Patrick Tierney v. Carrington Mortgage Services ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 5 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PATRICK LEONARD TIERNEY, No. 22-35221
Plaintiff-Appellant, D.C. No. 2:20-cv-01245-RSM
v.
MEMORANDUM*
CARRINGTON MORTGAGE SERVICES,
LLC; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, District Judge, Presiding
Submitted February 17, 2023**
Seattle, Washington
Before: W. FLETCHER, PAEZ, and VANDYKE, Circuit Judges.
Patrick Tierney appeals the district court’s grant of summary judgment to
defendants Bank of New York Mellon (“BNYM”) and Aztec Foreclosure
Corporation (“Aztec”). This case arises from a mortgage loan that Tierney and his
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
now deceased wife obtained in 2004 from Mortgage Loan Investment Lending
Associates (“MILA”). The loan was comprised of a note secured by a deed of trust
(“2004 Tierney Note”), which encumbered the Tierneys’ house. In August 2011,
the deed was assigned to BNYM. It is undisputed that BNYM now holds the
note.1 BNYM subsequently retained Carrington Mortgage Services (“Carrington”)
to service the loan.
When Tierney fell behind on his monthly payments, Carrington contracted
with Aztec to serve as the foreclosure trustee and commence a non-judicial
foreclosure on the Tierneys’ property.2 On August 27, 2019, Tierney found a
notice taped to his door titled: “Notice Required by the Fair Debt Collections
Practices Act,” which stated that he owed $153,693.34 to Carrington as servicer for
BNYM. On October 25, 2019, Aztec issued a Notice of Default. On December 6,
2019, Aztec issued a Notice of Foreclosure and Notice of Trustee’s Sale.
1
Although Tierney makes much of the chain of title, including suggesting that
BNYM fraudulently obtained the deed after MILA filed for bankruptcy, the
discussion has no bearing on Tierney’s claims. Because fraud was not a claim
asserted in the complaint, the district court did not address it and neither do we.
2
While preparing for the foreclosure, Aztec and Carrington concluded there had
been a vesting error in the chain of title, and the deed had been assigned in the
wrong name. A new assignment was thus created from BNYM f/k/a the Bank of
New York as Trustee for the Benefit of the Certificateholders of the CWABS Inc.,
Asset-Backed Certificates, Series 2004-5 to BNYM f/k/a/ The Bank of New York
as Trustee for Registered Holders of CWABS, Inc., Asset-Backed Certificates,
Series 2004-5 on August 19, 2019.
2
Despite Tierney’s repeated requests to postpone the sale, Carrington and
Aztec refused to postpone past July 24, 2020. Tierney then filed this action and
obtained a temporary restraining order in state court. The defendants ultimately
removed the case to federal court, where the district court granted a preliminary
injunction.
All parties filed motions for summary judgment. The district court denied
Tierney’s motion and granted the defendants’ motions on all but one claim against
Carrington.3 Tierney appeals the district court’s rulings on the four claims
discussed below. We have jurisdiction under 28 U.S.C. § 1291. A district court’s
grant of summary judgment is reviewed de novo. Reynaga v. Roseburg Forest
Prods., 847 F.3d 678, 685 (9th Cir. 2017). We affirm.
1. Declaratory and Injunctive Relief. Tierney seeks a judicial declaration
clarifying the legality of BNYM’s acquisition of the 2004 Tierney Note, because if
the assignments were invalid as he contends, BNYM cannot seek non-judicial
foreclosure. The district court correctly held that borrowers only have standing to
challenge the assignment of a loan if they are at a genuine risk of paying the same
debt twice. See, e.g., Hummel v. Nw. Tr. Servs., Inc., 180 F. Supp. 3d 798, 806
(W.D. Wash. 2016), aff’d 740 F. App’x 142 (9th Cir. 2018); Andrews v.
3
Tierney and Carrington have since reached a settlement, and no claims against
Carrington remain on appeal.
3
Countrywide Bank, NA, 95 F. Supp. 3d 1298, 1301–02 (W.D. Wash. 2015).
Tierney expressly states he is not “at risk of paying the debt twice,” so he lacks
standing to seek declaratory and injunctive relief.4
2. Fair Debt Collection Practices Act (“FDCPA”) Claim. To bring a
claim under the FDCPA, the plaintiff must show that the defendant is a “debt
collector” under 15 U.S.C. § 1692a(6). See Wheeler v. Premiere Credit of N. Am.,
80 F. Supp. 3d 1108, 1112 (S.D. Cal. 2015) (citing Turner v. Cook, 362 F.3d 1219,
1226–27 (9th Cir. 2004)). Tierney appeals the district court’s holding that Aztec is
not a debt collector. The problem, however, is that Tierney failed to plead an
FDCPA claim against Aztec; he named only Carrington and BNYM in his
complaint. This appears to have been an oversight, as Tierney consistently refers
to “Carrington’s and Aztec’s FDCPA Violations” throughout his summary
judgment briefing. While Aztec noticed Tierney’s mistake, called out the improper
4
On appeal, Tierney improperly raises several new arguments about the legality of
the 2004 Tierney Note based on unsupported allegations about the note’s
ownership. See, e.g., Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 997 (9th Cir.
2001). Because Tierney lacks standing to seek declaratory and injunctive relief,
we do not need to address these arguments. But even if Tierney could properly
assert such arguments, they are irrelevant: to enforce a note, a beneficiary need
only be the holder—not the owner—of the note. See, e.g., Wash. Rev. Code
§ 62A.3-301; Brown v. Wash. State Dep’t of Com., 359 P.3d 771, 773 (Wash.
2015). A trustee commencing foreclosure is entitled to rely on the beneficiary’s
declaration of its holder status. See Wash. Rev. Code § 61.24.030(7)(a); Bain v.
Metro. Mortg. Grp., 285 P.3d 34, 36–37 (Wash. 2012). Here, BNYM holds the
note and provided a sufficient declaration to Aztec.
4
pleading, and explained that it is not a debt collector under the statute, it does not
appear that the district court noticed Tierney’s mistake. The district court did not
mention Aztec in its analysis of the FDCPA claim.
Although it is not clear whether Tierney properly pled an FDCPA claim
against Aztec, even if he had, the claim would fail as a matter of law. In Obduskey
v. McCarthy & Holthus LLP, the Supreme Court held that an entity “principally
involved in ‘the enforcement of security interests’ is not a debt collector except for
the purpose of section 1692f(6).” 139 S. Ct. 1029, 1033 (2019) (emphasis in
original, cleaned up). One basis for the Court’s decision was that “Congress may
well have chosen to treat security-interest enforcement differently from ordinary
debt collection in order to avoid conflicts with state nonjudicial foreclosure
schemes.” Id. at 1037. Moreover, we have previously held that “actions taken to
facilitate a non-judicial foreclosure, such as sending the notice of default and
notice of sale, are not attempts to collect ‘debt’ as that term is defined by the
FDCPA.” Vien-Phuong Thi Ho v. ReconTrust Co., 858 F.3d 568, 572 (9th Cir.
2017). Given this precedent, Aztec is not a debt collector under the FDCPA.
Thus, the district court correctly concluded that Tierney failed to demonstrate that
any defendants are debt collectors, so his FDCPA claim fails.
3. Consumer Protection Act (“CPA”) Claim. To state a claim under
Washington’s CPA, a plaintiff must establish injury to his business or property.
5
See Hangman Ridge Training Stables v. Safeco Title Ins. Co., 719 P.2d 531, 533
(Wash. 1986). On appeal, Tierney argues that he lost equity in his home because
he was prevented from taking alternative action to avoid foreclosure, but he points
only to the state court’s issuance of a temporary restraining order as evidence that,
but for defendants’ actions, he could have taken alternative action in lieu of
foreclosure. Tierney does not explain what he could have done if he had received
a timely notice that the foreclosure continuance was denied, and absent a more
detailed showing of injury, he has not supported that claim with sufficient
evidence. See Klem v. Wash. Mut. Bank, 295 P.3d 1179, 1191 (Wash. 2013)
(noting specific evidence the plaintiff presented to show the creditor would have
postponed the sale). The CPA claim thus fails.5
5
For the first time at summary judgment, Tierney alleged that fees added to his
loan in the Notice of Default and Notice of Trustee’s Sale constituted injury under
the CPA. The district court correctly concluded Tierney could not assert injuries
for the first time at summary judgment. See Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). On appeal, Tierney continues to argue that “[f]ees added to a
loan, even if never paid, also constitute an injury under the CPA.” Even if Tierney
had properly alleged this injury, Washington law provides only that “expenses
incurred in investigating” a fee’s “legality may be compensable.” Frias v. Asset
Foreclosure Servs. Inc., 334 P.3d 529, 538 (Wash. 2014); see also Panag v.
Farmers Ins. Co. of Wash., 204 P.3d 885, 901–02 (Wash. 2009) (consulting an
attorney to institute a CPA claim is insufficient to show injury). Here, Tierney
testified that he has not incurred any out-of-pocket expenses, and because he has
not alleged that fees assessed against him were illegal or that he incurred costs in
investigating their legality, he has failed to provide evidence of injury in this
regard.
6
4. Negligence Claim. Finally, Tierney argues that the district court erred in
granting summary judgment to the defendants on his negligence claim. The
district court granted summary judgment for two reasons: (1) because there is no
cause of action for monetary damages under the Deed of Trust Act (“DTA”) absent
a completed foreclosure sale (which did not occur here); and (2) because Tierney
failed to make a substantial showing of damages, which is an essential element of a
negligence claim. While it is true that an action under the DTA requires a
completed foreclosure sale, Frias v. Asset Foreclosure Servs. Inc., 334 P.3d 529,
537 (Wash. 2014), Tierney associated his negligence claim in his complaint and
summary judgment briefing with the CPA, which does not have such a
requirement. Id. at 537–38. The district court’s analysis on this issue was thus
improper. Nevertheless, because we have already concluded that Tierney failed to
show damages under the CPA and Tierney presented no additional evidence of
damages for his negligence claim, the district court did not err in granting
summary judgment on this claim on that basis. We thus do not address Tierney’s
appellate arguments about duty under any statute or common law.
AFFIRMED.
7