Washington State Housing Finance Commission v. National Homebuyers Fund, Inc.
| Decision Date | 17 August 2020 |
| Docket Number | 76510-8-I |
| Parties | WASHINGTON STATE HOUSING FINANCE COMMISSION, a public body corporate and politic of the State of Washington, Respondent, v. NATIONAL HOMEBUYERS FUND, INC., f/k/a Homebuyers Fund, Incorporated, a California nonprofit corporation; GOLDEN STATE FINANCE AUTHORITY, f/k/a California Home Finance Authority, f/k/a California Rural Home Mortgage Finance Authority, a California joint powers authority; RURAL COUNTY REPRESENTATIVES OF CALIFORNIA, f/k/a Regional Council of Rural Counties, f/k/a Mountain Counties Water Resources Association, a California nonprofit corporation, Appellants. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
In 2015, the Washington State Housing Finance Commission (the Commission) filed a lawsuit against National Homebuyers Fund Inc. (NHF) arguing that NHF is unlawfully invoking governmental authority in Washington and interfering with the Commission's housing programs. The trial court agreed and entered an order declaring NHF's activities in Washington unlawful and prohibiting it from engaging in the further provision of its home ownership financing services in Washington. On appeal, we reversed, concluding that the Commission did not have standing. Wash. State Hous. Fin Comm'n v. Nat'l Homebuyers Fund, Inc. v., No 76510-8-I, slip op. at 5 (Wash.Ct.App. Jun. 11, 2018) (unpublished) http://www.courts.wa.gov/opinions/pdf/765108.pdf. However, our decision was reversed by the Supreme Court, which remanded the case to us for consideration of its merits, specifically to determine "[w]hether NHF's activities in Washington are of the type that would require authorization from the legislature." Wash. State Hous. Fin. Comm'n v. Nat'l Homebuyer's Fund, Inc., 193 Wn.2d 704, 720, 445 P.3d 533 (2019) (hereinafter WSHFC).
On remand, NHF asserts that the operation of its housing program in Washington does not constitute activity of the type requiring authorization from the legislature. Because NHF's operations in Washington require it to participate in the Federal Housing Administration (FHA) mortgage insurance program in Washington as a governmental entity acting in a governmental capacity, activity the Supreme Court concluded in its opinion requires authorization from our legislature, and NHF is not authorized to so participate by our legislature, we affirm the trial court's order declaring that NHF's program violates Washington law.
I
In 1983, responding to a shortage of affordable housing in Washington, our legislature established the Commission to make "additional funds available at affordable rates to help provide housing throughout the state." Laws of 1983, ch. 161, § 1; RCW 43.180.010. One of the Commission's ongoing programs "assists low-income and first-time home buyers [in] qualify[ing] for a mortgage by lending them funds for the required down payment." WSHFC, 193 Wn.2d at 707-08. The Commission is explicitly authorized to offer such programs in conjunction with loans qualifying for mortgage insurance offered through federal housing programs, including the FHA's mortgage insurance program. RCW 43.180.050(1)(e).
NHF began operating a down payment assistance program in Washington in 2014. NHF's program in Washington partners with individual lenders to provide down payment assistance to home buyers in the form of nonrepayable gifts of up to five percent of the mortgage loan. NHF requires its partner lenders to obtain mortgage insurance for their loans through the FHA mortgage insurance program. As part of this process, the lenders must report to the FHA the source of any gifts provided to help pay for the borrower's down payment. When NHF's partner lenders reported to the FHA that NHF's gift funds came from a nonprofit organization, their loans were denied mortgage insurance. As a result, NHF advised its partner lenders to report to FHA that their gift funds came from a governmental entity, which resulted in approval for FHA mortgage insurance. NHF also marketed itself as a governmental program.
The partner lenders also front the money for the nonrepayable gift. Then, the lenders sell the loans to a service provider partner, which also reimburses the lender for fronting the nonrepayable gift funds. The service provider partner then bundles the loans into mortgage securities, which it sells to NHF. In a separate transaction, NHF also reimburses the service provider for the gift funds that it paid to the lender. NHF then sells the mortgage securities it purchased on the open market for a profit.
Shortly after NHF began operating in Washington, the Commission began receiving inquiries from lenders who thought NHF was part of the Commission or had partnered with the Commission. The Commission became concerned that NHF was pretending to offer a government program and filed a lawsuit against NHF, RCRC, and GSFA on May 21, 2015. Therein, the Commission alleged that NHF was unlawfully invoking governmental authority in Washington and was thereby interfering with the Commission's programs. The Commission sought a declaration that NHF's activities in Washington are prohibited by law.
NHF unsuccessfully moved to dismiss the complaint. Following discovery, the parties filed cross motions for summary judgment. The trial court denied both motions, concluding that genuine issues of material fact remained to preclude summary judgment. However, upon the Commission's motion for reconsideration, the trial court granted summary judgment against NHF, declaring that NHF's housing activities in Washington are prohibited by law.[1]
NHF appealed to this court, [2] which reversed, declining to reach the merits while concluding that the Commission did not have standing to bring its claims against NHF. Nat'l Homebuyers Fund, No. 76510-8-I, slip op. at 5. However, our Supreme Court, after granting a petition for review of that decision solely on the issue of whether the Commission had standing, concluded that the Commission did, indeed, have standing, reversed our decision, and remanded the matter to us for consideration of the remaining issues presented. WSHFC, 193 Wn.2d at 720.
II RCRC and GSFA contend that the trial court erred by granting summary judgment against either of them, concluding that NHF's operation of its down payment assistance programs in Washington are in violation of Washington law, and prohibiting it from continuing to offer its housing assistance gift programs in Washington. This is so, NHF asserts, because (1) the trial court did not have personal jurisdiction over RCRC and GSFA, and (2) NHF's activities in Washington are not of the type requiring legislative authorization because it can administer its down payment assistance programs in Washington without purporting to be a governmental entity acting in a governmental capacity. [3]
We review de novo the grant of a motion for summary judgment. Strauss v. Premera Blue Cross, 194 Wn.2d 296, 300, 449 P.3d 640 (2019). "'Summary judgment is appropriate when there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.'" Strauss, 194 Wn.2d at 300 (alteration in original) (internal quotation marks omitted) (quoting Ranger Ins. Co. v. Pierce County, 164 Wn.2d 545, 552, 192 P.3d 886 (2008)). "Similarly, a trial court's assertion of personal jurisdiction is a question of law that we review de novo, where, as here, the jurisdictionally relevant facts are undisputed." Failla v. FixtureOne Corp., 181 Wn.2d 642, 649, 336 P.3d 1112 (2014).
III
NHF contends that the trial court did not have personal jurisdiction over RCRC and GSFA, that the judgment against them must be reversed, and that the claims against them must be dismissed. We agree.
"Under Washington's long arm jurisdiction statute, RCW 4.28.185, personal jurisdiction exists in Washington over nonresident defendants and foreign corporations as long as it complies with federal due process." Noll v. Am. Biltrite Inc., 188 Wn.2d 402, 411, 395 P.3d 1021 (2017). "Thus, Washington courts may exercise personal jurisdiction over a nonresident defendant so long as: (1) purposeful minimum contacts exist between the defendant and the forum state, (2) the plaintiff's injuries arise out of or relate to those minimum contacts, and (3) the exercise of jurisdiction is consistent with notions of fair play and substantial justice." Montgomery v. Air Serv Corp., 9 Wn.App. 2d 532, 538, 446 P.3d 659 (2019).
Washington courts may possess either general or specific personal jurisdiction over a defendant corporation or entity. Montgomery, 9 Wn.App. 2d at 539 (citing Noll, 188 Wn.2d at 412). The trial court herein possessed neither form of personal jurisdiction over RCRC and GSFA.
"A state court has general jurisdiction to decide any claim against a defendant corporation when the corporation's contacts with the state are so substantial that it is essentially at home in the forum state." Montgomery, 9 Wn.App. 2d at 539 (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011)). "A c...
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