigned its beneficial interest under the Deed of Trust to Chase. (Sullivan Decl. Ex. E; see Compl. ¶ 2.17.) The Vawters acknowledge that MERS is listed on the Deed of Trust as holding the beneficial interest, but contest whether MERS was actually entitled to serve as the beneficiary, asserting that “[t]he entirety of MERS' representations about its role and authority to act is false.” (Compl. ¶ 2.17; see id. ¶ 2.16.1.) Before MERS assigned its beneficial interest to Chase, however, Chase appointed QLS to replace First American as trustee. ( Id. ¶ 2.17.) The Vawters thus allege that QLS was not properly appointed as the successor trustee ( id. ¶ 2.17), and Chase and MERS concede in their briefing that the timing of the appointment was in error (Reply (Dkt. # 11) at 9 n. 4.)

The terms of the Note eventually resulted in “financial disaster” for the Vawters. (Compl. ¶ 2.13.) On an unspecified date, the Vawters defaulted on their payments under the Note. Although they attempted to negotiate a loan modification with Chase, the Vawters allege that they did not receive “any sort of meaningful response.” ( Id. ¶ 2.15.1.) The Vawters' default ultimately led to nonjudicial foreclosure proceedings on their home. ( Id. ¶ 2.17.) On May 28, 2009, QLS, ostensibly acting as trustee under the Deed of Trust, recorded a notice of trustee's sale (“Notice”), and also caused the Notice to be posted at and mailed to the Vawters' residence.⁶ (Compl. ¶ 2.17; Sullivan Decl. Ex. B (Notice of Trustee's Sale).) The Notice scheduled the trustee's sale for August 28 2009. (Compl. ¶ 2.17; Sullivan Decl. Ex. B at 30.)

Prior to the trustee's sale, the Vawters filed this action in King County Superior Court in an attempt to head off the nonjudicial foreclosure. (Compl. ¶ 2.15.1.) As the Vawters describe it, after failing to obtain a loan modification from Chase, “they [had] no choice but to file a lawsuit in order to obtain compensation for their losses and stop the foreclosure sale.” ( Id.) To these ends, the Vawters were at least partially successful: the trustee's sale has been discontinued. In addition to a cause of action for temporary and permanent restraint of the trustee's sale, the Vawters plead five other causes of action, including claims for: (1) intentional infliction of emotional distress; (2) wrongful foreclosure and breach of the duty of good faith under Washington's Deed of Trust Act, chapter 61.24 RCW; (3) violations of TILA; (4) violations of the MBPA; and (5) violations of Washington's Consumer Protection Act (“CPA”), chapter 19.86 RCW. Defendants removed this action to federal court.

Chase and MERS now move for judgment on the pleadings under Rule 12(c). The court heard argument on the motion on March 25, 2010.⁷ ( See Dkt. # 27.) At the hearing, the court directed the Vawters to file a supplemental response addressing the Note, which Chase and MERS submitted along with their reply. The Vawters timely filed their supplemental response.

III. ANALYSIS

A. Motion to Strike

As a preliminary matter, Chase and MERS request that the court strike pages 25 through 35 of the Vawters' 35-page response, as well as Exhibit 1 attached to the accompanying declaration of Melissa Huelsman. (Reply at 6.) Local Rules W.D. Washington CR 7(e), which governs the length of motions and briefs, provides that “motions to dismiss ... and briefs in opposition shall not exceed twenty-four pages.” Local Rules W.D. Wash. CR 7(e)(3). The Vawters' response substantially exceeds the applicable 24-page limit, and they have not requested leave to file an over-length brief. On this record, however, the court declines to strike the excess pages. Though the response does not comply with Local Rule CR 7(e), the court is persuaded that the ends of justice are best served by considering the entire response.⁸ By contrast, the court strikes Exhibit 1 to the declaration of Ms. Huelsman. Exhibit 1, which is a declaration filed in a separate lawsuit, is not appropriate for consideration on this Rule 12(c) motion.

B. Rule 12(c) Legal Standard

On a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the district court must “accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party.” Fleming, 581 F.3d at 925 (citing Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir.2004)). The Rule 12(c) standard is the same as the Rule 12(b)(c) standard. McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir.1988); see Corder v. Lewis Palmer School Dist. No. 38, 566 F.3d 1219, 1223-24 (10th Cir.2009) (applying Twombly-Iqbal standard on Rule 12(c) motion); Johnson v. Rowley, 569 F.3d 40, 43-44 (2d Cir.2009) (same). “A district court will render a judgment on the pleadings when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 529 (9th Cir.1997). “Judgment may only be granted when the pleadings show that it is beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. When reviewing a motion for judgment on the pleadings the court may consider documents that were either attached to the complaint or on which the complaint necessarily relies. See Lee, 250 F.3d at 688.

C. Washington's Deed of Trust Act

In 1965, the Washington legislature enacted the Deed of Trust Act (“DTA”), which created and governs statutory deeds of trust in Washington. Wash. Laws of 1965, ch. 74; see 18 William B. Stoebuck & John W. Weaver, Washington Practice, Real Estate: Transactions § 20.1, at 403 (2d ed. 2004) (hereinafter “Stoebuck & Weaver”). A deed of trust is a form of three-party mortgage, involving not only a lender and a borrower, but also a neutral third party called a trustee. See Buse v. First Am. Title Ins. Co., No. C08-0510MJP, 2009 WL 1543994, at *1 (W.D.Wash. May 29, 2009); 18...